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[The information follows:)
DEAR MR. VICE CHAIRMAN: I have attached a copy of the letter dated March 2, 1973, from the Office of Legal Counsel of the Department of Justice setting forth their response to my inquiry regarding conflict of interest problems that might arise from my participation in the above proceedings on behalf of Special Counsel. On pages 2 and 3 of the letter they suggest that the Commission determine whether my past participation in these proceedings has been personal and subs'antial within the meaning of 18 U.S.C. 207. I, therefore, request such a determination from the Chairman. Yours very truly,
LEONARD S. GOODMAN,
Associate General Counsel.
DEPARTMENT OF JUSTICE,
Washington, D.C., March 2, 1973. MR. LEONARD S. GOODMAN, Associate General Counsel, Interstate Commerce Commission, Washington, D.C.
DEAR MR. GOODMAN: This is in response to your inquiry to me of February 20, 1973, as supplemented by your letter of February 27. You ask whether your prior participation in certain rate proceedings before the Interstate Commerce Commission, upon your leaving its employment to serve as chief legal assistant or staff director to former Senator Gordon L. Allott, Special Counsel in ICC's investigations involving these proceedings, would be contrary to the conflict of interest law, 18 U.S.C. 202–209 or other criminal statutes.
From the materials which you have submitted, it appears that the proceedings involved are entitled: (1) Ex Parte No. 270, Investigation of Railroad Freight Rate Structure; (2) Ex Parte No. 270 (Sub. No. 2), Investigation of Railroad Freight Service; and (3) Ex Parte No. 271, Net Investment-Railroad Rate Base and Rate of Return.
You state that you did not personally participate in any aspect of the proceedings numbered (2) and (3), above. You did participate in a limited way in proceeding number (1), Ex Parte No. 270, as, for example, in preparing comments of the General Counsel in August 1971, on two somewhat conflicting drafts of an interim report. However, neither you nor anyone reporting to you drafted the report; nor did you or anyone reporting to you participate as a member of the staff committee which prepared the final draft. You state, moreover, that the Commission's primary involvement in Ex Parte No. 270 over the past two years, has been, prior to retaining Special Counsel, to engage a private firm to conduct special studies; and that you did not participate in that phase of the proceeding. Finally, it appears that Special Counsel has been retained by the Commission in the status of an independent contractor” to represent the public interest in the investigation, which is expected to run for about three years.
Preliminarily, I regret that we are unable to supply you with an official opinion on the questions you present, since the authority of the Attorney General (or that of his assistant) is limited to legal advice to the President and heads of executive departments in connection with their official business. 28 U.S.C. 511-512.
However, as a matter of information and to the extent that we are able, I am glad to be of assistance to you. The relevant provision is 18 U.S.C. 207, which deals with postemployment restrictions. That section establishes two rules applicable to former Government employees. First, section 207(a) bars the former Government employee for life from knowingly acting as agent or attorney for anyone other than the United States in connection with a particular matter involving specific parties in which the United States is a party or has a direct and substantial interest and in which he participated personally and substantially. Section 207(b) erects a one-year bar against personal appearance as an agent or attorney before a court or a governmental agency in connection with any such particular matter which was under his “official responsibility” within a year prior to the termination of such responsibility.
Passing the question whether Ex Parte No. 270 is "a particular matter" covered by the section and whether you would appear as “agent or attorney,” this Office is not competent to determine from the facts stated by you whether your prior participation in this particular matter was “personal and substantial” or whether it was under your "official responsibility." Determinations of this kind must of necessity turn upon circumstances that are more appropriately to be evaluated by the Commission, which has immediate and closehand knowledge of them. If the Commission agrees with the conclusions you have drawn regarding your prior participation, 18 U.S.C. 207 would not stand in your way of serving as chief legal assistant or staff director to the Special Counsel. I am not aware of any other criminal statutes that would be applicable under the facts presented by you.
Finally, it is noted from the attached agreement between you and the Honorable Gordon L. Allott that provision is made in paragraph 6 thereof that in the event that your employment extends for more than two years and eight months, you “shall be entitled to payment for lost sick leave (which currently totals 1,394 hours) in a liquidated sum of $6,000.” The terms of your employment agreement with the Special Counsel do not appear to present any question under the federal conflict of interest law. Sincerely,
Office of Legal Counsel.
INTERSTATE COMMERCE COMMISSION,
Washington, D.C., March 6, 1973. Re Ex Parte Nos. 270, 2707(Sub-No. 2), 271. LEONARD S. GOODMAN, Esq. Associate General Counsel, Interstate Commerce Commission, Washinglon, D.C.
DEAR MR. GOODMAN: I received your request for a determination whether your participation in the above proceedings has been “personal and substantial” within the meaning of 18 U.S.C. 207, and the copy of the letter to you of March 2, 1973, from the Office of Legal Counsel, Department of Justice.
As the Department of Justice relates, section 207(a) bars a former Government employee from participating in a "particular matter” involving specific parties in which he participated personally and substantially. Section 207(b) creates a one-year bar against personal appearance in connection with a particular matter that was under the former employee's "official responsibility.”
After consulting with our General Counsel, I am initially of the view that section 207 does not apply to rulemaking and investigatory proceedings like those in which Special Counsel would participate. In connection with section 207, Attorney General Kennedy stated the following in his memorandum of January 28, 1963, published in volume 18 of U.S.C.A. at page 282:
“Subsections (a) and (b) describe the activities they forbid as being in connection with “particular matter(s) involving a specific party or parties in which the former officer or employee had participated. The quoted language does not include general rulemaking, the formulation of general policy or standards, or other similar matters. Thus, past participation in or official responsibility for a matter of this kind on behalf of the Government does not disqualify a former employee from representing another person in a proceeding which is governed by the rule or other result of such matter.”
In any event, your participation in the subject proceedings, while at times personal, has not been substantial; and these proceedings have not been under your official responsibility. Sincerely,
W. D. BREWER, Acting Chairman.
Mr. GOODMAN. The upshot of all this correspondence, if I may briefly describe it, is that 18 U.S.C., section 207, would not apply to me in my particular situation.
Mr. POWERS. All right. You have a letter in there from Mr. Leon Ulman. Is that part of the submission?
Mr. GOODMAN. Yes. Each one of those letters I described, I have copies here.
Mr. POWERS. Did these letters that you have gone through constitute all the communications between yourself, the Department of Justice and the Commission concerning your employment or termination thereof and requests as to whether or not this constitutes in their opinion a conflict of interest, or other documents involved that were submitted back and forth?
Mr. GOODMAN. Well, obviously it's not all the communications because several of them were by telephone.
Mr. POWERS. Is this all the written communications?
Mr. POWERS. There are no other written communications concerning this?
Mr. GOODMAN. There are none.
Mr. POWERS. Do you have a time schedule on when you're going to submit your proposed budget to the Commission so that they can definitize the contract?
Mr. GOODMAN. Well, Mr. Powers, I have been with the Senator all of the 3 days on a full time basis. I have no such time schedule at this point, no.
Mr. POWERS. Is it anticipated that it will be submitted before the end of the month?
Mr. GOODMAN. That is a very difficult question, and I really don't know how to respond to it.
Mr. POWERS. Well, let me close, then, by saying the letter contract provides there'll be a definitive contract entered on or before April 1, that Mr. Allott will proceed with all due haste to supply everything so it can be done. This has now been extended by 30 days by order entered on March 30, by the contracting officer, which provides that the definitive contract has to be executed on or before May 1.
And so I assume you have to submit it on that time schedule, don't you?
Mr. GOODMAN. Well, frankly, it was not my understanding that we had to submit a time schedule which would show when we would produce portions of our study prior to the signing of a definitive contract.
Mr. Powers. But this provides for a definitive contract to be signed by May 1st?
Mr. "GOODMAN. Well, you see the difficulty is this; we're talking really about a chicken and egg situation. We are expected to go out and hire people without having a definitive contract, and I frankly don't see how it can be done. And we really cannot even approach people to determine their availability without that definitive contract.
So how are we to plan on some division as between consultants and full time people without even having a definitive contract to work with?
Mr. POWERS. I can have great sympathy with the problem, but if you can't tell what you're to do, and the Commission can't tell what you are to do, and you cannot move forward; how can the committee understand what is to be done here?
Mr. GOODMAN. Well, we think it is most important to have a certain amount of flexibility. Now, I am sure that this committee appreciates that not only is this proceeding most complex, but the type of participation that the Senator has been retained by the Commission to give is really a first time thing for the Commission.
It involves representation on a record of the public interest, the making and developing of a record. And this is not something that you can plan overnight. We have over 100 parties in this case already who have submitted materials which have to be evaluated by us, and then we have a staff to employ, and then we have just the matter of the issues to develop before we can proceed to advise the Commisssion where we are going.
So we need this flexibility in order to proceed.
Mr. POWERS. So, would you anticipate you have to do all of these things before you can enter a definitive contract?
Mr. GOODMAN. No, of course not. We want that definitive contract as soon as possible so we can go out and start hiring people to see who we can obtain on a full time basis, in order to avoid consultants. Consultants are quite expensive as this committee knows.
Mr. DINGELL. We've been discussing that today.
Mr. POWERS. Well, when do you anticipate that you will enter a definitive contract?
Mr. GOODMAN. Again, it is my hope that we can enter into a definitive contract as soon as possible, much before the first of the month.
Mr. POWERS. Do you anticipate, then, that you will enter the definitive contract without providing the schedule under which you will be performing the studies?
Mr. GOODMAN. That's right.
Mr. POWERS. So it is your anticipation that there will be no schedule on these studies in the definitive contract?
Mr. GOODMAN. This, of course, is a matter for the Commission to decide, but it is my hope that there would be no such schedule.
Mr. DINGELL. Well wait just a minute. It's not going to be a matter for the Commission to decide, because if Mr. Allott is going to be special counsel, and he's going to be an independent agent, who would be in effect directing the study as I read it.
Mr. GOODMAN. Mr. Chairman, my recommendation to the Senator would be—as well as to the Commission—not to tie the Senator down to some sort of schedule which would simply mean broken hopes in the future.
Mr. DINGELL. He's got a 2-year contract. Now, the committee's come to the conclusion sadly, that this is not a 2-year contract.
Mr. GOODMAN. It's a 2-year contract due to the sum of money involved; if we hire people on a full time basis for 2 years, the sum of money that we have got will hire approximately, or would bring into our employ, approximately 15 people including the Senator and myself.
Mr. DINGELL. This talks about the whole $650,000?
Mr. GOODMAN. If we could find, Mr. Chairman, if we could find the requisite talent that we needed, it would exclude the economic studies; if we cannot find these people, we've got to go that route.
You are talking about very—I really must emphasize this—you're talking about a very complex proceeding. You are talking about rate relationships that are national, that involve many different geographic areas, many different interests, conflicting interests, and to determine where the prejudices, the discriminations are in such a rate structure, which has not been one in the past, or to determine where the problems lie itself is a very large task.
Mr. DINGELL. I am curious to know whether this task is within the capabilities of the budget that the ICC proposes to afford you. I'm of the opinion that it's not.
Mr. GOODMAN. It's in the capabilities of a 2-year period. Now, what we can accomplish in 2 years, we have yet to see, but we don't know.
Mr. DINGELL. Part of your 2-year period would be in an adversary or semiadversary proceeding?
Mr. GOODMAN. Yes, it is.
Mr. DINGELL. Which is immensely time consuming, as you're well aware of.
Mr. GOODMAN. But let's understand this then, Mr. Chairman, it may not be necessary for special counsel to develop all of this evidence himself.
Mr. DINGELL. Who would develop it?
Mr. GOODMAN. At special counsel's request perhaps some of the parties could develop it, perhaps the railroads could develop it.
Mr. DINGELL. The ICC?
Mr. GOODMAN. Perhaps the ICC could develop it. But for the first time the Commission will have retained someone to coordinate all of this effort.
Mr. DINGELL. Isn't that something for which the ICC under the law has the responsibility? We never passed a statute setting up the Office of Special Counsel to the ICC. We have passed the Interstate Commerce Commission Act, which charges the ICC with this whole broad responsibility.
Mr. GOODMAN. Well, it is not entirely clear in the law that the ICC has the responsibility to develop the record. Of course, the ICC has the decisional responsibility.
Mr. DINGELL. Well, the courts have long held that they can't arrive at a decision and constitutionally carry out their function in the area of rates affecting the parties, without having a record made. You're aware of that.
Mr. GOODMAN. Mr. Chairman, I am aware of what the cases have held. Some cases have said in effect that the agency should get in there and develop a record when it has not been developed. Other cases have simply said that the agency has a decisional responsibility.
Mr. DINGELL. In an adversary proceeding?
Mr. GOODMAN. And it has no burden of proof in a proceeding. Now, if this is an adversary proceeding, there's no assurance that those adversaries will represent the public interest, that our record would develop on which a decision can be made by the agency in the public interest. This is the purpose of special counsel.
Mr. DINGELL. Well, I seem to be mixed up. I think this is a function of the ICC.