pliance orders and advertising substantiation programs, flammable fabrics acts and so forth was consistent with the President's goal of reducing Federal civilian employment.

Is that a justification for withholding funds appropriated by Congress for the enforcement of these acts by Congress to be declared necessary for carrying out the business of the United States?

Mr. BRADLEY. I don't know the facts on that one, sir.

Senator CHILES. I wonder, for the record, if we could get an answer from the Department on what grounds impoundment was made. Senator METCALF. Well, I would be delighted.

(The Office of Management and Budget subsequently supplied the following information for the record:)

ANSWER TO QUESTION CONCERNING IMPOUNDMENT OF FUNDS FOR THE FEDERAL TRADE COMMISSION

A $620,000 reserve for savings was established for the fiscal year 1972 appropriation of the Federal Trade Commission on November 29, 1971. This amount was directly attributable to the FTC's share of the Government-wide employment reductions ordered by the President as part of his new economic program, announced August 15, 1971. The funds were placed in reserve pursuant to authority under 31 U.S.C. 665 (c) (2), which provides for reserves to reflect savings and provide for contingencies.

The effect of this Government-wide reduction on the Federal Trade Commission was to reduce a planned increase of 77 positions, only four of which were planned for utilization in the headquarters bureaus responsible for cease and desist orders, investigations, and enforcement and regulation of the flammable fabrics law. The remaining 73 positions planned for addition were for the FTC's field offices and Bureau of Economics. Thus, this action did not in any appreciable way impact on the Commission's ability to carry out its then ongoing program activities during the remainder of FY '72. The flammable fabrics program, for example, was a $1.2M program in FY '72 and no impoundment of those funds were made. The impoundment of $620 thousand of the FTC's appropriation represented only 2% of the Commission's available resources. The Chairman. despite this small holdback, retained the discretion to reprogram to cover any important cases or investigations. The full amount of the reserve was released before the end of fiscal year 1972 to cover the FTC's fiscal year 1972 increased pay costs.

Senator METCALF. Mr. Chairman. I want to make part of the record, I cite the Humphrey Executive v. U.S., 295 U.S. 602, and allow me to quote as to the duties of the regulatory agencies a subsequent case, Weiner, where Mr. Justice Frankfurter wrote an opinion and also sustained the position that these independent agencies are independent of the executive contrary to what Mr. Ash has said and thinks, and are arms of the Congress. Citation of that case is Weiner v. U.S., 357 U.S. 249 in 1958, and that is the law, as far as I know, the power of appointment, the regulatory agencies are independent of the executive branch of Government.

The OMB has seized additional powers with the Reorganization Act probably illegally under the Federal Reports Act and AntiDeficiency Act. But these special cases involved in the enforcement of special needs of the people of the United States and enforcement of quasi-judicial decrees have suffered from impoundment without a single legal constitutional statutory authority, and despite your statement to the press, philosophical basis for such action.

Now, if you are going to be head of OMB

Senator CHILES. Without objection, the inclusion will be included in the record.

(The items referred to follow :)

In a unanimous decision, the Court in Humphrey Executor v. U.S., 295 U.S. 602 (1935), involving the arbitrary removal by President Roosevelt of a commissioner of the Federal Trade Commission, held that:

"The Federal Trade Commission is an administrative body created by Congress to carry into effect legislative policies embodied in the statute in accordance with the legislative standard therein prescribed . . . Such a body cannot in any proper sense be characterized as an arm or any eye of the executive (those are the Supreme Court's words). Its duties are performed without executive leave, and in contemplation of the statute.

And here is the famous paragraph often quoted by the courts and the scholars: "The authority of Congress, in creating quasi-legislative or quasi-judicial agencies. . . to act in the discharge of their duties independently of executive control cannot well be doubted; and that authority includes

power to fix the period during which they shall continue, and to forbid their removal except for course. . . . For it is quite evident that one who holds office only during the pleasure of another cannot be depended upon to maintain an attitude of independence against the latter's will,"

The Humphrey case was followed 25 years later in Weiner (pronounced Wyner) v. U.S., 357 U.S. 349 (1958), and remains the law today-undiminished in any way.

In the Weiner case, the Court held that President Eisenhower had no power to remove a member of the War Crimes Commission. Speaking for the Court, Mr. Justice Frankfurter said:

"The Humphrey case was a cause célébre-and not least in the halls of Congress. And what is the essence of the decision in Humphrey case? It drew a sharp line of cleavage between officials who were part of the Executive establishment and were thus removable by virtue of the President's constitutional powers, and those who are members of a body to exercise its judgment without leave or hindrance of any other officials or department of government.... This sharp differentiation derives from the difference in functions between those who are part of the Executive establishment and those whose tasks require absolute freedom from Executive interference."

(The following was subsequently supplied by OMB for the hearing record:)

ADDITIONAL COMMENTS OF ROY L. ASH, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

The area of independent regulatory agencies has always provided ample room for differences of opinion among men of honest conviction. Indeed, early in his "Report on the Regulatory Agencies to the President-Elect" in 1960, James M. Landis observes

"There is no single solution which can be projected for problems common to all the regulatory agencies. Indeed, no one can even correctly define the term 'regulatory agency,' or enumerate the group that comes within such a concept. Classification of these agencies under the category of 'independent' or 'executive' is also meaningless. No rational line has been pursued by the Congress in differentiating the 'independent' agencies from those embraced within some Executive Department. The regulation of stock exchanges, for example, has been delegated to an 'independent' agency whereas the regulation of commodity exchanges is under the jurisdiction of an Executive Department. Similarly misrepresentation in the sale of articles, including drugs, is the concern of an independent agency, whereas so-called mislabeling of foods, drugs and insecticides, which reaches far beyond the mere label, is a concern of an Executive Department.

1

Despite the underlying confusion and inherent semantical difficulties, I believe that much common ground for agreement exists between the views of Senator Metcalf and myself.

1 James Landis, "Report on Regulatory Agencies to the President-Elect." printed for use of the Senate Committee on the Judiciary, 86th Cong., second sess. (1960), p. 4.

For example, I have no quarrel when, in quoting Professor Robert E. Cushman, a respected authority on regulatory agencies, Senator Metcalf maintains that Congress has the power to create independent regulatory agencies and that "independent" means freedom from discretionary policy control normally exercised by the President over his subordinates. I do feel, however, that the normal administrative procedure of assembling a budget and legislative program does not interfere with this independence. I strongly reaffirm the right, the duty and the desirability for the Congress to establish regulatory agencies in a form that assures their quasi-legislative and quasi-judicial proceedings will be free from the discretionary policy control of the Executive.

At the same time, I would suggest that it is equally important that the substantive proceedings of these agencies be free of control by the Legislative Branch as well, and by all other potential sources of political influence on the deliberations and decisions of the independent regulatory agencies. This is not to say, of course, that Congress should not exercise oversight to assure that the agencies perform their statutory mandates in a satisfactory way; it is to say, as the Landis Report recommended, that "with respect to their quasi-judicial functions they should have the same immunity as courts.'

Indeed, there is good reason to believe that during the legislative debates leading to the establishment of the Interstate Commerce Commission and later the Federal Trade Commission that the Congress was more concerned with the political interference of the Legislative Branch than of the Executive. This concern seems largely reversed today, but Professor Cushman makes an interesting observation with regard to the legislative history of the Interstate Commerce Commission Act:

"In the thinking of those responsible for the Act, independence, if it meant anything, appears to have meant bipartisanship, as a guarantee of impartiality. Independence of executive domination seems not to have been thought of and was certainly not discussed, but independence of one-sided partisan control was a matter of great moment.”

3

Another indication that the legislative founders of the ICC were not so concerned with executive interference was the organizational placement of the ICC. As Professor Cushman points out: "Whatever independence the new commission was supposed to have was not incompatible with the location of the commission in the Department of the Interior. This appears to have been a sort of carry-over from earlier proposals and a reflection of the idea that the new agency ought not to be left in a vacuum. *** The Act of 1887 gave to the Secretary of the Interior general supervision over the Interstate Commerce Commission's budget, offices, and supplies, and the appointment and compensation of its employees. It provided that the annual report of the commission should be filed with the Secretary who should transmit it to Congress."

Freedom from partisan political influence—whether from the Executive or the Legislative Branches-was and still is a prime concern in the establishment and operation of the independent regulatory agencies.

Furthermore, I agree with Senator Metcalf that these agencies are “arms of Congress" if he means, as I do, that they are arms of the Congress not in a manipulative sense but as an extension of the Congress' legislative powers. In its wisdom, the Congress has empowered, within strict and carefully legislated limits, the regulatory agencies to make decisions in such detail and in such volume of caseload that the Congress understandably finds impossible to do itself. It is in the performance of these quasi-legislative proceedings that I consider the regulatory agencies "arms of Congress," and as such, they are as free of control by the Legislative as they are of the Executive Branch.

Indeed, it appears that the care taken by the well-intentioned legislators to insulate the regulatory agencies from special influence has also resulted in the development of what many students of regulatory agencies have come to term "the Fourth Branch of Government." In my view, the exigencies of independence have resulted in deficiencies of accountability. More than 30 years ago, the Brownlow Committee characterized the problem, as follows:

"They constitute a headless "Fourth Branch" of the Government * * * The Congress has found no effective way of supervising them, they cannot be con

2 Ibid., pp. 33-34.

3 Robert E. Cushman, "The Independent Regulatory Commissions," Oxford University Press, New York; p. 61.

4 Ibid., p. 62.

trolled by the President, and they are answerable to the Courts only in respect to the legality of their activities."

The lack of accountability persists today, and Congressional and Executive attention to regulatory needs is required today more than ever.

It is with these reflections in mind that I believe much remains to be done to improve the operations of our regulatory agencies while preserving the measure of independence necessary to serve the public interest. I hope I shall have the opportunity to work with the Congress in efforts to resolve these problems.

Senator METCALF. If you are going to be Director of OMB you are going to be confronted with that same proposition in all the agencies. These men all over America contributed so much money. These television executives are going to have cases before the Federal Communications Commission, these utilities executives before the Federal Power Commission, others before the Federal Trade Commission. And it is going to be within your power, if you carry out this declaration that Mr. Kirkpatrick was confronted with, to say to the commission empowered to hand down a quasi-judicial decree-well, look, these men helped elect the President and I am going to withhold any funds for the enforcement of those decrees.

Will you tell us that will not happen?

Mr. Ásи. You are starting from a premise that is in itself incorrect. I think I have clarified it at least three times. That is that the very article that you quote does not state either my or your or probably anybody else's views of the regulatory agencies and their positions today, and it was not intended to, and as you characterize my comments they continue to be mischaracterized because I think I have stated them fairly clearly for themselves without having them characterized as my position philosophically on that subject today.

OMB will

Senator METCALF. Well, why didn't you say that then, that you were opposed to this legislation and give us a reason, a position that you no longer hold?

Mr. Asн. I didn't say I was opposed to the legislation and give that as a reason for being opposed to the legislation.

Senator METCALF. Let

Mr. ASH. I am opposed for a different reason.

Senator METCALF. Mr. Ash also indicated he does not favor legislation that would take the funding of regulatory activities out of the hands of the executive branch of the Government. The agencies, Ash said, aren't originally setup to be independent of the executive branch. The word "independent" wasn't used in the first instance to be independent of the executive branch. It was used to note a degree of independence from the legislative branch.

Mr. Asн. And in no place in that article-these are two somewhat removed statements that he has brought just in juxtaposition probably to lead you and others to a wrong conclusion of that interview. Senator METCALF. I would like to have that clarified.

Mr. Asн. Those are two independent statements.

First, I do believe that OMB, under the Budget and Accounting Act, should continue to deal with the budget of the regulatory agencies as it always has.

The President's Committee on Administrative Management, "Report of the Committee With Studies of Administrative Management in the Federal Government," part I, p. 40 (1937).

90-538-73- -33

Second, an independent observation that in historic times, as my recollection at least is, the word "independent" was used differently than today that is come to mean. Now, the fact that a reporter puts those two statements in juxtaposition and suggests there is a causal relationship hardly characterizes my position and doesn't in fact say there is one.

Senator METCALF. Well, I am glad to have the opportunity to hear your-to have you make it perfectly and abundantly clear that your position is somewhat different than that cited, because as you know, there is before the Congress a suggestion that we do take away from OMB that power to handle the budget for the regulatory agencies and your opposition to that is based on something entirely different than it would appear from this article.

Mr. Ash. But again you have mischaracterized it by saying that cites my position. That does not cite my position. That recalls, in my best recollection. a historical discussion. That is what the article recalls.

Senator METCALF. But it is your position that the OMB still should have the power to fund?

Mr. ASH. Yes.

Senator METCALF. Yes, and is based on some other-you have some other basis in this historical

Mr. ASH. That is right.

Senator METCALF. What is the basis?

Mr. ASH. The Budget and Accounting Act itself provides

Senator METCALF. You are getting back to the question Senator Muskie asked, that can be amended by an opinion of the Congress, amendments should take place. Are you saying that Congress, when it passed the Budgeting and Accounting Act, was all wise, and that the Act cannot be improved or changed?

Mr. ASH. No: of course Congress can change anything it wishes. but the reason for doing it now, until there is subsequent legislation. is, of course, it is required now. If there is, and there is, proposed subsequent legislation, I would still believe that that would not improve the congressional consideration of the budget, that OMB can perform a useful and valid function relative to considering the budg etary levels and all that is implied by budgetary levels of the regulatory agencies just as they do the departments of the executive branch.

Senator METCALF. But you have no specific constitutional citation. nor specific statutory-other than the spirit of the Budget and Accounting Act?

Mr. ASH. Nothing that precludes the Congress from passing any law that it wishes to pass providing that it's constitutional.

Senator CHILES. Senator Ervin.

Senator ERVIN. I was intrigued by the suggestions, questions and motives that the President's objectives of impounding funds was immaterial. I think the motives are wholly immaterial. It is a question of power. If the President does not have the power to impound funds, that is the constitutional or statutory power to impound funds. he is acting, in so doing, is a usurpation of congressional authority. even though his motivation was as lofty as angels. If the President has the legal power to impound funds his action is, nevertheless, valid, even if he had the most reprehensible motives, but I don't attribute reprehensible motives to the President.