Budget, Macaluso had earned a reputation in the government community as a knowledgeable woman who speaks her mind.

Vargas and his staff, along with three hired consultants, reviewed court cases, congressional hearings, official policies of the major government agencies, relevant literature in books and periodicals, and interviewed fifty-odd people in different government agencies. Vargas met with representatives of the American Civil Liberties Union and with Ralph Nader's associates. He interviewed the authors of reputable books on government secrecy, often travelling to the campuses where they teach. "Whistle-blowing" cases were reviewed.

Then the results started rolling in. "I have done about four things in my life that were the height for me in intellectual integrity," said Ann Macaluso. "This study has been even better. For four straight days I hit an intellectual high. I knew this was the kind of report which was needed badly."

The completed draft was handed in on March 1, 1977. The report ran six chapters totalling 152 pages. As deputy director Mitchell says, it "carried warts and all."

Chapters three and four-about confidentially restraints on government information and the effects of the Freedom of Information and Privacy Acts-were particularly "warty." The report showed that agency practices for collection, maintenance, and dissemination of personal information remains unchanged despite the enactment of these laws.

It revealed that the government agencies' manipulation of information by timing its release has "developed into a fine art form, most effectively employed by the Defense Department and related national security agencies that report real or contrived threats or gaps at budget hearings to justify defense funding." Some agencies avoid or subvert the Privacy Act requirements by changing their files or putting material which belongs in permanent files into temporary files so investigators cannot get them.

The federal government hides data, both business and personal, in systems maintained by organizations which are not subject to the Privacy Act or the Freedom of Information Act.

Vargas's report also asserted that because corporations are licensed by the government they do not have the rights which private individuals have. And it recommended the repeal of Executive Order 11652, a Nixon directive that gives the executive branch potentially limitless power to restrict information.

There were also indications in the report's findings that officials at the policymaking level manipulate information to reflect a variety of personal interests and to increase their opportunities for career advancement.

Buhler did not like the report. In a meeting on March 7 he told Macaluso that it needed extensive reworking and rewriting. (When Macaluso told Vargas this, he independently sent some copies of the report to the offices of the President and Vice President.)

At a meeting with Vargas and his staff on Friday, March 11, Buhler told Vargas to report directly to him. Macaluso left the meeting angrily. To the staff that remained, Buhler outlined what he wanted in a new report. His main contention was that the report was "inconsistent with the charter." Vargas had reservations, believing that his study had done exactly what it had been supposed to do. The meeting broke up with the idea that everyone would think it over, cool off, and meet again soon.

Vargas thought it over, but he did not cool off. He disliked the way Buhler had treated Macaluso. He resented Buhler's judgment of the report.

On Monday, Vargas sent Buhler a memo saying he would not participate in the new report unless Macaluso played a "significant supervisory role." This way, Vargas thought, the direction and significance of their thirteen months of re search would be better protected.

On Wednesday, Vargas got the call from Buhler's secretary summoning him to the commission director's office. As he walked in he found Buhler perched casually on the edge of his desk. With him were deputy director Michael McGinn and assistant director Paul Keenan. Vargas sat down on the sofa facing the three of them.

Buhler suggested that Vargas no longer trusted Macaluso. In reply, Vargas requested that Macaluso be called to the meeting. Buhler talked on-about Vargas' performance, his relationship to the commission--Vargas says he felt that he was being set up. He again requested that, if not Macaluso, some other person be present as a friendly witness. Buhler said no, that wasn't necessary. Vargas said that he would not take part in the discussion unless he had a witness, and began to leave the room.

"Phil," said Buhler, "your services are no longer needed."

Vargas has never been one to give up. A few days after the meeting with Buhler, he exercised his veteran's right to a thirty-day termination notice and went back to the building. Buhler ordered him off the property.

Some weeks after he was dismissed. Vargas discovered that the commission's personnel director was telephoning places Vargas had worked in the past asking for details about his departures from his previous jobs. In the draft report that led to his firing, Vargas contended that surreptitious investigations of private citizens by federal agencies are violations of constitutional rights. Now he felt his confrontation with the bureaucracy had come full circle.

"There was a rumor floating around that Phil had had trouble at his former places of employment," said Buhler. "Naturally we wanted to check it out if we were going to take him back. But the rumors were not true." They did not, however, take him back.

Furious, and unwilling to let his report die or be diluted, Vargas wrote a letter to President Carter noting that, "The research and preparation of this study has already cost the public approximately $130,000. . . . Nonetheless, it is my firm conviction that the arbitrary suppression of this report is detrimental to a free and democratic government and is a matter that merits your serious attention. . . . It exemplifies the abuse of federal employees who act on principle and in the public interest."

No one at the White House ever replied.

At one point Vargas was able to talk with Al Eisele of Vice President Mondale's office. Later Eisele wrote back to him saying he had read the report, but "was in limbo as to what to do about it."

Meanwhile, at Buhler's direction, a new report has been prepared. Hubert Mitchell, who has worked on both, believes the Vargas version "pointed out too many warts. I don't think the staff of the commission wanted to make waves." He calls the new report a "placebo," and says no interviews were conducted in researching it. "It will look good, but it doesn't have much meat. The controversial chapter three has been reduced to four pages and chapter six has been eliminated. It's nice and soft."

Buhler stands behind the new version, calling it an "improvement" on the Vargas report.

What has become known as "the Vargas affair" at the Paperwork Commission has surfaced charges of content control by other study directors.

Feelings have been running high, with rashes of accusations.

William Devine and his assistant, John Anderson, said they were shocked to learn on their last day of work at the commission that their draft report about the financial impact of paperwork on various segments of society had not been read, reviewed, or criticized. Buhler said they didn't turn it in until the night before they left. Anderson said it was submitted ten days previously.

Even while working on the Vargas report, Eileen Bartscher received directives to take out "the red-flag words like 'Watergate,' 'Vietnam' and 'Cambodia.'" "We were told it would fly better if we didn't use words detrimental to the government," said Bartscher.

Elliott Morss says he was surprised to learn that Buhler has changed the whole concept of his report, which considered the value of information. "We ascertained that information is judged to be valuable as it contributes to citizen well-being, that is, as it relates to public need. But the concept has now been changed to information is valuable as it relates to government needs. In other words, if it suits bureaucratic desires, go with it."

The report, which cost roughly $210,000 to prepare, will probably be used as a background information paper.

Dick Teauber, who also served as a study director, found the whole situation perplexing.

"I have never been in a more bureaucratic environment in my whole life." said Teauber. "It seems to me what's wrong with government and paperwork is the Paperwork Commission."

Buhler sits in his office a little exasperated and apparently surprised at all the fuss. "It is my job to be responsible for what goes out of here." says Buhler, who feels that each report must satisfy the general interests of all fourteen commissioners. "I hope you note that this is the most successful commission of all time." By "successful" Buhler means that the commission's recommendations are leading to significant changes in the way government agencies operate.

"Phil Vargas sometimes seemed to have the impression that this whole commission was set up so Congress and the President could hear his views on privacy and confidentiality. It just wasn't the case."

Vargas, who has filed various suits against the commission, says "I just think it is ironic that we're doing a study on openness in government and we have our own report suppressed."

Observers of the Vargas affair point to it as a "classic example" of the tangle that ensues when academia encounters Capitol Hill. "One is in the pursuit of truth," said a longtime commission observer, "while the other is in pursuit of politics." Commissions always do well until it is time for the reports to come in. "That's when things start getting tense. These people put a year or two of their life in it and they're not ready to bend an inch when changes occur."

"My position is that there are a number of prima donnas who are using this commission to launch their pet ideas," said Woody Horton, a consultant who has twenty-five years of experience in the bureaucracy. "It is completely natural. These clashes happen in commissions so much that they're almost laughable."

[Exhibit 74]

CIA ADMITS WORKING TO RAISE SUB

[From Washington Post, June 24, 1977]

(By Timothy S. Robinson)

The Central Intelligene Agency has finally acknowledged publicly that it was "involved in the Glomar Explorer's attempts to raise a sunken Russian submarine from the Pacific Ocean floor.

The terse acknowledgement came in a court document filed in the U.S. Court of Appeals by the Justice Department two weeks ago. The document asked that a suit against the CIA by a private group concerning the Glomar's financing be sent back to a lower court for further hearings.

The filing marks an abrupt change from the previous position taken by the Justice Department in the 18-month-old case that the mere acknowledgement of the CIA's involvement in the project would be harmful to national security. Although the CIA's operation of the project has been reported in numerous publications, the agency has been adamant in its refusal to say publicly whether those reports were true.

The case brought by the nonprofit Military Audit Project, which monitors spending by the defense and intelligence establishments, has involved an unprecedented amount of secret court proceedings as the CIA attempted to prove the need for secrecy to U.S. District Court Judge Gerhard A. Gesell. The suit seeks the financial details of the Glomar project.

For example, Gesell was forced to issue a secret opinion in the case last October that even the attorneys involved still have not been able to read. The opinion was issued in that secret fashion upon direct orders of the U.S. Court of Appeals, which instructed Gesell to accept secret affidavits from high-level government officials concerning the case.

Public affidavits filed at the time by former President Ford's top national security adviser, Lt. Gen. Brent Scowcroft, said disclosures of the CIA involvement or other details about the project might prompt other nations offended by the project to retaliate against the United States.

Scoweroft said that retaliation might take the form of "strong measures" that might "endanger U.S. military and diplomatic personnel and businessmen overseas."

The federal government had previously acknowledged only that the ship was part of a 1969 classified U.S. government project "to accomplish certain secret tasks in furtherance of national security objectives."

[Exhibit 74a]

JUDGE GESELL SAYS CIA PLAYED GAME WITH HIM

[From Washington Star, July 1, 1977]

(By David Pike)

U.S. District Judge Gerhard A. Gesell, angrily contending that he was "just made fun of" by the CIA during "a game that was played over a period of a year

in front of me," has removed himself from a civil case in which a private group sought government documents about financing of the Glomar Explorer salvage ship.

Gesell's unusual action came during a hearing Tuesday following a recent acknowledgement by the Justice Department that the CIA was involved" with the ship's attempts to raise a sunken Russian submarine from the Pacific Ocean floor.

The acknowledgement came in a document filed three weeks ago with the U.S. Court of Appeals asking that the 18-month-old case be sent back to Gesell for further hearings. It marked an abrupt change from the Justice Department's previous position that even admitting the CIA's involvement in the project would harm national security-even though the CIA's operation of the project has been reported in numerous publications.

As a result of the original national security contentions, Gesell was forced to accept documents and hear witnesses in secret, and then issue a secret opinion that even the attorneys have not been able to see.

After the appeals court sent the case back to Gesell for further consideration, he called in attorneys for the Justice Department and the nonprofit Military Audit Project, which brought the suit. Gesell told Justice Department attorney Jeffrey Axelrad that he had "very serious problems" with his continuing to hear the case.

"I took your representations to me in good faith and I have made, after ex-parte hearings, decisive findings that I guess are still going to be litigated." said Gesell, who later revealed that he had ruled in favor of the government's position against releasing any Glomar information.

"I heard witnesses. I reviewed documents, at your insistence. I made findings of fact. Then as soon as you face the realities of an appellate court, you change your position entirely and take a direct opposite position from what you have been constantly taking in front of me . . . I think I am compromised in this case," he continued.

"I feel very disturbed about my status in this whole matter. I certainly can't accept your representations any longer and I wouldn't be able to accept the representations of those witnesses who appeared before me, who cut their heart out about the secrecy here, and led to findings by the court which are now-obviously I was just made fun of by the agency . . . How can I sit?" Gesell said. Axelrad protested that the government had acted in "good faith," and contended that Gesell could continue to hear the case.

But the judge said that he believed he was "euchred" into his decision "by what I can only feel now were irresponsible representation (and) that I ought to get out, as one way to cleanse the proceedings. . . Let someone else look at it. It is an outrageous chapter in this courtroom."

Axelrad and William Dobrovir, attorney for the Audit Project, began to discuss the appeals court ruling and whether some of the disputed documents and testimony should now be made public. But Gesell refused to get involved and said he would keep all materials under seal "pending the action of the other judge," who is to be assigned by an administrative committee of the court.

[Exhibit 74b]

"COMPROMISED," JUDGE GESELL QUITS CIA CASE

[From Washington Post, July 1, 1977]

(By Timothy S. Robinson)

A federal judge has removed himself from hearing any more argument in a case involving access to documents about the Glomar Explorer project, saying that attorneys for the CIA had been "playing games" with him when they forced him to hold secret hearings in the case last year.

"I think I am compromised in the case," U.S. District Court Judge Gerhard A. Gesell told a CIA lawyer in a hearing this week. "I certainly can't accept your representations any longer and I wouldn't be able to accept the representations of witness" who testified in the earlier secret proceedings, he added.

Gesell's ire was incurred by the lawyer when the CIA finally admitted publicly last week that it was "involved" in the secret Glomar attempt to raise a sunken Russian submarine from the Pacific floor.

The CIA had earlier claimed before Gesell that even to confirm or deny its involvement in the project would endanger national security, and won a U.S. Court of Appeals ruling on those grounds that forced Gesell to hold the unprecedented secret hearings.

After those hearings, Gesell said, he was forced to make decisions based on the secret material. "Then as soon as you face the realities of an appellate court, you change your position and take a direct opposite position from what you have been constantly taking in front of me," Gesell told Justice Department attorney Jeffrey Axelrad, who is representing the CIA.

Axelrad said the government had not attempted to mislead Gesell, but merely that the secrecy of the agency's involvement the project had been re-evaluated recently by the National Security Counsel.

"It turns out that it was all just a game that was played over a period of a year in front of me," Gesell interjected ". . . I was just made fun of by the agency."

The Judge called the government's actions "irresponsible," saying it had refused to disclose some of the 128,000 documents to him in the earlier secret proceedings. "It is an outrageous chapter in the courtroom," Gesell declared. Axelrad said in the hearing that many of the documents at issue still could not be made public, and won an order keeping all the material under seal until another judge is selected.

The suit involves an attempt by a nonprofit group called the Military Audit Project to gain access under the Freedom of Information Act to CIA materials concerning the financing of the Glomar project by the government through Howard Hughes' Summa Corp.

MAP attorney William Dobrovir said he plans to file a motion to make all the previous proceedings public.

[Exhibit 74c]

CIA'S GLOMAR "GAME PLAN"

[From the Washington Post, Oct. 23, 1977]

(By George Lardner, Jr. and William Claiborne)

On February 27, 1975, William E. Colby, then Director of the Central Intelligence Agency, had an unusal telephone conversation with Parade Magazine editor Lloyd Shearer. The subject was photographs Parade had obtained of a mystery ship, off the coast of Hawaii, which belonged apparently to billionaire Howard Hughes.

"We have some pictures Summa Corp pictures," Shearer, the editor of the weekly magazine, said, alluding to the holding company Hughes owned. The location of the ship was said to be 600 to 800 miles off Oahu.

"You are onto something very, very delicate" the direction of central intelligence responded. "This one I really would like you to sit on."

Shearer was worried about his competitors in the press. "Can you turn off all the sources who have it?" he asked the CIA director. "Do you think you can sit on this?"

Colby promised: "I will try like hell."

The transcript of that telephone conversation preserved by the CIA since it took place, concerned the Glomar Explorer, the huge salvage ship that had secretly plucked portions of a sunken Soviet submarine from the Pacific Ocean floor a few months earlier. It was a secret that the CIA was determined to keep through an intensive campaign of persuasion by Colby with some of the nation's most influential publishers, editors and broadcasters.

Details of that effort have now become public in close to 150 pages of CIA documents forced to light under the Freedom of Information Act. After contending in court for several years that Colby's efforts to suppress the Glomar Explorer story could not be disclosed without compromising national security, the CIA finally relented.