Now, if there are any questions, Mr. Chairman, I will be willing to do my best to respond to them.

The CHAIRMAN. Are there any questions?

Mr. Pickle.

Mr. PICKLE. Thank you, Mr. Chairman.

Mr. Moss, after you wrote your letter of October 10, 1973, to the GAO asking that this matter be looked into, did you receive any information after that date that the rules were, or were not being complied with or that disclosure was or was not being met?

Mr. Moss. I did not receive any, until I had a preliminary briefing from the General Accounting Office team just before the recent break Congress took toward the end of August.

Mr. PICKLE. Then you did not receive any information from the GAO about conflict of interest until this August?

Mr. Moss. No; Mr. Pickle, it has been my policy over many years of dealing with the General Accounting Office to await their report after the agency has had an opportunity to make its comments. That, as you know, is a right the General Accounting Office accords each agency of Government.

Mr. PICKLE. As I understand it, Mr. Chairman, the session today primarily is to concern itself with the aspects of disclosure and not so much with the rates and other matters which I presume will be tomorrow or whatever other time the hearing will take place. So, I would like to ask two or three questions about disclosure.

I am hoping you can be here for the other aspects of the hearing because you have given the committee a very important document. Would you tell this committee what kind of disclosure you think the employees or officials at FPC should make? What kind? How often? And in what amount?

Mr. Moss. At this moment, Mr. Pickle, I would be satisfied if the disclosure rules the Commission, itself, has adopted were fully implemented. They do require a full disclosure on the part of each of ficial and employee of the Commission of any holdings of securities, debentures, or whatever the nature of an investment might be.

In my judgment, that list has not been kept updated, and the failures spread upon the record of this report represent failures of enforcement: failure to follow their own rules.

If the Commission feels that the rules are onerous, that they are unrealistic, it should then on a public record undertake to revise those rules. But as long as those rules are part of the body of their requirements, then they should take appropriate steps. It is their responsibility to enforce them.

Mr. PICKLE. Primarily, you are saying they have sufficient rules, but they did not enforce them; they did not carry them out?

Mr. Moss. That is correct. Nor did they keep the list updated, so that if a person were to undertake to check the filing of an employee or a top official, it would necessarily reflect the kinds of conflicts that might be inherent in additional securities that should have been added to the list.

Mr. PICKLE. Should the covered FPC officials make disclosure initially and then automatically at any time that some assets are added to their own inventory? Should they make such disclosure annually as well as initially?

Mr. Moss. I believe that disclosure should be revealed at any time. there is a significant change in the portfolio of investment of any person subject to disclosure rules.

Mr. PICKLE. Mr. Chairman, I don't want to take any more time, but I do want to say that Mr. Moss has made a statement which is very serious in nature, and this statement is when you said there is a possibility that criminal statutes may have been violated.

Now, do you have any evidence that you can submit to this committee that such was the case? If you hesitate to mention names, I think it should be submitted to the committee by name and transaction.

Mr. Moss. I believe the report itself implicitly carries with it the possibility of a violation of a criminal nature.

The letter of transmittal to me lists a number of agencies automatically receiving the report from the Comptroller General. I have supplied a copy of this report to the Attorney General of the United States in addition to the list contained on the first page of the letter of transmittal under date of, I believe, September 13.

Mr. PICKLE. The GAO report is rather explicit in points raised about the nondisclosure, the failure to keep records, the failure to even know when disclosure should have been made or by whom.

I think it would be very important that we listen to the testimony of the FPC, but I am concerned that you make the statement that possible criminal violations may have been committed.

Mr. Moss. I believe I would base that upon my view that disclosure rules are backed by several provisions of our Federal criminal statutes. Therefore, they should be fully explored.

Mr. PICKLE. Obviously, if they have complied, that is a fact. If there has been a criminal violation that is of such a serious nature this committee would ask that it be looked into, and we should proceed carefully.

I would add also that your statement implies that the corporate interests and the FPC Commissioners were raising prices constantly. The fact that the price has been raised is apparent.

My part of the country has suffered perhaps more than anybody in the country, and this is an odd fact of life coming from an oil-andgas-producing State.

At the same time, I would think we would be careful not to state as a fact that the increases were improper because disclosure had not been made.

I assume you do not mean to infer that the increases, themselves, have come about in big amounts because of financial ties.

Mr. Moss. I do not want to state as a factual matter that there is a direct relationship between failure to disclose and failure on the part of the Commission itself to follow its own rules and regulations on pricing.

But I say that a reasonable man reading this report could conclude that.

I do not so state it other than in that context.

The CHAIRMAN. Before I call on our next colleague for questions, I must state to the committee that the Chair has to attend a conference with the Senate. I have to leave but I hope to get back as soon as I can. While I am gone Mr. Pickle will take over.

Mr. Lent.

Mr. LENT. I have no questions.

Mr. CARNEY. I see you were a party to a lawsuit along with the Consumers Union of the United States. What was the date of filing? Mr. Moss. I don't recall the exact date of filing.

Mr. CARNEY. Why did you file it?

Mr. Moss. Because I felt there was a lack of appropriate regulation discretion being exercised by the Commission.

I felt they were moving toward deregulation. In my judgment, as a regulatory body this would affect those they were charged by the Congress with regulating.

I felt the decision to deregulate should have been one they requested of the Congress. We should have relieved them, let us say, of responsibility to regulate rather than having them initiate such action on their own.

Mr. CARNEY. I have no other questions, Mr. Chairman.

Mr. PICKLE [presiding]. Mr. Manelli, do you have questions?
Mr. MANELLI. No, sir.

Mr. PICKLE. Mr. Moss, I will thank you for your testimony. You have given us a lot to ponder on in this committee. I am sure that the committee will proceed with other authorities to look into any aspect of wrongdoing that might have taken place.

In reading this portion of the report from the GAO, this member must conclude that there have been glaring gaps of omission and withholding of information.

It must be testified to by the FPC, but I would suggest that this be done by all people who want to know about this.

I am concerned about one or two other things, since I have you here. I notice in this report that the attorneys represented by the OGP's and the OPP's, some of them did not file disclosure statements. I wonder if you have any comment on that.

Here are the counsel representing the General Counsel's Office, and attorneys themselves did not file these reports. Would you comment on that?

Mr. Moss. Mr. Pickle, there seems to have been a pattern generally of ignoring the requirements for disclosure.

Other than as I said in my statement, at lower and middle levels in the Commission, I know of no practice of regularly, routinely filing reports as required by the Commission's regulations.

Mr. PICKLE. Do you know how many, what they call the ALJ's, at the Fedreal Power Commission, the administrative law judges? Mr. Moss. I don't know how many there are. You would have to get that from the Federal Power Commission witnesses.

Mr. PICKLE. Would you also tell me from this report, I notice that they list the number, and by name, and the companies in which some of the employees had an interest. It goes all the way from Exxon down to Potomac Electric & Power Co. In it, it has such companies as the Ford Motor Co.

I assume there must be some direct alinements between Ford Motor Co. and the utility field?

Mr. Moss. The relationship in each instance is predicated upon subsidiaries or affiliated activities in which the corporation is engaged. The list is compiled by the Federal Power Commission, the list of holdings which would constitute a conflict.

It is their judgment and, therefore, the omissions occurred notwithstanding their having decided that the holdings of that kind of security in that particular company would constitute a conflict.

Mr. PICKLE. I read in the report that the Scott Paper Co. owned a utility concerned, in the South somewhere as I recall it, so I can see that that would classify them as a company with whom you would not want to have a conflict of interest if you were a member of the EPC.

I am trying to get in my mind now how far we extend the interest in, to show that there might be a conflict of interest. Do you go past the primary or the secondary or tertiary level?

We have to, if we make a recommendation, set some level beyond which we would say that is not a substantial interest. Would you have any comments on that?

Mr. Moss. Mr. Chairman, first, I think we can agree we have a pattern which has emerged in recent years of corporate conglomerates. It is very difficult from the title to tell what in the world the business operation is.

But I would be willing to rest on the rules as they have been adopted by the Commission.

Also, unless there is a showing in the course of hearings that the rules, themselves, are inadequate to embrace the kinds of entities which would have matters before the Commission routinely and, therefore, would constitute conflicts. But I think the rules adequately enforced and conscientiously enforced would serve the necessary objectives.

Mr. PICKLE. I thank you, Mr. Moss. You have given us a great deal to think about.

Mr. Carney.

Mr. CARNEY. In your testimony on page 4, Mr. Moss, you say that the FPC should be prevented from raising any gas prices anywhere until the situation is resolved.

How could this be accomplished? Would it be by court order or what? Who should get the court order?

Mr. Moss. I suppose, absent an agreement from the Federal Power Commission, you would have to seek some court action or a joint resolution which would require the signature of the President.

I recognize the practical difficulties of implementation of that recommendation. But the Federal Power Commission certainly has a far greater burden now than it would have had, had it followed its own procedures and enforced its own rules, not only in the matter of disclosure of any possible conflicts, but in granting emergency increases. As a matter of fact, from the Commission's own records, it is very difficult to tell how many suspensions did occur.

The General Accounting Office used one figure supplied by the Commission. I would refer to page 4 of the report. They used the records of the Secretary of the Federal Power Commission in arriving at 96 extensions to the 60-day producer of emergency gas sales.

However, their own Bureau of Natural Gas records show 130 extensions were granted and the GAO was unable to reconcile the differences, which in this instance amounts to 34. Again, this is somewhat typical.

In one instance, there was an emergency increase which was permitted to go into effect in the case of two companies without them even having filed or having pending a current request for the increase to be granted.

This kind of housekeeping and regulation is to be severely censured by this Congress. We cannot tolerate it-nor should we.

Mr. CARNEY. This report and the conclusions of this report indict this Commission pretty badly, but you still have not answered the question. Are there laws not being lived up to? Should we pass more laws that will not be lived up to?

The courts interpret the laws. It appears to me, to get real action on the allegations you made here is a matter for the courts. To pass a law does not seem to do much good. This report says they have not lived up to the laws. If you pass more laws, does it mean they may not do it more?

Mr. Moss. You will note a copy has been sent to the Chief Judge of the Court of Appeals of the District of Columbia. Because of the possibility the Commission was acting in contempt of an order issued by that court, they accomplished their purpose through adoption of a different order which permitted them to continue to do, in my judgment, precisely what they were prohibited from doing by the court's

order.

How do we stop it?

These hearings. The work of this oversight committee. This special oversight committee of the Committee on Interstate and Foreign Commerce constitutes one of the most effective forums in which tobring these issues into focus, and to secure more effective compliance with the law.

I think the oversight functions of the Congress are as important, if not more important, than the legislative functions of the Congress. Proper oversight will insure a far more faithful adherence to the laws we write.

It does not do good always to seek a legislative answer, especially when the failure is failure to observe not only laws we enact but the regulatory body of law adopted by the Commission itself.

Mr. PICKLE. Would the gentleman yield to the Chair?

Mr. CARNEY. I yield.

Mr. PICKLE. Is it your contention or statement to the committee that the Federal Power Commission has not now complied with full disclosures as of this date?

Mr. Moss. I do not know, Mr. Chairman. I think that is something you are going to have to find out as you move through the findings that were made.

This report is a fairly current one in its basic work. It reflects a condition which, unless most recently corrected, would suggest that all defects found to exist have not been corrected.

Mr. PICKLE. Mr. Carney's question was in relation to your point. that there should be no further increases until these disclosures have been fully complied with. If they have been complied with, that would not relate itself directly to increases necessarily?

Mr. Moss. No; I think increases ought to be made in accordance with proper procedural requirements of the Commission.

Mr. PICKLE. I notice in the GAO report, and they can perhaps comment when they testify, when they talked about the last three appointees to the Federal Power Commission, the language in it throughout says that these appointees would divest certain holdings. I assume that they did divest.