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Department. It could be that some large insurance company might want the services of just such a man after he is built up to Cabinet stature. Any suggestion of building up a job as a potential steppingstone to a better-paying job can hardly be endorsed by the Government employee when agencies designed for his benefit are scraped together to help supply the justification for such Cabinet post.

The Bureau of the Budget says in the reorganization order that abolition of a statutory bipartisan commission and substitution of an administrative board of appeals with a single official in charge of operations has proved "satisfactory to claimants in many similar programs," and that It is essentially the plan

employed by "many States” in their workmen's compensation programs.

The statement regarding the practice of the States in workmen'scompensation administration is definitely contrary to the facts. Nor can the Bureau of the Budget plead that it did not know any better.

The facts are and were definitely known to that Bureau. In 36 of the 47 States workmen's-compensation laws are administered by an independent commission. Only eight States have departmentalized administration and in three States administration is by the courts.

In no instance is this specialized administrative and quasi-judicial function administered by an agency comparable to the Federal Security Agency.

The plan for substituting a single administrator for a bipartisan board destroys the important advantage of continuity of policies and decisions and would make possible partisan control of workmen's compensation administration.

Repeatedly, the International Association of Industrial Accident Boards and Commissions have emphasized the importance of commission form of administration of this function. The American Federation of Labor, employees' organizations in general, and insurance associations affected by the Federal workmen's compensation laws likewise have advocated this form of administration and retention of the independent bipartisan commission.

I believe your committee may want to ask the Bureau of the Budget if, at any time, it or any other agency ever made first-hand and consultative investigation of the operations of the Compensation Commission to determine what practical advantages might be expected from this change of administration. Or did it do the whole job of arriving at its conclusions in this case as a paper project?. Also the committee may want to inquire whether any person or "special-interest group” in Federal Security Agency were heard on the general theme of reorganization. Certainly the Estimates Division of the Bureau will tell you that the Commission repeatedly has been complimented upon its economy of operations. Unless the Bureau can demonstrate that some one or more points in Congress' design for reorganization can be met under this order, I ask this committee to support the resolution of disapproval.

In this Reorganization Order No. 2 there is language which gives the Federal Security Administrator authority to perform the present functions of the Commission “in such manner and under such rules and regulations" as he may prescribe. Such blanket authority places no limitation upon his powers and obviously leaves to his discretion any changes in administration as he may decide upon.

The Board of Appeals provided for under this plan is a creation of the Agency Administrator and serves at his pleasure. Consequently such Board lacks all of the semblance of autonomy essential for the exercise of free and independent judgment. And by its origin, it likewise is susceptible to partisan control and personal politics.

May I summarize the reasons I am here asking that a flat-footed rejection be given Reorganization Plan No. 2 until its purposes can be made to conform to the outline as set down in the Reorganization Act. The reasons are:

(1) The law is not being complied with. It is proposed to establish administratively functions which did not exist when this plan was submitted.

(2) Certain statements in this plan are at variance with the facts which could have been obtained without difficulty..

(3) Administration of the compensation law does not belong in a public welfare agency. Compensation is for injury on the job and is not what is commonly referred as “rocking chair money, as I have heard Members of the House apply the term to some forms of social security.

(4) Abolition of this Commission or any other of similar size will not lighten the Presidential burden in the slightest degree. This Commission has never been a burden upon the President.

(5) A board of appeals of limited authority and discretion can be subject to partisan control of the appointing power. If the agency head comes to dislike the manner in which his board of appeals functions he can fire all members.

(6) The manner in which the present Commission is functioning is entirely acceptable to its clientele, the employees of the United States Government.

(7) No persons or their representatives affected by operation of the compensation law have been permitted the slightest opportunity to offer any constructive proposals which might have made this reorganization order conform to law.

(8) Abolition of the Employees' Compensation Commission would be the first step toward abolishing the civil-service retirement system which was established and perfected laboriously so many years.

(9) The ends of economy and efficiency are not served by this order of abolition.

I ask you in the name of the Government Employees' Council of the American Federation of Labor, largest grouping of Federal personnel who believe that the American Government is still the best ever devised by man, that your committee report out House Concurrent Resolution 65.

The Compensation Commission exercises only one function, namely, the quasi-judicial function of deciding workmen's compensation claims. The Commission administers compensation laws in two relatively broad clasess: (1) Where compensation is paid directly by the United States, as in the case of Federal employees; and (2) where compensation is claimed by employees against their private employers or insurance carriers.

The processes are somewhat similar. In the first example, the Commission functions largely as a judicial body: Claims are filed within a certain time, notices thereof are given, and answers thereto filed by employers. There are intermediate details with which I will not burden you. In the case of Federal employees, the process involves determination of the facts by the Commission, upon evidence, and the fixing of substantive rights of claiming individuals which involves receiving, weighing, and resolving the evidence.

A workmen's compensation law is the substituted right of an employee against his employer for the employer's liability or commonlaw action. The right to compensation, therefore, is a substantial fundamental right and the processes for determining the right are in their very essence quasi-judicial. In Crowell v. Benson (285 U. S. at p. 75), Mr. Justice Brandeis spoke of review of the "quasi-judicial decisions” of the Federal tribunals such as exist under the Commission (under the Longshoremen's Act) and he refered to the power entrusted to the Commission “to make initial determinations in matters within, and not outside, ordinary judicial purview." Similarly in Paramino Lumber Company v. Marshall (18 F. Supp. 645), the court said that the deputy commissioner of the Commission “is a quasijudicial officer having certain recognized jurisdictional and discretionary powers."

As I read your Reorganization Act, I am convinced that you intended to preserve the quasi-judicial functions of agencies discharging the laws you passed.

The Reorganization Plan No. 2 would abolish this statutory quasijudicial independent commission, diffusing its functions into the Federal Security Agency, not as a separate workmen's compensation commission or board but pasing the functions to the Federal Security Agency to be performed “in such manner” as that agency shall prescribe.

The most serious objection to abolition of the Commission rests on a constitutional ground. The Reorganization Act is not a law requiring administration which sets up standards for the President to apply. It contains a clear delegation to the President of legislative authority of the kind the lawyers tell me is unconstitutional (cf. Schechter Poultry Corp. v. United States, 395 U. S. 495). The Compensation Commission was created by statute. I am told it can only be abolished by statute, that is, by Congress, which created it. It apparently is beyond the power of Congress to surrender to the Executive authority to abolish any agency created by Congress. Yet, the reorganization plan says the Commission is "hereby abolished.”

Under previous reorganization plans it had been clearly understood by Congress that the power to abolish necessarily lay with Congress and could not be delegated. Reference to this can 'be found readily in House Report No. 1126, dated April 25, 1932, accompanying H. R. 11597, in which this statement appears on page 11:

The power to abolish agencies of the Government created by statute cannot be delegated under the Constitution.

Significantly enough in the reorganization bill of 1937 (S. 2700, 75th Cong.) it was provided that the President could not abolish any independent establishment.

Reorganization Plan No. 2 requires a board of three to be appointed to “make workmen's compensation claims." I find no place in the act which purportedly authorized such creation by anyone outside Congress.

Mr. Chairman, on March 5, 1946, I appeared before the Ways and Means Committee to present a brief on retention of the civil-service

retirement system under its present auspices and separate and apart from social security and public welfare in general. The members of that committee were astounded to learn that anybody had designs on the retirement system. After nearly 90 minutes of presentation and colloquy, here is how Representative Forand, in the presence of fellow committeemen, summed up the situation in speaking to another witness:

Now I want to ask you—you have heard the remarks of several members of the committee here a few monents ago while Mr. Riley was on the stand. You have heard several of the members give assurance of the fact that in no way is it the intent of this committee to tamper with existing benefits under the civil service - and I want to add my voice to those voices that you have already heard, and I think all of you can rest assured that we in no way intend to jeopardize any of the benefits that are yours now

Chairman Doughton made this statement in support of Mr. Forand:

The chairman would like to join with what the distinguished gentleman, Mr. Forand, has said, that it is the purpose of this committee to protect the Federal employees under the civil-service system

Mr. Chairman, this abolition of the Compensation Commission is the first step toward doing what we have assurances from your own Ways and Means Committee will not be allowed. I have knowledge of the fact that without great delay as soon as you permit this Commission to be wiped out that the professional relief bloc will proceed to move in on the civil-service retirement system and you soon will be handed a bill to remove exemption of Railroad Retirement Board from this act.

One more point, Mr. Chairman: your committee has been diligent in asking for some representation of savings in reorganization. You have been given no promises. I personally have been told that the greatest budgets for public relief or welfare are in the offing as soon as you put your stamp of approval on plan No. 2. You

You may have sensed this by reading all the buttery language at the outset.

But if you really want a story of economy which you will remember a long time, here it is. Administrative costs in the Compensation Commission today, despite several salary adjustments are fa

less than they were when the agency started business. Today the cost is only 6.4 percent. I ask if you know of any agency in any government, State, Federal, or city, which can match that figure. I am submitting a table of administrative percentage costs for all years since 1917 when the cost was 22 percent: Percent cost of

Percent cost of administration

administration 1945. 6.4 1930

4.9 1944_ 6.3 1929

5.3 1943 6.1 | 1928

4.3 1942 5.9 1927

5.5 1941. 4.8 1926

5.7 1940. 5.5 1925.

5.5 1939 5.6 | 1924.

6.3 1938. 5.5 | 1923

5.7 1937 5.5 1922

5.9 1936_ 4.3 | 1921

6.6 1935. 4.0 | 1920

6.7 1934 4:3 | 1919

9.3 1933. 4.0 | 1918

11.0 1932 4.7 | 1917

22.0 1931.

5.0

I thank the committee for its attention.

The CHAIRMAN. Thank you very much, Mr. Riley, for your presentation.

The next witness is Mr. H. E. Foreman, managing director, the Associated General Contractors of America, Inc.

I understand Mr. Foreman would like to testify regarding Reorganization Plan No. 1.

Mr. Foreman, you may proceed.

STATEMENT OF H. E. FOREMAN, MANAGING DIRECTOR, THE ASSO

CIATED GENERAL CONTRACTORS OF AMERICA, INC. Mr. FOREMAN. The Associated General Contractors of America is the national trade association of construction contractors. Its members, numbering about 3,700, operate in all parts of the country and perform all types of construction, including housing.

This association is opposed to part V of Reorganization Plan No. 1 of 1946, as set forth in Document No. 594. This is that part of the plan which would establish the National Housing Agency on a permanent basis and would consolidate under the direction of the National Housing Administrator the functions of the Federal Home Loan Bank Administration, the Federal Housing Administration, and the Federal Public Housing Authority.

The reasons for the association's opposition to creation of a permanent National Housing Agency are:

First, the creation of a permanent National Housing Agency would give added impetus to the permanent control and regulation of a large segment of the construction industry, real estate and finance and lending business of the country.

Second, the creation of a permanent NHA would give added impetus to the construction of more and more public housing.

Third, the creation of a permanent NHA is not necessary for efficient operation of the Federal Housing Administration, the Federal Home Loan Bank Administration, or the Federal Public Housing Authority.

Fourth, the membership of the association has expressed the conviction that the construction industry could execute the work which is vitally needed for the development of the Nation more quickly, more efficiently, and more economically without control and regulation by the Federal Government.

Fifth, the association believes that the best interests of the industry and the public will be served by the abolition of wartime regulations over the industry at the times currently established by law.

The CHAIRMAN. If there is nothing further, the committee will stand adjourned until 10 o'clock Tuesday morning.

(Thereupon, at 12 o'clock noon, Friday, June 7, 1946, the committee recessed until Tuesday, June 11, 1946, at 10 a. m.)

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