succeed to the corporate status. I do not know what this language means. Does it make it a corporation?

Mr. WASHINGTON. I should say it simply preserved the status quo. It did not change it.

Under the court decisions, many agencies in the executive branch of the Government are considered corporations for certain purposes. In the State of California, for example, I understand that the Veterans' Administration is considered a corporation for purposes of the California law relating to gifts and descent. Many Government agencies, for various purposes, have corporate status.

The CHAIRMAN. Do you mean that the trend of thought now is that any Government agency can be treated as a corporation?

Mr. WASHINGTON. It may for certain purposes. I have mentioned an example under California law.

The CHAIRMAN. I am talking about the United States as a whole, and not any particular State.

Mr. WASHINGTON. In Federal law the term "Government corporation" has a meaning which is now largely fixed by the Government Corporation Act. I do not believe there is any doubt as to the coverage of that act. But that provision in section 504, as I see it, would not have the effect of changing any phase of the United States Housing Authority's status, nor that of the Federal Housing Authority, with respect to the Government Corporation Act recently passed.

The CHAIRMAN. Could the Administrator go ahead and borrow money under the charter of the Corporation?

Mr. WASHINGTON. If I may, I would like to examine that further and file a memorandum with you.

The CHAIRMAN. I wish you would submit a brief on that.

Mr. JUDD. I think that is very important, because again, it is neither fish nor fowl, it has the powers of a corporation without being a corporation. If it is a corporation it cannot be done under the section which I read, as it said no agency can acquire a corporation without the act of Congress. Here under this section 504 (a) (3) it appears that the Federal Housing Authority becomes a corporation, to all intents and purposes, without act of Congress. I think that that should be clarified.

Mr. WASHINGTON. I think Mr. Kemp may have some comments there.

Mr. KEMP. I recall the idea was to change the name, at one stage, anyhow, in the preparation of the plan, to change the name of the United States Housing Authority to the Federal Public Housing Authority. The manner of expression was just altered in the course of the preparation of the plans to read, "shall succeed to the corporate status." The Reorganization Act provides for the change of the name of any agency in section 4, paragraph 1, which says that any reorganization plan shall change the name of any agency, the title of its head, and so forth, if that is deemed necessary. That was the real object there.

Mr. JUDD. However, what it does, actually, it makes the Federal Public Housing Authority a corporation without giving it the name of a corporation.

Mr. KEMP. You can put it that way. What it does is give the United States Housing Authority, a corporation, a different name, the name of the Federal Public Housing Authority.

Mr. JUDD. However, it still stays a corporation?

Mr. KEMP. Yes, sir; I believe it does. It is already a corporation, Mr. Congressman, and it is continued a corporation, only it is under a different name, in accordance with section 4, paragraph 1.

Mr. JUDD. I yield to the gentleman from Illinois.

Mr. RESA. I must confess that these explanations create in my mind the need for more explanation.

What was meant by the language, "the Federal Housing Authority which shall succeed to the corporate status of the United States Housing Authority" by the people who used it? What was that language intended to mean?

Mr. KEMP. What I have just stated.

Mr. RESA. As I understood your statement, it was to the effect that the name of the corporation, the United States Housing Authority, shall be changed to the Federal Public Housing Authority; is that right?

Mr. KEMP. That is about right.

Mr. RESA. Would it not be better to say so? If you are changing a name, those two words "changing" and "name" are well established in the English language, everybody knows what they mean, they do not require judicial interpretation. That section could have said that the name of the United States Housing Authority shall be changed to the Federal Public Housing Authority, and so forth. Mr. KEMP. For some reason, the people in the Housing Agency preferred this form of expression for their purposes.

Mr. CHURCH. To which Housing Agency do you refer?

Mr. KEMP. I am referring to the National Housing Agency.
Mr. BENDER. Why is that?

Mr. CHURCH. It might be well to ask who it was that appeared for them at these conferences. I have been trying to find out all morning. Mr. WHITTINGTON. I do not want to delay you, but I think you have clarified the meaning of this act by your statement that much of the language means just contrary to what it says. I think now, with all deference, and I mean that, that a reorganization of the Government housing agencies is long overdue, and when we have subsequent witnesses, for my part, I am interested in the subject, in view of your explanation, and the transfer and so on; for instance, the meaning of the word transfer, and some of the language you have used here means transfer, but for my part I cannot get away from the idea that even this bill with the National Housing Administration away from where it would revert to the Federal Housing Agency, and with the Home Owners' Loan not reverting to the Federal agency and with a man like Wilson Wyatt as Administrator of all these agencies, there is much in the reconciliation that we want to think and I think the language is most unfortunate.

Mr. RESA. Mr. Chairman, I should like to call your attention to the fact that those drafting plan No. 1 were not unfamiliar with the word "transfer," because they have used it several times on pages 12 and 13.

Mr. CHURCH. Mr. Chairman, are there not some private property interests we can have some hope of hearing today, somebody that represents the people's interests back home?

(The following was submitted for the record:)

Hon. CARTER MANASCO,

DEPARTMENT OF JUSTICE,
Washington, June 11, 1946.

Chairman, Committee on Expenditures in the Executive Departments,

House of Representatives, Washington, D. C.

MY DEAR MR. CONGRESSMAN: I enclose herewith a memorandum, prepared at your request, discussing the question whether Reorganization Plan No. 2 of 1946, with respect to the United States Employees' Compensation Commission, complies with section 5 (a) (6) of the Reorganization Act of 1945.

This memorandum supplements my oral statement to a subcommittee of the House Committee on Expenditures in the Executive Departments, at a hearing on House Concurrent Resolutions 151, 154, and 155, on June 5, 1946. It is respectfully requested that this memorandum be made part of the record of the hearing. Further material supplementing other parts of my statement is now in preparation and upon completion will be submitted to your committee.

Sincerely yours,

GEORGE T. WASHINGTON, Acting Assistant Solicitor General.

REORGANIZATION AFFECTING UNITED STATES EMPLOYEES COMPENSATION COMMISSION-COMPLIANCE WITH SECTION 5(A) (6) OF THE REORGANIZATION ACT OF

1945

The United States Employees' Compensation Commission determines workmen's compensation claims of employees of the Federal Government and of the District of Columbia and, in certain cases, of employees of private employers. It is composed of three members, no more than two of whom may be members of the same political party (5 U. S. C. 778).

Section 3 of Reorganization Plan No. 2 of 1946 transfers the functions of the Commission to the Federal Security Agency and abolishes the Commission. The section also provides that the functions thus transferred are to be performed in such manner and under such rules and regulations as the Federal Security Administrator shall prescribe; and that these regulations shall provide for a board of three persons, to be designated or appointed by the Administrator, with authority to hear and decide appeals on claims of Government employees.

The question has been raised whether section 3 of the plan complies with section 5 (a) (6) of the Reorganization Act of 1945. By the terms of this provision, no reorganization plan submitted under the act shall provide for or have the effect of

"(6) imposing, in connection with the exercise of any quasi-judicial or quasi-legislative function possessed by an independent agency, any greater limitation upon the exercise of independent judgment and discretion, to the full extent authorized by law, in the carrying out of such function, than existed with respect to the exercise of such function by the agency in which it was vested prior to the taking effect of such reorganization; except that this prohibition shall not prevent the abolition of any such function."

The question presented is whether the transfer of functions from the Compensation Commission to the Federal Security Agency will impose a greater limitation, than now exists, upon the exercise of independent judgment and discretion in the performance of such functions.

The plan does not subject the Federal Security Agency, in discharging these functions, to outside controls to any greater extent than now obtains with respect to the Compensation Commission. Under the plan, the Federal Security Agency, to the same extent as the Compensation Commission, will have authority to pass on compensation claims without interference from any other agency. Of course, section 3 of the plan does not affect any existing right to court review, since it states expressly that the board's decisions on appeal shall be "final," "subject to applicable law." The full discretion now vested by law in one independent agency of the Government, the Compensation Commission, is transferred by section 3 of the plan to another independent agency of the Government, the Federal Security Agency. (See S. Rept. 638, 79th Cong., 1st sess., Senate committee report on S. 1120, appendix III, p. 31.) It follows, therefore, that under the provisions of the plan the Federal Security Agency may fulfill the functions transferred with no "greater limitation upon the exercise of independent judgment and discre

tion, to the full extent authorized by law" than now exists in the case of the Compensation Commission.

The suggestion has been made that the reorganization under consideration does not satisfy the requirements of section 5 (a) (6) of the statute, because the Federal Security Agency is headed by a single administrator, whereas the Compensation Commission has a bipartisan membership. The application of section 5 (a) (6) does not turn, however, on the number or political affiliation of agency members. As noted above, the test is whether the plan increases the dependence of an agency, in exercising a given function, upon any other agency; and such dependence is not enhanced merely because a function is transferred from a bipartisan agency to an agency headed by one official. Moreover, the legislative history does not show that the Congress intended section 5 (a) (6) to prevent all such transfers.

The plan does not impose any political or other outside control upon the Federal Security Agency in connection with the exercise of the functions transferred. It may perform these functions as independently as the Compensation Commission, even though it has a single, rather than bipartisan, head. There is no reason whatever for believing that it will not discharge these functions completely without partisanship or political favor. Indeed, it is already responsible for the administration of other benefit programs requiring an equal freedom from political partisanship. Under these circumstances, there is no warrant for inferring that the Congress intended to prohibit the transfer in question.

It has also been suggested that the appeal board mechanism may not be consistent with section 5 (a) (6), but this point is clearly not well taken. The function of hearing administrative appeals, in Government-employee cases, is now performed by an undifferentiated group within the Compensation Commission. (See 5 U. S. C. 787; S. Doc. No. 10, 77th Cong., 1st sess. Monograph of Attorney General's Committee on Administrative Procedure, U. S. Employees' Compensation Commission, pp. 50-52.) The appeal board, to be created by the Federal Security Administrator within the Federal Security Agency, will act finally on Government-employee appeals (except for such right of appeal to the courts as may exist). The effect is to segregate more sharply than the Compensation Commission does the functions of making initial determinations and of making decisions on appeal, and consequently to increase the employee's opportunity of securing full consideration of the merits of his claim. The appeal board gives the employee a chance to obtain a separate, independent review of his case. The plan, therefore, far from imposing greater limitations on the independence with which the compensation functions may be performed, actually increases such independence. That the appeal mechanism does not constitute an infringement of section 5 (a) (6) is plainly evident from its language and purpose.

The conclusion reached is that the reorganization of the United States Employees' Compensation Commission complies with the provisions of section 5 (a) (6) of the Reorganization Act of 1945.

Hon. CARTER MANASCO,

GEORGE T. WASHINGTON, Acting Assistant Solicitor General.

DEPARTMENT OF JUSTICE,
Washington, June 13, 1946.

Chairman, Committee on Expenditures in the Executive Departments,

House of Representatives, Washington, D. C.

MY DEAR MR. CONGRESSMAN: At a hearing on House Concurrent Resolutions 151, 154, and 155, by a subcommittee of the House Committee on Expenditures in the Executive Departments, held June 5, 1946, you requested that I file a memorandum discussing the corporate status of the Federal Public Housing Authority, under Reorganization Plan No. 1 of 1946, and the power of this Authority to borrow money under the charter of the United States Housing Authority. I am enclosing a memorandum on this subject.

I referred in my statement at the hearing on June 5, 1946, to the legislative history of section 2 (c) of the Reorganization Act of 1945. I am also enclosing a supplementary memorandum with respect to this legislative history.

I should like permission to make these memoranda part of the record of the

hearing.

Sincerely yours,

GEORGE T. WASHINGTON, Acting Assistant Solicitor General.

CORPORATE STATUS OF FEDERAL PUBLIC HOUSING AUTHORITY

Reorganization Plan No. 1 of 1946 consolidates the agencies and functions of the National Housing Agency established under the First War Powers Act, 1941 (55 Stat. 838), by Executive Order No. 9070 of February 24, 1942 (7 F. R. 1529), to form a permanent agency of the same name. Section 504 (a) of the plan provides that the Federal Public Housing Authority shall be a constituent unit of the National Housing Agency and that it "shall succeed to the corporate status of the United States Housing Authority." The questions have been raised whether, under the plan, (1) the Federal Public Housing Authority is a corporation and (2) such Authority may borrow money under the charter of the United States Housing Authority.

The United States Housing Authority, a permanent corporation, was created by the United States Housing Act of 1937, 42 U. S. C. 1401-30, and was given borrowing authority up to $800,000,000. It was consolidated with other agencies by Executive Order No. 9070 to form the wartime National Housing Agency. The Executive order also provided that the United States Housing Authority should be "administered as the Federal Public Housing Authority, one of the main constituent units." If Reorganization Plan No. 1 becomes effective, the United States Housing Authority will simply continue as a corporation with authority to borrow as conferred by the 1937 act, but under the name of Federal Public Housing Authority.

Under the plan, the United States Housing Authority as a corporation merely undergoes a permanent change of name, as authorized by section 4 (1) of the Reorganization Act, which provides that "any reorganization plan transmitted by the President—(1) shall change, in such cases as he deems necessary, the name of any agency affected by a reorganization, Thus, the Federal Public Housing Authority validly has the corporate status and borrowing authority of the United States Housing Authority, pursuant to the provisions of the Reorganization Act of 1945.

*

*

GEORGE T. WASHINGTON, Acting Assistant Solicitor General.

LEGISLATIVE HISTORY OF SECTION 2 (c) OF REORGANIZATION ACT OF 1945

Section 2 (c) of the Reorganization Act of 1945 provides as follows: "It is the expectation of the Congress that the transfers, consolidations, coordinations, and abolitions under this Act shall accomplish an over-all reduction' of at least 25 per centum in the administrative costs of the agency or agencies affected."

H. R. 4129, the reorganization bill, was reported to the House of Representatives, and passed by it, with a provision in section 3 requiring the President in his message transmitting a reorganization plan to "state, to such extent as he deems practicable, approximately the reduction of expenditures, if any, which it is probable will be brought about by the taking effect of the reorganizations specified in the plan." The House-Senate conference eliminated this provision from the bill. The Reorganization Act of 1945, as finally enacted, does not contain any provision similar to the deleted clause. (See H. Rept. 1378, 79th Cong., 1st sess.; Statement of the managers on the part of the House, p. 9).

During the debate on H. R. 4129 in the House of Representatives the following provision was proposed as an amendment to the bill:

"It is the policy and expectation of the Congress that the transfers, consolidations, and abolitions contained in any reorganization plan under this Act shall accomplish an over-all reduction of at least 25 per centum in the administrative costs of the agency or agencies affected by such plan." [Italics supplied.]

This amendment to the bill was adopted by the House after it was explained by Congressman Martin, its proponent, that the provision was not "mandatory" (Congressional Record, October 4, 1945, pp. 9571-9574).

The House-Senate Conference struck this paragraph from the bill and substituted section 2 (c) now found in the act. Thus, the reference to any savings with respect to a particular plan was eliminated. cited above.)

(See statement of House managers,

GEORGE T. WASHINGTON, Acting Assistant Solicitor General.