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OVERSIGHT OF THE GOVERNMENT IN THE SUNSHINE ACT-PUBLIC LAW 94-409  HEARINGS BEFORE THE  SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT OF THE  COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE NINETY-FIFTH CONGRESS JtIRST AND SECOND SESSIONS  NOVEMBER 29, 1977; JUNE 13 AND AUGUST 4, 1978  Printed for the use of the Committee on Governmental Affairs   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  OVERSIGHT OF THE GOVERNMENT IN THE SUNSHINE ACT-PUBLIC LAW 94-409  HEARINGS BEFORE THE  SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT OF THE  COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE NINETY-FIFTH CONGRESS FIRST AND SECOND SESSIONS  NOVEMBER 29, 1977; JUNE 13 AND AUGUST 4, 1978  Printed for the use of the Committee on Governmental Affairs  U.S. GOVERNMENT PRINTING OFFICE 36-867 0   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  WASHINGTON : 1978  COMMITTEE ON GOVERNMEKTAL AFFAIRS ABRAHAl\I RIBICOFF, Connecticut, Chairman CHARLES H. PERCY, Illinois HENRY )I. JACKSON, Washington JACOB JAVITS, Xew York ED"-IUXD S. )IUSKIE, :\Iaine WILLIAl\I V. ROTH, JR., Delaware THO:\IAS F. EAGLETON, l\Iissouri TED STEVENS, Alaska LAWTON' CHILES, Florida CHARLES )IcC. l\IATHIAS, JR., )Iaryland SA:\I NUNN, Georgia JOHN C. DANFORTH, :Missouri JOHN GLENN, Ohio H. JOHN HEINZ III, Pennsylyania JDI SASSER, Tennessee :\!URIEL HU:\IPHREY, l\Iinnesota RICHARD A. WEG:IIA:S:, Chief Counsel and Staff Director CLAt:DIA T. IlrnR.UI, Professional Staff Member PAUL HOFF, Counsel ELLEX s. :\!ILLER, Professional Staff Member ELIE. XOBLE:IIAX, Counsel THEODORE J. JACOBS, Counsel PAUL C. ROSENTHAL, Counsel J A:IIES :\I. GRAHA:II, Counsel IRA S. SHAPIRO, Counsel CLAt:DE E. BARFIELD, ETHEL z. GEISIXGER, Professional Staff Member Professional Staff Member  )lARILYN A. HARRIS, Executive Administrator and Professional Staff Member ELIZABETH A. PREAST, Chief Clerk JOH::\'. B. CHILDERS, Chief Counsel to the Minority BRLl.:S: CO:S:BOY, Minority Staff Director HAROLD C. AKDERSOI-', Staff Editor  SUBCO~L\HTTEE ON FEDERAL SPE:'WING PRACTICES AXD OPEN GOVERNMENT  LAWTON CHILES, Florida, Chairman SA:\I NUNN, Georgia H. ,JOHN HEINZ III, Pennsylyania HENRY :\I. JACKSON, Washington JACOB K. JAVITS, New York :\HIRIEL HU:\IPHREY, :\Iinnesota WILLIA:\! V. ROTH, JR., Delaware ROXALD A. CHIODO, Chief Counsel and Staff Director ROBERT F. HARRIS, Deputy Staff Director JAXET STUDLEY, Counsel CHRISTD!E SHERIDAN BETTS, Chief Clerk   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (II)  CONTENTS :Page  Opening statement: Senator Chiles___________________________________  1  WITNESSES TUESDAY, NOVEMBER  29, 1977  David Cohen, president of Common Cause; accompanied by Ms. Anne McBride, associate legislative director, and Robert Rodriguez________ Lynne K. Zusman, Chief, Information and Privacy Section, Civil Division, Department of Justice___________________________________________ Miles A. Cobb, General Counsel, Federal Deposit Insurance Corporation accompanied by Alan R. Miller, Executive Secretary________________ Charles B. Curtis, Chairman, Federal Energy Regulatory Commission____ Daniel O'Neal, Chairman of the Interstate Commerce Commission, accompanied by l\fark Evans, General Counsel__________________________ Fred G. Favor, executive director, Local and Short Haul Carrius National Conference, accompanied by Everett Hutchinson, attorney__________ John R. Evans, Commissioner, U.S. Securities and Exchange Commission, accompanied by Harvey L. Pitt, General Counsel___________________ Richard K. Berg, executive secretary, Administrative Conference of the United States, accompanied by Stephen Klitzman, staff attorney_____ Wayne Granquist, Associate Director for Administrative Management, Office of l\lanagernent and Budget, accompanied by Robert Bedell, Associate General CounseL_ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ TUESDAY, JUNE   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  133  150 177  201 218  225  4, 1978  G. William Miller, Chairman, Board of Governors, Federal Reserve System_________________________________________________________ Mark Cymrot, senior litigator, Consumers Union, Washington office, accompanied by Ms. Ellen Broadman, attorney_____________________ Joseph M. Hendrie, Chairman, Nuclear Regulatory Commission, accompanied by Steve Ostrach and Samuel Chilk_________________________ Harold M. Williams, Chairman, U.S. Securities and Exchange Commission, accompanied by Harvey L. Pitt, General CounseL _ _ _ _ ________ ______ Alphabetical list of 1vitncsscs: Bedell, Robert: Testimony______________________________________ Berg, Richard K. : Testimony________________________________________________ Prepared statement________________________________________ Broadman, Ellen: Testimony____________________________________ Chilk, Samuel: Testimony __ ----------------------------________ Cobb, Miles A.: Testimony __________ -- __ -- -- -- ---- -- -- -- -- -- -- -- -- -- -- -- -Prepared statement ____ -- -- -- -- -- ------ -- -- -- -- -- __ -- -- -- __ Cohen, David: Testimony ____________________________ -- -- -- -- -- -- -- -- -- -Library of Congress study__________________________________ Common Cause study______________________________________ Letter from Bill Bagley, Chairman, Commodity Futures Trading Commission, November 2, 1977___________________________ Prepared statement ______________ -- ---- -------- -- -- ____ ---OII)  65 78  13, 1978  James T. McIntyre, Director, 0MB, accompanied by Wayne Granquist, Associate Director and William Nichols____________________________ FRIDAY, AUGUST  3 58  243 263  288 338 218  201 206 263  288 65  70 3 9 12 45 47  IV Alphabetical list of witnessess-Continued Curtis, Charles B. : Testimony ____ -- -- -- -- -- -- -- -- -- -- -- -- -- __ -- -- __ __ __ __ __ __ Article: "FPC Can't Decide on Route To Bring Gas From Alaska," from the Washington Star, May 3, 1977____________________ Prepared statement with attachments________________________ Cymrot, Mark: Testimony ______ -- -- -- -- -- -- -- -- -- ---- -- -- -- -- -- -- -- -- __ __ Prepared statement with exhibits____________________________ Evans, John R.: Testimony________________________________________________ Open meeting agenda______________________________________ Prepared statement ______ -- -- -- -- -- ---- -- -- -- -- -- -- ------ __ Evans, Mark: Testimony _________________ -- -- -- -- -- -- -- __ __ __ __ Favor, Fred G.: Testimony ______________________________ -- -- -- -- -- -- __ __ __ Prepared statement with attachments________________________ Grandquist, Wayne: Testimonies____________________________ 218, Hendrie, Joseph M.: Testimony ____________________________ -- -- -- -- -- -- __ __ __ __ First annual report on compliance with Government in the Sunshine___________________________________________________ Prepared statement________________________________________ Letter from Mr. Hendrie to Senator Chiles, August 31, 1978____ Hutchinson, Everett: Testimony__________ _____________________ Klitzman, Stephen: Testimony__________________________________ McBride, Anne: Testimony_____________________________________ McIntyre, James T.: Testimony________________________________________________ Prepared statement with attachment_________________________ Miller, Alan R.: Testimony_____________________________________ Miller, G. William: Testimony________________________________________________ Prepared statement________________________________________ Board of Governors open meeting agenda_____________________ A guide to meetings of the Board of Governors________________ Nichols, William: Testimony___________________________________ O'Neal, Daniel: Testimony________________________________________________ Prepared statement________________________________________ Ostrach, Steve: Testimony _______ -----------------------------Pitt, Harvey L.: Testimonies_______________________________ 177, Rodriguez, Robert: Testimony__________________________________ Williams, Harold M.: Testimony________________________________________________ Prepared statement with exhibits____________________________ Zusman, Lynne K.: Testimony________________________________________________ Letter to Wayland D. McClellan, General Counsel, U.S. Foreign Claims Settlement, from Barbara Allen Babcock Assistant, Attorney General, April 19, 1977 __________________________ Prepared statement________________________________________  Page  78 81 87 263 269 177 180 187 133 150 152 225 288 289 334 337 150 201 3 225 236 65 243 255 258 260 225 133 143 288 338 3 338 354 58 60 63  ADDITIONAL MATERIAL SUBMITTED FOR THE HEARING RECORD Statement of Michael Pertschuk, Chairman, Federal Trade Commission__ Number and status of Sunshine Act meetings. Study made by the Library of Congress, Congressional Research Service, Rogelio Garcia, analyst, Government Division-------------------------------------------Letter to James L. Kelley, Acting General Counsel, U.S. Nuclear Regulatory Commission, from Barbara Allen Babcock, Assistant Attorney General, July 21, 1977___________________________________________   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  392 395 405  OVERSIGHT OF THE GOVERNMENT IN THE SUNSHINE ACT-PUBLIC LAW 94-409 TUESDAY, NOVEMBER 29, 1977  U.S. SENATE, SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES, AND OPEN GOVERNMENT, COMMITTEE ON GOVERNMENTAL AFFAIRS,  Washington, D.O. The subcommittee met, pursuant to notice, at 10 a.m., in room 1114, Dirksen Building, Senator Lawton Chiles ( chairman of the subcommittee) presiding. Present: Senator Chiles. Staff members present: Ronald A. Chiodo, chief counsel and staff director; Janet R. Studley, counsel ; Robert F. Harris, deputy staff director ; and Christine Sheridan Betts, chief clerk. Senator CHILES. Good morning. We will convene our hearings.  OPENING STATEMENT OF SENATOR CHILES Senator CHILES. When I first came to Washington, 7 years ago, I noticed that all of the doors in town were closed. Whatever of the public's business was being conducted behind those doors was apparently of such import and necessary secrecy that the public could not be trusted to know how its own Government ran. Besides the sensitivity of the matters under discussion, I ,vas told, was the necessity to let Commission and committee members meet in camera so that they could be "very frank" in discussing the matters at hand. Well, I don't buy that. Most people who are reluctant to state their opinions publicly are reluctant because they either are unable to state their position or simply don't understand the matter at hand. While I can sympathize with their desire to be inarticulate in front of as small a group as possible, I don't think fear of embarassment should override the public's right to see their own Government being run, warts and all. Government in the Sunshine works well in Florida. Although a number of Florida newspaper people had to get themselves thrown out of meetings or into jail, they were successful in forcing reluctant bureaucrats to conduct the public's business in public. I was sitting in a closed Senate committee meeting one morning when it struck me that the matter being discussed was the budget for the Botanical Gardens. While the matter was obviously of great importance to the employees there, no one suggested that the national   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (1)  2 security would be materially weakened if the Chinese found out we were into azaleas this year. In the end, it turned out the meeting was closed because somewhere along the line someone had closed the meeting one day many years ago and no one had ever thought to open the door again. In due course, we opened the doors of the Congress, so that today practically all meetings are entirely open to anyone who chooses to attend. Hopefully, the taxpayers will become slightly more trusting of a Congress which does their business in the open. Certainly, we have not weakened the Republic by discussing the Botanical Garden's budget in public. When I first introduced the "Government in the Sunshine Act," everyone laughed. The next year I had 16 cosponsors. Everyone stopped laughing and got mad. We heard an ocean of testimony which proved beyond any reasonable doubt that if this law were passed economic depression would be unavoidable. Short of suggesting that a plague of locusts would lay waste to the Middle West, the bill's detractors prophesied an unending stream of disaster which would befall us. Well, the bill passed the Senate by 94 to 0. The House vote was 384 to 0. In spite of the chorus' mutterinp;s of doom, the act went into effect on March 11. And, 8 months later, the Republic still stands. Hopefully, we have convinced the doomsayers that the general public can be taken into its Government's confidence. Someday we may even convince the general public to take us into their confidence. ,vhat we intend to do today is see how well the Government in the Sunshine Act is faring. We will ask opponents and defenders of the act what their views are now that the act has been in effect for 8 months. We will ask the agencies what their difficulties have been, and chastize them in some instances for particularly flagrant violations of the act. But most of all, we want to begin to change people's minds about the whole idea of Government in the Sunshine. The Congress has overwhelmingly stated that the people of this country have a perfect right to know and observe our Government being run. With a few exceptions-secret material, plans for criminal prosecutions, or material which would constitute an invasion of privacy, there is no commonsense reason why citizens don't have every right to watch how the Government is spending their money. Citizens cannot hold Government officials accountable for their actions if they don't know what those officials are doing. We want to make sure that the public has the opportunity to be informed about and to understand its Government activities. The agencies make decisions which directly affect. all Americans. Today we hope to determine how accessible the decisionmaking processes really are. Government employees should not instinctively resist a requirement to make their policy decisions in public. Most agencies are proud of their capacity for rational thought, and of their staff's ability to assemble a comprehensive set of documentation and policy options. I would think they would be proud to have their skill and ability displayed in public. ,ve hope to convince some, if not all, of them that Government in the Sunshine is the most desirable way to go about conducting the public's business.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  3  I am pa.rticularly pleased that 0MB is going to testify today. As we all know, the President himself campaigned actively in support of the right of the people to have free and open access to the operations of their Government. Accordingly, we expect to learn from 0MB today what initiatives they have taken and what oversight mechanisms they have instituted to insure that sunshine is a reality, not only in collegial agencies, but in all of our Government's daily operations. COMMON CAUSE Our first witne,sses this morning will be Mr. David Cohen, president of Common Cause. As I imagine everyone is aware, Common Cause is one of the principal movers and shakers in helping us get the Government in the Sunshine Act passed. In a town which is noted for its collective short memory, it would be worthwhile to remember that sunshine had some formidable and articulate opponents. It was put in a simpler form in a law review article by Mr. Jerry Markham. He wrote: The hearings and debates and so-called sunshine requirements have tended to break down into two mobs of sorts, one desiring complete public access to governmental decisionmaking processes and another wishing only for as little public disclosure as will placate current public opinion.  He goes on to quote from the Pickwick Papers: "In deciding which of these two mobs to join, Mr. Pickwick's advice might be useful: 'Don't ask any questions. It's always best on these occasions to do what the mob do.' 'But suppose there are two mobs,' suggested Mr. Snod~rass. Shout with the largest,' replied Mr. Pickwick." I think the debate on sunshine was a lot more intellectual than that and in the end the legislation reflected a very modest position. Still, we ended up with the biggest mob, including Mr. Pickwick. The question is what, if anything, have we won. Now that the clamor of the debate has died a way I think it is time to see what we have. Mr. Cohen, we would like to have you come on first, to find out from you w hn t you think we> hn w. TESTIMONY OF DAVID COHEN, PRESIDENT OF COMMON CAUSE, ACCOMPANIED BY MS. ANNIE :McBRIDE, ASSOCIATE LEGISLATIVE DIRECTOR, AND ROBERT RODRIGUEZ Mr. COHEN. Thank you very much, Mr. Chairman. With me is Anne McBride, who serves as our associate legislative director, and who is our manager on the sunshine legislation. Senator CHILES. Ms. McBride did a tremendous job in managing that issue and converting lot of people. That vote of 94 to O was sort of a magical vote, and sometimes it was quite illusive until it finally materialized. I think Ms. McBride had a lot to do with that. Mr. CoHEN. We've asked Anne McBride to top that in for a copy of the campaign finance reform legislation. On my right is Robert Rodriguez who supervised the ~udy that we did on the first 3 months of the implementation of the Sunshine Act. We very much appreciate the opportunity to be here, Mr. Chairman, and what I would like to do, with your permission, is ask that our   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  4 study and that my statement be made part of the record, and what I would like to do is summarize portions of the testimony. Senator CHILES. We will do that. We appreciate your summarized testimony. It looks like we are going to have a long hearing and it gives us a little more time for the questions. OVERSIGHT IS ESSENTIAL Mr. COHEN. First, Mr. Chairman, I think it is absolutely welcome that you have begun the serious process of congressional oversight on implementation of the Sunshine Act. Too often laws are enacted but their implementation is ignored, and I think we all know enough about how law works to know that laws are not self-executing or self-enforcing. They need attention and monitoring and we have always believed the congressional oversight is essential if our Federal programs and laws are to work as intended. I think the most important thing that can come out of these hearings is not only to determine how the Sunshine Act is working in its early stages, to send a forceful signal from this committee and from the Congress that you are serious about agency compliance with the letter and spirit of this law. Col-.DION CAUSE STUDY What I would like to do, Mr. Chairman, is immmarize the results of our study which was based on a survey of the number and status of meetings held by the 47 agencies covered by the act during the first quarter. Our survey found that 39 percent, 232 of 591 meetings held during the quarterly period study were entirely closed to the public. Also 24 percent or 143 of 591 meetings held during the quarterly period were partially closed to tJhe public. But only 37 percent or 216 of these 591 meetings held were fully open to the public. Exemptions relating to financial information accounted for 38 percent of the exemptions used to close meetings. The statistics are plainly disturbing and I think they establish presumptively that there are serious problems with the agencies implementing the Sunshine Act. The fact is, it is not ,vorking as Congress intended it to and any time you have a situation in which five-eights of the meetings are either closed or partially closed for a law that intended open meetings, it is a serious problem and the fact that this is the way it began, it is important to nip it so that we change the course or direction, and that tihis committee can play a role in teaching the agencies how to live by a pattern and a habit of openness, and to change the old habit of when in doubt, close. Our analysis of the use of the exemptions of the agencies closing meetings or portions of meetings indicates that the 10 exemptions to the openness rule were used to close entire meetings or portions of meetings 835 times. While much of the public debate surrounding the need for exceptions in the Sunshine Act centered on the concern for national security and the unwarranted invasion of personal privacy, 38 percent of the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  5 time the exemptions cited were those regarding financial information, and anlysis of the data reveals that matters of national security accounted for only 1½ percent of the closed meetings while invasions of personal privacy were cited for closing only 9 percent of the time. The data indicates that the financial exemptions may well be used by agencies in a mindless manner, in a manner tlhat is plainly overused. The Federal Reserve Board is a prime example, and ·as all of us know from the efforts of trying to achieve the law, the Federal Reserve Board was its most persistent opponent, probably the ultimate doomsayer. And Chairman Burns fought the law vigorously, and although tihe Federal Reserve Board is covered by the act the broad language of the exemptions dealing with financial matters mean that as a practical matter few of the Board's meetings would be open to the public. Our own studies show ,that subjects dealing with office furniture and office renovation were closed under the guise of financinl information and that is Chairman Burns and the Federal Reserve Board just thumbing its nose at this law. The disproportionately large number of closed meetings justified by the Fed on the grounds that they are of a sensitive financial nature, that is hard to believe when you are dealing with office design and furniture. What I would like to do, Mr. Chairman, is turn to our suggested recommendations. THE NEED  FOR  EXECUTION ACTION  First, we believe that agency compliance with the Sunshine Act requires active Presidential leadership and initiatives as well as continuous congressional oversight. So far we do not see that Presidential initiative has been forthcoming. We think, as you stated in your opening remarks, that President Carter campaigned on a theme of openness and I think open meetings is the first step in building an affirmative antisecrecy policy in Government. It can be implemented administratively at this point because of the law that the Congress passed. Those administrative innovations and initiatives have not been forthcoming. Senator CHILES. I would certainly agree with you on that point. As I recall there were times during the campaign when even Executive order was discussed as a method to open up Government. This happened at a time the sunshine bill had not yet been passed. I recall that statements were made that, whether the Sunshine Act was passed or not, Executive order could open up these meetings. Certainly now we recognize that, while we have covered the collegial bodies, so to speak, an Executive order could go much further by setting policy and could certainly implement sunshine much more effectively by setting some guidelines or setting some enforcement task group within the executive branch. And while we always talk about the exceptions, no one seems to talk about the fact that an exemption under the act is not enough to close a meeting. In addition to finding an appropriate exemption, the agency must make a determination whether or not there is an over-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  6 r~ding public interest in opening the meeting in spite of that exemption. And I wo1;1ld be very i_nterested today in seeing how our agencies have dealt with that reqmrement. I think some strong langua1Ye from the_ E_xecutive would be most helpful in getting the agencie;' t~ stop res1stmg open Government. Mr. CoHEN. The point I want to make before we get to the specifics of o~r suggestions, and we are not bashful about making some suggestions on what steps the President could take, is that here was a chance to act~ally carry out campaign promises with specific performance and 1t only takes the stroke of a pen, the convening of the appropriate people within the executive branch to take a clear signal and that signal just has not been coming and I think it is important tha~ this comn_iittee let the executive branch know that they ought to begm performmg specifically. Senator CHILES. This committee hopes that signal is going to come today. Mr. COHEN. Well, it is just unrealistic to expect that absent Presidential initiative that agencies which resisted the law are going to clamor to follow overriding public interest of openness. In our judgment the President should issue a directive to the agencies affirming the administration's commitment to openness. establish standards of openness and require that agencies comply with not only the letter but the spirit of the act. The directive should recommend that agencies close meetings only when there is an overriding public interest in doing so. The act allows an agency to close a meeting under certain circumstances, but does not require it to do so. An agency can decide even whether an exemption applies that the public interest is served by openness and justification for meeting in secret. One of the things tllC' President could do very easily is sav from the agencies affected by tlw bill. I want to have regular i·eports on how many meetings are open. and how many meetings were closed. and what your reasons are for closing those meetings, and what that overriding public interest is, if an agency does close a meeting. and that simple kind of a signal puts the appointees on notice that they had better shape up by learning how to operate. in an open way. Few agencies are following this approach. ·we believe that they should be directed to do so bv the President. The President should° direct the agencies to include 'in their regulatiom; such items as a broad definition of meetings, including committees and subdivisions. Over and over again you get the sense that meetings are being held. but that they are not called meetings. A requirement that notice be given 10 days in advance of a meeting. A provision permitting the use of sound recorders and photographic equipment. And I think we have enough experience now to know that it is time to prohibit notational voting on substantive items, and it is important to require why a meeting is closed. the exemption and the purpose behind it, and the reason behind it ought to be listed in the Federal Rrgister.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  7 There ought to be a requirement that certification procedures in the General Counsel take place prior to holding of a closed meeting and there ought to be a procedure that would allow a citizen to request that a closed meeting be open, as well as a justification for the use of expedited closing procedures. In our judgment the 0MB has a critical role to play. Although agencies have been given flexibility in developing regulations the act does not provide for any review of these regulations by any agency of Government to determine whether they adequately meet the act's requirements and spirit. We urge the President to direct the Office of Management and Budget to review for the White House each agency's regulations to insure that they meet the high standards of openness. OMB's approval of the regulation should be based on their compliance with the Presidential directive that I discussed earlier. Just asking 0MB to do it absent the directive will just become a technician's game. The point here is that policy ought to be established. The 0MB ought to carry out the policy. That is why we need the directive, and then the responsibility ought to be fixed with 0MB to review the other agencies' regulations. The results of the review, including any recommended changes, should be made available to the public for comment and discussion. On oversight hearings, as we stated at the outset, Senator, we believe that the oversight hearings that you have initated here ar~ critical to the future of the Sunshine Act. We believe that every agency must be held accountable to Congress for its performance under the act. We believe that there are several basic questions that must be answered to the oversight process. Are the exemptions being properly used? Do the exemptions need to be more narrowly written? Are agencies ignoring the presumption of openness? Is the expedited closing procedure being used properly by the appropriate agencies~ Do the expedited closing procedures serve the public interest i I hope that we can learn today. I know you will make an effort to hear from the agencies on why these meetings have been closed, what positive steps will be taken ~o change practices? And I think it would be useful as a sign of this committee's seriousness about this question that after these oversight hearings are completed, if the committee were to issue a report with specific recommendations and that degree of formality, has a way of putting public officials on notice and working at changing their current habits. Included in our study is a model regulation design to implement the Government in the Sunshine Act. And that is part of what we asked to be submitted for the record. I hope that this can serve as at least a point of departure for showing that the job is doable. In a real sense you have to refight the debate all over again. There are always those who will say that it can't work or matters will be paralyzed. It hink they don't get paralyzed from openness. They may get paralyzed from closeness but they surely don't get paralyzed from openness.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  8  The agencies covered by this law make decisions that affect all Americans in very specific ways. I think the point that you made earlier about people being able to know what's going on is fundamental to accountability of public officials is right. And equally right, Senator, is that citizens just want to know what's going on so they can understand what is happening to them. That is part of what the Government is about. It is part of what leadership is about. And we can't lead unless people do know what's going on, and that's why it is so important for the Presic~ent to change his ways and to establish once and for all a clear policy of openness and a clear direction that he wants this law to work, and that he intends to make it work. Thank you. THE FLORIDA EXPERIENCE REVISITED Senator CHILES. Thank you very much for your statement. Your findings, I am afraid, are similar to those in a study that the Library of Congress has done for us. As we might have expected, some agencies took us literally. Others, it would seem, are not aware that the act has been passed, and the only conclusions that I can draw now is that we are in a sort of hiatus period. Sunshine at the operating level has neither been a resounding success nor a resounding failure. I guess that you could be very, very disappointed about this. But, I can't say that I am too surprise because this really is again followinj! the established pattern. "\V"e passed the act in Florida and immediately upon the passage of the act many of the boards and agencies across the State felt that this couldn't apply to them. It was just something that they would have to pay some kind of a token significance to, but no more than that. So we found school boards, county commissions, others, coming up with a pattern on how they were going to ope.rate, whether they would hold a meeting in the morning beforehand or whether some would just ignore the act completely. A few complied. But we went through that period of time and fortunately had the courts helping. People were bringing cases which certainly helped us enforce the law. I am surprised that in 8 months somebody hasn't brought a sunshine case about some of these Federal agency meetings. That hasn't happened yet, but it took a period of time, really several years, before everybody finally knew that Sunshine was going to be the law in the State of Florida and was going to be enforced. It may take that period of time here, but we are going to make sure that eventually we get the same kind of message across, that is that the law is going to be enforced. We are really talking about such a change in approach that the agencies' oYerriding concern will be to find out how to open a meeting, not to figure out how to close a meeting. I don't think this change in perspective has come yet to many of the agencies. It has to some, and we certainly want to applaud them. THE LIBRARY OF CONGRESS STUDY vVe asked the Library of Congress to study this for us. Their conclusions a.re similar to the Common Cause study. Of 1,002 meetings   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  9 which were subject to the Sunshine Act, 339 were totally closed,_ and 108 partially closed, £or a tota_l of 527 or 53 perc~nt of ~he meetmgs. Your findings are somewhat higher but, as you will notice, la~er, n?t all of the meeting notices were pub~ished in the Fede_ra~ Register m the first place. Still, based on admittedly soft data, it is clear that some agencies have a lot more closed meetings than others. In order to avoid treating slightly suspect data in a t~tally mechanical fashion we analyzed the Library's data in five diff~rent ways: Raw number of meetings, raw number of closed and partially closed meetings, percentage of all meetings to closed meetings, percentage of all meetings compared to all partially closed me~tings, and, th~n, fifth, a percentage of all pa.rtially or all closed meetmgs £or agencies ·which had more than 35 meetings during the period. . The last category is designed to screen out relatively small agencies which have few meetings. For example, the Harry S. Truman Scholarship Committee led the percentage lists becausce three of their meetings were partiallly closed. Presumably, it discussed the academic credentials of various applicants. Leaving these out, we saw five or six agencies kept the doors closed much of the time. The Securities and Exchange Commission, Federal Trade Commission, Federal Power Commission, and, surprisingly, the Commodity Futures Trading Commission. I will place the Library of Congress study and your study in the record at this point. [The studies follow:] THE LIBRARY OF CONGRESS, CONGRESSIONAL RESEARCH SERVICE,  Washington, D.O., September 19, 1977.  To: Senate Subcommittee on Federal Spending Practice Attn: Pete Roman. From: Rogelio Garcia, Analyst, Government Division. Subject: Sunshine Act ::\Ieetings. The following information and material is sent in response to your request for a compilation of Sunshine Act meetings listed in the Federal Register, copies of law review articles dealing "·ith or analyzing the Sunshine Act, and "horror" story clippings about the need for such a law. An analysis of Sunshine Act meetings listed in the Federal Register between '.\larch 24, when it began listing such meetings in a special section, and September 9 reveals the following : ( 1) 1,003 meetings were listed-527 were completely ( 339) or partially ( 188) closed to the public. Relative exemptive provisions were cited in only 193 of the 527 meetings that were fully or partially closed. (2) 32 agencies held totally or partially closed meetings, but only 12 of them cited relevant exemptive provisions-none did so in all instances-when holding such meetings. (3) Agencies most frequently closing all or part of their meeting included the Securities and Exchange Commission (64), the Nuclear Regulatory Commission ( 45), the Federal Reserve System ( 43), the Federal Trade Commission ( 33) and the Commodity Future Trading Commission (30). ( 4) Provisions most frequently cited in closing all or part of a meeting included 5 USC 552b (c) (4) (8) (9) (A) (10)--42-5USC 552b (c)-28-and 5 USC 552b (c) (10)-24. The above figures are taken from Tables 1, 2 and 3 of this report. Several law articles dealing with the Sunshine Act are attached, as is a copy of pages S19433, 19442--43 of the Congressional Record of November 6, 1975, which succinctly state the need for such an act. These pages from the Congressional Record are being sent because a review of our files failed to uncover any "horror" story clippings regarding the need for a Sunshine Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  10 TABLE 2.-Breakdown by Agency of the 193 occasions on which exempted provision cited to close all or portion of meeting Agcnc11  CAB: 5 U.S.C. 552b (c)-  OccaBianB  (2) ------------------------------------------------------------(3) (B) (7) (A) (10) --------------------------------------------(3) (B) (9) (B) -------------------------------------------------(7) (A) (9) (B) -------------------------------------------------(7) (A) (9) (B) (10) ----------------------------------------------  1 1 1 1 1  (9) (B) ---------------------------------------------------------  5  Total ---------------------------------------------------------  10  CTC: 5 U.S.C. 552b-(c) (total) -------------------------------------EEOC: 1 29 CFR 1612.3(a)-5 U.S.C. 552 b (c) and (d) (4) (total)______  11  1  1  Cite only Commission 29 CFR 1612.3 (a) as authorization to close meetings.  FDIC: 5 U.S.C. 552b (c)(4) (8) (9) (a) (ii) (10) and (d) (4) -------------------------------(6) ------------------------------------------------------------(6) and (d) (1)-------------------------------------------------(6) (9) (B) and (d) (l)___________________________________________  (8)(9) (A) ------------------------------------------------------  2  9 3  1 1  (8) (9) (A) (ii) (10) ----------------------------------------------  10  Total---------------------------------------------------------  26  FTC: 5 U.S.C. 552 b (c)-(10) and (d) ( 4) (total)---------------------FRS .: 5 USC 552 b-( c) (total)---------------------------------------ITC: 5 USC 552 b (c)-  27  (2) (6) --------------------------------------------------------(2) (6) and (d) (1) ---------------------------------------------(5) (7) (9) (10) -------------------------------------------------(10) ------------------------------------------------------------  2  1  5 1 1 8  Interstate Commerce Commission: 5 U.S.C. 552 b (c)-(10) (total)_______ NRC 1 : 5 U.S.C. 552 b (c)1  8  On 4/28 began citing only Inst digit of provision.  (1) (1) (1) (1) (1)  and (d) (1) -------------------------------------------------(4) and (d) (1)----------------------------------------------(3)(4)(6) and (d)(l)________________________________________ (4) (6) (9) (10) ----------------------------------------------(4)(9) (10) --------------------------------------------------  (1) (9) ---------------------------------------------------------  2 2 1 1 1  1  (1)(9)(B) and (d) (1) -----------------------------------------(1) (9)(10) ----------------------------------------------------(1) (10) ---------------------------------------------------------  3  (2) (6) ---------------------------------------------------------  1 1  (6)(9) --------------------------------------------------------(6) (10) --------------------------------------------------------(9) -----------------------------------------------------------(9) (B) and (d) (1) ---------------------------------------------(9) (Bl (10) and (d) (1)__________________________________________ (9) (10) -----------~-------------------------------------------(9) (10) and (d) (1) --------------------------------------------(10) -----------------------------------------------------------(10) and (d)(l) ------~------------------------------------------  Total------------------------------------------------------  1 2 1 6  3  2  4 1 2 7  42  PC: 5 U.S.C. 552 b (c)(6) (7) (A) (10) ------------------------------------------------(10) ------------------------------------------------------------  9  Total ---------------------------------------------------------  10   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  1  11 PRC: 5 U.S.C. 552 b (c)(2) (10) -------------------------------------------------------(10) ------------------------------------------------------------  9  Total--------------------------------------------------------SEC: 5 U.S.C. 552 b (c)-(4) (8) (9) (A) (10) (total)____________________  43  1 10  TABlE 3.-BREAKDOWN OF EXEMPTIVE PROVISION CITED TO CLOSE ALL OR PORTION OF MEETING Provision  Occasions Agency  5 U.S.C. 552b: (cXl) and (dXl)________________________________________ (c~lX4) and (dXl)______________________________________ (cx')(3*4X6) and (dXl) __ -----------------------------~lO)_ -- -----------------------------------  2 NRC. 2 NRC. 1 NCR.  i ~!t  {i*mi~~*1  (cXlX9XB) and (dXl)__________________________________ (cXlX9XlO) ________ -- -- -- ______ -- ---- -- -- __ ____ ____ __ __ (cXlXlO) ____________________ -- ____ ______ __ __ __ __ ____ __ (c)(2)______________________ -------- ____ __ ______ ____ __ __ (cX2X6)_______________________________________________ (cX2X6) and (d)(l)_____________________________________ (cX2XlO) ______________ -------- ---- __ -- ------ ______ ---(cX3)(BX7XAX10) ______ -- -- __ -- ---- -------- ____ __ ____ __ (cX3XBX9XB) ___ -------------------------------------cX4X8X9XAXiiX10) and (dX4)__________________________ cX4X8X9XAX10) __________________ ------ ---- __ ____ __ __ ~ ~*Wx9x10>-:: :::::::::: :::::::::::: :: :::: :::::::::: (cX6) and (dXl)________________________________________  3 1 2 1 2 5 1 1 1 2 43  i ~1~c. l ~~·c. 1 FDIC.  3 FDIC.  ~~~~*~rx10>-:::: :::::: :::::::::::: :::::: :::::: :::::: (cX6X9XB) and (dXl) ____ ------------------------------  i ii!.  Iifil~~~1~:k  10>-------------------------------------(c)(8X9XAXiiX10)______________________________________  10 FDIC.  ~3  ~~*ikB,_:::::::::::::::::::: :::::::: :::: :: :::::: :::: ::  (cX9XB) and (dXl)_____________________________________ (cX9)(BX10) and (dXl)_ __________ __ ____ __ ____ __ ____ __ __ (cX9)(10)_ --------------------------------------------(cX9XIO) and (dXl)_ ____ _____ __ __ ____ __ __ __ ____ __ ____ __ (cXlO)_________________________________________________ (c)(lO) and (dXl)___ ______ __ ______ __ ____ __ ____ __ ____ __ __ ~tlO) and_(dX4)_______________________________________ 29 CFR 1612.3(a)(5 U.S.C. 552b(c) and (dX4)) ____,_____________ Total________________________________________________  NRC. NRC. NRC. CAB. ITC and NRC. ITC. PRC. CAB. CAB. FDIC. SEC.  2 41 24 7 2~  ~:~: NRC.  NRC. NRC. NRC. 2 NRC; 9 PRC; 9 PC; 3 ICC; l ITC. NRC. m'RS; 1 CFTC. 11 EEOC.  ---193  TABLE 1.-SUNSHINE MEETINGS BY AGENCY (As listed in Federal Register, Mar. 24 to Sept. 9, 1977)  Agency  Number of meetings - - - - - - - - - - - - - - - - Occasions Totally/ exemet!ve Totally Partially partially prov1s1on Total Opened closed closed closed cited  Civil Aeronautics Board (CAB) ___________________ _ Commodity Credit Corporation, USDA (CCC) ______ _ Council on Environmental Quality (CEQ) __________ _ Commissions on Federal Paperwork (CtP) ________ _ Commodity Futures Trading Commission (CFTC)___ _ Consumer Product Safety Commission (CPSC) _____ _ Civil Riehts Commission (CRC) __________________ _ (CSC) Civil Ser\ice Commission __________________ _ (EEOC) Equal Employment Opportunity Commission_ (FCC) Federal Community Commission ___________ _ (FCSC) Settlement Commission __________________ _ (FDIC) Federal Deposit Insurance Corporation _____ _ (FEC) Federal Elections Commission ______________ _ (FHLBB) Federal Home Loan Bank Board _________ _ (FHLMC) Federal Home Loan Mortgage Corporation_   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  52 3  2 1 40 43 13 10 21 60 26 40 30 36 5  41  9  2  (11)  3 -- -- ------ -- -- -------- -- ---- --  2 -- ------ -- ---------- ---- ---- -1 ------ -- ---------------- ---- -10 16 14 (30) 27 6 10 (16) 5 2 6 (8) 6  3  1  (4)  2 5 14 (19) 35 25 ---------(25) 26 ---- -- ------ ---- -------- -- -- -2, -------22· 1~ 24 10 2 (12) 3 2 ---------(2)  m!  10 NA NA NA 1 0  0 0 11  0 NA 26 0 0  0  12 SUNSHINE MEETINGS BY AGENCY-Continued [As listed in Federal Register, Mar. 24 to Sept. 9, 1977) Number of meetings - - - - - - - - - - - - - - - - - Occasions Totally/ exemptive Totally Partially partially provision Total Opened closed closed closed cited  Agency  (FMC) Federal Maritime Commission ........ ·--··· (FPC) Federal Power Commission ..••.••..... _••• _ (FRS) Federal Reserve System.................... (FTC) Federal Trade Commission •••.....• ·-······ (HSTS) Harry S Truman Scholarship Fuondation •• _. (IAF) lnter•American Foundation .••••••.• _....... (ITC) International Trade Commission............. Indian Claims Commission ••••....• ·-····-······· (ICC) Interstate Commerce Commission............  ~~mT~i~!fi~~~i i~:~~~~o~i~~oiiectroiiic.Funii"  4  Transfers ••.. ·-·-···························· (NCER) National Council on Educational Research.. (NCLIS) National Commission on Libraries and Information Service............................. National Labor Relations Board (NLRB)............ National Mediation Board (NMB)·-·--·-·········· Nuclear Regulatory Commission (NRC)....••.... -.. National Railroad Passenger Corporation (NRRPC).. National Science Board (NSB) ••..•. ·-·····-····-· National Transportation Safety Board (NTSB).... .. Overseas Private Investment Corporation (OPIC).... Occupational Safety and Health Review Commission (OSHRC) •.• ·-··-········-·······-··--·······Parole Commission (PC>·········--·············Postal Rate Commission (PRC>-····-··-····-·--··· Postal Service (PS).•.·-····-··-··········-······ Railroad Retirement Board (RRRB).-·•-·····-·-··· Renegotiation Board (RB>-··············-·······Securities and Exchange Commission (SEC>-····-·Tennessee Valley Administration (TVA) .• ·•·--····· United States Railway Association (USRA)••••.. -... Uniformed Services University of the Health Sciences (USUHS) •.. --•·············--··--·-·-·--·····  TotaI. ___ · - •-• • •• -- ---· ---· -· ----• - •· · -· ·  28 6 l 21 (22) 31 30 1 ·-········ (1) 55 12 38 5 (43) 53 20 26 7 (33) 22 ••.•••••2•••..•.••.•••••••••. 2······-·(2) 38 12 l 25 (26) 25 22 •.•.••.••. 3 (3) 26 23 3 •.•••••••. (3) 4 ·············-··-·············  1 ···-·························· l ·······-·-·-·-················  o o  27 2 u NA 8 o 3 NA NA NA  3 3  3 •..••.••••.•••..•••....•...... 2 l ·-·-······ (1)  NA O  5  5 ··························--·-  NA  71 26 34 6 l ·····-·-·· 6 .......•.. l 28 15 12 3 •......... 1  11 5 5 1 2  (45)  ( 3) (3)  42 0 0 0 O  14 13 ·-·-···-·· 1 (1) ( 2151)) 62 2117 1158 -··-·--·;· a ( 10 10 ·······-·····-·····-··-····-·· 9 1 1 7 (8) 29 6 10 13 (23) 106 42 63 1 (64) 10 10 ·--······················-··-· 5 ··-·-··---·····-·--· 5 (5)  0 10 10 NA 0 0 43 NA 0  i5)6)  -------------------3  l, 003  3 -····-·····-··-··-·········-··  476  339  188  (527)  NA  193  SHADOWS OVER THE SUNSHINE ACT-A COMMON CAUSE STUDY OF FEDERAL AGENCY COMPLIANCE WITH THE GOVERNMENT IN THE SUNSHINE ACT OF 1976 SUMMARY  Multi-member executive branch and independent agencies have often been criticized as being largely unaccountable and overly secretive in their deliberations. Congress enacted the Government in the Sunshine Act of 1976 (Public Law 94-409) to help remedy this situation by opening the decision making processes of these agencies to the public. The data contained in this study are based on a Common Cause survey of the number and status of meetings held by 47 agencies covered by the Government in the Sunshine Act during the first calendar quarter under the Act from March 12, 1977 through June 12, 1977. The data reveal that a substantial part of the decision-making process within the 47 agencies covered by the Act is still carried on behind closed doors despite the 1976 Act. Common Cause found that: -39 percent ( or 232) of 591 meetings held during the quarterly period were entirely closed to the public; -24 percent (or 143) of 591 meetings held during the quarterly period were partially closed to the public ; and -only 37 percent ( or 216) of all 591 meetings were entirely open to the public. The data indicated a strong tendency on the part of agencies to close meetings under one of the Act's ten exemptions in spite of the Act's presumption in favor of openness and the public's interest in openness. Our analysis of the 825 times exemptions were used to close meetings or portions of meetings indicates heavy use of the exemption related to financial information-it was cited 38 percent of the time ( or 315 times) .   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  13 The Common Cause study documents the number of open, closed, and partially open/closed meetings held by the covered agencies during the first quarterly period under the Act. A large portion of the data regarding the status of meetings was taken from the Sunshine Act Meeting notices section of the Federal Register. When an agency covered by the Act closes a meeting or portion of a meeting, the Agency is required by the Act to cite the relevant exemption which justifies the closing of the meeting. Our data regarding exemptions reflects the information submitted by each agency. Common Cause contacted the agencies and asked them to review our draft list of meetings for any omissions or errors and to provide us with the correct information and relevant exemptions. Where appropriate, corrections offered by the agencies have been incorporated in our study. A number of examples cited within the body of the study point to agency disregard for ,the spirit and sometimes the letter of the Act. They indicate that the fact that less than forty percent of all meetings are fully open to the public may have as much to do with agency attitudes regarding openness and accountability in government as it does with the legitimate use of the Act's exemptions. It is, the study concludes, unrealistic to expect that those agencies which lobbied so vigorously against the enactment of the Sunshine Act will now comply with the letter and spirit of the law. Their past resistence to openness pose a direct challenge to President Carter's commitment to openness in government. Common Cause believes the President and the Congress must take certain specific steps to ensure meaningful compliance with the Sunshine Act and to set a new tone of openness in government. The study recommends that : -the President issue a directive to the agencies covered by the Act affirming the Administration's commitment to openness in government and requiring that agency regulations conform not only to the letter but also the spirit of the Act; -the President direct the Office of Management and Budget (O1\!B) to review each agency's regulations to ensure that they meet high standards of openness; and -the Congress conduct thorough oversight hearings (including witnesses from agencies covered by the Act) in order to examine •the extent of agency compliance with the Act. The study includes a model agency open meetings regulation to implement the Act. In addition to provisions explicitly required by law, highlights of the model regulation include : -a procedure to permi,t any person to make a timely appeal from an agency decision to close a meeting or portion of a meeting or limit the disclosure of information; -a provision to make records and other documents quickly and inexpensively available to the public; -a proposal to limit the use of notational voting to agency decisions •that are of a routine rather than substantive nature ; -a provision to require notice of meetings 10 days in advance of the meetings ; -a provision to require that minutes be kept of all open meetings and that a transcript or recording be kept of all closed meetings ; -a provision to permit the unobtrusive use of photographic equipment and sound recorders ; and -a provision to require that the general counsel's certification for closed meetings that is mandated by the Act must be completed prior to the holding of a closed meeting or portion of a meeting rather than after the meeting. I. INTRODUCTION  On September 13, 1976, President Gerald R. Ford signed into law the Government in the Sunshine Act (Public Law 94-409). The result of years of effort led in Congress by Senator Lawton Chiles (D.-Fla.) and Representative Dante Fascell (D-Fla.) with the support of citizens' organizations including Common Cause, the Government in the Sunshine Act is the most comprehensive anti-secrecy measure affecting federal agencies since the Freedom of Information Act of 1966. It represents a further, necessary step in the continuing effort to make government at all levels more responsive to the needs of its citizens. The basic purpose of the Act is to provide that meetings of multi-member federal agencies (a majority of the members of which are appointed to their posi-   35-867 0 - 79 - 2 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  14 tions by the President with the advice and consent of the Senate) shall be open to the public. The Act provides ten narrowly defined exemptions to the openness rule that can be used -to close meetings unless the public interest requires otherwise. In addition, it provides for a prohibition on ex parte communications to and from agency officials with respect to the merits of certain pending proceedings. ·The basic premise underlying the Act is the principle that the government belongs to the people. The people, in the words of Federalist No. 49, "* • • are the only legitimate foundation of power, and it is from them that the constitutional charter is derived." Government, if it is to be fully accountable must be accessible and open. Secrecy is fatal to accountability. Citizens cannot hold government officials accountable if they do not know what government officials are doing. In the words of James Madison: "A popular government, without popular information, or the means of acquiring it, is but a prologue to a farce or tragedy ; or, perhaps both." All the great instruments of accountability that the citizen must depend upon-Congress, the courts, the electoral process, the press-may be rendered impotent if the information crucial to their functioning is withheld. Secrecy perpetuates abuse of power, thwarts citizen participation, and diminishes -the accountability and responsiveness of government. ' By and large, agency commissioners are far removed from the public view. Little is known of their day-to-day activities and the impact of those activities pn our nation. Yet few would deny that government agencies are playing an ever increasing role in our way of life. Agency secrecy makes it extremely difficult if not impossible for the citizenconsumer-taxpayer to effectively compete with the behind-the-scenes influence of the special interests. The ironic thing is that government secrecy is no problem for the special interest lobbyists. They have ways of knowing what goes on. The close relationship between agency officials and the special interests has been documented time and again. A Common Cause study (Serving Two Masters, October 1976 revealed widespread conflicts of interest within the executive branch departments and federal agencies. A more recent study (With Only One Ear, August 1977) revealed that consumer interests were seldom represented before the independent regulatory commissions as compared with representatives of the industry they regulate. The study found that the 39 regulatory commissioners surveyed met with representatives of regulated industry ten times more often than they did with representatives of consumer organizations or concerned individuals. · It is not surprising then that public confidence in agency officials has declined precipitously in recent years. \Ye have seen grievous abuses of power in the past, but the problem is not power as such; the problem is power that cannot be held 11ccountable in part because it is veiled in secrecy. Earlier this year, pollster Louis Harris found that a substantial majority of Americans (71 percent) support the concer,t of opening "almost all meetings to the public of federal boards, commissions, agencies, and Congressional Committees." The Government in the Sunshine Act represents one attempt at making government more accountable. One of its aims is to cast the light of sunshine on federal agencies in order to increase public understanding of and access to the decisionmaking process in the formulation of policy within executive branch and independent agencies. In any discussion where the public interest is at stake, it is essential that a broad perspective be brought into play and that the debate not be limited to rather narrow bureaucratic or special interests. Certainly no one can guarantee that a greater awareness of the process will reverse the precipitous decline in public confidence in agency officials and their decision-making. It may, if officials are not performing as they should, lead to less confidence. But whatever the outcome, ultimately our system of democratic government will have been strengthened. II. SUMMARY OF THE MAJOR PROVISIONS OF THE ACT  Appendix A beginning on page 37 contains the highlights of the legislative history of the Act. A copy of the full text of the Government in the Sunshine Act of 1976 is found in Appendix B beginning on page 41. A summary of the major provisions of the Act follows. Ooverage  The open meetings provisions of the Government in the Sunshine Act apply to the 47 federal agencies that are headed by a collegial body of two or more mem-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  15 bers, a majority of whom are appointed by the President with the advice and consent of the Senate.' '.rhe Act requires that every portion of every meeting must be open to the public unless the meeting involves the discussion of infQrmation which falls within one of the Act's ten specific exemptions. In case of doubt as to whether a meeting or portion of a meeting falls within one of the exemptions, the Act establishes a presumption in favor of openness according to the legislative history." Even where a matter clearly falls within an exemption, the discussion must be open where an agency finds that the public interest requires. A "meeting", as defined by the Act, includes those "deliberations of at least the number of individual agency members required to take action on behalf of the agency where such deliberations determine or result in the joint conduct or disposition of official agency business." According to the legislative history, "meeting" also includes the deliberations of committees or subdivisions of the agency where their meetings are held to formulate recommendations to the agency, as well as briefing sessions attended by at least a quorum of agency members where the members have an opportunity to ask questions or seek clarification of matters of concern. Ememptions  Unless the agencies find that the public interest requires otherwise, meetings may be closed if they relate to one of the following exempt categories : (1) national security matters that are specifically authorized and properly classified ; (2) internal personnel rules and practices; ( 3) matters specifically exempted from disclosure by statute; ( 4) trade secrets and commercial or financial information obtained from a person and privileged or confidential ; ( 5) formal censure or accusation of a crime; (6) clearly unwarranted invasion of personal privacy; (7) law enforcement investigatory records or information; (8) information contained in or related to reports used by agencies responsible for the regulation or supervision of financial institutions. (9) information the premature disclosure of which would: (a) lead to financial speculation or significantly endanger the stability of any financial institution; or (b) significantly frustrate implementation of a proposed agency action; or (10) issuance of a subpoena; participation in a civil action or proceeding; or the initiation, conduct, or disposition by the agency of a particular case of formal agency adjudication made on the record. Procedure to close a meeting  A meeting or portion of a meeting may be closed by majority vote of the entire membership of an agency. A vote need not occur during a meeting and can properly be taken by circulating a written ballot or tally sheet. A copy of each vote on the closing of a meeting must be made available to the public whether or not the meeting or session is closed. This provision is designed to inform the public of the full voting record of each agency member on the issue of openness. When a vote to close fulfills the requirements for closing a meeting, the Act requires a full written explanation of the action. A list of all persons expected to attend the meeting must be made available to the public. Expedited closing procedure  The Act permits any agency, a majority of the meetings of which may properly be closed under exemption (4), (8), (9) (A), or (10), to close these meetings by special regulation and under simplified, expedited procedures. An agency qualifying under this provision may dispense with most of the closing procedures normally required of agencies including the requirement that meeting notices be published in the Federal Register. 1 A list of agencies which ha,·e Issued regulations implementing the open meetings proYlsions of the Act appears on page 21. A list with citations to both the proposed and final rules appears in Appendix C beginning on page 49 of this study. 'See Senate Report No. 94-354, 94th Congress, 1st Session (1975). at 19; House Report No. 94-880 (Part I) Go,·ernment Operations Committee, 94th Congress. 2nd Session (1976), at 13: House Report No. 94-880 (Part 2), Judiciary Committee, 94th Congress. 2nd Session (1976). at 12. Full citations to the legislative history of the Act are found In Appendix A beginning on page 37.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  16 Public Sotice  "'ith certain exceptions, the agencies must giYe public notice at least one week in, advance of meetings of the time, place, and subject matter of meetings. The one week notice proYision may be waiYed by a recorded Yote of a majority of the members of an agency if notice is then given at the earliest practicable time. Notice must be submitted for publication in the Federal Register. Records of closed meetings  For each closed meeting, the chief legal officer of au agency must certify that the meeting may be closed and must state the relevant exemption. The agencies must maintain a complete transcript of electronic recording or detailed minutes of each closed meeting or portion of a meeting. The agencies must make available to the public any portion of a transcript, recording, or minutes that does not contain exempt material. Enforcement  The district courts of the United States have jurisdiction to enforce the Act by declaratory judgment, injunctiye relief, or other relief as may be appropriate. Any person may bring an action and the burden is on the agency to sustain its action. The court may examine in camera the relevant transcript, recording, or minutes. The court may award reasonable attorney fees and other litigation costs. Em parte communications The Act also prohibits any interested party in a formal agency adjudication or on-the-record rule-making from making an ex parte communication with an agency official involved in the decision-making process. Any agency official who receives or makes an ex parte co1mnunication must place on the public record all written communications and memoranda stating the substance of the commtmicatiou. Yiolatiou of the ex parte provision may be sufficient ground for a decision adverse to any party that knowingly commits the violation. III. METHOD OF STUDY  A. Approach  The Common Cause findings in the study were based on a survey of the meetings held by the 47 agencies covered by the Act during the first calendar quarter after the effectiYe date of the Act. Pursuant to the mandate of the Act, each agency was required to promulgate regulations implementing the open meetings provision of the legislation within 180 days after the bill's enactment. Final regulations were to be published in the Federal Register by March 12, 1976. In addition. each agency was required to give 30 days notice before the implementation of the final regulations with an opportunity for written comment by any person. ,ve found that fewer than half of the covered agencies complied with the statutory deadline specified by the Act (Appendix C beginning on page 49 lists dates and Federal Register citations to proposed and final regulations). After examining the regulations that were eventually promulgated by the agencies, we concluded that the wide variance in the substantive quality of regulations, coupled with the widespread misunderstanding of some of the basic proYisions of the Act. necessitated independent monitoring of agency compliance not only with the letter but also with the spirit of the Act. This study deals only with Section 3, the open meetings provisions of the GoYerument in the Sunshine Act. No attention is given to Section 4, which deals with ex parte communications in formal agency proceedings. The information contained in this study is designed to provide an overYiew of agency compliance with the Act. The study has two major parts: the first is a statistical breakdown of the number of open, closed, and partially open/ closed meetings held by each agency with the releYant exemptions cited by each agency when closing meetings. The second part is a series of substantive recommendations designed to improve implementation of the Act. The first part is based largely on a review of the Sunshine Act Meetings notice section of the Federal Register during the first calendar quarter lll2,der the Act, the period beginning March 12. 1977 (the effective date of the Act) through June 12, 1977. The second part is based on a review and analysis of agency compliance with the Act during the first quarterly period. Due to the numbf'r of agencies coYerf'd by the Act, a thorough discussion of each agency's regulations is not possible in this report. Instead we have   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  17 reviewed agency regulations implementing the Act and designed a model regulation incorporating those agency provisions we believe best implement the letter and most accurately reflect the spirit of the Act. This model regulation appears in Appendix D beginning on page 50 and is summarized beginning on page 27. The data contained in this study should be useful to the Congress and the President in carrying out their oversight responsibilities in order to determine whether : first, exemptions are being properly used; second, the presumption of openness is being ignored ; third, the exemptions need to be more narrowly defined; and fourth, whether the expedited closing procedure is being abused by the agencies. Section V of the study beginning on page 24 contains a full discussion of Common Cause's recommendations. It is our hope that this study will strengthen the principle of openness and accountability in government. Common Cause believes agency compliance with the letter and spirit of the Act, which is consistent with President Carter's desire for a new era of openness, will go a long way toward ensuring that the public has access to the "fullest practicable information regarding the decision-making processes of the Federal Government" as called for by the Act. B. Collection of the data  With certain exceptions, each agency covered by the Act was required to give public notice one week in advance of meetings of the time, date, location, and subject matter of each meeting held and to submit that notice for publication in the Federal Register. A large portion of the data contained in this study was taken from the Sunshine Act Meetings notice section of the Federal Register for the period beginning March 12, 1977 through June 12, 1977. The study reflects the information submitted by each agency to the Federal Register. In addition, 17 agencies claimed use of the expedited closing provisions of the Act and announcements of their meetings were not published in the Federal Register under all circumstances. Subsection ( d) ( 4) of the Act permits any agency, a majority of the meetings of which may properly be closed under exemptions ( 4), (8), (9) (A), or (10) to close these meetings by special regulation and under simplified, expedited procedures. Agencies can qualify under this subsection if they close a majority of their meetings under any of the four cited exemptions. The expedited closing procedures were designed primarily for those agencies that are responsible for regulating financial institutions, securities, and commodities as well as agencies that have adjudication a their primary or sole responsibility. As the legislative history clearly points out, these agencies "often have to conduct their sensitive business in private, and on short notice." (S. Rept. 94-354, at 29) It i important to emphasize that the expedited closing procedure does not permit an agency to close any meeting which is not otherwise eligible to be closed, nor does it permit the agency to omit in each case a determination as to whether the public interest calls for invoking the exemption. It does, however, allow an agency to dispense with most of the closing procedures-most significantly for the purpose of our study-the requirement that meeting notices be published in the Federal Register. In order to ensure that our records accurately reflected the number and status of all meetings held-not only by agencies using the expedited closing procedures but also by the other agencies covered by the Act-Common Cause wrote and asked the chair of each agency to review our draft list of meetings for any omissions of errors and to provide us with the correct information. Where appropriate, corrections offered by the agencies have been incorporated in our study. 0. Designation of the status of agency meetings  For purposes of our study, agency meetings were designated as either open, closed, or partially open/closed. The designation of a meeting as either opened or closed is self-explanatory. Those meetings at which members of the general public were permitted to attend were designated as open. Those which were entirely closed to the public under one of the Act's ten exemptions were designated as closed. The meeting designation "partially open/closed" (PO/0) indicates a meeting at which a portion of the meeting's agenda is open to the public and the remainder of the meeting is closed under one of the appropriate exemptions. In most instances, meetings with the PO/C status were designated as such by the agency in their announcement appearing in the Federal Register. For the purposes of our study in order to ensure the reliability and consistency of the data, Common Cause extended the PO/O status to include two or more sessions held consecu-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  18 tively by an agency without an announced recess period between meetings. For example, sessions announced in the following manner were designated as PO/C regardless of the designation gh·en them by the agency : 9 :00 a.m.-Open. 9 :45 a.m.-Closed ( or held at the conclusion of the open session). Any two sessions held consecutively but with an announced recess period ~etween them where one of the sessions was open and the other closed were designated as separate meetings. For example: 9 :00 a.m.-Open. 12 :00 noon-Recess for lunch. 2 :00 p.m.-Closed. The chart beginning on page 22 provides a listing of the total number of open, closed, and partially open/closed meetings held by each agency covered by the Act. In addition, we included the number of times exemptions were used by each agency to close a meeting or portion of a meeting. The Act requires agencies to cite the relevant exemption justifying the closing of a meeting or portion. Our data regarding exemptions is based on information supplied by each agency to Common Cause. The total number of exemptions exceeds the number of closed or partially closed meetings because agencies are permitted to cite more than one exemption when closing a meeting or portion of a meeting. IV. FINDINGS  The chart on page 22 summarizes the total number of meetings held by the 47 agencies covered by the Act as well as the use of exemptions to close meetings or portions of meetings. As the data indicate, a large number of meetings held by the agencies were closed or partially closed to the public and press. Our survey found that : -39 percent ( or 232) of 591 meetings held during the quarterly period were entirely closed to the public; -24 percent (or 143) of 591 meetings held during the quarterly period were partially closed to the public; and -only 37 percent (or 216) of the 591 meetings held were fully open to the public; and -exemptions relating to financial information accounted for 38 percent of the exemptions used to close meetings. No comparatiYe data exist to measure the impact of the Act on the meeting practices of the covered agencies. The large number of meetings which were not open to the public raises serious questions about the extent of agency compliance with the Act. In light of the fact that the law contains a presumption in favor of openness, we believe the fact that less than forty percent of agency meetings were entirely open to the public indicates the possibility of agency over use of the exemptions. Even where a matter fall!! within one of the Act's ten exemptions, the Act provides thnt the discussion must ht' open whNr th!' puhlic- interest requires. We doubt that the authors of this legislation anticipated that fewer than forty percent of all meetings held would be entirely open to the public. We find it highly unlikely that the public interest is served where more than sixty percent of the meetings are closed or partially closed to the public. Our analysis of the use of exemptions by agencies closing meetings or portions of meetings indicates that the exemptions were used to close entire meetings or portions of meetings 825 times. Thirty eight percent (or 315) of the time the exemptions cited were those regarding financial information ( exemptions 4, 8, and (9) (A)). This heavy use of the financial exemptions is in spite of the fact that much of the public debate surrounding the need for exemptions in the Government in the Sunshine Act centered on the concerns in the Government in the Sunshine Act centered on the concern for national security and the unwarranted invasion of personal privacy. An analysis of the data reveals that matters of national security ( exemption 1) accounted for only 1:5 percent of the closed meetings or portions while invasion of personal privacy (exemption 6) was cited for closing only 9 percent of the time. The data indicate that financial exemptions may well be over used by agencies without concern for the public interest in these important matters. We can only conclude that agency compliance with the letter and spirit of the Act is a mixed record. A number of agencies appear to be making every effort to contract their business in the sunshine and provide the public with the fullest   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  19 practicable information regarding their decision-making process. For example, the Civil Aeronautics Board has held nearly 70 percent of its meetings in open session. Additionally, the CAB's regulations implementing the Act's open meeting provi· sions permit any person to petition the Board to reconsider the closing of a meeting. Another agency that appears to have gone beyond the literal requirements of the Sunshine Act in several ways in order to affirmatively implement the spirit of open government is the U.S. International Trade Commission. First, the Commis· sion did not exercise (as it could have) the option under the expedited closing provision which would permit an agency to close its meetings by regulation. Sec· ond, the Commission's regulations go beyond the literal requirements of the Act by requiring that a complete transcript or electronic recording be kept for all Com· mission meetings whether open or closed to the public. Third, the Commission through its informative notices has taken affirmative steps to widely disseminate public notices by maintaining a "sunshine" mailing list and by sending copies of these notices to the press. Most agencies have not gone beyond the minimum requirements in order to carry out the spirit of the legislation. Many agencies seem to be adapting to the Act but only grudgingly. They view the Act as a procedural burden to be circumvented when possible. They continue to conduct business as usual behind closed doors. The Federal Reserve Board is a prime example. Chairman Arthur Burns fought vigorously in Congress to exempt the Board from the law. Although the Board is covered by the Act, the broad language of the exemptions dealing with financial matters mean that as a practical matter few of the Board's meetings will be open to the public. In fact, of the 37 meetings held by the Fed, 30 were entirely closed. The disproportionately large number of closed meetings are justified by the Fed on the grounds that matters of a sensitive financial nature were being considered by the Board as permitted by the Act. But the fact that the Board elected to close one of its meetings in order to consider a proposed office furniture design as well as the Board's building renovation project raises serious questions about the Fed's willingness to comply with the spirit and meaning of the Sunshine Law ( see 42 F.R. 21899). Another agency worthy of attention is the Interstate Commerce Commission which recently disposed of one of the most important cases in its history in pri• vate. Although not reflected in our data because it occurred after the first calendar quarter of the Act, the Commission close its June 28, 1977 meeting to determine the tariff rates on the transportation of oil in the Alaska pipeline. Certainly a question of such national importance should have been considered in open session based on an agency finding that the public interest would be served by openness. A more recent example of the ICC's questionable application of the Sunsine Act occurred on August 17, 1977 when, according to an article appearing in the \Vashington Star of August 28, 1977, agency members met in private m·er lunch with members of a trade association ( the National Industrial Traffic League) According to the ICC's general counsel "it wasn't a meeting to conduct business or deliberation, it was a working meeting with general exchanges of views • • • so in terms of the Sunshine Act it was not a meeting." \Ve believe this is a perverse interpretation of the Act in light of the fact that as a matter of policy, agen· cies are obligated to broadly define meetings in order to further the spirit of the Act (see S. Rept. 94-354 at 18). Certainly no one would deny the importance of an agency attempting to gain insight as to the problems affecting the busines~ they are charged with regulating. However, we doubt the wisdom or the propriety of an agency meeting in private with an association that has a clear and vested interest in the outcome of agency decisions. These examples point to agency disregard for the spirit and sometimes the letter of the Act. They indicate that the fact that less than 40 percent of all meetings are entirely open to the public may have as much to do with agency attitudes regarding openness and accountability in government as it does with the legitimate use of the Act's exemptions. AGENCIES COVERED BY THE GOVERNMENT IN THE SUNSHINE ACT  1. Board for International Broadcasting (BIB). 2. Civil Aeronautics Board (CAB). 3. Commodiy Credit Corporation (CCC) (Board of Directors). 4. Commodity Futures Trading Commission (CFTC).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  20 5. Consumer Product Safety Commission (CPSC). 6. Council on Environmental Quality ( CEQ). 7. Equal Employment Opportunity Commission (EEOC). 9. Export-Import Bank of the United States (EIB) (Board of Directors). 9. Federal Communications Commission (FCC). 10. Federal Deposit Insurance Corporation (FDIC) (Board of Directors). 11. Federal Election Commission ( FEC) . 12. Federal Farm Credit Board (FFCB) within the Farm Credit Administration. 13. Federal Home Loan Bank Board ( FHLBB). 14. Federal Home Loan Mortgage Corporation (FHLl\IC). 15. Federal Maritime Commission (Fl\IC). 16. Federal Power Commission ( FPC). 17. Federal Reserve Board ( FRB). 18. Federal Trade Commission (FTC) . 19. Harry S. Truman Scholarship Foundation (HSTSF) (Board of Directors). 20. Indian Claims Commission (ICC). 21. Inter-American Foundation ( IAF). 22. Interstate Commerce Commission (ICC). 23. Mississippi River Commission ( MRC). 24. National Center for Productivity and the Quality of Working Life (NCPQWL). 25. National Commission on Libraries and Information Science (NCLIS) 26. National Council on Educational Research (NCER). 27. National Labor Relations Board (NLRB). 28. National Mediation Board (Nl\IB). 29. National Railroad Passenger Corp. (NRPC). 30. National Science Board (NSB) of the National Science Foundation. 31. National Transportation Safety Board (NTSB). 32. Nuclear Regulatory Commission (NRC). 33. Occupational Safety and Health Review Commission (OSHRC). 34. Overseas Private Investment Corp. (OPIC) (Board of Directors). 35. Postal Rate Commission (PRC). 36. Railroad Retirement Board ( RRB). 37. Renegotiation Board (RB). 38. Securities and Exchange Commission (SEC). 39. Tennessee Valley Authority (TVA) (Board of Directors). 40. Uniformed Services University of the Health Sciences (USUHS) (Board of Regents). 41. U.S. Civil Service Commission (USCSC). 42. U.S. Commission on Civil Rights (USCCR). 43. U.S. Foreign Claims Settlement Commission (USFCSC). 44. U.S. International Trade Commission (USITC). 45. U.S. Parole Commission (USPC). 46. U.S. Postal Service (USPS) (Board of Governors). 47. U.S. Railway A!..'lOciation (USRA).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  SUMMARY OF MEETINGS HELO BY AGENCIES UNDER THE SUNSHINE ACT Number and status of a1ency meelin&s  Agency 1. BIB-----·---·-------·-·2. CAB ••••• ---··-·----··-· 3. CCC'·····--·-··----·--4. CFTC•····-----·--·-·-·5. CPSC.·------·--··---·--6. CEQ_·-------·-··--·-·--7. EEOC•·····---···-···--8. EIB •···-----·-··-·-··-·9. FCC ••••• ---------·-··--10. FDIC'···------··-·--·--11. FEC--·-·---------------12. FFCB•.···----------·--13. FHLBB•-------------·--14. FHLMC •··--------·····-· 15. FMC •••• -----·--------·· 16. FPC _____ ·-----·---··---17. FRB • •• -·······-·-··--·· 18. FTC•-·--------------·--19. HSTSF--···--------···-20. ICC•-------------------· 21. IAF.·------·---------·-· 22. ICC.·---·----··---·-·-·· 23. MRC···--·-····-··-····· 24. NCPQWL ••••• ·-·-···--25. NCLIS ___ ·-·--·---······. 26. NCER •••• -·-··-·······-27. NLRB•···------·····---28. NMB ___ ··------·----·--29. NRPC •••• ---··--···-·--30. NSB •••••• --·--------·--31. NTSB •••• ---------·-·--32. NRC __ ··-·----·-····-·-·33. OSHRC•.·----·-·--·-·--34. OPIC •• ---·---·-·--·-·-·35. PRC•·-····------·-·-·--· 36. RRB ••• ·--·-·----·-·-·--37. RB_·--·---··----·-·-··-38. SEC•-··---···-----·----39. TVA •• ···--···-·--------40. USUHS.·----············ 41. uscsc ••••..•••••..••...  Open  Closed  Partially open/ closed  0 13 2 5 17 7 0 0 9 l 0 6 0 0 2 19  0 4 0 13 6 0 3 26 6 9 3 0  0 3 0 6 10 0 7 0 8 5 13 0  12  11  5  11  1 9  l 7 5 0 2 2 4 2 0  4 8  12 3 0  1  2 2 11 9 2 0  See footnotes at end of table, p. 22.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  0  2  2 9  1 30 15  0 2  0 0 0  2 0  0 0 0 0 13 0  0 0 0 0 0  0  3  2  7  1  1  0  1  3 6 20  0 9  5  1  0 5  2  1  3 31 0 0 0  3  2  5  7  a 0 0  Frequency and use of exemptions to close a meetin& or portion 1  2  Totals 0 20 2 24 33 7 10 26 23 15 16 6 23 2 13 20 37 33 2  3  4  6  7  8  9  9A  9B  10  Totals  ·- •••••••••••••• -· -- - ••••• -- - - -· •••••• - - - ••••• -· ••• - - - •• - - -····· ·- •• -- •••• - • - - • ··-· •••• - •• ·- - ••• -· -- •••• -· ••••••• ··- ···-·-··· 1 2 --·-··----·-·······-·-····· 2 ··-··-·······-····-·--··-·5 2 12  ············--·-·····--·······-···---·········-·-··-······-······-··-······--····---·--···--··-····-·-···--···--····· ·····-·-· 1 11 13 6 4 6 ......... 1 11 ···-····· 15 68 ···········-·-···-···-····· 2 2 3 -··---·-·······-·1 ·············--·-· 12 20 ·······--··-·····-···---····-·-·····--·---·-···-·--···---··-·-····-··-·-·-·---·····--····-···-·-·--···-······-·--···· ·····-·-··----·-·· 5 2 1 1 2 ·-······--··-··-·····-····· 1 10 22 ····--·-·········-········· 26 ·-····-··-·-··············-·-·-······-········-·-·········•·· ·-·· ·•····· 26 1 -···-···-····-·······-·········-·-··········· 3 ·····-··· 3 ...........•.•..•• 11 18 ·····-·-·······-··········· 3 ·-··---·· 7 ··-··-··· 12 ··-·-···· 11 6 9 48 ······--·········14 ·-··········-····· 14.................. 3 ······················-···· 31 ······-····-•·····-·-·······-········-·-·······················--···········-·······-·························-······ .•....••• 2 1 ···•-·······-····· 2 ········5 ....•.... 17 ········· 1 28 ......... 1 ··•······ 1 ····-····························-·· 2 •··•····---·····-·········· 4 ·························•· 2 ····-·····-············-···················•······-··· 2 10 14 ··-·······-·-········-················-··········-························-·····1 1 1 3 ····-•··· 8 1 21 5 9 1 28 ·-······· 23 24 7 127 -················-·················· 1 1 7 ······•·········-·-·-···••· 1 21 31 . ...... .. 1 .......................................•................. -· ···- .. ·- ........•...•...... ·-·. 1  11 ··-··-··.  2 ···-·-··········-·-······ .. ·-··-· ···················-·-·•--·-·-··············-·-·······•··  2  1 ·······-·····--···········-··············-········-·-············-·····-····-········································ 10 ···-···········-·-·-·····-·-··-·--·· 1 ·-·-····1 ··--·---· 1 -···-·------······ 3 6 5 ··---·······-·-·-·······---···-·--··----·-·-··-····-··----·--·-----··--·-·-··--·--··-·-·--·--·····--·····-----·-··-·· 0 ··········-···-·-····--·-·-·-·-··--·--···-····---····-·-·-·---·-·--··--·----·-··-···----··········---·--·---------·--  2 ·-·- -· -· --· - --···· -· -- ---·-- --· - --- -·- ···- -· ·- ·- -- - - -- -- -• -• ·- -- ·- ...• - --·- -. -. -- -· --·· -· -·. ---··-·· ·- .. -·- -.. -· --· -2 ------··----····-·-·-·-·------------·---··-·--·--··------·-----------·---··-··-···-·-·---·-·---···-·-·----··-·------1 12 ---·-·-·-··-··--·· 1 ---·-·--·-------·-·--·--····--········-·-····-·--·--·14 2 ·----····--··----·-·-··--·------····---·---·-------··----··-----·-·-·--········-··-···-·-·-·---··-··---·-·-·-·----···  17 ··---·-·3 8 14 41 9 2 9 5 10 49 9 2 0  ··-----·· 3 --····-··--··-··----··---·3 ··-·-·--· 3 ····-·-············-·----·3 ·-----···---·-··-·-·····-·4 ······--· 4 ·-·····-·---···-·-·--·----···-···--· 4 -·--·---·---·-·-· 3 ·····-----·-·-·-·---···--·--·---·-·-····-··--·-····-·-·----·---··-·-·-·1 4 9 ·--·-·--· 1 6 ····--··· 2 ·-····----···-·-·8 ··-·-·--9 19  _·---· .... __ .... -·· __ ----··· -· __ -· .. -- _-· __ . _-·. _. ·-· -- -·· ··-· .. --·· ·-·-· __ ·- _. -- _•. -··· ·- ·- ·- .• -· _ 6 2 2 ····-·-·· 2 ··-----·2 ·-·······---··--·2 ···-··-···--··--·2 ·--- -· .. _ 1 ··-· _·-· ---- -- _____ --· -· •... -· .....••• -· _. _____ --- -· .. -· -· .. ·-. _-· .. .. .. .....•... 8 ·- ·--·. .. 3 _-··· •. -·-· .. ·- .. ···- ___ -· .. __ . -· ...... -· -· .. ·- ·- ·- ........•............ _·- -- •. ·- ·- _______ ·----·-·· 4 ··-·--··· 4 ·····-·-· 3 ···-·-··-···-····· 2 ·-----·-·-·-·-·--· 1 ······---······-·-·-··-·-·· 38 ···-·-···--·····-····-·--·· 38 --······· 38 ·-·--···· 38  12 12 8  54 6 12 9 3  14  152 -·--···--·-···--····-··--·--···-··-·····-·--·-·----·-···----··--·-·-··----·-··-·---·-···---·-·-·-·····-·-·-·--·--··-·  ··----·-·--·-·-·--·--·---·-·······-·-········-··-···-·----·-----··----·---·--·---··--·-·-------------·---·---··--··--  ··---···---·-·-·-··-·-·--·--···-------··-···-----··--·-··----·--··----·-·--·-·---···-·-----·-·-···-·-·--··-·-···-··--  SUMMARY OF MEETINGS HELD BY AGENCIES UNDER THE SUNSHINE ACT-Continued Number and status of agency meetings Agency 42. 43. 44. 45. 46. 47.  USCCR •.••••.....•....•. USFCSC .••••..........•. USITC .....••..........•. USPC• •.•.••......•..... USPS• ••••.•....•....... USRA .•••.••............  Open  Closed  Partially open/ closed  2 20 4 1 5 0  7 0 0 6 0 0  5 0 14 1 0 3  Frequency and use of exemptions to close a meeting or portion 1 Totals  2  5  6  8  9  9A  9B  10  Totals  14 ...•.....•.....••..•. ······································•··· .. ················•········ 10 7 17 20 .........•......•.••.•..............................•................ •·· ......................•.............•.•...•.• 18 ...•...•. 14 ··•······ 1 •........ 14 ·····················•································ 29 8 ....•...• 1 ··················•··· ····· 1 ............... •· ····•·············· 1 7 10 5 ····································•·····················•··········•··················•···············•···•········ 3 ........• 3 ·······•· 3 •·•······ 3 ···············•····························· 3 12 TotaL................ 591 12 51 47 128 16 74 22 86 23 101 65 200 825 216 232 143 Percentage•••.•.............============1=00===1=. 5===6.=2===5.=7==15=.=5==1=.=9==9=.0===2=.7==1=0=.4===2.=8==1=2.=2===7.=9==2=4.=2===1=00 37 39 24 1  --------------------------------------------------------  Exemption key: (1) National defense classification. (2) Internal personnel rules. (3) Specifically exempted by statute. (4) Trade secrets. (5) Criminal accusation. (6) Personal privacy. (7) Law enforcement. (8) Regulation of financial institutions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (9) Premature disclosure (see 9A and 9B). (9A) Premature disclosure/financial speculation. (9B) Premature disclosure/frustrate implementation. (10) Civil action or formal agency adjudication. 2 Agencies using the expedited closing procedure. Note: Total number of exemptions exceeds total number of closed or partially closed meetings because agencies may cite more than I exemption when closing a meeting.  23 V. RECOMMENDATIONS  Agency compliance with the Sunshine Act requires active Presidential leadership and initiative and continuous Congres:,donal oversight. The legislation was vigorously opposed by a number of executive branch and independent agencies prior to its adoption by Congre.,;s. These agencies argued that the presence of the press and public at their meetings would inhibit open and candid discussion, impede the progress of their work, and force them to decide controversial matters in secret before official meetings. 'l'hey proposed every conceivable justification for closing their meetings and lohllied for special exemptions. It is unrealistic to expect that the agencies which lobbied so vigorously against the enactment of the Sunshine Act will now comply with the letter and spirit of the law. 'l'heir past reshitance to openness poses a direct challenge to President Carter's commitment to openness in government. Common Cause believes the President and the Congress must take certain specific steps in order to ensure meaningful compliance with the Sunshine Act ancl to set a new tone of openness in government. A. Prcsiclc11tia! directive  The President should issue a clirecth·e to the agencies affirming the .\dministration's commitment to openness, establishing :;tan<lnrds of openness, and requiring that agency regulations conform not only to the letter but also the spirit o:I' the Act. The directfre should emphasize that agencies should close meetings only when there is an overriding public interest in doing so. 'l'he Act allows an agency to close a meeting under certain circumstances hut does not requirP it to do so. An agency can decide even where an exemption applies that the public interest is served by openness and outweights the justification for meeting in secret. Many agencies are not following this approach. )Ve believe they should be directed to do so by the President. B. 0.111.B. review  Although agencies ha,·e been gh•en flexibility in de,·eloping regulations, the Act does not provide for any review of these regulations by any agency of government to determine whethPr they adequately meet the Act's requirements and spirit. President Carter should direct the Office of :.\Ianagement and Budget ( O:.\IB) to review for the )Vhite House each agency's regulations to ensure that they meet high standards of openness. 0.:.\1.B.'s appro,·al of the regulations should he lYased on their compliance with the Presidential directive discussed ahove. The resultH of the review, including any recommended changes, should he made antilable to the public. 0. Oversight hearings  We believe that Congress should holcl comprehensfre and thorough oversight hearings on agency implementation of the Act. Agencies subject to the rpquirements of the Act should he called hefore Congress. 'l'hey should he required to provide Congress with a talmlation of the total number of meetings closed to the public and the reasons for closing these meetings. Congress in its oversight function should examine: whether exemptions are being properly used-this should include an examination of the minutes or transcripts of those meetings closed to the public in order to determine whether they legitimately fall within any of the Acfs ten exemptions; whether the presumption of openness is being ignored; and whether the Act's exempltions need to he more narrowly written. Special attention should he given to the use of exemptions relating to financial matters. Congress should also examine whether the expediited closing procedure is being legitimately used by the 17 agencies that have invoked the provision. The Act allows an agency which will be closing a majority of its meetings under certain exemptions to issue regulations for closing these meetings through expedilted procedures. Common Cause recognizes that agencies that regulate financial institutions, commodities, or securities, or that have adjudication as a primary responsibility may on occasion need to conduct agency business on short notice and in closed session. However, the use of regulations to close whole caltegories of meetings should lie carefully monitored. Since only a few of the 17 ageneies explain how they determined that a majority of their meetings can be anticipated to he closed, Congress should require each agency that wishes   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  24 to continue to qualify under this provision to document fully, on 1the basis of records of meetings over the.past several years, that a majority of its meetings do fall within the s1)ecified exemptions. D. Model agency regulations Appendix D beginning on page 50 of ithis study is "A l\Iodel Agency Regulation 'l.'o Implement The Government in the Surn,hine Act." Although all agencies covered by the Act have promulgated regulations implementing the open meetings provision of the law, Common Cause \1elieves that each agencJ· should periodically review its existing regulations for possible improvements. Any reYision should be based on an evaluation of the ageney's-as well as the public's-experience under existing regulations. Amendments should be designed to further the Act's spirit of openness based on a reaiwned and thorough analysis of the legislath-e history and agency experience under the Act. 1Vhere the la,v permits agency discretion in implementing the Act's open meeting provisions. the Cornman Cause model regulation offers a guide to possible revisions in existing agency regulations in order to further the spirit of the Act. A brief section-by-section analysis of the Common Cause model regulation follows: 1. Pu,-pose: Section 1 generally describes the policy behind the open meetings provisions of the Government in the Sunshine Act. Each agency covered by the Act should affirmatively state the Congressional policy underlying the Actthat the public is enti1tled to the fullest practicable information regarding the decision-making processes of the Federal Go,·ernment. 2. Dcfi11 itio11s: Section 2 generally defines terms used in the model regulation. The model regulation differs signifieantl~· from most a!?:ency regulations in its definition of a meeting. The term "'meeting" as used in the model regulation reflects the language of the .\et hy defining the term to include those meetings of the ageney iti-elf as well as dh·h,ions or eommittees of the ageney where they are authorized to act on the ageney·s behalf. 1Yhile it appears from the legislative history that. agene~· eommittees or subdivisions are eO\·ered by the Aet, many agenc~· regulations do not appl~· to these meetings (H. Rept. 9~-880, at 7; see also S. Rept. 94-35~. at 17-19). It ahm appears from the 1egislatiYe history that as a matter of poli<'~· ageneies are obligated to broadly define meetings in order to further the spirit of the Aet. The model regulation has been written to inelude meetings of conunittee8 and subdh-isions held to formulate recommendations to the agency as well as briefing sessions attended by at least a quorum of agency members, where the members hm·e an opportunity to ask quei;tions or seek clarification of matters of concern. ,'l. Kotirc of meetings: Seetion 3 of the regulation specifically states the notice requirements each ageney must complJ· with when ealling a meeting. This section has been written to eneourage the agency to u,;e all reasonable means necessary to ensure that the public is fully informed of all public announcements pursuant to this seetion. Public notiee of meetings is a significant part of the Aet, since meetings are obviously onl~· effectively open to those who have notiee of them. However. the Act itself does not describe what is meant by public announcement. 'l.'he legislatiYe history inclieates that. more is required than merely publishing a notice in the Federal Register, posting notices on bulletin boards within the agency, and filing copies with the secretary of the ageney. The Conference Report stated: " ... means of publicizing such information should includE> posting noticeR on the agency's public notiee boards, publishing them in publication,; whose readers may have an interest, and ,;ending them to the individuals on the agency's general mailing list maintained for thm-1e who desire to receh-e sueh material.'' (at 19; see also H. Dept., at 14). This indicates that agencies should publish notice of meetings in the periodicals of groups that would be affected by deciRions made during those meetingR. Agencies Rhould establish mailing lists of indiYiduals or groups that consult with them, including groups that represent consumer interests. Notiee of meetings should he sent to those on the list. Additionally, the Act requires the agency to give public notice at least one week before meetings. This provision does not prohibit an agency from drafting a regulation providing for a longer notice period. The model's provision requiring that at least ten days public notice be given prior to each meeting is offered beeause the seven day requirement of the Act may not be sufficient to ensure that notices will be published in time for subscribers to the Federal Register to receive them and   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  25 make plans to attend agency meetings. Allowing time for publication and mailing, 10 day notice will result in the equivalent of 7 day notice for recipients. In order to ensure that public notice in advance of a meeting is adequate, agencies should attempt to provide longer notice whenever possible. 4, Open meetings: Section 4 of the model regulation generally states that every portion of every meeting of the agency shall be open to public observation. Since the Act does not define public observation, agencies are given some discretion in regulating the kinds of conduct permitted by members of the public at open meetings. Obviously, public observation does not include the right to interfere in the conduct of the meeting. The Common Cause model regulation has been written to permit the unobtrusive use of sound recorders and photographic equipment. We believe it to be a questionable practice and a possibl~ violation of the spirit of the Act for agencies to prohibit the use of sound recorders or photographic equipment where their use is unobtrusive. Allowing the use of photographic equipment and sound recorders offers the best opportunity for accurate and complete reporting of meetings. The use of these devices would permit a subsequent, more reasoned analysis of the discussion at an open meeting, as well as enhance public understanding of agency proceedings. Additionally, the model regulation prohibits meetings from being held in places which discriminate on the basis of race, color, creed, national origin, ancestry, religion, or sex. 5. Criteria to close meetings: Pursuant to the provisions of the Act, an agency may close certain types of meetings or portions of meetings under any of the law's ten exemptions to the openness rule. The agency must determine that openness is not in the public interest. In addition to using the language contained in the Act specifying the ten exemptions to the openness rule, Section 5 of the model regulation attempts to define in more specific fashion the kinds of information that are exempt from disclosure where possible. Sections5(b) (2), (4), (5);and (6) ofthemodelregulationhavebeendrafted in a more detailed fashion, borrowing heavily from the manner in which courts have interpreted analogous exemptions to public disclosure in the Freedom of Information Act of 1966. Agencies may wish to further define activities or subject matter exempt from disclosure that pertain to their agency. Agencies, however, should construe those exemptions narrowly in light of recent judicial interpretation of analogous FOIA exemptions aml the broad purposes to be iwrved by the open meeting requirements. 6. Procedure to close meetings or limit the disclosure of in.formation: Section 6 establishes the procedures an agency must follow to close a meeting or portions of a meeting and to withold from the public announcements relating to the meeting otherwise required by the Act. To the extent that a person's interests may be directly affected, this section reflects the letter of the Act by permitting any person to petition the agency in writing to close a portion of a meeting pursuant to any of three specific exemption provisions. In addition, the model regulation provides that within one day after an agency votes to close a meeting or portion of a meeting, the general counsel of the agency is responsible for issuing an opinion certifying that the portion or portions of the meeting or series of meetings were properly closed to the public by the agency. Since the Act does not address the question of whether the general counsel's certification must take place prior to a closed meeting or portion, this provision reflects the Congressional intent that the certification procedure be completed before a closed meeting or portion of a meeting (see S. Rept. 94-1178, at 19). 1. Procedure to open meetings: Section 7 permits any person to make a request that a meeting or portion of a meeting be open. Although this provision is not mandated by the Act, its inclusion in the model regulation is reasonable and consistent with the spirit of the Act. For example, this section permits any agency employee to petition the agency in writing to open a meeting or portions which might otherwise be closed if that employee's appointment, employment, or dismissal is the subject of the meeting or portion. The agency will be required to open the meeting upon receipt of a petition from the employee. The following language in the Senate Report supports the position that any person may waive his or her personal i;,rivacy and request that the meeting be open: "The main purpose of the examption (6) is to protect an individual's privacy. It would clearly not be appropriate, therefore, to invoke this paragraph when the individual involved prefers the meeting to be open." (S. Rept. 94-354, at 22).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  26 8. Ercpcditcd closing procedure: Section 8 is intended for agencies regulating financial institutions, securities, and commodities as well as agencies the primary or sole responsibility of which is to conduct adjudicitory proceedings. The provision contained in the model regulation implements subsection (d) (4) of the Act which permits any agency that may properly close a majority of its meetings under expemptions (4), (8), (9) (A), or (10) or any combination of these exemptions to close these meetings by special regulation. The agency does not lmve to explain its decision to close these meetings and the 7 day notice requirement does not apply. The agency must, however, vote to close these meetings and make a record of the vote available to the public. .An agency invoking subsection ( d) ( 4) of the Act should describe in detail its basis for determining that a majority of its meetings will be closed. It is clear from the legislative history that requiring a justification of the use of the expedited closing procedure is reasonable and necessary. Each agency invoking the expedited closing procedure should periodically examine its use of the provision and issue justifications for its continued use. As the legislative history indicates: "Even if it could close a majority of its meetings, an agency should examine whether it will really need to close such a large number of its meetings under the specific (d) (4) exemptions. Full recognition must be giwn to the fact that this bill establishes a new principle of openness that is equally applicable to all agencies." (S. Rept. No. 94-354. at 29). 9. Rccordkccping rcquirc111rnt.~: 'l'his section requires each agency to maintain a complete transcript or electronic recording of each meeting closed to the public. The Act permits an agency which closes a meeting or portion of a meeting pursuant to exemptions (8). (9a), or (10) to maintain a transcript, recording, or minutes. Common Cause belie,·ei-; the maintenance of minutes may be inadequate, particularly where an action is brought in federal district court to enforce the requirements of the Act. :\Iinutes are highly subjective and sometimes do not reflect the actual conduct of a meeting. To ensure that the court has access to the fullest possible information in order to determine whether an agency has in fact properly closed a meeting. each agency should maintain a transcript or recording of each meeting or portion closed to the public. Additionally, this section requires that minutes be kept of each open meeting. This provision furthers the policy of the Act which declares that the "public is entitled to the fullest practicable information regarding the decisionmaking processes of the l!'ederal Gm·ernmeut." The fact that a meeting is open to the public in no way guarantees that all interested members of the public will be able to attend. :\Iinutes are essential. Records are to be kept of all matters of a routine nature that are disposed of by notational voting. :\Iatters of a routine nature include the placing of an item on the agenda. selecting the time. date. and location of a meeting, or reviewing a request to open or close a meeting. These records are to be indexed and made available in the same fashion as records of closed meetings. The regulations provide that decisions of a substantive nature or significant procedural decisions may not be made by notational voting. 10. Public availability of records and other documents: Section 10 implements the spirit of the legislatiYe history that agencies are expected to make the meeting record materials available promptly in anticipation of the receipt of public requests for these materials. A large number of agency regulations, however, provide for the availability of and access to non-exempted material only upon request. Those regulations providing for the availability of non-exempted material "upon request" place the burden on the public. This would appear inconsistent with the Act which places the burden on the agency to re\"iew its meeting records to determine what can be released. As the legislath·e history indicates: "The transcripts and recordings that may be made public must be promptly placed in a public document room. The agency must do this on its own initiative, rather than waiting until it receiYes a particular request." (S. Rept. No. 94--354, at 32). This burden is consistent with the burden imposed on the agency to justify its closed meetings and the withholding of information. Additionally, Section 10 of the regulation provides an appeals process from an initial determination by the agency to withhold materials under Section 5.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  27 APPENDIX A  HIGHLIGHTS OF THE LEGISLATIVE HISTORY  1  The Government in the Sunshine Act was introduced during the 92nd Congress on August 4, 1976 by Senator Lawton Chiles (D-Fla.). A companion bill was introduced in the House by Representative Dante Fascell (D-Fla.). The measure, with certain exceptions, provided that all meetings of any government agency at which official business is transacted must be open to the public, A more comprehensive and expanded version of the original legislation with bipartisan co-sponsorship was introduced at the start of the 93d Congress by Senator Chiles. The companion bill to the expanded Senate version was offered in the House by Representative l!'ascell in August of 1973. Nearly a year passed before hearings were held on the legislation by the Subcommittee on Reorganization, Research, and Internal Organizations of the Senate Government Operations Committee. 'festimony was received by the Subcommittee from a number of public officials and public interest representatives, including Common Cause. Several months later, in the fall of 1974, the Subcommittee heard from officials representing the views of federal agencies, including the Interstate Commerce Commission, Civil Aeronautics Board, and the Securities and Exchange Commission. During the 94th Congress, the proposal was again introduced by Senator Chiles and referred to the Subcommittee on l!'ederal Spending Practices, Efficiency, and Open Government of the Committee on Government Operations. The bill was eventually reported out favorably by the full committee with a number of modifications. Most notable was the narrowing of the scope of the bill to cover only those multi-member agencies headed by persons appointed by the President with the advice and consent of the Senate. }further amendments were added specifying additional grounds justifying the closing of meetings. The legislation was then referred to the Senate Committee on Rules and Administration and the Committee on the Judiciary. Judiciary agreed to report the bill with the right to amend on the floor. At the insistence of then l\Iajority Whip Robert 0. Byrd (D-W. Va.), the Rules Committee divided the Sunshine Act in two, with one bill applying only to executive agencies and a separate resolution covering Senate committees ( S. Res. 9). The Rules Committee then voted to maintain the status quo on Congressional committee meetings. Instead of requiring open meetings it recommended that each Senate Committee determine at the start of every Congress its own policy toward open and closed meetings. This recommendation became known as the Rules Committee substitute. ,vhen it was brought to the floor of the Senate on November 5, 1975, Senator Byrd and other Rules Committee members were sharply rebuffed. In a rare defeat for Senator Byrd, advocates of sunshine and a strong open meeting rule defeated the Rules Committee substitute by a lopsided 77-16 vote. The Senate passed both the resolution (S. Res. 9) and the Sunshine Act (S. 5) by unanimous votes of 94-0. On the House side, Representative Bella Abzug (D-N.Y.) introduced a slightly revised version of the earlier Fascell measure. It was referred to the Subcommittee on Government Information and Individual Rights of the Committee on Government Operations chaired by Abzug. Following hearings, the bill was reported out favorably by the full committee. 1 The Senate and House Committees on Government Operations have jointly issued 11 source book on the Government in the Sunshine Act. A compilation of leglslatiYe hlstorv materials, the joint eomm!ttee print is entitled Government in the Sunshine Act-s.'1; (Public Law 94-409)-Source Book: Legislative History, Texts, and Other Documents. It may be purchased from the U.S. Government Printing Office, Washington D.C. 20402. Key documents in the legislative history of the Act follow: ' House Reports: No. 94-88-0, Pt. 1 and No. 94-880, Pt. 2, accompanying H.R. 11656 (Comm. on Government Operations) and No. 94-1441 (Comm. of Conference). Senate Reports: No 94-354 (Comm. on Government Operations), No. 94-381 (Comm. on Rules and Administration) and No. 94-1178 (Comm. of Conference). Congressional Record: Vol. 121 (1975) : Nov. 5, 6, considered and passed Senate. Vol 122 (1976) : July 28, considered and passed House, amended, In lieu of H.R. 11656. Aug. 31; Honse and Senate agreed to conference report. ·· Weekly compilation of presidential documents: vol. 12, No. 38 (1978) : Sept. 13, Presidential statement.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  28 At the direction of the Speaker, the bill was referred to the Committee on the Judiciary, where the Subcommittee on Administrative Law and Government Relations held further hearings. After adopting further amendments, the Judiciary Committee formally reported the bill to the full House where it was adopted by a vote of 390-5 on July 28, 1976 ( H.R. 11656). The differing proposals passed by each Chamber were ironed out in a conference Committee. On August 31, the House unanimously approved the Conference Report by a vote of 384--0, and the Senate agreed to it by voice vote. On September 13, 1076, former President Ford signed the bill into law (Public Law 94-409).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  29 APPENDIX B Government in the Sunshine Act of 1976  Public Law 94-409 94th Congress, S. 5 September 13, 1976  To provide that meetlup of Government ngencles shall be open to the puhlle, and for other purpo,es.  Be it enacted by the Senate and /louse of Repre1Jentatives of the U'llited States of America in Congre1Ja (llJ8embled, That this Act may Government be cited as the "Govl'rnment in the Sunshine Act", In the  Sunshine Act. 5 use 552b note. SEC. 2. It is hereby declared to be the policy of the United States that 5 use 552b the public is entitled to the fullest practicable information regarding note. DECLARATION OF POLICY  the decisionmaking processes of the Federal Government. It is the purpose of this Act to rovide the public with such information while protecting the rights o individuals and the ability of the Government to carry out its responsibilities.  f  OPEN MEETINGS  SEC. 3. (a) Title 5, United States Code, is amended by adding after section 552a the following new section: "§ 552b. Open meetings 5 use 552b. " (a) For purposes of this sectionDefinitions. "(I) the term 'agency' means any agency, as defined in section 552(e) of this title, headed by a colleiial body composed of two 5 use 552, or more individual members, a majority of whom are appointed to sut'h position by the President with the advice and consent of th!' Senate, and ar•y subdivision thereof authorized to act on behalf of the agency; "(2) the term 'meeting' means the deliberations of at least the number of individual agency members required to take action on behalf of thP agency where such deliberations determine or rPsult in the joint conduct or disposition of official agency business, but does not include deliberations required or permitted by subsection (d) or (e): and , "(3) the term 'member' means an individual who belongs to a collej?ial body headini an agency. (b) Members shall not jointly conduct or dispose of agency businPss other than in accordance with this section. Except as provided in subsi-ction _(c), every portion of every meeting of an agency shall be open to pubhc observation. " (c) Except in a case where the agency finds that the P.ublic interest requires otherwise, the second sentence of subsection (b) shall not apply to any portion of an agency meeting, and the requirements of subsections (d) and (e) shall not apply to any information pertaininl[ to such meeting otherwise required by this section to be disclosed tn the public, where the agency properly determines that such portion or portions of its meeting or the disclosure of such information is likely to" ( 1) disclose matters that are (A) specifically authorized under criteria established by an Executive order to be kept secret in the   35-867 0 • 79 - 3 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  90 STAT. 1241  30 Pub. Law 94-409  5  use 552,  5  use 554,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  - 2 -  September 13, 1976  interests of n1;1tionnl defPn~e or foreign p~licy n11<l (B) in fact properly classified pursuant to such Executive orcler; "(2) relate solely to the intemnl persomwl rulPa and prnctices of an aj?Pncy; "(3) disclose matters specifirnlly exemptc•d fl'Om clisclo,nre by statute ( othrr than SP<'tion 552 of this titl<'). prol'idrd that xnd1 statute (A) rl'quires that the mnttHs he withheJ.l from the pnhlic in ~uch a manner as to Jenn no discretion on the issue, or (B) establishes p11rtic11lar criteria for withholding or ref<'rs to particular types of matters to be withheld; "( 4) disclose trn,le secrets nncl commer<'ial or· finanC'ial information ohtairml from a person and pridlPgPd or confi,lmtinl; "(5) irwolw'nc<'using nny person of a crinr(•, or formally <'l'nsuring an~· person; "(6) disclose information of II pPrsonnl nntur<' wh<'l'I' clis<'lo,nre would <'Onstitute a cl(•arly 1111wnnant<'d invn,ion of pHsonal prirncy; "(7) clis<'lose investigator~· rPcorcls compilP<I for lnw enfor<'ement. purposes. or information which if written would he contained in such re,·onl,;, hut only to the <'Xt<'nt that the production of such recorrls or information would (A) interfpr·p with Pnfor,•pment prnc,•l'dings, (B) rlPprirn a p<'rson of a right to a fnir trial or an impartial adjudirntion. ((") cm1stit11te an unwnrTantNl im·asion of pPrsonnl pri,·ac~·. (T)) disclosl' the i,lentity of a confi<h•ntial source nncl. in the rnsP of a rPcord conrpill'<I h~· n criminal law enforcen1Pnt nuthoritv in tlw course of n niminal inn•stiiration, or by an n1,.re1w~· conducting a lnwfnl nntionnl Ferm:ity intelligmce irn-estigntion, conficlPntinl information fnrnishl'd only by the confidential sourre, (E) disclosl' investigatin• tPchniq0ul's0and prol'l'durl's, or (F) l'ndnnger the lifl' or physicnl safl'ty of law enforcement personnel; "(8) disclose information contained in 01· J'l'lnted to exnminntion, opl'rating, or c-ondition rPpor·ts pn•pared by. on behalf of. or for the nse of an ageney responsible for the regulation 01· snperdsion of finnncinl institutions; · "(9) disclose information the premature diselosure of which would"(A) in the case of an agl'nC)' which regnlntes c11rre1wies, seruritil's, commodities, or financial institutions. he like]~· to (i) lend to significant financial specnlntion in cnrrerl('ies, securities, or commodities, or (ii) significantly endanger the stability of any finan<'inl institution; or "(H) in the case of any agency, he likely to significantly frustrate implementation of a proposed agency action. except that subparagraph (H) shall not apply in any instan<'e where the agency has nlrendy disclosed to the pnhlic the contl'Pt or nature of its propOFed aC'tion, or where the agency is requii'l'd by law to make such diselosnre on its own initiative prior to taking final aj?encv artion on such proposal; or "(10) specifically concern the aj?Pncy's issuance of a snbpena, or the age.ncy's participation in a civil action or proceeding. an action in a foreil!'n court or international trihunal. or an arbitration, or the initiation, conduct, or disposition by the ag-ency of a particular case of formal a~nry ndiudication pursuant to the procedures in section 554 of this title or otherwise involving a determination on the rerord after opportunity for a hearing.  90 STAT, 1242  31 September 13, 1976  - 3 -  Pub. Law 94-409  "(d) (1) Action under subsection (c) shall be taken only when a majority of the entire membership of the agency (as defined in subsection (a) (1)) votes to take such action. A separate vote of the agency members shall be taken with respect to each agency meeting a portion . or portions of which are proposed to be closed to the public pursuant to subsection (c), or with resp1•ct to any information which is proposed to be withheld nndt>r subsection (c). A single vote may be taken with respect to a series of meetings, a portion or portions of w-hich are proposed to be closed to the public, or with respect to any information concerning such seriPs of meetings, so long as each me<'ting in such series inrnh-Ps the snme particular matters and is scheduled to he held no more than thirty days nfte1· the initial mePting in such series. The vote of ench agency mPmher participating in sueh \"ote shall be recorclPll and no proxies shall b1• allowed. · ·'(2) "'henM·rr any person whose inte1·ests mny hr dirPcth· nlf1•cted hy a portion of a meeting requests that the ag1•11cy close such jiortion to thP public for any of the rPnsons refprred to in parn1?mph (ii). (6). or (i) of subf<l'dion (c), the agency, upon request of nnv one of its members. shall votP by rel'or1ll'd rnte whPthrr to elos1• sul'li mel'ting. "(3) "'ithin one day of any ,·ote taken pm·snant to pnrngrnph (1) or (2), the al?enry shall mnke publicly nrnilnhh• a written c·op~· of such vote rPflPcting the ,·ote of each memher on the question. If n portion of a mePting is to he closed to the puhlic, the n1?enc-y shall. within one clay of thi, rnte taken pursuant to pa-rn1?rnph (1) or (2) of this subspl'tion, mnkr publiclv arnilablr a fnll writtPn Pxplnnntion of its nction c-losinl? the portion t'ogether with a list of nil persons expel't1•d to nltt>1ul the mePting and their affiliation. "(4) Any ng1•m·y, a majority of whoS<• mei•tings may propPrly b1\ 1·lose<l to the public pursuant to pnrngrnph (-l). (H). (!I)(.\). or (10) of subsi•ction ( c). or any romhinntion the1~•of, 11111~· pr0\·i1le b~· reirulntion for thl' closing of such meetings or portions tlll'rt>of in tlll' 1•1·pnt that II mnjorit.v of the memhns of the agl'lll'Y ,·oh•s by l'l'l'Ol'1h•cl nite at thP hl'ginning of SUC'h nwrting. or portion tlwrl'l>f, to l'los1• the 1•x1•1»pt portimi or portions of tlw meeting. and II copy of sueh ,·otP, rPtlPC'tinir thl' rnt1• of ench nwmh1•r on the q1wstjon. is mndl' :1rnil11ltl1• to the puhli1·. The provisions of p11rngr11phs (1 ). (2). ancl (a) of this suhse<'tion nnd suhsPction (e) shnll not nppl~- to ,my portion of n ml'Pting to whid1 such regulntions nppl,v: l'rorirl,·rl. Thnt the ngen<·~· ~hull, 1,xePpt to tlw extl•nt that such infornmtion is exempt from clisdosnre mull'r thP prO\·isions of suhst•l'tion (I'). pro\'ide tlw puhlil' with puhlic ann011111·e1111•nt of the time. pince. nncl suhj!'ct matter of th!' nweting nncl of euch portion thereof at the earliest practil·nble time. "(e) (1) In till' case of e,wh mreting, th<> ngPnc·~· shall mnkl' public a11nonnc1•111ent. nt l<•nst one wPek befot'l' the me<>ting, of the time. pine•,•, and subjrl't matter of the meeting. wh!'ther it is to be open or clOS<•1I to tlw public, 11ml th.- nnme ancl phone numhrnif the offic-i11I cli•signntPd by tlw ngPney to r1•sponcl to requests for informntion nhont tlw ml'Pting. Suc·h ann01111ct>mPnt shall be made unless a majority of the mPlllhPrs of the agency determines bv n recorded \"otr thut n~•m·y businPss r1•quires that 'sul'h meetinir lie called at nn PnrliPr clat,.•. in whi<'h case th~ agency shall mnk<> publie nnnonncrment of the tim1•, pln<'e, and subject mntt<>r of such meeting. and whether open or l'losPcl to thl' public, at the earliest prnC'ticable tinw. "(2) Thi' time 01· pince of n meeting may be chnnl?l'd following the public announcement requit't'd by paragraph (1) only if tlw agency pnblicly announces snrh chani.."l' nt the 1•arliest practirable time. The   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  90 STAT, 1243  Recorded voting,  Coples, availability,  Meeting closure, regul atlon,  Public announcement.  Scheduling, public annOID'lcement.  Scheduling changes, public announcement.  32 Pub. Law 94-409  Scheduling notice, publication in Federal Register.  Closed meetings, certification.  Transcripts 1 recordings or minutes.  Public availability.  Retention.  Regulations. Notice, publication in Federal Register.  - 4 -  September 13, 1976  subject matter of a meeting, or th(• <lPtermination of the agency to open or close a meeting, or ~ortion of a meeting, t<:> the publi_c, may be changed following the pubhc announcement reqmred by this subsection only if (A) a majority of the entire mem~ership of thl: agency determines by a recorded vote that agency bnsmess so reqmres and that no earlier announcement of the change was possible, and (B) the agency publicly announces such chnng~ and ~he vote of each member upon such change at the earliest practicable time. "(3) Immediately following each public announcement required by this subsection, notice of the time, place, and subject matter of a meeting, whether the meeting is open or closed, any change in one of the preceding, and the name and phone number of the official designated by the agency to respond to requests for information about the meeting, shall also be submitted for publication in the Federal Register. "(f) (1) For every meeting closed pursuant to paragraphs (1) through (10) of subsection (c), the General Counsel or chief legal officer of the agency shall publicly certify that, in his or her opinion, the meeting may be closed to the public and shall state each relevant exemptive provision. A copy of such certification, together with a statement from the presiding officer of the meeting setting forth the time and place of the meeting, and the persons present, shall be retained by the agency. The agency shall maintain a complete transcript or electronic recording adequate to record fully the proceedings of each meeting, or portion of a meeting. closed to the public, except that in the case of a meeting, or portion of a meeting, closed to the public pursuant to paragraph (8), (9) (A), or (10) ofsubsection (c), the agency shall maintain either such a transcript or recordinl!:, or a set of minutes. Such minutes shall fully and clearly describe all matters discussed andshall provide a full and accurate summary of any actions taken, and the reasons therefor, including a description of each of the views expressed on any item and the record of an:v rolkall vote (reflecting the vote of each membPr on the question). All documents considered in <'Onnection with any action shall be identified in such minutes. · "(2) The agency shall make promptly available to the public, in a place easily accessible to the public, the transcript, electronic recording, or minutes (as required by paragraph (1)) of the discussion of any item on the agenda. or of any item of the testimony of any witness received at the meetiniz, except for such item or items of such discussion or testimony as the al!:ency determines to contain information which may be withheld under subsection (c). Copies of such transcript, or minutes, or a transcription of such recording disclosing the identity of each speaker, shall be furnished to any person at the actual cost of duplication or transcription. The al!:ency shall maintain a complete verbatim copy of the transcript. a complete copy of the minutes, or a <'Omplefo electronic recording of enrh meetiril!:, or portion of a meeting, closed to the public, for a period of at !erst two years after such meeting. or until one year after the ronclnsion of any al!:Cncy proceeding with respect to which the meeting or portion was held, whichever occurs later. "(g) Each agency subject to the requirements of this section shall, within 180 days_ after the date of enactment of this section, following consultation with the Office of the Chairman of the Administrative Conference of the United States and p11blished notice in the Federal Register of at least thirty days and opportunity for written comment by any person, promulgate regulations to implement the requirements   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  90 STAT. 1244  33 September 13, 1976  - 5 -  Pub. Law 94-409  of subsection~ (b) tln-ough ( f) of this section. Any person may bring a proc!'eding in the Unitl>d States District Court for the District of ('ohunbia to require an uirency to promulgate such 1-egulations if such agl•ncy has not promnlgatecl such reirnlations within the time period specifi<'d herl'in. Subject to any limitations of tinw p1-ovided by law, any person may brinir a proceeding in the Lnited States Court of Appl•als for the District of Columbia to set aside n1,.rt'ncy re1,1ulations issued pursuant to this subsection that 1u·e not in acC'or<l with the re<111irements of subsections (b) thro111,1h (f) of this section aml to require the pro111ul1,1ation of re1,1ulations that are in a..cord with such subsections. '' (h) (1) The district l'Onrts of the Unite,! StutPs shall haw jnriscliction to Pnforee thl• 1~•,p1ire111ents of s11bsl•dions (b} through ( f) of this S(•c·tion by <leclamtory jud1,1111ent, injunctive rPlief, or other relief as may b<• nppro1Hiatl'. Snrh adions may be bro111,1ht hy any person against 1111 a1,.rem·y prim· to, or within sixty da)'S nftl'r, th!' meeting out of whil'h th11 violation of this st>ction urii«•s, l'X<"l'(lt thut if public 1111n01mcement of su"h mePting is not initially rn·o\·idP,I by the a1,.'l'rn·y in acror,hrn,·e with tlw 1'1'<p1ir<•ments of this s<'ction, s1wh al'tion muy hi' institutl•d pnrs111111t to tins Sl'l'tinn at any time prior to sixty cluys· after any public amwnm·l'ment of s11d1 meetinl,(. 811<"11 actions muy lw bmught in the disti-ict <·onrt of the Unite,! States for the distri<"t in whil'h the agenc·y llll'Ptinir is lwld or in whil'h the airenry in <111estion has its hea<lqnartl•rs, or in the District Court for the District of Columbia. In s1wh llctions a defrrnlnnt shall Sl'n·e his answer within thil'ty days after the serdt'e of the ro111plnint. The b1mlen is on the dl'fendnnt. to sustain his ac-tion. In <lr<"i<ling such l'RSl'S the court may ex11111i11e in <·arnem nny portion of th!'. tmns<"ript, Plectronic recor,ling, or minutes of II nweting closed to the public. nnd may take sul'h a,l<litional evidem·<• ns it ,ler111s nc•,·1•ssn :·v. Till' court, hal"inir clue re1,111rcl for orderly administration aml the puhlie intl't'l'St, as well as tlw intPrests of the parti1•s, may grunt such <•1p1itnhle relief as it deems appropriut<•, inclmlinir irrunting an injunl'tion against future violations of this s<>ction or ol'<lPring the agpm•y to mnk(I uvailable to the public snC'h portion of the transcript. n•eor,hng, or minnh•s of a mePtinir as is not authorized to be withheld unc!Pr subSN·tion (c) of this sl'ction. ''(2) Any F1•deml <'Olllt otherwise authorized hv law to review uirl'ncy ll<'tion may, nt thl' applic·ation of any person 'properly parti<'ipnting in th(I procee<ling pursuant to oth(•r appli,·uhll' luw, inquire into violations by the a1,1ency of the requirements of this ser•ti<m 11ml nffor<I such rehd as it deems appropriate. Nothinir in this sertion authorizes any Federul court having jurisdiction solely on th11 basis of paragraph (1) to set. aside, enjoin_ or inrnlidate any agency action (other than 1111 R<'tion to close a meeting or to withhold information nnrlPr this s<•<'tion) taken or disrussed at any agency meeting out of which the violation of this seC'tion arose. "(i) Thi' l'Omt may assess against any party reaso11Rhle attorney f<'e.s and other litigation rosts reasonably inc·urred h,v any otlwr party who substantially prevails in any aetion bi-ought in accordance with the pmdsions of suhsertion (g)° or (h) of this sec·tio'I, rxrl'J>t. thnt <'osts may be assrssed against thl' phmtiff only where the <"onrt finds that. the suit. was initiated hy the plantiff primarily for frirnlous or dilatory pm·posc•s. Tn thl' <"ase of assessment of costs against an a•rern'J', thP costs ma.v be assessP<I by the eourt Rl!llinst the FnitP,I States. "(j) !<:ach ag11m·y subject to the re<111irPn1<•nts of this seC"tion shall anmmlly report. to Congress T't'garding its complinnre with such rrqnin•ml'nts, includinic a tabulation of the total number of agency   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  90 STAT. 1245  Judicial Jll'Oceedlng.  Jmlsdlctlon.  Civil actions.  Relief.  Inquiry.  • Litigation  costs, assessment.  Report to  Congress.  34 Pub. Law 94-409  5  use 552,  44  use 3301.  5 USC 552a, s use prec. 500,  - 6 -  September 13, 1976  ntl'etings open to the public, the total number of meetings closed to the public, the l'Pasons for closing such meetings, and a description of any litigation brought against the agency un<lPr this section, including any costs assrssed against the agency in such litigation (whetlwr or not paid by the agency). "(k) Nothing herein expands or limits the present rights of any pl'rson undl'r section 552 of this title, exC'ept that the exemptions set forth in suhsl'<'tion (c) of this section shall govern in the ense of any request made pmsuant to section 552 to copy or inspect the transcripts, J'l•cordin1-,'8, or minufos <lrsrrihecl in subsection (f) of this st•C'tion. The 1-e1111irements of chapter :m of title 44, l,nited Htates Codr, shall not apply to th,• transrripts, re('ordings, and minutes described in subsec• tion (f) of this se,·tion. , "(I) This sertion does not constitute authority to withhold any information from Congress, and does not authorize thr rlosinir of any al!en<'y mrl'ting or portion thereof required hy any othrr provision of law to he oprn. "(m) Nothinir in this SP<'tion authorizes any agen<'y to withhold from any individual any re<'ord. including trnns<·ripts, rr!'ordings, or minutes requirrcl by this srction, whil'h is othrrwise ar<'rssible to suC'h individual under section /\ti2a of this title.". (b) The <'hapter analysis of chapter /i of titfo Ii, Pnitecl Rtntes Cmfo, is amended, hy inserting: "!i!i2h. Open mPetings."  immediatl•ly below: "U52a. Record~ about individuals.". Jo:X PAUT1': COl\:llft:NH'ATIOXS  S•x;. -1. (a) Section 557 of title 5, United States Code, is amended hy mhling- at the l'nd thrreof tlw followinir 1ww suhsrC'tion: "(d) (I) In any ngrn,·y procl·Pding which is subj«'<'t to subsl'C'tion (a) of this s('(·tion. rx,·1•pt to till' extent required for the disposition of 1•x pnl'fl' mntt .. rs us n11thori,w1l h1· lnw"(A) no interl'sted person outside the agency shall mak,~ or knowingly cau~e to he nut1le to any member of the body <'Ompris• ing- tlw agency, administrative law jud1-,re, or other employee who is or may rrasonably be expected to be involvrd in the decisional process of the proceedinir, an ex parte communication relevant to the ml'rits of the proceeding; "(B) no memher of the hody comprising the agency, administrative law judge, or other employee who is or may reasonably he expe<'t«'d to be inl"Olved in the cll'cisional procrss of the proceeding, shall make 01· knowinirly cause to be made to any interested prrson outside the agency an ex partc communication relevant to the merits of the proceeding; '!(C) a mPmher of the body comprising the agency, administrative law judge, or other employee who is or may reasonably he expe<'tcd to be involved in the decisional process of such proceeding who receives, or who makes or knowingly causes to be made, a communication prohibited by this subsection shall place on the public record of the proceeding: "Ii) a 11 su('h written <'on1munications; "(ii) m«'mormHla stating the substan<'e of all such oral com• municntions; and   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  90 STAT, 1246  35 September 13, 1976  - 7 -  Pub. Law 94-409  " (iii) all written responses, and memoranda stating the substance of all oral responses, to the materials described in clatist•s (i) and (ii) of this subparagraph; "(D) upon receipt of a co11111111niration knowingly made or knowingly caused to be made by a party in violation of this subsel'tion, the agency, a1l111i11istrnti1·e law j1Hlge, or other employee presiding at the hearing may, to the extent consistent with the interests of justice and the policy of the underlying statutes, require the patty to show cause why his daim or intl•rest in the procet•ding should not be dismissed, denie,l, disregarded, or otherwise a<ln•rsely atfectt>d on account of su<'h violation; and "(E) the prohibitions of this subsection shall apply beginning at bt1d1 tinw 11, till' agency may designate, but in no case shall they begin to apply httPr than the ti111e at which a lH"Ol'l'l'<ling is notirt><l for lll'aring unless tht• person responsible for the com111uni<"ation has knowh•dge that it will be notirPd, in which case the prohibitions shall apply beginning at the time of his acquisition of snch knowletlge. "(2) This subsedion does not constitute authority to withhol<l information from Congress.". (b) Section !i!il of title 5, Fnited States Code, is amende<l(1) by striking ont "and'' at the end of paragraph (12); (2) by striking out the "act.'' at the Pnd of paragraph (1::\) and inserting in lieu thereof "act; and"; and (3) by adding at the end thereof the following new paragraph: "(H) 'ex parte cornm1mil'ation' lll<'ans an oral or written cornmuni<"ation not on the puhlic record with respeet. to whic·h rt'asonablt> prior notice to all parties is not given, but it shall not inclmle requests for status reports on any matter or proceeding cowt-ed hy this snhchapter.". (<") Hertion !i!i6(d) of title Ii, Unite<! States Code, is amended by inserting betw,•en the, third and fourth sentences the1·eof the following 111>w sentenre: "The agency may, to tlw extent l'onsistent with the interests of justil'e and the policy of the undl'rl_ying statutes 11,lministPrecl by the age,wy, consider a violation of section !i!i7(cl) of this title sufficienl ,1rrounds for a deeision ad,·erse to a party who has knowingly com111itte,l such violation or knowingly caused such violation to occur.".  Appllcab!hty,  "Ex parte communication,"  5 USC 557.  CONFOR~[INO AMF.NIIMt:NTS  :-t:c. !i. (n) SPC·tion 410(b) (1) of till<' 39, lTnited 8tatPs Code. is amernlerl by insetting after "St•c·tion Ii/ill (public infor111utio11)," the words "sPC'tion 552a (records about imlil·idnals), section !i!illh (open meetings).". (h) Section !i!i2(h) (a) of title Ii, United Stall's Code, is nuwmh•,l to read as follows: "PH spe,<'ifirally e,xempt<'d from disclosure hy- statute ( other than section !i/i2h of this title). provided that such statute (.\) r<'qnires that the matters he withlll'lcl from tlw puhlic in stH"h a manner as to learn no discrc•tion on the issue, or (Il) establishes partirulnr criteria for withholding or r<>fers to partic·ular types of matters to he withhelcl ;". · ( r) Subsection ( d) of section 10 of the Fr,leral Advisory Committee Act is nmendt>d by striking out tht> first sentence and insertinl,' in lieu 5 USC app, I, ther<>of the followinir: "Suhsections (a) (1) and (a) (3) of this s<'dion shall not. apply to any portion of an advisory committee mc•Pt ing where   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  90 STAT, 1247  36 Pub. Law 94-409  - 8 -  September 13, 1976  the President, or the head of the agency to which the advisory committee reports, determines that such portion of such meeting may be closed to the public in accordance with subsection (e) of section 552b of title 5, United States Code.". EFFECTIVE DATE  5 use 552b note.  SEc. 6. (a) Except as provided in subsection (b) of this section, the provisions of this Act shall take effect 180 days after the date of its enactment. (b) Subsection (g) of section 552b of title 5, United States Code, as added by section 3(a) of this Act, shall take effect upon enactment. Approved September 13, 1976,  LEGISLATIVE HISTORY: HOUSE REPORTS: No, 94- 880, Pt, I and No. 94-880, Pt. 2, accompanying H. R. 11656 ( Comm, on Government Operations) and No, 94-1441 (Comm, of Conference), SENATE REPORTS: No, 94-354 (Comm, on Government q,erations), No, 94381 (Comm, on Rules and Administration) and No, 94-1178 (Comm, of Conference), CONGRESSIONAL RECORD: Vol, 121 (197S): Nov, S, 6, considered and passed Senate, Vol, 122 (1976): July 28, considered and passed House, amended, in lieu of H. R, 11656, Aug, 31, House and Senate agreed to conference report, WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS: Vol, 12, No, -38 (1976): Sept, 13, Presidential statement,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  90 STAT. 1248   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  APPENDIXC DATES AND FEDERAL REGISTER CITATIONS TO PROPOSED AND FINAL AGENCY REGULATIONS 1 PROPOSED REGULATION  FINAL REGULATION  1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.  Board for International Broadcasting (BIB) Civil Aeronautics Board (CAB) Commodity Credit Corporation (CCC) (Board of Directors)• Commodity Futures Trading Commission (CFTC)* Consumer Product Safety Commission (CPSC) Council on Environmental Quality (CEQ) Equal Employment Opportunity Commission (EEOC)* Export-Import Bank of the United States (EIB) (Board of Directors)• Federal Communications Commission IFCC) Federal Deposit Insurance Corporation (FDIC) (Board of Directors)* Federal Election Commission (FEC) Federal Farm Credit Board {FFCB) within the Farm Credit Administration• Federal Home Loan Bank Board (FHLBB)* Federal Home Loan Mortgage Corp. (FHLMC)* Federal Maritime Commission (FMC) Federal Power Commission (FPC) Federal Reserve Board (FRB)* 18. Federal Trade Commission (FTCI*  42 F.R. 9388 (Feb. 16, 1977) 41 F.R. 2995 (Jan. 14, 1977) 42 F.R. 7963 (Feb. 8, 19771 42 F.R. 6558 (Feb. 2, 1977) 42 F.R. 5079 (Jan. 27, 1977) 42 F.R. 8673 (Feb. 11, 1977) 42 F.R. 7162 (Feb. 7, 1977) 42 F.R. 5364 (Jan. 28, 19771 41 F.R. 56675 (Dec. 29, 1976) 42 F .R. 8146 (Feb. 9, 1977) 42 F.R. 3810 (Jan. 19, 1977) 42 F.R. 55 (Jan. 3, 1977) 42 F.R. 2503 (Jan. 12, 1977) 42 F.R. 5125 (Jan. 27, 1977) 41 F.R. 55207 (Dec. 17, 1976) 41 F.R. 52303 (Nov. 29, 1976) 42 F.R. 5699 (Jan. 31, 1977) 41 F.R. 65885 (Dec. 23, 1976)  42 F.R. 15405 (Mar. 22, 1977) 42 F.R. 14678 (Mar. 16, 1977) 42F.R.146731Mar.16, 1977) 42 F.R. 13701 (Mar. 11, 1977) 42 F.R. 14683 (Mar. 16, 1977) 42 F.R. 20818 (Apr. 22, 1977) 42 F.R. 13830 (Mar. 14, 1977) 42 F.R. 12417 (Mar. 4, 1977) 42 F .R. 12864 (Mar. 7, 1977) 42 F.R. 14675 (Mar. 16, 1977) 42 F.R. 13202 (Mar. 9, 1977) 42 F.R. 12161 (Mar. 3, 1977) 42 F.R. 13107 (Mar. 9, 1977) 42 F.R. 14857 (Mar. 17, 1977) 42 F.R. 12049 (Mar. 2, 1977) 42 F.R. 14697 (Mar. 16, 1977) 42 F.R. 13297 (Mar. 10, 1977) 42 F.R. 13538 (Mar. 11, 1977)  19. Harry S. Truman Scholarship Foundation (HSTSF) (Board of Directors) 20. Indian Claims Commission (ICC20)•  42 F.R. 5986 (Feb. 1, 1977) 42 F.R. 3864 (Jan. 21, 19771 41 F.R. 66828 (Dec. 30, 1976) 41 F.R. 56340 (Dec. 28, 1976) 42 F.R. 2572 (Jan. 12, 1977) 42 F.R. 14736 (Mar. 16, 19771 42 F.R. 3667 (Jan. 19, 1977) 42 F.R. 9399 (Feb. 16, 1977) 42 F.R. 5105 (Jan. 27, 19771 42 F.R. 8155 (Feb. 9, 1977) 42 F.R. 9456 (Feb. 16, 19771 41 F.R. 54956 (Dec. 16, 1976) 42 F.R. 5111 (Jan. 27, 1977) 41 F.R. 55880 (Dec. 23, 1976) 42 F.R. 8680 (Feb. 11, 19771 42 F.R. 5086 (Jan. 27, 1977) 41 F.R. 54950 (Dec. 16, 1976) 42 F.R. 9034 (Feb. 14, 1977) 42 F.R. 3222 (Jan. 18, 1977) 42 F .R. 6827 (Feb. 4, 1977)  42 F.R. 42 F.R. 42 F.R. 42 F.R. 42 F.R.  ~!: ~:~~;~e=:=~=~~i!~ ucc22, 23. Mississippi River Commission {MRC) 24. 25. 26. 27. 28. 29. 30. 31. 32. 33, 34. 35. 36. 37. 38.  National Center for Productivity and the Quality of Working Life jNCPQWL) National Commission on Libraries and Information Science (NCLIS) National Council on Educational Research (NCER) National Labor Relations Board (NLRBI* National Mediation Board (NMB) National Railroad Passenger Corp. INRPC) National Science Board (NSB) ofthe National Science Foundation National Transportation Safety Board (NTSB) Nuclear Regulatory Commission (NRC) Occupational Safety and Health Review Commission (OSHRC)* Overseas Private Investment Corps. (OPIC) (Board of Directors) Postal Rate Commission (PRC)* Railroad Retirement Board (RRB) Renegotiation Board (RBI Securities and Exchange Commission (SEC)*  14722 (Mar. 16, 1977) 13823 (Mar. 14, 1977) 20460 (Apr. 20, 1977) 13796 (Mar. 11, 1977) 13286 (Mar. 10, 1977)  42 F.R. 13553 (Mar. 11, 1977) 42 F.R. 14721 (Mar. 16, 1977) 42 F.R. 13550 (Mar. 11, 1977) 42 F.R. 14716 (Mar. 16, 1977) 42F.R.13635 (Mar.11, 1977) 42 F.R. 14719 (Mar. 16, 19771 42 F.R. 13284 (Mar. 10, 1977) 42 F.R. 12875 (Mar. 7, 1977) 42 F.R. 15413 (Mar. 22, 1977) 42 F.R. 13110 (Mar. 9, 1977) 42 F.R. 15311 (Mar. 21, 1977) 42 F.R. 15311 (Mar. 21, 191771 42 F.R. 12855 (Mar. 7, 1977) 42 F.R. 14691 (Mar. 16, 1977)  1 C.F.R. §§ 460.1 et seq. 14C.F.R. §§310b.l et seq. 7 C.F.R. §§ 1409.1 et seq. 17C.F.R. §§ 147.letseq. 16C.F.R. §§ 1012.l et seq. 40C.F.R. §§ 1517.1 et seq. 29 C.F.R. §§ 1612.1 et seq. 12 C.F.R. §§ 407.letseq. 47 C.F.R. §§ 0.601 et seq. 12C.F.R. §§ 311.l et seq. 11 C.F.R. §§2.1 et seq. 12 C.F.R. §§ 604.SOOetseq. 12C.F.R. §§ 505b.l et seq. l C.F.R. §§ 460.l et seq. 46C.F.R. §§ 503.70et seq. 18 C.F.R. §§ l.l,l.2,l.3aetseq. 12 C.F.R. §§ 26lb.l et seq. 16 C.F.R. §§ 2.14,3.52,3.61,4.9, 4.10,4.14,4.15 45 C.F.R. §§ 1802.1 et seq. 25C.F.R. §§504.1 etseq. 22C.F.R. §§ 1004.1 et seq. 49C.F.R. §§ 1012.1 et seq. 33 C.F.R. §§ 209.50  45C.F.R. §§ 1703.101 et seq. 45 C.F.R. §§ 1440.1 et seq. 29 C.F.R. §§ 102.137etseq. 29 C.F.R. §§ 1209.01 et seq. Appendix A, Corporate By-Laws 45 C.F.R. §§614.1 et seq. 49C.F.R. §§804.1 et seq. lOC.F.R. §§9.lOOetseq. 29C.F.R. §§2203.1 et seq. 22C.F.R. §§ 708.1 et seq. S9C.F.R. §§3001.5, 3001.7, 3001.43 20C.F.R. §205.5 32 C.F.R. §§ 1482.1 et seq. 17 C.F.R. §§200.21, 200.40, 200.41, 200.42, 200.80, 200.400 et seq. 18C.F.R. §§301.41 etseq_. 32 C.F.R. §§2428.l et seq. 5 C.F.R. §§ 295.101 et seq. 45 C.F.R. §§ 702.50et seq. 45C.F.R. §§ 504.20etseq. 19 C.F.R. §§ 201.33 et seq. 28C.F.R. §§ 16.200etseq. 39C.F.R. §§ 7.letseq. 49C.F.R. §§903.1 et seq.  39. Tennessee Valley Authority (TVA) (Board of Directors) 42 F.R. 4859 (Jan. 26, 1977) 42F.R. 14086 (Mar. 15, 1977) 40. Uniformed Services Univ. of the Health Sciences (USUHS) (Board of Regents) 41 F.R. 55724 (Dec. 22, 1976) 42 F.R. 12853 (Mar. 7, 1977) 41. U.S. Civil Service Commission (USCSCI 41 F .R. 55537 (Dec. 21, 1976) 42 F .R. 13009 (Mar. 8, 1977) 42. U.S. Commission on Civil Rights (USCCR) 42 F.R. 5705 (Jan. 31, 1977) 42 F.R. 14107 (Mar. 15, 1977) 43. U.S. Foreign Claims Settlement Commission (USFCSC) 42 F.R. 3872 (Jan. 21, 1977) 42 F.R. 11010 (Feb. 25, 1977) 44. U.S. International Trade Commission (USITC) 41 F.R. 53039 (Dec. 3, 1976) 42 F.R. 11241 (Feb. 28, 1977) 45. U.S. Parole Commission (USPC)* 42 F.R. 6610 (Feb. 3, 1977) 42 F.R. 14713 (Mar. 16, 1977) 46. U.S. Postal Service (USPS) (Board of Governors)* 42 F.R. 2699 iJan. 13, 1977) 42 F.R. 12868 IMar. 7, 1977) 47. U.S. Railway As,ociation IUSRAI 42 F.R. 6614 (Feb. 3, 1977) 42 F.R. 14113 (Mar. 15, 1977) 7 agencies have claimed use of the expedited closing procedure (d)(4) bUSC 552b Much of the information contained within this Appendix was obtained from the Office of the Chairman, Administrative Conference of the United States  il  38 SECTION 1  Purpose  (a) Consistent with the principle that the public is entitled to the fullest practicable information regarding the decisi0111-makiug processes of the federal government, it is the purpose of this Subpart to open all meetings of the agency to public observation while at the same time protecting the rights of individuals and the ability of the goyernment to carry out its responsibilities. These regulations are promulgated pursuant to the directive of Section (g) of the Go'l"ernment in the Sunshine .Act [Public Law 9-1-400, 00 Stat. 1241, 5 U.S.C. 552b (g)] to implement the open meetings requirement of the .Act. ( b) One of the primary purposes of this regulation is to inform the public to the fullest extent possible of the agency's activities. The agency believes that in order to guarantee public confidence in the integrity of its decisionmaking, it must conduct its bqsiness in an open manner, whenever possible. SECTION 2  Definitions  For purposes of this Subpart : (a) ''Act'' means the Government in the Sunshine Act (Pub. L. 94-409, 90 Stat. 1241; 5 U.S.C. 552b). (b) "Chainge'' as applied to the time or location of a meeting includes cancellation of a meeting. (c) "Meeting" means the deliberations, including conference telephone calls, · of a quorum of the members of th-e agenc~· or a committee or subdivision of the agency where these deliberations determine or result in the joint conduct or disposition of official agenc~· business. Meeting includes briefing sessions attended by at least a quorum of agency members where members have au opportunity to ask questions or seek clarification of matters of concern. It does not include deliberations to take action to open or close a meeting or to release or withhold information. Except for matters of a routine nature, "meeting" shall be c0tnstrued to prevent agency members from considering individually agency business that is circulated to them sequentially in writilllg unless no conduct or disposition of agency business occurs during circulation. (d) "::\!ember" means au individual who belongs to a collegial body, a majority of the members of which are appointed to their positions by the President with the advice and consent of the Senate. (e) "Person" includes an individual, partnership, corporation, association, exchange, or other entity or organization. (f) "Routine nature" as applied to the subject matter of deliberations includes: action to open or close a meeting; release or withhold information; place an item on the agenda; or select the time, date, and location of a meeting. (g) As used in this Subpart, all terms not defined shall have the meaning giYen them by the Act. SECTIOX 3  Notice of meetings  (a) Prior to each agency meeting, the agency shall issue a public not1ce which(1) states the time, date, and location of the meeting: (2) lists the subject matter or agenda items to be discussed at the meering; (3) States which portions of the meeting shall be open or closed to public observation; and ( 4) provides the name and business telephone number of the official de,iignated by the agency to respond to requests for information about the meeting. (b) Public notice shall be made not less than ten days prior to the meeting unless a majority of the members of the agency determines by a recorded public vote that the meeting must be called at an earlier date. If au earlier date is established, the agency shall make a public announcement as required in paragraph (a) of this Section within 24 hours. (c) The time or location of a meeting may be changed following the public announcement required in paragraph (a) of this Section only if the agency publicly announces the change within 24 hours. ( d) ,vhen the agency has voted to close any portion of any meeting pursuant to Section 5 of this Subpart, the notice referred to in paragraph (a) of this Section shall also include, or be amended to include- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  39 (1) a list of persons and their affiliations reasonably expected to be present at the closed meeting, portion, or series of meetings; (2) a written copy of the vote of each member on whether or not the meeting, portion, or series of meetings will be closed to public observation ; (3) a full, written explanation of the agency's action in closing the meeting, portion, or series of meetings ; and ( 4) a copy of the certification of the general counsel required by S.:-ction 6 that the meeting, portion, or series of meetings were properly closed i:o the public by the agency. (e) The subject matter of a meeting or the determination to open or close a meeting or portion of a meeting to the public may be changed following the public announcement required in paragraph (a) of this Section only if(1) a majority of the entire membership of the agency determines by a recorded vote that the public interest requires it 'lnd that no earlier announcement of the change was possible ; and (2) the agency publicly announces the change and the vote of each member upon the change within 24 hours. ( f) When a vote to close a portion or portions of a meeting in accordance with Section 5 of this Subpart or a vote to change the subject matter of a meeting or to change a determination to open or close a meeting or portion of a meeting to the public fails for lack of a majority of the entire membership of the agency, the vote shall be published as part of the notice required by paragraph (a) of this Section. (g) The agency must use all reasonable means to ensure that the public is fully informed of public announcements pursuant to this Section. This includes but is not limited to(1) posting of notices on the agency's public notice boards and in its Public Information Office; (2) publishing notices in publications with readers who may have an interest in the agency's operations; (3) sending press notices to publications of general as well as specialized readership: and ( 4) sending notices to persons on the agency's general mailing list or a mailing list maintained for persons requesting the material. Any person who requests it shall be giwn notice of all special or rescheduled meeting,; in the same manner as is giYen to members of the agency. (h) Immediately following the issuance of each public notice required by this Section, the agency shall submit for publication in the Federal Register except to the extent that the information is exempt from disclosure under Section 5 of this Subpart and the agency determines that nondisclosure is consistent with the public interest : (1) notice of the time, date, location, and subject matter of a meeting; (2) which portions of the meeting shall be open or closed to the public; (3) any change in one of the preceding; and ( 4) the name and business telephone number of an official of the agency who may be contacted for information about the meeting. SECTION 4  Open meetings  )!embers shall not jointly conduct or otherwise dispose of agency business other than in accordance with this Subpart( a) Every portion of every meeting of the agency or committees or subdivisions of the agency shall be open to the public unless closed pursuant to Section 6 or Section of this Subpart. ( b) This regulation shall not apply to any chance meeting or a social meeting at which matters relating to official business are not discussed. Xo chance meeting, social meeting, or electronic communication shall be used to circumvent this regulation to discuss or act upon a matter over which the agency has supervision, control, jurisdiction, or advisory power. (c) A convenient location with sufficient space, visibility, seating, and acoustics shall be provided for all meetings to accommodate obserrntion by the public. ( d) This Subpart shall not be construed to allow any observer to interfere in the conduct of the meeting; nor does it prohibit removal of any person who willfully disrupts the orderly conduct of a meeting. (e) Meetings shall not be held in places which restrict membership or attendance or other\\ise discriminate on the basis of race, color, creed, national origin, ancestry, religion, or sex.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  40 (f) All or any part of an open meeting may be recorded by any person in attendance by means of a tape recorder or any other means of visual or sonic reproduction provided that the recording does not actively interfere with the conduct of the meeting. (g) This Section does not prohibit the use by the agency of notational voting to make agency decisions on matters of a routine nature. Matters of a routine nature include the placing of an item on the agenda, selecting the time, date, and location of a meeting, or reviewing a request to open or close a meeting. No decision with respect to any rulemaking or administrative order may be made by notational voting. SECTION 5  Criteria to oZose meetings (a) Except in cases where the agency finds that the public interest requires otherwise, every meeting of the agency shall be open to the public. (b) The agency may close all or portions of agency meetings when it determines that disclosure is not in the public interest and where the subject matter to be discussed is likely to( l) disclose matters that are specifically authorized under criteria established by an executive order to be kept secret in the interests of national defense or foreign policy and are in fact properly classified pursuant to the executive order; (2) relate solely to the internal personnel rules and personnel practices of the agency, including but not limited to rules for the use of parking facilities, working hours, or sick leave; ( 3) disclose matters specifically exempted from disclosure by statute ( other than the Freedom of Information Act, as amended 5 U.S.C. 552), provided that the statute-(i) requires that the matters be withheld from the public in a manner that leaves no discretion on the issue; or (ii) establishes particular criteria for withholding or refers to particular types of matters to be withheld; (4) disclose trade secrets and commercial and financial information obtained from a person on a privileged or confidential basis, where the disclosure of the information is likely to cause harm to the competitive position of the person from whom the information was obtained ; (5) involve accusing any person of a crime or formally censuring nny person, including but not limit!'d to(i) requests by the agency that the Attorney General of the United States institute a criminal action against any person believed to have violated any law which the agency is responsible for administering; and (ii) the consideration of any administrative proceeding regarding the censure of ·a person for violation of an internal agency regulation or for violation of the agency's standards of ethical conduct ; (6) disclose information of a personal nature where disclosure would constitute a clearly unwarranted invasion of personal privacy ; personal information includes but is not limited to home address, social security number, medical history, date and place of birth, and personal or family history; this information may be withheld only where irt is clear that the interest in maintaining personal privacy outweighs the public interest in disclosure; wherever practicable, an effort should be made to release information by deleting that portion of the information that can 'be used to identify individuals; (7) disclose investigatory records complied for law enforcement purposes, or information which if written would be contained in these records, hut only to the extent that the production of the records or information would( I) interfere with enforcement proceedings; (ii) deprive a person of a right to a fair trial or an impartial adjudication; (iii) constitute an unwarranted invasion of personal privacy; (iv) disclose the identity of a confidential source and, in the case of a record compiled by criminal law enforcement authority in the course of a criminal investigation or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source; (v) disclose investigative techniques and procedures; or   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  41 (vi) endanger the life or physical safety of law enforcement personel; (8) disclose information conrtained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of any agency responsible for the regulation or supervision of financial institutions where the premature disclosure of the information would be likely to have an adverse effect on currencies, securities, commodities, or other matters of a serious financial nature; (9) disclose information the premature disclosure of which would(i) in the case of an agency which regulates currencies, securities, commodities, or financial institutions, be likely to-(A) lead to significant financial speculation in currencies, securities, commodities or (B) significantly endanger the stability of any financial institution; or (ii) in the case of any agency, be likely to significantly frustrate implementation of a proposed agency action ; except where the agency has already disclosed to the public the conitent or nature of its proposed action, or where the agency is required by law to make the disclosure on its own initiative prior to rtaking final agency action on a proposal; or (10) specifically concern an agency's issuance of a subpoena, or its participation in a civil action or proceeding, an action in a foreign court or international tribunal, or an arbitration, or the initiation, conduct or disposition by an agency of a particular case of formal •agency adjudication ,.Pursuant to the procedures in 5 U.S.C. 554 or otherwise involving a determination on the record after opportunity for a hearing. SECTION 6  Procedures to close meetings or Zimit the disclosure of information  (a) Meetings shall not be closed to the public and information about a meeting or portion of a meeting shall not be withheld from the public meeting notice without a recorded vote of a majority of the entire membership. For this purpose, these votes shall be cast by the members themselves without the use of proxies. (b) When a subdivision or committee of an agency meets, the vote of a majority of the entire membership of the subdivision or committee is necessary to close a meeting or limit the disclosure of information. ( c) A majority of the agency membership may vote to close a series of meetings or portions of meetings if the meetings are held no more than thirty days after the initial meeting of the series. (d) A closed meeting or information withheld from disclosure is limited to subjects exempt from the requirement of disclosure listed in Section 5 of this Subpart. ( e) Before any meeting or portion of a meeting may be closed, the general counsel or chief legal officer of the agency bas the responsibility for certifying and issuing an opinion of whether an exemption applies to a meeting or a portion of a meeting. (f) A determination that one portion of a meeting is exempt and may be closed does not justify the closing of any other portion. (g) If a majority of the agency membership votes to close a meeting or portion of a meeting, the agency shall within one day make publicly available--(1) a list of persons and their affiliations reasonably expected to be present at the closed meeting, portion, or series of meetings; (2) a written copy of the vote of each member on whether or not the meeting, portion, or series of meetings sh9uld be closed to the public ; (3) a full, written explanation of the agency's action in closing the meeting, portion, or series of meetings ; and : ( 4) a copy of the certification of the general counsel required by this Subpart that the meeting, portion, or series of meetings were properly closed to the public by the agency. (h) Notwithstanding that the members may already have voted not to close a meeting, whenever any interested person requests in writing that the agency close a meeting or a portion of a meeting or prevent disclosure of information pertaining to the meeting because it is likely to--   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  42 (1) involve accusing someone of a crime, or formally censuring someone; (2) disclose personal information constituting a clearly unwarranted disclosure of personal privacy ; or (3) disclose personal information which if written would be contained in the records, but only to the extent that the production of the records or information would(i) inerfere with enforcement proceedings; (ii) deprive a person of a right to a fair trial or an impartial adjudication; (iii) constitute an unwarranted invasion of personal privacy; (iv) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, confidential information furnished only by the confidential sources; (v) disclose investigative techniques and procedures; or (vi) endanger the life or safety of law enforcement personnel; the agency shall, upon the request of one of its members, vote on whether to close the meetings or portion of the meeting or withhold the pertinent information. SECTION 7  Procedure to open meetings  (a) Following any announcement that the agency intends to close a meeting or portion of a meeting, any person may make a request that the meeting or portion be opened. (b) A request to open a meeting shall be made of the chair of the agency or his or her designee, who shall see that the request is circulated to all members of the agency within one business day from the day on which it is received. ( c) The request shall set forth the reasons why the person making the request believes the meeting or portions of the meeting should be open to the public. (d) The agency upon the request of any member or its general counsel shall vote on the request. (e) If the request is supported by the votes of a majority of the agency membership sufficient to constitute a quorum, an amended public meeting announcement shall be issued and the agency shall immediately notify the prson making the request of its decision. (f) If no agency member or the general counsel requests that a vote be taken on a request to open a meeting, the chair shall certify that not vote was taken and shall notify the person making the request of the agency action within 48 hours. (g) Agency actions to withhold information pertaining to a meeting shall conform to the procedures set forth in paragraphs (a) through (e) of this section. No information required to be disclosed under Section 5 of this Subpart may be withheld without a recorded vote of the members of the agency. (h) ,vhenever any agency employee whose appointment, employment or dismissal is to be the subject of a meeting or portion of meeting closed to the public pursuant to Section 5 requests in writing to the agency that the agency open that meeting or portion of meeting, the agency shall open that meeting or portion of meeting to the public. SECTION 8  E:cpeditctl closing procetlure  (a) Any meeting or portion of a meeting may be closed to the public pursuant to Section 5, Subsections (b) (4), (b) (8), (b) (9) (A), or (b) (10) of the Act or any combination of them provided that(1) a majority of the members of the agency vote by recorded vote at the beginning of the meeting or a portion to close the exempt portion ; and (2) a record of the vote of each member on the question is made available to the public in the agency's Public Information Office within one day of the vote. (b) Unless the information is exempted from disclosure by Section 5 of this Subpart, the agency must as soon as possible provide a public announcement of( 1) the time of the meeting ; (2) the date of the meeting; ( 3) the location of the meeting; ( 4) all subjects of the meeting;   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  43 (5) closed status of the meeting; and ( 6) the name and business telephone number of the agency official whose duty it is to respond to requests for information about the meeting. SECTION 9  Recordkeeping requirements  (a) The agency shall maintain n complete transcript or electronic recording of any meeting or a portion of a meeting closed pursuant to Sections 5 and 6 of this ~ubpart. (b) '.l'he agency shall maintain com11lete and accurate minutes of all meetings open pursuant to Section 4 of this Subpu1't. (c) Minutes of a meeting or portion of a meeting shall fully and accurately describe all matters discussed and shall provide a full and accurate summary of any actions taken and the reasons for the action, including a description of the views expressed by any member on any item and the record of any rollcall vote. All documents considered in connection with any action shall be identified in the minutes. (d) All records required to be kept by paragraphs (a) and (b) of this Section shall be public records and shall be made promptly available to the public not later than 48 hours after a meeting with respect to minutes of a meeting, except for the portion or portions of the discussion which the agency determines to contain information which may be withheld under Section 5 of this Subpart. (e) The agency shall maintain all records required to be kept under paragraphs (a) and (b) of this Section for a period of at least two years after any meeting, or until one year after the conclusion of an agency proceeding with respect to which the meeting was held, whichever occurs later. (f) Records shall be kept of all matters disposed of by notational voting, where agency members consider individually agency business which is circulated sequentially in writing. These records shall include all documents circulated and all votes and comments made in writing by any member in responding to the circulated material. These records shall be indexed and made available in the same fashion as records of closed meetings. (g) Nothing in this Subpart expands or limits the present rights of any person under the Freedom of Information Act, 5 U.S.C. 552, except that the exemptions set forth in Section 5 shall govern in the case of any request made pursuant to the Freedom of Information Act to copy or inspect the transcript, recordings, or other records described in this Section. (h) Nothing in this Subpart authorizes the withholding from any individual of any record, including transcripts, recordings, or minutes required by this Subpart which is otherwise accessible to such individual under the Privacy Act, 5 U.S.C. 552a. (i) Public access to documents being considered at agency meetings may be obtained by access to the public files of the agency. SECTION 10  Public availability of records and other documents  (a) All documents and records required to be made and maintained by Sections 4, 6, 7, and 8 of this Subpart shall be made available to the public for examination and duplication during regular business hours, except for an item or items of discussion or testimony that the agency determines to contain information which may be withheld under Section 5 of this Subpart. (b) Where all or any portion of a document or record is withheld pursuant to Section 5 of this Subpart, the copy of the record or document available for public inspection shall reflect the existence of the withheld portion and shall indicate the exemption which justifies the withholding. (c) Requests for materials not immediately available and for material withheld under Section 5 of this Subpart shall be made pursuant to the provisions of the Freedom of Information Act. (d) The agency shall designate an official to receive requests for information required to be maintained by this Subpart. Within 10 days after a request for materials pursuant to paragraph (c) of this Section is received, that official shall make a determination as to whether to comply with the request and shall immediately give written notice of the determination to the person making the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  44 request. If the determination is to deny .the request, the notice to the person making the request shall include a statement of the reasons for denial and a notice of the rights of the person making the request to appeal the denial and the time limits for an appeal as well as a copy of the agency procedures for an appeal. (e) Any person who has been denied all or part of a request made pursuant to paragraph (c) of this Section may appeal the denial to the agency. An appeal is taken by delivering a written notice of appeal to the officer or office specified by the agency to receive appeals. The notice shall include a statement that it is an appeal from a denial of a request made pursuant to Section 9(c) and the Government in the Sunshine Act. (f) Within twenty days after .the appeal is received, the agency itself or an official designated by the agency shall make a final determination on the appeal. In making the determination, the agency shall consider whether to waive the provisions of any exemption contained in Section 5 of .this Subpart in order to promote the public interest in openness. The agency shall immediately give written notice of the final determination to the person making the appeal. If the final determination on the appeal is to deny all or part of the request, the notice to the person making the request shall include a statement of the reasons for denial and a notice of the person's right to judicial review of the· denial. (g) All materials available or made available to the public under this section shall be placed in a centrally located agency office to which the public has access during business hours of the agency. (h) Copies of materials available for public inspection under this Section shall be furnished to any person at the actual cost of duplication. (i) Where practicable, self-service duplication of requested documents on agency machines will be made available to any person requesting the documents. (j) Persous requesting copies of the transcripts of meetings, where the agency has prepared a transcript, shall be charged for the duplication of the transcript only. (k) Where data has been extracted from the agency's public records on magnetic tape computer files, copies of the tape files may be secured on a reimbursable basis, upon a written request. The fee charges for the preparation and duplication of materials shall in no case be greater than the cost to the agency. No fee shall be charged for any expenses incurred in the search for documents required to be maintained under this Subpart or for any costs incurred in determining whether records or any portion of them are exempt. (m) Records and documents shall be furnished without charge or at a reduced charge where the agency determines, upon application, that a waiver or reduction of the fee is in the public interest. (n) Certification of any agency record shall be performed without charge. THE  SUN SHINES IN THE COMMODITY FURURES TRADING COMMISSION  Senator CHILES. Mr. Cohen, I was surprised to see the Commodity Futures Trading Commission on the list. As you know, and I assume everybody else knows, Mr. Bill Bagley, the Commission Chairman, is one of the most ardent advocates of sunshine in town. He is the author of California's principal pieces of sunshine le,iislation and has made considerable attempts to open upon his Commission's activities to the public. I wonder if you could explain how he got in this fix of being on the list as No. H Mr. CoHEN. One of the reasons he says-and Mr. Rodriguez reminds me-deals with the fact that some of their items are litigation, but I think the best way to understand it is for him to be here and explain it. Senator CHILES. Well, we have a copy of a recent letter on this matter and and I will place it in the record at this point. [The letter follows:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  45 CoMMODITY l!'UTUBE TRADING COMMISSION, OFFICE OF THE CHAIRMAN, Washington, D.C., November 2, 1977.  Re Common Cause report on open meetings. Mr. DAVID COHEN, President, Common Cause, Washington, D.C.  DAVE: I was mildly shocked (but not chagrined) by the report indicating that we (of all people) have more closed meetings than open and that we use the "expedited procedure" approach. Let me say this about thatAs we have one market surveillance meeting a week and at least one enforcement meeting a week and have several judicial sessions per month, we will always have more closed sessions than open. Our open general sessions, lasting several hours, are held once a week. I would hope that can be understood and explained. And yes, we have been using expedited procedures. But because of your report <and the fact that I asked questions) "staff" now tells me that we can avoid this. As "market" meetings etc. are now regularly scheduled, we can simply schedule and announce them prospectively, as you suggest. We will also announce, sometimes after the fact, any emergency market-type or enforcement-type meetings that will from time to time become necessary. And further, just so you know, we are still the only agency in town which (1) hands out staff papers so those listening can understand, (2) allows upon request public participation in our regular meetings, (3) has open budget meetings, (4) broadens the definition of meetings, and (5) prevents in advance the possibility that the Oommission might meet in a facility that discriminates in any way. All of this has not been easy and the staff (some of them) stili think I'm crazy. So-keep up the good work. Without you, and a few people on the Hill and in the press, I'd be all alone. And that of course would confinn the views of staff. BILL.  P.S.-Good to see you the other day. Let me know what, where, when I can do.-B.  Senator CHILES. I am particularly impressed with it. His is the only agency which now distributes staff papers to those in the audience so they can understand what's going on. I think that's important. Mr. CoHEN. That is a very useful idea. In our own work we have discovered, and it is no great discovery, but once you do it it works much better. We follow the same principle in our own relations with our governing board. We send out the notices 2 and 3 weeks before the meeting so that people do have a chance to read them and comment and understand. Senator CHILES. Well, I think it is also important. You note that many of these agencies are dealing with technical subjects, and in many of the meetings they are dealing with people who are in the industry that they are regulating. They pick up a jargon that they use. jargon within the industry. They talk about document numbers and other abbreviated items that they understand but no one else can understand. Then they say: "We have opened some of our meetings, but the public isn't there. We don't know why they are not there." They might as well be conducting a Greek seminar if there isn't some way of understanding what is taking place. I think that is tremendously important if people are going to have some view of what goes on in Government. Mr. CoHEN. I think as defenders of the proposition that nothing should be left solely to the experts. We have taken it upon ourselves as   35-867 0 • 79 - 4 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  46 part of our responsibility to begin to cover some of these agency meetings. ,ve can't cover all 47 of them and don't pretend to, but I think those of us in the public interest movement learn what's going on, and I think with that I think we can begin to show the experts that the terrain is not only theirs. Senator CHILES. Well, I note that also he allows, upon request, public participation in meetings. He has opened his budget meetings and broadened the definition of meetings. He also makes sure that the Commission meetings are held in facilities which are open and do not discriminate in any way. ,ere think all of those are !audible steps. I want to thank you all very much for your participation and for your statement, and we look forward to continuing to work with you. Miss McBRIDE. Thank you. Mr. CoHEN. Thank you. [The prepared statement of Mr. Cohen follows:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  47 PREPARED STATEMENT OF DAVID COHEN, PRESIDENT, COMMON CAUSE  Mr. Chairman and Members of the ·senate Committee, Common Cause appreciates the opportunity to come here today and present to this Subcommittee the results of one of our recently completed studies, Shadows over the Sunshine Act:  A Common Cause Study of Federal Agency Compliance  with the Government in the Sunshine Act of 1976.  With your  permission, we would like to submit the entire study for the record. We commend you, Mr. Chairman, for beginning the serious process of Congressional oversight on the implementation of the Sunshine Act.  Too often laws are enacted--  but their implementation ignored.  Laws seldom are self-  enforcing --they need attention and monitoring.  We have  always believed that Congressional oversight is essential if our federal programs and laws are to work as intended. These oversight hearings of this Subcommittee will ·play a critical role in determining how the Sunshine Act is actually working.  Of equal importance, they will send a forceful  signal that Congress is serious about agency compliance with the letter and spirit of this landmark openness law. RESULTS OF THE STUDY Mr. Chairman, at this point, I would like to summarize the results of •.·ur study. The data contained in the study are based on a survey of the number and status of meetings held by 47 agencies covered by the Government in the Sunshine Act duri_ng the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  48 first quarterly period beginning March 12, 1977 through June 12, 1977. Our survey found that: -- 39% (232) of 591 meetings held during the quarterly period were entirely closed to the public; -- 24% (or 143) of 591 meetings held during the quarterly period were partially closed to the public; only 37% (or 216) of the 591 meetings held were fully open to the public; and exemptions relating to financial information accounted for 38% of the exemptions used to close meetings. The implications of these statistics are plainly disturbing.  Despite a landmark law mandating openness in multi-  member executive agencies, despite President Carter's call for a new era of executive branch openness, the prevailing pattern remains the same:  to avoid openness.  Decisions are still  made behind closed doors. Surely no public interest is served when well over half of agency meetings are closed or partially closed to public observation.  Secrecy perpetuates abuse of power, thwarts  citizen participation, and diminishes the accountability and responsiveness of government.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  49 When the House of Representatives in 1973 passed a Sunshine rule covering its committee meetings, a long held tradition of behind-closed-doors legislating was immediately reversed.  Common  Cause found that in the first 12 months of House implementation of its Sunshine rule, over 80% of its meetings were held in public.  Although we have no similar statistics for the Senate,  which adopted an open door policy in 1975, it is clear to those who follow Senate committee action that the closed meeting is the rare exception to the general rule of openness. Congress passed the Government in the Sunshine Act with the high expectation that the process.of secret decision-making by executive branch agencies, boards, and commissions would finally end.  When, in the first three months under the Act, far fewer  than half of all meetings are open to the public, serious questions are raised about the extent of agency compliance. At a minimum, the data clearly indicate a strong tendency on the part of agencies to close meetings under one of the Act's ten exemptions in spite of the presumption in favor of openness and the interest of the public at large in openness.  The Act  makes it clear that even where a matter falls within one of the Act's ten exemptions, the discussion must be open when the public interest requires it.  With fewer than half the meetings open to  the public, the strong and likely possibility exists of agency overuse of the exemptions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  50 We doubt that the authors of this legislation anticipated that fewer than forty percent of all meetings held would be entirely open to the public. Our analysis of the use of exemptions by agencies closing meetings or portions of meetings indicates that the ten exemptions to the openness rule were used to close entire meetings or portions of meetings 835 times.  While much  of the public debate surrounding the need for exemptions in the Government in the Sunshine Act centered on the concern for national security and the unwarranted invasion of personal privacy, thirty eight percent (or 315) of the time the exemptions cited were those regarding financial information (exemptions 4, 8, and (9) (A)). An analysis of the data reveals that matters of national security (exemption 1) accounted for only 1.5% of the closed ~eetings or portions while invasion of personal privacy (exemption 6) was cited for closing only 9% of the time. The data indicate that financial exemptions may well be over ased by agencies without concern for the public interest in these important matters. prime example.  The Federal Reserve Board is a  Chairman Arthur Burns fought vigorously in  Congress to exempt the Board from the law.  Although the  Board is covered by the Act, the broad language of the exemptions dealing with financial matters mean that as a practical matter few of '-he Board's meetings will be open to the public. In fact, of the 37 meetings held by the Fed, 30 were entirely closed.  The disproportionately large number of closed  meetings are justified by the Fed on the grounds that matters   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  51 of a sensitive financial nature were being. ·considered by the Board as permitted by the Act.  But the fact that the Board  elected to close one of its meetings in order to consider a proposed office furniture design as well as the Board's building renovation project raises serious questions about the Fed's willingness to comply with the spirit and meaning of the Sunshine Act. ( ~ 42 F.R. 21899). Another agency worthy of attention is the Interstate Commerce Commission which after the law was in force, disposed of one of the most important cases in its history in private. Although not reflected in our data because it occurred after the first calendar quarter of the Act, the Commission closed its June 28, 1977 meeting to determine the tariff rates on the transportation of oil in the Alaska pipeline.  Certainly a  question of such national importance should have been considered in open session based on an agency finding that the public interest would be served by openness.  A more recent example of  the ICC's questionable application of the Sunshine Act occurred on August 17 when, according to an article appearing in the Washington Star of August 28, 1977, agency members met in private over lunch with members of a trade association (the National Industrial Traffic League).  According to the ICC's  general counsel "it wasn't a meeting to conduct business or deliberation, it was a working meeting with general exchanges of views • • •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  SJ  in terms of the Sunshine Act it was not a  52 meeting." Act  We believe this is a perverse interpretation of the  in light of the fact that as a matter of policy, agencies  are obligated to broadly define meetings in order to further the spirit of the Act ( ~  s.  Rept. 94-354 at 18).  Certainly no one  would deny the importance of an agency attempting to gain insight as to the problems affecting the business they are charged with regulating.  However, we doubt the wisdom or the  propriety of an agency meeting in private with an association that has a clear and vested interest in the outcome of agency decisions. These examples point to agency disregard for the spirit and sometimes the letter of the Act.  They indicate that the  fact that less than 40 percent of all meetings are entirely open to the public may have as much to do with agency hostility to openness and accountability in government as it does with the legitimate use of the Act's exemptions. In marked contrast, it does appear th.at some agencies are making every effort to provide the public with the fullest practicable information regarding their decisionmaking process. For example, the Civil Aeronautics Board has held nearly 70% of its meetings in open session.  Additionaliy,  the CAB's regulations implementing the Act's open meeting provisions permit any person to petition the Board to reconsider the closing of a meeting.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  53 A number of other agencies have gone beyond the literal requirements of the Sunshine Act in order to affirmatively implement the spirit of open government.  Unfortunately most  agencies have not gone beyond the minimum requirements in order to carry out the spirit of the legislation.  Many  agencies seem to be adapting to the Act but only grudgingly. They view the Act as a procedural burden to be circ~vented when possible. ;!\ECOMMENDATIONS Agency compliance with. the Sunshine Act requires active Presidential leadership and initiative and continuous Congressional oversight.  The legislation was vigorously opposed  by a number of executive branch and independent agencies prior to its adoption by Congress.  These agencies argued that the  presence of the press and public at their meetings would inhibit open and candid discussion, impede the progress of their work, and force them to decide controversial matters in secret before official meetings.  They proposed every conceivable  justification for closing their meetings and lobbied for special exemptions. rt is unrealistic to expectthat the agenci.ea which. lobbied so vigorously against the enactment of the Sunshine Act will now comply with the letter and spirit of the law. Their past resistance to opennesa poses a direct ch.allenge to President Carter's commitment to openness in_ government.  Common  Cause believes the President and the Congress must take certain.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  54 specific steps in order to ensure meaningful compliance with the Sunshine Act and to set a new tone of openness in government. A.  Presidential Directive The President should issue a directive to the agencies  affirming the Administration's commitment to openness, establishing standards of openness,and requiring that agency regulations conform not only to the letter but also the spirit of the Act. The directive should reconunend that agencies close meetings only when there is an overriding public interest in doing so.  The Act allows an agency to close a meeting  under certain circumstances but does not require it to do so.  An agency can decide even where an exemption applies  that the public interest is served by openness and outweighs the justification for meeting in secret. following this approach.  Few agencies are  We believe they should be directed  to do so by the President. The President should direct the agencies to include in their regulations such items as: -- a broad definition of meetings, including conunittees and subdivisions: -- a requirement that notice be given 10 days in advance of a meeting: -- a provision ~ermitting the use of sound recorders and photographic equipment:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  55 a requirement that certification procedures of the General Counsel take place prior to the holding of a closed meeting; -- a procedure that would allow a citizen to request that a closed meeting be open; -- a justification for the use of the expedited closing procedure. B.  O.M.B. Review Although agencies have been given flexibility in  developing regulations, the Act does not provide for any review of these regulations by any agency of government to determine whether they adequately meet the Act's requirements and spirit. President carter should direct the Office of Management and Budget (0MB) to review for the White House each agency's regulations to ensure that they meet high standards of openness. O,M.B.'s approval of the regulations should be based on their compliance with the Presidential directive discussed above.  The  results of the review, including any recommended changes, should be made available to the public. c.  Oversight Hearings As we stated at the outset, Mr. Chairman, we believe  that the oversight hearings that you have initiated are critical to the future of the Sunshine Act.  We believe  that every agency must be held accountable to Congress for its performance under the Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  56 We believe that there are several basic questions that must be answered through the oversight process: Are the exemptions being properly used? Do the exemptions need to be more narrowly written? Are agencies ignoring the presumption of openness? Is the expedited closing procedure being used properly by the appropriate agencies? -- Do the expedited closing procedures serve the public interest? D.  Model Regulations Included in our study is a model regulation designed  to implement the Government in the Sunshine Act.  Although all  agencies covered by the Act have promulgated regulations implementing the open meetings provision of the law, Common Cause believes that each agency should periodically review its existing regulations for possible improvements.  Any revision should be  based on an evaiuation of the agency's -- as well as the public's experience under existing regulations.  Amendments should be  designed to further the Act's spirit of openness based on a reasoned and thorough analysis of the legislative history and agency experience under the Act.  Where the law permits agency  discretion in implementing the Act's open meeting provisions,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  57 the Common Cause model regulation offers a guide to possible revisions in existing agency regulations in order to further the spirit of the Act. Mr. Chairman, the American public has a vital interest in open agency decision-making.  These agencies make decisions which  affect all Americans in specific ways, from the quality of television commercials to the price of gas and electricity.  The  successful implementation of the Sunshine Act, creating a truly open process, is the only chance the citizen-consumer-taxpayer has to counter the behind the scenes influence of the special interests. We would be happy to assist you and this subcommittee in any way we can as you proceed with oversight of the Sunshine Act_.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  58 DEPARTMENT OF JUSTICE  Senator CHILES. Our next witness is Lynne K. Zusman, Chief, Information and Privacy Section, Civil Division, U.S. Department of Justice. The Civil Division has responsibility under the Sunshine Act for defense of litigation. We are glad to welcome the ,Tustice Department here today. Your written statement will be inserted in the record and we would greatly appreciate hearing the Department's views on the Sunshine Act.  TESTIMONY OF LYNNE K. ZUSMAN, CHIEF, INFORMATION AND PRIVACY SECTION, CIVIL DIVISION, U.S. DEPARTMENT OF JUSTICE Ms. ZUSMAN. Good morning, Senator. It is a privilege and honor to be here and to be representing the Department of Justice. As I tried to indicate in the statement that we have submitted to the subcommittee, the Department of Justice views the Sunshine Act as a very important part of the concept of openness in Government. Along with our responsibilities in the area of freedom of information and in the area of the Privacy Act we regard the Government in the Sunshine Act as adding an extremely important dimension to the concept of making the maximum disclosure of information about the decisionmaking process of Government available to private citizens. I would like to respectfully bring to your attention a minor correction in your statement that there had been no litigation at all. That is almost 99.44 percent true. We have about half of one lawsuit which was recently filed. I say "half" because it is a very interesting situation where the plaintiff is bringing the action under the Freedom of Infol'lnation A.ct as well as the Sunshine A.ct. The purpose of the lawsuit is to obtain a written document 'Yhich was discussed during an open meeting wherein the position of the plaintiff in the lawsuit is that the meeting was not truly open because this document had not been made available to it at the time of the meetin2:. This lawsuit was quite recently filed and the Department of Justice is defending it. I am sorry but I can't say anything more about it because it is a matter currently in litigation. Senator CHILES. Well, we thank you for correcting us, and bringing that matter to our attention. I did not know of any case. Mr. ZusMAN. I am particularly interested in vour experience with the Florida statute because I gather from vour remarks that there was a volume of litigation probably fairly recently after the statute became effective. We had anticipated that probably there would be litigation under the Federal statute. That hyopthesis· was based on the large volume of litigation that occurred as a result of the 1974 amendments to the Freedom of Information Act; that is, the volume of litigation that has been so very extensive that it has really almost caught the Department of Justice off guard. The office that I am the section chief of is an office of 11 attorneys and we are responsible at the moment for roughly 1,000 lawsmts   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  59 around the country. About two-thirds involve the Freedom o:f Information Act. I :frankly don't know why the Federal experience under the Sunshine Act has been so different :from the Florida experience. ,v-hat also is somewhat bewildering is the fact that Department has not ·been engaged in the process o:f prelitigation or consulting although we are available to do that. As the Senator may be aware, prior to the enactment o:f the Federal statute, several members o:f the Office o:f Legal Counsel in the Department o:f Justice, primarily, Deputy Assistant Attorney General Mary Lawton and Attorney David Marblestone, were active in discussions about the proposed legislation. I have checked with Mr. Marblestone very recently and he verified the same experience that my office has had virtually no inquiry :from the agencies as to interpretations o:f specific parts o:f the statute. I am afraid I don't :feel qualified to guess why that is. Senator CHILES. I am not sure that I :feel qualified either, but, like you, I am surprised. I will note a number o:f the cases in Florida initially were brought by the press. There has always been a completely different kind o:f attitude on sunshine by the national press than was true in Florida. That has always amazed me, too. In Florida the reason we really had sunshine was because o:f the continual persistence o:f the press. Every time you held a closed meeting in Florida, you had to throw some o:f the press out. They took your picture when you went in and your picture when you went out, and they displayed them. After a while, the people become so incensed they began to ask everybody in public office how they stood on sunshine. Finally, after a while the heat got so great that the bill finally came out o:f committee where it had rested for a long period o:f time. And, as it always seems to happen with the public vote, sunshine passed very strongly once it passed. Then when the boards and commissions ignored the act and began to hold their secret meetings and other meetings, many o:f these cases were brought by the press. As I say, we have never had the same strong interest o:f tihe national press up here. I think they have been so used to operating with the doors being closed, and by leaks or by being told afterward what happens, that there has just never been that kind o:f interest that there was, or that kind o:f persistence that there was in the Florida situation. That may have something to do with it. Ms. ZusMAN. ,v-ell, I don't know whether one very rapid effect o:f these hearings will be that suddenly we will be. :faced with some lawsuits. I think that that is possible. You are turning up the heat in sunshine and maybe something will-Senator CHILES. ell, that may be true.  ":r  DEPARTMENT OF JUSTICE-ADVICE TO THE AGENCIES  I note that Barbara A. Babcock, Assistant Attomey General, wrote a letter to different agencies in connection with your Civil Dfrision's responsibility :for defense o:f the act, and that letter was dated April 19, 1977. I would like to put a copy o:f that in the record.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  60 [The lette.r follows:] APRIL 19, 1977.  Mr. WAYLAND D. McCLELLAN, General Counsel, U.S. Foreign OZaims Settlement Commission, Washington, D.C.  DEAR MR. McCLELLAN: In conjunction with the Civil Division·s responsibilities for the defense of litigation under the Sunshine Act, 5 U.S.C. § 552b, I think it might be helpful to comment from time to time on matters which may raise potential litigation issues. This is the first such letter. I hope that you will consider the discussion in this letter as a part of our joint responsibility to insure that the Sunshine Act works and to avoid litigation whenever possible. Please feel free to distribute the letter to your staff so that our offices can cooperate and work together toward effective implementation of the Sunshine Act. Recently promulgated agency regulations bring to light a number of matters of interest which may merit consideration within your office : 1. Several agencies define the term "meeting" as used in subsection (a) (2) of the Sunshine Act (5 U.S.C. § 552b (a) (2)) in such way as to limit the joint deliberations which are subject to the Act. For instance we believe that in order to avoid ultimately fruitless litigation, a "briefing session" attended by at least the number of agency members required to take action on behalf of the agency, where the members attending have an opportunity to ask questions or seek clarification of matters of concern, should be included within the purview of regulations or practices applying the term "meeting". Where the deliberations do determine or result in the Joint conduct or disposition of official agency business, and except as specified in subsection (d) or (e) of the Act, such deliberations are meetings subject to the Act. Hhould your agency have drawn a more narrow regulation, it leaves the agency's proceedings subject to continuous attack. Subsection (h) (1) of the Act (5 U.S.C. § 552(.b) (h) (1)) provides that suits chaHenging agency action may be brought prior to the action challenger or within 60 days after the meeting out of which the violation allegedly arises "except that if public announcement of such meeting is not initially provided by the agency in accordance with the requirements of this said section, such action may be instituted pursuant to this section at any time prior to sixty days after any public announcement of such meeting." I suggest that you insure that the term "meeting" is broadly defined in practice so that the statute of limitations can come into play and so that the potential for litigation can be reduced. 2. The Act requires that agency meetings shall be open to "rmblic observation" (5 U.S.C. § 552h(b) ). Obviously public observation does not include the right to participate in the meeting. Likewise, the right to observe does not include any right to disrupt a meeting. Within these limits, I suggest that you accommodate members of the public desiring to attend open meetings. Meetings should be held in a room that has ample space, sufficient visibility, and adequate acoustics. Again, in order to avoid needless litigation over issues which do not go to the heart of the Act, the public should be permitted to take notes and photographs (without flash aids) and should be permitted to make sound recordings in a non-obtrusive manner. Each of these measures will enhance the public's ability to observe meetings and still permit the agency's business to proceed. If your agency has regulations not consistent with the foregoing, I suggest that you consider amending them. Of course, any person may attend a meeting without indicating his identity and/or the person, if any, whom he represents and no requirement of prior notific-ation of intent to.observe a meeting may be required. 3. A number of agency regulations explicitly provide that meetings will be open although an exemption may permit the closing of the meeting or portion thereof. I can add that a general practice of opening meetings to the fullest extent practicable will not only reduce litigation under the Act but will likely place us in a better posture in litigation, if and when any litigation occurs. I am certain that a vote of the membership of your agency on whether to close a meeting or portion thereof would, of course, take the public interest into account. I hope that the foregoing discussion is of assistance to you. I would welcome any suggestions you may have for matters appropriate for discussion in future, similar letters. Very truly yours, BARBARA ALLEN BABCOCK,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Assistant Attorney General.  61 Senator CHILES. I am impressed by the letter because it appears to me that the Division in trymg to prepare, and to get agencies to prepare, for the possibility of litigation that Justice has come up with good guidelines as to what the agencies should be doing. Ms. Babcock states: [W]e believe that in order to avoid ultimately fruitless litigation, a "briefing session" attended by at least the number of agency members required to take action on behalf of the agency, where the members attending have an opportunity to ask questions or seek clarification of matters of concern, should be included within the purview of the regulations or practices applying to the internal "meeting."  I am delighted to see that. I note that a number of the agencies define those sessions as being preliminary sessions. I think they definitely fall within the act's broad definition of meeting. I think that litigation will bring that out. I am glad to see that the Justice Department does not want to defend on those grounds and wants to have that matter cleared up. Ms. Babcock further states: Should your agency have drawn a more narrow regulation, it leaves the agency's proceedings subject to continuous attack.  At the bottom of that paragraph Ms. Babcock continues: I suggest that you insure that the term "meeting" is broadly defined in practice so that the statute of limitations can come into play and the potential for litigation can be reduced.  Paragraph 2 of Ms. Babcock's letter addresses public observation: I suggest that you accommodate members of the public desiring to attend open meetings. * * * [T]he public should be permitted to take notes and photographs. * * * [It] should be permitted to make sound recordings in a nonobtrusive manner. Each of these measures will enhance the public's ability to observe meetings and still permit the agency's business to proceed.  A number of agencies say you have got to have their permission to record or photograph. One of them even regulates the taking of notes. Others ban photographing. Some have outlawed sound recordings. We in the Senate seem to be able to conduct our meetings with people moving around with mikes and with sound recording devices. In fact, ,ve are happy to see it. I guess it is the nature of our business, maybe, but I don't see that those things should handicap people. I am delighted that the Justice Department doesn't see that either. The letter also says: Of course, any person may attend a meeting without indicating his identity and/or the person, if any, whom he represents, and no requirement of prior notification of intent to observe a meeting may be required.  Well, we found that some agencies make you give prior notification if you are going to attend, and then you must identify yourself. I am delighted to see the Justice Department clearing that up. A general practice of opening meetings to the fullest extent practicable will not only reduce litigation und·er the Act, but will likely place us 111 a better posture in litigation, if and when any litigation occurs. I am certain that a vote of the membership of your agency on ,vhether to close a meeting or portion thereof would, of course, take the public interest into account.  I am glad that she is sure. I hope she is right. We do want to place this letter in the record. I would like to ask you, has the Department come up with any guidelines on notation voting~  https://fraser.stlouisfed.org 35-867 0 - 79 - 5 Federal Reserve Bank of St. Louis  62 Ms. ZusMAN. No, we have not been asked any specific interpretations yet. In preparing for my appearance this morning, I did meet with mdividuals who had been ~nvolved in the development of the act previously, and I did learn that it had been contemplated at one time that in the Office of Legal Counsel in the Justice Department, which performs a very strong consulting role to the agencies in many subject areas, there had been some thought of producing guidelines in the form of a blue book memorandum, similar to what had been done when the FOIA was originally enacted, and then when the FOIA was amended. The blue book, as we call it, has been very helpful to the agencies and I did inquire whether there was any likelihood that OLC would be taking on this responsibility in regard to the Sunshine Act. I guess it is in limbo. It was considered last winter ,and it wasn't followed through on. It may be, perhaps, that if there were sufficient interest or encour~ment that something like that might be done. Senator CHILES. We.II, that seems to be the prevailing theme around here, that everythin~ is sort of in limbo. We can't find any hand at the helm right now m providing these guidelines, but we are looking for it. We are continuing through this meeting, hopeful that we are not only going to have a hand at the helm, but wind in the sails. Ms. ZUSMAN. The Department would like to help you in any way that is appropriate. Obviously, wherever it is possible it is a good idea to reduce litigation, to reduce the strain on the courts, and to practice preventive law and try and assist the agencies in coml?orting their behavior to the standards and the intent of the legislation. I think, basically, it comes down very often to -a commonsense interpretation. We all know what the framework of the statute is, and we all know that the purpose of it is to provide the maximum accessibility to meetings, and I think that this is the theme of the letter that you quoted from. Senator CHILFi!. It very definitely is. The letter was very encouraging. I am delighted to see the Department taking such an approach. We thank you very much for your appearance here today. Ms. ZusMAN. You are very welcome. [The prepared statement of Ms. Zusman folJows :]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  63 STATEMENT TO SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT OF UNITED STATES SENATE Sunshine Act Hearing, November 29, 1977 Department of Justice represented by Lynne K. Zusman In your letter of November 2, 1977 to the Attorney General, you stated that the purpose of this hearing was to discuss the impact of the Act since its effective date of March 11, 1977. been filed under the Act,  To dat~, only one laws~it has  !I  and we have had little exper-  ience with the Act. We have previously transmitted to the Subcommittee two letters sent to government agencies by Assistant Attorney General Barbara A. Babcock regarding the Sunshine Act.  The letter  sent on March 7, 1977 alerted the agencies to the imminent effective date of the statute and that the Information and Privacy Section is assigned the responsibility for defending all litigation under the Act.  In the letter  of April 19, 1977 several specific matters were addressed and Ms. Babcock noted that a general practice of opening meetings to the fullest extent practicable is desirable.  1/ In Consumers Union of the United States, Inc. v. Board of Governors of the Federal Reserve System, (U.S.D.C. D. D.C., No. 77-1800), plaintiff asserts that defendant violated 5 u.s.c. 552b(b) of the Sunshine Act by failing to make available a memorandum discussed during an "open" meeting·. The lawsuit was filed on October 17, 1977 and the government answered on November 21, 1977.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  64 The Sunshine Act clearly adds an important dimension to the accessibility of information to American citizens about their Government.  The Department of Justice stands  willing to cooperate in any way to assist the achievement of the goals of the Sunshine Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  65  FEDERAL DEPOSIT INSURANCE CORPORATION Senator CHILES. Our next witness will be Miles A. Cobb, General Counsel of the Federal Deposit Insurance Corporation. The FDIC is charged with promoting and preserving public confidence in banks through the provisions of insurance coverage for bank deposits. Mr. Cobb, it is a pleasure to have you with us today. Your statement in full will be inserted in the record. If you could summarize your remarks .in any way it would be appreciated because we do have a full line of witnesses. TESTIMONY OF MILES A. COBB, GENERAL COUNSEL, FEDERAL DEPOSIT INSURANCE CORPORATION; ACCOMPANIED BY ALAN R. MILLER, EXECUTIVE SECRETARY  Mr. Conn. I will just hit the high points of the statement, Senator. With me is Alan Miller, FD I C's Executive Secretary. I think in summary we have found that, as the act anticipated, a fair portion of the items to come before the FDIC Board are not suitable for open meetings. As a consequence we have found that on an item basis we have closed those portions of meetings dealing, for example, with the issuance of cease and desist orders designed to prevent unsafe or unsound banking practices and with applications by banks to employ individuals who have at some point in their life been convicted of a criminal offense involving dishonesty or breach of trust. Under the provisions of our act FDIC approval is required to hire that kind of employee. We have also closed to the public those agenda items dealing with applications where the applicant bank may be suffering from a sensitive problem involving a weakness in its capital structure or management. The FDIC is also charged with responsibilities as insurer of bank deposits and as received of insolvent banks and in those capacities the Board is frequently involved in negotiations with banks leading up to financial assistance to troubled banks or the sale of certain assets of an insolvent bank and the assumption by the purchaser of its deposit liabilities. As receiver of failed banks the FDIC and its Board of Directors must also pass on the sale or liquidation of bank assets in countless commercial transactions. As a consequence, in these areas of our responsibility we have closed agenda items dealing with app~ications by financially distressed banks to the FDIC for financial assistance. We have closed agenda items involving sensitive negotiations leading to the sale of assets of an insolvent bank and the assumption by the purchaser of its deposit liabilities. We have 3:lso. clo~ed agenda items which involve the discussion of proposed hqmdat10n transactions such as sales of assets, compromises of debts, settlements of lawsuits. Now since the Sunshine Act became effective we have had 77 meetings fr~m March 12 to November 22 involving 3: total of 1,102 a_genda items. Four hundred and twenty-one of these items were considered in open session, approxi~ately 40 pe_rcent of the tot_al. , . The point we would hke to make rn that regar_d is that we don t view this as static. About midway through our experience under the act, we  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  66 reviewed transcripts of closed meetings and noted that some of the bank application items, such as applications for insurance, applications to establish remote facilities, applications to retire capital notes of banks, which items were being closed up to that point, did not have to be closed. Accordingly, procedures were revised so that all discussions of bank applications except those involving particularly sensitive issues are now open to the public. We are a three-member agency, and we have been concerned, of course, about the definition of the term "meeting." The definition in the act is somewhat vague. It can be interpreted very broadly to cover almost any discussion of agency business among two members of our Board of Directors, even if the discussion is exploratory in nature and even if it does not result in reaching a consensus on a decision. We view that interpretation as not in the best interest of the working of FDIC. It is very difficult for two Directors who share office space on the same floor of our building to, in effect, live in an isolation booth and never discuss any matters relating to agency businesR without first going through the procedure of calling a meeting, or if it is a particularly sensitive matter to provide for a closed meeting. So what we are concerned about are the preliminary exploratory discussions and we have, as you know, in our regulations, followed the language of the Senate report on the bill which I will quote: It is not the intent of the ·bill to prevent any two agency members, regardless of agency size, from engaging in informal •background discussions which clarify issues and expose varying views. When two members constitute a quorum, however, the agency must be careful not to cross over the line and engage in discussions which effectively predetermine official action.  At the present time the problem is not a serious one because we have one vacancy on the Board, but we expect that to be filled in the near future. Chairman LeMaistre and the new director will share office space on the same floor and should be permitted to discuss informally preliminary background matters without the necessity of callin~ a. meeting. That is our biggest problem with the act, and while we feel we can live with the legislative history in the Senate report, it would be preferable if that issue were clarified for us, and we believe other three-member agencies would feel likewise. In closing, I would like to emphasize that the FDIC supported the enactment of this bill throughout its legislative process and will continue to make efforts to increase public awareness of what we do, consistent with our bank regulatory responsibilities. Thank you. Senator CHILES. Thank you. I understand that there are many of your meetings that necessarily have to be closed. That is exactly why we wrote exemptions within the act under which you could close meetings. We were not trying to endanger banks that might be on the verge of insolvency, nor were we trying to expose people in matters of privacy. And I can share the concern expressed in your statement that your agency is having a tough time with provisions of the act, especially when you have two people constituting a quorum. Your regulations do exclude from the definition of a meeting, informal background discussions among Board members and staff which clarify issues and expose varying views. You also exclude sessions  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  67 with individuals from outside the corporation, and meetings where Board members listen to a presentation and elicit additional mformation. That second part gives me problems. I think you might have problems with it also. I can understand the convenience of not holding such meetings publicly, but I find it difficult to believe that you can conclude, before such a session is held, that that meeting is not going to result in a predetermination of agency business. What might start off as exposing a view could easily end up as a unanimous agreement, especially when you are bringing in outsiders to present their views. I believe the decisionmaking process logically includes discussions which clarify issues and elicit information. I know that there is a fine line that you draw here. Two people on the same floor and two of them constitute a quorum I can understand that having two members constitute a quorum, working together on the same floor, gives you particular problems. I note in your statement, too, though, that you say you go through a great deal of difficulty in having to open a meeting. I.can't understand why it is so difficult to open a meeting. Can you tell me why you have such difficulty in opening a meeting? Mr. CoBB. I wouldn't say that that's particularly burdensome. It is more burdensome to close a meeting, as it probably should be. Senator CHILES. That probably has something to do with the intent of the act. Mr. MILLER. Mr. Chairman, to give the General Counsel his due, we send down all of the papers that will come to the next Board meeting and he makes a distinction between the ones that might be closed and the ones that might not be closed, and I am not too sure that from the standpoint of the person involved, that it is one single process. It is the closing, of course, where the work is involn'd. GUARDING THE PUBLIC INTEREST  Senator CHILES. Well, I understand that you have recently moved to amend your regulations to make clear that the act of closing a meeting is a two-step process, requiring a determination of whether the public interest requires an open meeting despite the availability of the exemption. Mr. COBB. That's correct. Senator CHILES. Would you tell us what criteria you use in making a determination as to whether the public interest requires that a meeting to be kept open? Mr. CoBB. I would say that as a general proposition that in most cases we cite exemptions (6), (8), and (9) (A>, and that if it appears from the agenda item that it is likely that information would come out in the meeting which would significantly endanger the stability of a financial institution, then we don't believe the public interest dictates that that be discussed in public. In effect, if we determine that a particular exemption, for example, applies because of the nature of the information and the likelihood of it being discussed, then we do not believe that the public interest requires that that be discussed publicly. Similarly, if it is likely that inform•a,tion which the language of the act says "constitutes a clearly unwarranted invasion of personal   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  68 privacy," will be discussed in a meeting, then I would say we don't believe that the public interest requires that that be discussed. For example, these cases that I mentioned where the FDIC is required to npprove employment by a bank of someone with a certain kind of criminal record. '\Ve don't think that the public interest requires that that person's record, which may be many years old, be discus.5ed in public. Senator CHILES. ,vell, I can understand that, but I am just wondering if there is anyone in the agency who addresses himself to the public interest issue. Is the public interest surveyed with the same thoroughness, the issue of whether the meeting falls within an exemption i Mr. CoBB. ell, the directors consider that question and make that finding. Senator CHILES. The other thing that I am concerned with, while I would agree with you generally that the financial stability of a bank can be sensitive, at what sta.ge should the public be advised that banks are in trouble, that banks are failing, that there is instability i Are we going to keep that information from the public indefinitely i It is more convenient, maybe, for the banking community to get another bank to come in and sort of take over the asse.ts. But at what stage is the public entitled to know that there are a heck of a lot of banks in troublei Now, we are not t,alking about the First National Bank, we are talking about the fact that banks in a particular region are in trouble. l\fr. CoBB. ,vell, the FDIC does make public the number of banks that are on what is called its problem list nationwide without identifying regions or individual banks. That has been made public for a number of years. Now, we don't think that it is in the interest of the public to disclose the financial difficulties of any particular bank. A bank is ,a very sensitirn instrnmentality. It can be destroyed in a very short order if public confidence is undermined and there are a lot of uninsured deposits in banks because our insurance is limited. Other persons who have financial interests in banks are not protected by the FDIC and we think the public interest in general is served by our being able to work out a smooth transition of an insolvent bank without our forcing the issue by disclosing its problems.  ,v  "HOLEY"  CERTIFICATIONS  Senator CHILF.S. ,vell, let me just ask you something else. I see some of the problems that you face is writing a closed meeting certification, which in itself might disclose information which would be sensitive and the very basis of closing the meeting. I note that where you ha.ve included sensitive information in the certification, you end up with big holes in these public documents. Mr. CoBB. We excised the names of banks, is what we did. Senator CHILES. Well, it would seem to me that we could avoid that kind of circumstance by at least describing the subject matter in general terms. Mr. CoBB. For example, the certifications that we do now where the agenda item is under section 8 of our act involving a. cease and desist   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  69 order to be issued against a bank to attempt to correct an unsafe and unsound condition, it is my judgment that all of those will be_ closed and we no longer list them individually by bank, but we certify the generic category. Senator CHILES. You certify now a generic category, a cease and desist order against the bank for unfair practices. Mr. CoBB. Or a number of banks. It is just one agenda item. Senator CHILES. I think that's much better. How often and under what circumstances have you used the abbreviated exemption status for eliminating the 7-day-prior-notice rule'? Mr. CoBB. Our regulations do provide for expedited closing. Senator CHILES. I am just wondering if you have found it necessary to use that and if so how many, and in what insta,nces. Mr. MILLER. I don't have a number. ,ve do do that, particularly on liquidrution accounts where there is a very tight timeframe, for instance on an offer to purchase something or there is property we have a lien on and we suddenly discover some prior lienholder is in the process of foreclosing. I don't have a real feel for the number. Percentagewise, it is rather small, but we do do that consistently. Senator CHILES. I note from your formal statement that you haven't · had much public attenda,nce at your meetings. Mr. CoBB. No, we have not. Senator CHILES. What steps have you all taken to try to make sure that the public can understand what is taking place at your meetings? Much of what you do is technical. You are involved in technical matters. Do you ha\,e any kind of a briefing statement that would be available to public observers, a summary of what the proceedings are'? Mr. COBB. No, we have not done that. Our premeeting notification procedures involve publication in the Federal Register and public posting of the notices in our lobby, and we do have a mailing list which is available for those who wish to be notified. At the present time there are only a. handful who have asked to be notified. We do follow that procediire. ,ve have not undertaken a briefing of the meetings or press releases. ,ve don't see:m to find much press interest in some of these things. Of course, those items which would be of most interest to the press we are not about ,to discuss in open meetings. Mr. MILLER. Abont onP-half of our cases are applications of the banks for insurance or relocations of branches or the like. In our publication we do indicate the bank and what it is applying for. Senator Cmrns. Normally do you have in attendance just the parties that are affeoted '? Mr. 0oBn. I don't recall since the act went into effect any parties even appearmg. Mr. Mnnm. I think we have had some in appeals under the Freedom of Information Act. Senator CHILES. Bnt the parties are notified that you wi11 be .taking up the application at that time? Mr. CoBB. Yes . .Senator CHILES. Well, we thank you very much. Mr. Conn. Thank ~rou very mnch: Rena tor. [The prepared statement of Mr. Cobb follows:]  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  70 PREPARED STATEMENT OF MILES A COBB, GENERAL COUNSEL, FEDERAL DEPOSIT INSURANCE CORPORATION I appreciate tnis opportunity to testify on the effect of tne uovernment. in the Sunshine Act on the federal Deposit Insurance Corporation.  I am FDIC General Counsel and accompanying me is  ~r. Alan rt. ~iller, tne FDIC's Executive Secretary. defore suggesting a clarifying amendment to the Act which I believe would furtner tne principles of tnis legislation, let  me oriefly review our experience witn the Act.  As originally  anticipated, a significant portion of tuIC business is not suitaole for open meetings.  In our capacity as a bank regulator, we constantly  assess tne conaition of Danks, including their management.  Sometimes  it is necessary to consider issuing cease-and-desist orders to prevent unsound banking practices.  Open consideration of these matters could  unnecessarily endanger the safety and soundness of banks regulated by tne FUIC. Examples of regulatory matters considered by E'DIC's Soard of Directors which are customarily closed to tne public are as follows: l,  Administrative enforcement proceedings under § 8 of the FDI Act, 12 U.S.C, S 1~18 under  s  ~  of tne FDI Act, the FDIC frequently issues  cease-and-desist orders to prevent unsafe or unsound oanking practices.  Compliance with these orders helps  return tne bank to a sound position.  However, open  discussion of a case would result in the release of contidential information contained in examination reports and also significantly endanger the stability of tne bank.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Exemptions (8) and (9) (A) (ii)  71 are therefore applied to close tnese meetings.  Addi-  tionally, the proceeding may involve sensitive discussions concerning the bank's management which, though relevant to our supervisory authority, would constitute an unwarranted invasion of personal privacy if publicly discussed.  In these cases exemption (6)  is also cited. ~-  ~pplications under§ 19 of tne BDl Act, 12  u.s.c.  §  182~  Under S 19 of our Act, an insured bank may not employ an individual who has been convicted of a criminal offense involving dishonesty or breach of trust without first securing FDIC consent.  Very often the employee  in question was convicted years before seeking employment at the bank.  In many cases the individual went on  to compile a good record following his conviction. Jpen discussions of the individual's earlier conviction would constitute an unwarranted invasion of personal privacy, and exemption (6) is applied to close tte issue to tne public. 3.  unusually sensitive banK applications The FDIC receives numerous applications from banks. These include applications for insurance, to establish orancnes or remote facilities, and to retire capital notes.  Some of these applications are now considered  in open session.  In other instances, however, the  applicant bank may be suffering from a sensitive   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  72 problem such as weakness in its capital structure or management.  In these particularly sensitive  cases, exemptions (8), (~)(A)(ii) and (6) are applied to close the meetings. In fulfilling its function as insurer of bank deposits and receiver of insolvent banks, the FDIC is often required to engage in sensitive negotiations with oanKs leading up to financial assistance to troubled banKs or to the sale of certain assets of an insol,ent banK and the assumption by tne purchaser of its deposit liabilities.  The remaining assets of a failed bank are  then liquidated over time througn countless commercial transactions. Open discussion of these deliberations could lead to a run on the bank, or to a smaller price being obtained from the sale of the bank than would otherwise be possible.  Similarly, discussing a  proposed liquidation transaction in public session could very easily reduce our return on the asset.  To the degree that the FDIC  does not recei,e tne maximum price possible for a failed bank's assets, it would not be meeting its obligations as a receiver under State and Federal law. Examples of financial assistance and liquidation matters closed to tne public are as follows: 1.  Requests for assistance under S 13 of the FDI Act, 12 u.s.c. 1~~3 Financially distressed banks may make application to the FDIC for financial assistance under S 13 of the FDI Act. Open consideration or premature disclosure of these matters could lead to a run on tne banK.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Accordingly,  73 exemption 8 (information contained in or related to bank examinations, condition, or operating reports) and exemption 9(A)(ii) (information the premature disclosure of which would significantly endanger the stability of any financial institution) are relied upon to close these matters to the public. 2.  ~urchase and Assumption Transactions ~eetings involving sensitive negotiations leading to the sale of certain assets of an insolvent bank and the assumption, by the purchaser, of its deposit liabilities are closed pursuant to exemptions (8), (9)(A)(ii), and 9(d) (information the premature disclosure of which would significantly frustrate a proposed agency action).  3.  Liquidation of tne Assets of an Insolvent Bank ~eetings to discuss  proposed liquidation transactions  are normally closed for the reasons discussed above. Liquidation cases co~er a wide range of commercial transactions.  They may, for example, involve seli~ng an asses,  compromising a debt, or settling a lawsuit.  Exemptions that  na~e been used in closing these matters are (4) (trade secrets or commercial or financial information obtained from a person and privileged or confidential), (&), (9)(d), or (lU) (information relating to an agency's participation in a civil action).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  74 3ince tne Act oecame effective in ~arcn of tnis year, tne FuIC's ratio of open to closed meetings has been 1:3.  Of the  77 meetings held from Maren 12 to November 22, a total of 1,102 agenda items have been considered.  Four hundred and twenty-one  of these items, or almost 4u percent, were considered in open meetings. I want to empnasize, also, tnat determination as to what items of ousiness must be closed to the public is not static. Approximately midway through our experience witn the Act, transcripts of closed meetings were reviewed and it was noted that some of the bank application cases (sucn as applications for insurance, applications to estaolish remote facilities, applications to retire capital notes, etc.) which were being closed did not have to be closed.  Accordingly, the procedures were revised so that  all discussions of bank applications except those involving particularly sensitive issues are now open to tne public. In spite of these efforts to conduct more business in open session, tnese open meetings are not well attended.  I do not believe  this poor attendance is the result of FDIC procedures.  In addition  to announcing meetings in the Federal Register as required by the Act, announcements of meetings are posted on a large, prominently displayed oulletin board in tne Corporation's lobby.  If the public  interest requires it, there are procedures for announcing a meeting through tne use of a press release.  Finally, a mailing list is  maintained to notify individuals of pending meetings.  Anyone who  makes an inquiry about a meeting is also advised that his or her name canoe added to the list.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  75 ~oor attendance at open meetings raises tne question of wnether the administrative burcten of tne Act is justified. buraen is a very sizeable one.  rhis  In order to comply with the Act, a  suostantial amount of paper work and staff time is required for open meetings.  Closing a meeting is an even more time-consuming  process. I would like to suggest tnat this burden is unduly heavy for t11e r'ulC and tne other three-member agencies, and that the Act should be reassessed to provide relief.  aecause this adminis-  trative buraen t1as been and will continue to be the Corporation's greatest problem with the Act, I will discuss it in some depth. ·rhe Act aefines "meeting" to mean "the aeliberations of at least the number of individual agency members required to take action on behalf of the agency where such deliberations determine or result in the joint conduct or disposition of official agency ousiness .  rnis rather vague definition could be inter-  pretea very broadly to cover almost any discussion of agency business among a quorum of agency members even if tne discussion is exploratory in nature and even if it does not result in reaching a consensus on an issue before them. Buen a broad interpretation of "meeting" would not create the same problems in a large agency as in a three-member agency where two members constitute a quorum.  In a tive-member agency, two  members can discuss agency policy and explore issues without a meeting taking place since a quorum would not be present.  In a  three-member agency sucn as FaIC, nowever, this broad construction   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  76 would require tnat all ousiness discussions between any two &emoers oe treated as a meeting under tne Act.  Announcements would  nave to oe maae and sent to the Federal Kegister, votes taken, and if the "meeting" is to be closed a Jenera! Counsel's certification, list ot attenaees, and transcripts would also have to be provided, It would often be very difficult to assemble all of the staff necessary to carry out these requirements every time two of our directors wisn to discuss an agency matter. ~nere a consensus is reached, or wnere a decision is preOetermined  or finalized, the Act should, of course, apply. are preli~inary, exploratory discussions.  In question, however,  Treating these as meetings  under the Act could create an unmanageable burden in three-member agencies.  Tne FDIC has not reached this point as yet because a  third director has not yet been confirmed, and the Comptroller of tne Currency, an ex-officio memoer of the aoard, is not directly involved in the day-to-day operation of fUIC business.  When a third  director is confirmed, however, he will occupy an office in close proximity to Cnairman LeMaistre and tney should be permitted to converse frequentiy.  Consequently, difficult administrative problems  would arise if the broad interpretation of "meeting" were"followed. Tnere are also proolems in staff briefings of two directors if tne broader interpretation is followed.  The recording of the pro-  ceedings that would oe required by tne Act could well stifle free and open staff discussion of issues related to sensitive matters, since portions of the transcript could in time become available to tne public.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  77 Fortunately another reading of the definition of "meeting" is supported oy the legislative history of this Act.  The Senate Heport  states tnat: "It is not the intent of the bill to prevent any two agency memoers regaroless of agency size, from engaging in informal oackground discussions which clarify issues and expose varying views • • • • ~nen two member3 constitute a quorum, however, the agency must oe careful not to cross over the line and engage in discussions wnich eftectively, predetermine official actions.• ln an Interpretive Guioe to tne Act, staff members of the Aaministrative Conference (the agency cnarged with overseeing agencies' implementing regulations) explain the aefinition of "meeting" in a way that would permit two directors of tne FDIC to have preliminary discussions without triggering the Act's requirements. ~e oelieve this is the correct construction of "meeting• under the Act and recommend that your 3ubcommittee consider clarifying the definition of "meeting• in a way that taKes into account the special proolems of tnree-memoer agencies under the Act.  Let me emphasize  that these comments should not be taken as opposition to the Act's primary purpose.  rne iOiC supported enactment of this legislation  and intends to continue its efforts to increase public awareness of agency decision-making, consistent with our oank regulatory functions.  1/  3ee p. 18 of Jovernment in the Sunshine Act -- An Interpretive  ~uiae, aer1  &  i\litzman.  lv1ention of tnis Guice is to carry, by the  author's request, the tollowing disclaimer. "£his draft Guide has been prepared tor tne utfice ot the Cnairman, Administrative Conference of the Jnited States. It represents only the views of its authors, not necessarily those of tne Office of the Chairman or the Conference."'  35-867 0 • 79 • 6  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ll  78 FEDERAL ENERGY REGULATORY COMMISSION Senator CHILES. Our next witness will be the Honorable Charles Curtis, Chairman of the Federal Energy Regulatory Commission, and previously the Federal Power Commission. Mr. Curtis was recently confirmed by the Senate on October 20, 1977, so I nm especially pleased to have him here to tell us about the leadership he will hP. providing for the agency in carrying out the spirit and letter of the Sunshine Act. Mr. Curtis, if you would briefly summarize your remarks we will insert your statement in full in the record. TESTIMONY OF CHARLES B. CURTIS, CHAIRMAN, FEDERAL EliERGY REGULATORY COMMISSION  Mr. CuRTIS. Thank you, Senator. As you indicated m your remarks I am newly confirmed in the Office of Chairman of the Federal Energy Regulatory Commission. This is an agency which came into existence under the terms of the Department of Energy Organization Act. It was activated on October 1. Necessarily, therefore, my comments bf.fore you today will relate to the experience at the Federal Power Commiss10n, on which I had the privilege to serve as its last Chairman, before the termination of that agency coincident with the activation of the Department of Energy. As you may know, the Federal Power Commission opened its meetings to public observation, prior to the enactment of the Sunshine Act, on April 1, 1976. The first Federal Power Commission open meeting took place on April 21, or approximately 5 months before the act was adopted, and approximately 11 months before it became effective. A total of 71 Commission meetings were held during that period and all but 5 of them were open to the public. The Federal Power Commission implemented by Order No. 562 the provisions of the Sunshine Act on March 11, 1977, and between that date and October 1, 1977, the Federal Power Commission held 46 meetings or approximately 8 meetings per month. Of the 46 meetings only 4 were closed to :public observation. One of the closed meetmgs concerned the Alaska natural gas pipeline system, then the subject of an on-the-record proceeding in connection with formulating the FPC recommendation to the President under the terms of the Alaska Natural Gas Transportation Act. The other three meetings involved a number of pending on-the-record proceedings, civil litigation, or internal personnel matters, all properly closed to the public. Since the activation of the Federal Energy Regulatory Commission the Commission has held 13 meetings. Of this number only two have been closed in part to public observation. Those sessions were closed in order to discuss pending civil litigation involving the Commission. In both cases that involved actions which the Commission may take with respect to pending applications for certiorari to the Supreme Court.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  79 At the time the implementing regulations of the Sunshine Act were adopted, the Federal Power Commission recognized that a majority of its meetings could properly be closed to the public pursuant to exceptions provided in 4, 8, 9 (A), or 10 of the act, thus qualifying the Commission to adopt simplified procedures for closing Commission meeting-s under subsection ( d) ( 4) of section 3 of that act. The Federal Power Commission determined not to adopt such procedures. This reflected a conscious policy to close meetings only on a case-by-case basis. Absent some future need to modify our procedures, which is unknown to me today, the Federal Energy Regulatory Commission will continue to follow the more restrictive practice previously adopted by the Federal Power Commission. We believe in maximizing the opportunity for public involvement in the decisionmaking process and it will continue to be the Commission's policy to close meetings or parts of meetings only on a selective and limited basis as the need arises. I have mentioned in my prepared remarks a number of problems with implementation of the Sunshine Act and one of those is a request for legislative clarification of the definition of "meeting." It would be helpful to provide further congressional guidance in this respect. The second area involves practical considerations that we have encountered in meeting the 7-year advance notice requirement through publication in the Federal Register, given the fact that this agency is required to take action within a statutory time period of 30 days with respect to a number of the most important aspects of the Commission's work and is also required to act for emergency purposes, in conjunction with the President, in dealing with the deepening natural gas supply shortage problem. I do not intend my summary remarks to repeat those contained in my prepared statement, but I would be happy to respond to any questions. A MEETING BY ANY OTHER NAME  Senator CHILES. Thank you, sir. I notice that the definition of a meeting in your regulations, whil~ basically trackin~ the statute, embellishes it somewhat. Specifically, you define meetmgs as face-to-face deliberations thus eliminating conference calls and, interestingly in order for a quorum to constitute a. meeting, the Secretary or his designate must be present. Is there some reason for having the Secretary or his designate to have to be there to constitute a quorum j Mr. CURTIS. I don't know the history behind the Federal Power Commission's adopting that definition. It had been adopted before I got there. My personal view is that face-to-face deliberations are not a prerequisite to a defined meeting under the Sunshine Act. Conference calls, as well, would necessitate compliance with the intent of the Sunshine Act. As to the Secretary's presence, I can only offer a guess,. b~t we will be happy to supply an explanation of that. I assume that 1t 1s out of the caution for the legal requirement that there be a record of the meeting of the Commission, as required under the terms of the Sunshine Act. But, it is not intended to define out from the Sunshine Act require-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  80 ments those meetings which may be for decisionmaking purposes simply because of the absence of the Secretary. I think it was directionally intended the other way. Senator CHILES. I note that on page 8 of the statement, you state that preliminary discussions can be excluded from the definition of a meeting. That interpretation would seem to be in plain disagreement with your own regulations defining a meeting. It would seem to me that the preliminary discussions of the Commission would be the very discussions when the public might be most interested in hearing the Commission's views. First, because they would like to know his or her instinctive reactions, and second, those reactions are going to determine what the agencfs business is going to be at a later pomt. I am concerned as to how we can be sure beforehand that a preliminary discussion wouldn't in fact turn out to be something very final. Briefings from outside parties or agencies also interest me. Even if the Commissioners do nothmg besides sit there and don't say a word while being briefed by outsiders, I think, as a member of the public, I would like to know what kind of information the Commissioners are being given. After all, it is on the basis of information of all sorts that you make your decisions. How do you currently treat such briefing sessions? Mr. CuRTIS. Since I have been a member of the Federal Power Commission and also the Federal Energy Regulatory Commission there has not been any such meeting in which someone outside the agency briefed the Commission. This presents a problem. We have a new Commission, that is to say, new Commissioners who bring different levels of experience and familiarity to the task that they have undertaken to perform. We have attempted to go through an educational process bY' having staff briefings on the regulatory purposes behind the Federal Power Act, for example. The briefings considered its legislative history, what had been the Federal Power Commission's regulatory attitude and objectives in administering that act. where had the agency concluded a limit on its jurisdictional responsibilities, and where might there be opportunities to further that jurisdictional reach or to retreat from a reach that. the agency had previously engaged in. Now, those types of briefings of the Commission. in my opinion, do not constitute a meeting within the purview of the Sunshine A.ct. If in the course of that meeting, however, the discussion becomes so focused that it would lead members of the Commission to formulate a decision with respect to a particular issue or matter which may be pending before the Commission, then T think at that point we step over the line. As you noted in the Senate report that accompanied the Sunshine A.ct, Senator, what constitutes a meeting is a matter which would have to be within the judgment of the members of a collegial body, keeping mindful that the presumption would be to stop the proceeding if that line is stepped over. But I suggest to you it is not a very bright line and any guidance yon could give to us so that we may carry out the intent of the Congress properly would be helpful. As you know, the Administrative Conference has concluded an analysis of the Sunshine Act. In this particular regard they noted that there is difficulty in determining what is a meeting for purposes of the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  81 require~en~s of ~he Sunshine Act and borrow~d rat~er heavily from !he legis~ative _history created by your committee m suggesting an mterpretive gmde for an agency to observe. I guess my question to you is whether that guide comports with your understanding of the intent of the Congress. Senator CHILES. Well, I think the Justice Department letter comes ruuch closer than the Administrative Conference to what I would consider to be in the legislative history. The Administrative Conference writes a nice treatise. I have read it several times, and I don't know what I have read after I finish reading it. But, I can understand the Justice Department letter. When in doubt, err on the side of openness. I think that's exactly what the legislative history and the act itself are trying to set forth. Mr. CURTIS. Well, Senator, I hope this committee would observe that the Federal Power Commission has had a pretty good record of openness and I think the Federal Energy Regulatory Commission is equally committed to that. Senator CHILES. I do want to applaud the Federal Power Commission for its early actions in opening up its meetings. I think that's laudable and I want to applaud you for that. NOTATION VOTING-DECISIONMAKING BEHIND CLOSED DOORS?  I am particularly interested in getting your views on the matter in which the Commission handled its decision regarding a route to bring gas from Alaska. That was reported in the Washington Star on M:ay 3, 1977, and according to that article, which I will submit for the record, the Commission attempted to avoid the Sunshine Act while conducting much of its business through notation voting which is not expressly prohibited by the act; but for a decision that seems to be one of the most important decisions the Commission has ever handled with 45,000 pieces of public testimony, notation voting seems to hardly be in keeping with the intent of the act. [The article follows:] [From the Washington Star, May 3, 1977]  Two  PIPELINES PREFERRED-FPC CAN'T DECIDE ON ROUTE ALASKA  To  BRING GAS FROM  (By Stephen M. Aug) President Carter has begun consideration of a l!'ederal Power Commission recommendation in which the commissioners couldn't make up their minds which of three routes should bring huge quantities of Alaskan natural gas to the 48 contiguous states-a recommendation handed down following a highly unusual meeting yesterday. About all the four commissioners could decide was that U.S. consumers need the 20 trillion cubic feet of natural gas known to exist at Prudhoe Bay, Alaskaenough 'to provide about 5 percent of the Nation's gas consumption for the next 25 years-and that the gas probably should be transported over land, rather than via ocean vessels. And even at that, the commissioners left open the possibility that if the Canadian government won't grant permission on acceptable terms to build a pipeline through Canada, the gas may have to be shipped by a riskier route involving liquifying it, shipping the liquid in special tankers and converting it back to gas at a plant on the West Coast.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  82 TWO COMMISSIONERS  Chairman Richard L. Dunham and Commissioner James G. Walt-backed a 4,600-mile gas line proposed by the Alcan Pipeline Co., a consortium of the Northwest Pipeline Corp. and three Canadian firms. This pipeline would follow the new Alaska oil pipeline before branching off into Canada where it would pa:rallel an existing 'highway. Further, in an apparent attempt to avoid the new federal law that requires open meetings, the commissioners in this case have accomplished much of their business by so-called notation voting-sending memos from one office to the other in their ninth-floor complex at commission headquarters, 825 North Capitol St. According to one account, after the new Sunshine Act went into effect the commissioners were given advice that they could not get together even tu have a staff briefing. One source pointed out that things got so touchy that even if the commissioners were sitting in a room talking about basketball and somehow the subject moved around to the Alaskan gas case. Every time the gas situation was mentioned, "Smith would run out of the room. You just couldn't mention Alaska withou't gyrating the furniture." The commissioners, however, made their final decisions at an open meeting yesterday-a meeting marked by almost total secrecy by the commissioners themselves as to what they were talking about. Dunham named the various chapters of the report to be issued. The commissioners made their comments by referring to paragraphs for footnotes-but never reading them so those in the audience could understand what they were talking about. In fact, when the commissioners considered the letter to the President-the document which contains a summary of the FPC's recommendations-only code names were given for the various drafts. Commissioners Don S. Smith and .John H. Holloman III backed the Alaskan Arctic Gas Pipeline Co. plan to build a pipe through virgin territory in Northern Alaska and through the Mackenzie Delta in Canada. Alaskan Arctic is a consortium of five gas companies. All of the commissioners rejected a plan by El Paso Alaska Co. to build a line entirely in Alaska ending on the South Coast from which liquified gas would be shipped in tankers 1900 miles to California. The cost of any of the projects ranges from $6 to $10 billion. An FPO judge in February recommended the Alaskan arctic plan be implemented. Under the 1976 Alaska Natural Gas Transportation Act, the President has until Sept. 1 to make his recommend•ation to Congre;,s-although he may postpone his decision until Dec. 1. Congress then must either approve it or return it for revisions. Although the FPO recommendation is just that-not a final decision-the Alaskan gas matter is generally conceded to be one of the most important cases the FPC ever has handled, and, following lengthy public hearings during which nearly 45,000 pages of testimony were compiled plus thousands of pages of exhibits, most of the agency's consideration of the matter has been in private. In fact, so secret have its deliberations been that even its closest staff experts have not attended meetings.  Senator CHILES. What limits do vou intend to place on the use of notation voting? Mr. CURTIS. Well, can I comment on the Alaska Natural Gas Transportation Act decision? Senator CHILES. Yes. Mr. CURTIS. I think one of the aspects of that, that the committee may wish to consider, is that the Congress took that decision away from the Federal Power Commission and lodged it, instead, in the hands of the President and of the Congress by approving the President's recommendation through joint resolution, which the Congress has only recently approved. The Commission's deliberations that you referred to, in connection with the Commission's consideration of the Alaskan   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  83 natural gas transportation system, conserved the recommendation that the Commission was to make to the President. Now, of course, the embodiment of that decision was a matter of public record. . I think that the Commission decision must have been a particularly difficult one, as to whether it should have an open meeting since it involved our foreign relations with the Government of Canada, as well as participation in the Presidential and congressional decisionmaking processes. I would be happy to ask the member of the Comm;ssion who sat at the time that the matter was under consideration to provide the committee with an explanation of the considerations that r rent into the determination to close that meeting, if the committee shc,uld so desire. Again, I was not there at the time. Senator CHILES. Is there any publication of the notation votes? Mr. CuRTIS. Yes, there is an official record of that which delineates those items which the Commission has determined by notation vote. One of the things that I have done since I got to the Commission has been to have books compiled of the proposed orders that the Commission has under consideration, for review by the public participants in our meetings. Heretofore, they were not able to track the Commission discussion, which focused on various paragraphs in the proposed orders. Now they can and I think that has increased the public's understanding of those meetings which they have attended. Second, on the notation voting-Senator CHILES. Well, I note that one of the things that was raised in the Star article about the public meeting held at the time of the announcement of the Commission's-decision or recommendation was that no one really knew what was taking place because all of the comments were made with reference to paragraphs and in codes. There was no way anybody could understand what was going on. You say you have changed that? Mr. CURTIS. I think that's a proper criticism and we have changed thatbsir. I think it has worked pretty well, although we have had trou le with members of the audience ripping out the pages of the proposed orders. Therefore, it is hard to keep the copies current, even during the period of Commission deliberation. That is a practical problem, but we, nonetheless, intend to continue the practice. On notational voting, what I have asked the Secretary to explore is the use of notational voting only when it follows public considera.tion; that is, where the Commission has reached a determination at an open meeting and then has the proposed order redrafted for circulation. Senator CHILES. Well, that's exactly why we did not expressly prohibit notation voting. People started raising examples dealing with shopkeeping matters, routine matters. One of the thing-s we were trying to keep agencies from saying is that the act was just going to be a harassment, keeping an agency from being able to operate. Thus, we didn't prohibit notation voting. On the other hand, we find that sometimes if a meeting does not fall within one of the exemptions, and thus should be opened, an agency can circulate papers and decide issues by notation voting. We   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  84 definitely see that as evading the act. We may have to do something about notation voting. It would be unfortunate if we are forced to because of agency abuse, because there are areas, as you have just pointed out, when you have already made a decision and simply circulate it for final approval, where notation voting seems to make a lot of sense. Mr. CURTIS. Sir, in regard to your concern that the public be provided with additional information at Commission meetings, it should be noted the staff papers could be requested under the Freedom of Information Act. My personal view is to take one step at a time in determining the types of materials that may be distributed to the public, when those materials serve as the backup :for Commission decisionmaking. These backup memorandums are all in the category of interagency memorandums and contain various recommendations from the staff as to the Commission's decisionmaking responsibility. I must confess that I have some concern with a broad circulation of such documents :for two reasons. One, I think there is some legitimacy in the assertion that it would impede the frank and open communication of the staff with the Commission. And second, that the Commission would have the opportunity-Senator CHILES. What if you had a digest rather than a complete document? Perhaps you could distribute some kind of digest that could serve as a summary of the arguments in the case. In other words, the public should not he prohibited from knowing what the basic arguments are. Mr. CURTIS. I would agree with that. Our proposed orders attempt to state the facts, as well as the contesting points of view, and the Commission's proposed determination of those facts and ar~ments. Our proposed orders as I noted, are now made available to the public participants so that they may understand what is the case before the Commission, the nature of the arguments and contested point of view, and the Commission's proposed resolution of those matters. The ~nderlying documents to which I referred, the various recommendations of, say, the Office of General Counsel or our Office of Producer and Pipeline Regulations, are sometimes in conflict as to the wisdom of particular Commission action. The proposed judgment of the Office of General Counsel may often relate to a strategy in litigation which would clearly be subject to an exemption from disclosure. Senator CHILES. Well, what about the public notice before the meetings? I understand that Columbia Gas Transmission Corp. requested that the Commission expand the format of its published agenda in order to describe each action being considered by the Commission. As I understand your format, the docket numbers indicate that public docu~ents may be examined in your office. In your response to the Columbia Gas request, you adopted the suggestion due to the fact that: The purpose of the act is to open the deliberations of the Commission to the public rather than expand the public's right to secure information which would otherwise be exempt from public disclosure.  It looks like there could be some middle ground here in which you could identify the subject matter in a way adequately to inform the general public thoroughly. Legislative history makes clear that docu-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  85 ments and names are not enough. Each reference to a generic subject matter, such as consumer complaints or applications for new routes does not meet the requirements of this subsection. You know, when your announcement comprises 56 docket numbers and corporate names, you cannot expect the public to troop down to the information office and wade through all those files. Mr. CuRTIS. No, I think that also is a problem, Senator. Bew.nning next week, although this has been in process for sometime, we will have a more refined Commission agenda which breaks down the docket items by subject matter identification that will help. As far as presenting a digest of each item, I believe we would have significant administrative problems in doing that, but we will certainly consider whether we can provide a brief description of the nature oi cases which are before the Commission. Often we have sessions which involve more than 100 docket items. and the Federal Power Commission has been round]y criticized in th~ past for its inability to manage its case]oad expeditiously. We have a great deal of problems in just getting the documents to the point of decisionmaking. We are frantically trying to catch up with our process all the time. Further expansion of the agenda format, while in the interest of the public understanding of the Commission's proceedings, would add significant burdens upon our administrative staff. Frankly, I think you just have to balance the contesting interests and resources. Senator CHILES. I understand you have a great problem in trying to catch up. I have been among those criticizing the way the Commiss10n has handled that in the past. CAN THE PUBLIC RECORD AN OPEN MEETING?  I note your regulations prohibit the use of recording devices by public observers during the open meetings. Would you tell me how 1t bothers you if someone sitting in the audience has a recording device in his lap 1 Mr. CuRTIS. It does not bother me at all, sir. I propose to change that aspect of the regulations. I would just state the obvious that regulations are regulations of the Commission, and require majority vote. A sitting member of the Commission, who also served on the Federal Power Commission at the time that prohibition was adopted, has strong views against the use of recorders. This will have to be matter o:f discussion. Senator CHILES. I hope that you might read that sitting member a copy of Ms. Babcock's letter :from the Justice Department. She would hate to be defending any lawsuit involving someone who had a recording device. You might tell that seated member that if he continues to be a majority, he might find me in the audience with my recording device. The same thing, applies, o:f course, to the picture taking. I notice that you prohibit cameras also. It would seem that as long as it is not disruptive, picture taking should be permitted. Gosh, it's nice to get your picture taken sometimes. Mr. Curtis, I would like to thank you :for your appearance here today and for sharing your agency's views with us, and I hope you--   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  86 Mr. CURTIS. Senator, if I may make just one parting comment. My answer to your question relatin~ to whether our regulations define meetings as face-to-face deliberations should be clarified for the record. I stated it would be my personal view that you could not eliminate conference calls from the re.quirements of our regulations because I did not recall that as nn aspect of our rewilations. I have now had the opportunity to check that. As I read our implementing regulations, it tracks exactly the language of the statute with respect to the definition of a meeting. I am wondering if there is some confusion that I am not aware of. Senator CHILES. What we were looking at was the Administrative Order No. 8, which was dated April 9, 1976, and which, under definitions, is used in this order and subsection C. It said that Commission meetings are defined as face-to-face deliberations of at least the number of Commissioners required to take action. Mr. CURTS. Yes, sir. That was the order prior to the Sunshine Act. After enactment of the Sunshine Act, the Commission took guidance from the Congress. Senator CHILES. Good, we are delighted with that change. Thank you very much. Mr. CURTIS. Thank you, sir. [The prepared statement of Mr. Curtis follows:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  87 STATEMENT OF CHARLES B. CURTIS CHAIRMAN, FEDERAL ENERGY REGULATORY COMMISSION BEFORE THE SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE November 29, 1977  Mr. Chairman and Members of the Subcommittee,  I am appearing today in response to your November 2nd letter concerning the implementation and impact of the Government in the Sunshine Act since it became effective on March 11, 1977.  Your staff has indicated to us that  _'your particular interest is the implementation of the statute's open meeting requirements. Although I am meeting with you today as the Chairman of the Federal Energy Regulatory Commission, of necessity, my statement relates, in large measure, to the Federal Power Commission's experience under the Sunshine Act.  As  you are aware, upon the activation of the Department of Energy on October 1, 1977, the Federal Power Commission, on which I had the privilege of serving as the last Chairman, was terminated and most- of its jurisdictional respons.illilities were·transferred to the new Federal Energy Regulatory   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  88 Commission.  The FPC's regulations, including those im-  plementing the Sunshine Act, were made applicable to the FERC by Order No. l issued October 6, 1977. FPC Administrative Actions to Open Commission Meetings As you may know, the Federal Power Commission opened its meetings to public observation prior to enactment of the Sunshine Act pursuant to its Administrative Order No. 160, issued Aprill, 1976.  y  The first FPC open meeting  took place on April 21, 1976, or approximately five months before the Sunshine Act was adopted and approximately ll months before it became effective.  A total of 71  Commission meetings were held during that period and all but five of them were open to the public. The Federal Power Commission issued Order No. 562, implementing the Sunshine Act, on March 11, 1977.  y  The  FPC's regulations for implementation of the open meeting provisions of the Sunshine Act were prepared in consultation with the Administrative Conference of the United States.  y y  See Appendix A. See Appendix B.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  89 The proposed regulations were widely supPorted by the respondents to the notice of proposed rulemaking as an important extension of the process of opening FPC deliberations to public scrutiny.  Indeed, as one respondent noted:  •The Commission's open meetings have provided the public with a better understanding of the Commission's decisionmaking processes, and have enabled  •• parties vitally  affected by Commission regulation to better plan their operations on the basis of the Commission's expressed intentions Between March 11 and October l, 1977, the FPC held 46 meetings under Order No. 562, or approximately 8 meetings per month.  Of the 46 meetings, only 4 were closed to  public observation.  y  Two of the meetings concerned the  Alaska Natural Gas Pipeline System, then the subject of an on-the-record proceeding before the FPC in connection with its recommendation to the President.  The other two  meetings involved a number of pending on-the-record proceedings, civil litigation, or internal personnel matters properly closed to the public.  y  Copies of General Counsel Certifications required by the Sunshine Act are contained in Appendix C.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  90 Since the activation of the Federal Energy Regulatory Commission on October l, the Commission has held 13 meetings. Of this number only 2 meetings have been closed in part to public observation.  ii  Those sessions were closed in order  to discuss pending civil litigation involving the Commission. At the time Order No. 562 was adopted, the FPC recognized that a majority of its meetings could properly be closed to the public pursuant to exemptions 4, 8, 9A or 10 of the Sunshine Act, thus qualifying the Commission to adopt simplified procedures for closing Commission meetings under subsectio.  (d) (4) of Section 3 of the Act.  The FPC  decision not to adopt such procedures reflected a conscious policy to close meetings only on a case-by-case basis. Absent some future need to modify our procedures, we will continue to follow the more restrictive procedures for closing Commission meetings.  We believe in maximizing the  opportunity for public involvement in the decision-making process and it will continue to be Commission policy to close meetings or parts of meetings only on a selected and limited basis as the need arises.  ii  Copies of the General Counsel Certifications are contained in Appendix D.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  91 Implementation Problems and Issues Implementation of the Sunshine Act has given rise to some difficulties and issues have come to light which may require legislative clarification. The legislative history of the Sunshine Act reveals that there was considerable discussion about what should constitute a •meeting" for Sunshine Act purposes.  As  stated in the Administrative Conference's very helpful interpretive guide to the statute, "[d]efining the scope of the term 'meeting' is one of the most troublesome problems in interpreting and applying the Sunshine Act.•~ There appears to be a fine line between those joint activities of a collegial body which require Sunshine Act procedures and those which do not, In order to discharge our responsibilities, it is necessary for Commission members to consult and discuss matters of general concern on an almost daily basis. I believe the need for this kind of ongoing interaction was well recognized  by  the Congress and is reflected  1/ Government in the Sunshine Act: An Interpretive Guide, Administrative Conference of the United States, November 1977, p. 3.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  92 in the effort that went into the formulation of what constitutes a "meeting" for Sunshine Act purposes.  It was  intended, I believe, that the open meeting requirements of the Act were to be observed whenever a quorum of the Commission met for the purpose of resolving or discussing the resolution of Commission business.  The statutory  language defining a "meeting" and its legislative h~story reflect that it was~ the intent of the Congress that all sessions at which a quorum or more of the Commission is present and at which matters under our general jurisdiction are brought up should be elevated to the level of a "meetingn within the meaning of the statute.  Yet,  there is inadequate guidance in the legislative materials as to where the line should be drawn between activities that must be carried out in a public forum and those that need not be. The Administrative Conference's interpretive guide offers a valuable suggestion on this point.  The Conference  urges that exploratory and informational discussions among Commissioners be exempted from the open meeting requirements as long as they do not become so focused as to be likely to result in a decision or the taking of firm positions on   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  93 pending matters.§/  I believe this suggestion has con-  siderable merit and warrants Congressional consideration. In any event, it would clearly be desirable if Congress could refine the definition of "meeting" so as to insure public access to agency decision-making without impeding the necessary daily give and take among Commission members. Another area of concern is the need for expedition of Commission business.  By statute, the FERC is required to  review, analyze, and decide whether to suspend a proposed rate increase within 30 days after a filing is made.  In  many instances it is impossible to complete this process prior to the minimum 7-day notice period normally required by the Sunshine Act.  ' The problem is compounded by our lack  of control over the timing of such rate increase applications. In addition, there are emergency filings before the Commission which must be decided more quickly than the 7-day notice period contemplates.  Thus, for example, seven  of eighteen late items added to the Commission's agenda  !/ "A discussion which is sufficiently focused on discrete proposals or issues as to cause or be likely to cause the individual participating members to form reasonably firm positions regarding matters pending or likely to arise before the agency is a meeting, while; in our view, a discussion which is merely informational or exploratory is not." p. 7.   35•867 0 - 79 - 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  94 during November related to emergency applications under the Natural Gas Act.  While the statute does contemplate  such exigencies (S3(e) (2)), additional voting recordations and notice requirements must be satisfied with resulting administrative and paperwork burdens.  Since the need to  change Commission agendas is not an infrequent occurrence, consideration should probably be given to whether this problem is sufficiently widespread among affected agencies to warrant modification of the statute's requirements. We have attempted to institute administrative procedures which diminish the burden of late additions to the agenda.  Our regulations allow deletions from the  Commission's agenda to be made without further action by the Commission or the necessity of further public notice. The public is informed of the practice in our meeting notices, and is advised to contact the Secretary's office for the current status of a particular item on the agenda. This practice, it seems to me, is preferable to the alternative of leaving matters off the public agenda until we are certain they are ready for Commission consideration   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  95 and then, in many instances, having to issue a late addition notice.  Such notices are almost never pub-  lished in the Federal Register until after the Commission meeting has been held. The lead-time required by the Federal Register for publication of our Sunshine Act documents is also a major problem in the Act's implementation.  Due to the Commission's  weekly meeting schedule and·the normal 3-to-S day delay  between Federal Register receipt of documents and publication, notices of closed meetings and late-added items are usually published well after the fact.  This is a recurrent  problem despite our practice of telecopying such notices directly to the Federal Register in order to avoid mail and messenger delays. In order to complement our Federal Register notice procedures, the Commission has copies of all notices and press releases posted in the Office of Public Information and makes printed copies available in that office twice daily.  In addition, the Commission's Secretary maintains  a special mailing list for meeting notices.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  96 Other procedures have been adopted to enhance public awareness of Commission activities.  For the first time,  copies of proposed Commission orders and opinions under consideration are being made available to the general public at open meetings.  Public observation has also  been improved through the recent installation of audioamplication equipment. All of the above procedures have been established to overcome the shortcomings of Federal Register publication of our Sunshine Act notices and to enhance public observation and undertstanding of the Commission's decisional process.  We will continue to evaluate our notice procedures  and will revise those procedures as appropriate to effectuate the purposes of the Sunshine Act. This concludes my prepared statement.  I and the  Commission staff with me today will be pleased to respond to your questions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  97 APPEN:JIX A  41 FR 15095, 4/9/76 UNITED STATES OF AMERICA FEDERAL POWER COMMISSION  .:  ,.~,,..,.,_  i  ' .,,.........:  Before Commissioners: Richard L. Dunham, Chairman; Don S. Smith, John H. Holloman III, and James G. Watt. Renu-:ibereci ty AO tllA, 8 7/26/77. ADMINISTRATIVE ORDER NO,•J;vil PUBLIC ATTENDANCE AT COMMISSION MEETIIIGS (April 1, 1976)  1. Purpose. In order for the Commission to carry out its mandate to provide Federal regulation in the public interest of the interstate electric and natural gas utility service, the Commission recognizes the principle that the public interest is best served when regulatory affairs are open to the fullest extent practicable. To ensure the achievement of this goal, it is the purpose of this Order to bring to the attention of all Bureaus, Offices, and Regional Offices the policy of the Commission to open Commission meetings to the public and, whenever practicable, to notify the public in advance of all Commission meetings. 2.  Definitions.  As used in this Order:  (a)  "Commission Staff" includes the employees of the Federal Power Commission other than the five Commissioners;  (b)  "Commission" includes the five Commissioners of the Federal Power Commission acting in an official capacity; and  (c)  "Commission meetings" are defined as the faceto-face deliberations of at least the number of Commissioners required to take action on behalf of the Commission where such deliberations concern the joint conduct or disposition of Commissio~ business and are conducted with the Secretary or his designate present.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  DC-108  98 3. Open Commission Meetings: Open Commission meetings will be attended by the Commissioners, the Commission Staff, and any other individual or group desiring to observe the meetings. The public will be invited to observe the meetings but not participate nor to record any of the discussions by means of electronic or other devices, or cameras. Access to documents being considered at Commission meetings shall be obtained in the manner set forth in Section 1.36 of the Commission's Rules of Practice and Procedure. 4. Physical Arrangements for Open Meetings: The Secretary shall be responsible for seeing that ample space, sufficient visibility, and adequate acoustics are provided for public observation of the Commission meetings. 5, Closed Commission Meetings: Closed Commission meetings will be attended only by the Commissioners, the Commission Staff, and the Secretary. Closed Commission meetings may be held when it is determined by a majority of the Commissioners that the disclosure of information pertaining to a meeting, or any portion thereof, would be likely to: (a)  disclose matters (1) specifically authorized under criteria established by an Executive order to be kept secret in the interests of national defense or foreign policy and (11) are in fact properly classified pursuant to such Executive order;  (b)  relate solely to internal personnel rules and practices of an agency;  ( C)  disclose information recuired to be withheld from the public by any statute establishing particular criteria or referring to particular types of information, including 15 U.S.C. 717g(b); 16 U.S.C. 825(b); 18 U.S.C. 1905;  (d)  disclose trade secrets and commercial or financial information obtained from a person and privileged or confidential, including geological and geophysical information and data, including maps, concerning wells;   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  99 (e)  involve accusing any person of a crime, or formally censuring any person;  (f)  disclose information of a personal nature where disclosure would constitute a clearly unwarranted invasion of personal privacy, including personnel and medical files and similar files;  (g)  disclose information contained in investigatory records compiled for law enforcement purposes, but only to the extent that the disclosure of such records would (1) interfere with enforcement proceedings, (11) deprive a person of a right to a fair trial or an impartial adJudication, (111) constitute an unwarranted invasion of personal privacy, (iv) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (v) disclose investigative techniques and procedures, or (vi) endanger the life or physical safety of law enforcement personnel;  (h)  disclose information contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation,or supervision of financial institutions;  (1)  disclose information, the premature disclosure of which would (1)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  in the case of information prepared by an agency which regulates currencies, securities, commodities, or financial institutions, (a) be likely to lead to significant financial speculation, or (b) significantly endanger the stability of any financial institution;  100 (11)  in the case of any agency, (a) be likely to significantly frustrate implementation of a proposed agency action, or private action contingent thereon; or (b) relate to the purchase by such agency of real property;  This paragraph shall not apply in any instance where the Agency is required by law to make such disclosure prior to taking final agency action on such proposal; or (111)  (J)  be inconsistent with the provisions of Public Law 93-579 (89 Stat. 1896) and implementing Commission regulations. (See particularly Commission Order No. 536, as amended).  specifically concern the Commission's issuance of a subpoena, or the Commission's participation in a civil or criminal action, an action in a foreign court or international tribunal, or an arbitration, or the 1n1t1at1on, conduct, or disposition by the Commission of a particular case of formal agency adjudication pursuant to the procedures in Section 554 of Title 5, United States Code, or otherwise involving a determination on the record after opportunity for a hearing.  This section shall not apply where the Commission finds that the public interest requires otherwise. 6. Public Announcement. Advance notice of Commission meetings will be provided to the public at the earliest practicable time. (a)  Commissioners and the Staff are responsible for reporting meeting arrangements to the Office of the Secretary at the earliest possible time. Such reports are to include the following information:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  101 (1)  Date, time, and place of the meeting;  (11)  Subject of the meeting (as fully and precisely designated as possible);  (111) (iv)  Whether the meeting is open; and Name and telephone number of the Commission official who is to respond to requests for information about the meeting.  (b)  The Secretary shall ensure the timely publication of notice of'Comm1ss1on meetings which is to contain the information described in subsection (a) of this section.  (c)  Following each Commission meeting, the Secretary shall issue a 11st of Commission actions taken, which shall become effective as of the date of issuance of the related order or other document, which the Secretary shall issue in due course, all in the manner prescribed by the Commission under the Natural Gas Act, Federal Power Act or other legal authority.  7. The provisions of this Order shall be effective for the Commission meeting as of April 21, 1976. 8. Supersession. Administrative Order l~o. 65, dated June 18, 1958, and any other order that is inconsistent with the contents herein are hereby superseded. Subsequent to the issuance of this Order, the appropriate portions thereof will be published as a Commission directive. By the Commission. ( S I AL )   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Kenneth F. Plumb,  Secretary.  102 APPENDIX B  UNITED STATES OF AMERICA FEDERAL POWER COMMISSION (18 CFR Parts land 3) Before Commissioners:  Richard L. Dunham, Chairman; Don S. Smith, John H. Holloman III, and James G. Watt.  Adoption of Rules Governing) Observation of Commission) Meetings and Ex Parte Com·) munications )  Order No.  Docket No. RM77·4  562  Order Adopting Rules Governing Observation of Commission Meetings and Ex Parte Communications (Issued March 11, 1977) November 15, 1976, the Commission issued a notice in this proceeding, 41 Fed. Reg. 52,303 (1976), wherein we·proposed to amend portions of Parts land 3 of the Commission's rules and to adopt a new Section 1.3a, Chapter I, Title 18, C.F.R., to be entitled "Notice and procedures for Commission meetings." The purposes of the proposed changes are to conform the Commission's current open meeting procedures to the requirements of section 3 of the Government in the Sunshine Act (Act), Pub. L. No. 94-409, and to revise and clarify its current~ parte rule in light of section 4 of the Act. On  The Commission had previously issued a notice in Docket No. RM76·24, statin2 that it had been petitioned by certain utilities and others to amend its ex padtehrule, 18 C.F.R. §l.4(d) (1976). The petition propose t e amendment for the stated purpose of facilitating the disposition of niatters before the Commission by allowing informal discussions between Commission staff counsel, or certain other Commission employees, and counsel for parties to proceedings before the Commission concerning proposed settlements or prooosed agreements for disposition of particular issues. To the extent that the comments filed in Docket No. RM76-Z4 have been incorporated by reference by respondents herein, they   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  llC-C-41  103 Docket No. RM77-4  - 2 -  have been considered in revising the p~oposed :! parte rule. The notices provided for a period of comment and comments were received from 24 parties in Docket No. RM7&-24 1/ and 11 parties in Docket No. RM77-4 . 2/ The concerns of the commenting parties are discussed hereafter according to subject matter. In addition to the opportunity for written submittals, an on-therecord public conference was held on February 24, 1977 in response to a request for further consideration of the proposed ex partehrule amendments. A number of participants Trom wit in and without the Commission attended. y Open Meeting Provisions The meetings of the Commission, i.e., the deliberations of the Commissioners, have been opened to public observation :since April 21, 1976 pursuant to Administrative Order No. 160, issued Aprill, 1976. The respondents indicat'ed no objection to the proposed procedures in light of the Act. Some suggestions for technical revisions to the proposed rules are adopted and are not specifically discussed herein. The Southern California Edison Company (Edison) requested that the Commission allow public observers at open meetings to record such meetings by electronic equipment or cameras in order to benefit those interested persons who are unable to attend due to distance from Washington, D. C. In view of the fact that official minutes of such meetings will be made, which will be available to members of the general public, and that ample provision is made for members of the press desiring to report on the Commission's public  !J  See Attachment A.  !/ See Attachment B.  y  See Attachment C.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  104 Docket No. RM77-4  - 3 -  deliberations, we decline to accede to Edison's request. The logistical difficulties coupled with the potential for interruption do not warrant allowing the requested procedures in view of alternatives available to those unable to attend the Commission's open meetings. The Director of the U.S. Department of Health, E•ucation and Welfare's Consumer Affairs Office commented that the agenda for an open meeting should be publicized as early as possible and at least one month in advance, whenever possible. We will, of course, give notice of such meetings as early as possible, although we recognize that it will likely be infeasible to announce the agenda for a particular meeting more than one week in advance in most situations. The Director also urged that we use the Coffll!lission's 24-hour telephone "Hotline" fer announcing upcoming meetin«s. Technical limitations prevent us from extending total taped message time to include meeting announcements at the present; however, we believe the suggestion is a good one and we intend to pursue its implementation whenever it appears technically feasible to do so. Columbia Gas Transmission Corporation, et al. requested that the Co111111ission expand the currenr format of its published agenda in order to describe each action being considered by the Commissioners. The Commission's current procedure is to announce its agenda by designating each agenda item by complete docket number without further elaboration. We believe that this procedure is sufficient to alert interested members of the public of the general matters to be considered, particularly in the context of current filings that are available for public inspection. We therefore decline to adopt the suggestion due to the fact that the purpose of the Act is to open the deliberations of the Commissioners to the public rather than to expand the public's rights to secure information which would otherwise be exempt from public disclosure under the Freedom of Information Act. 5 U.S.C. 1552(b)(k), 90 Stat. 1241, 1246. Congresswoman Bella Abzug, Chairwoman of the Government Information and Individual Riaht~ ~nhcnmm'itt"'" of the House Committee on Government nperations made several suggestions for clarifying amendmen·ts   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  105 Docket No. RM77-4  - 4 -  which are adopted herein without further elahorii.tinn Congresswoman Abzug incorrectly asserted howeve; • that the Commission cannot avail itself ~f exemption 9A of the Act "since fthe Commi~sionl is not 'an agency which regulates currencies, securities, commodities, or financial institutions.'" In light of our responsibilities under various statutes respecting certain CO?'llOrate transactions of reSNlated utilities, we do not choose.to delete exemption 9A fran.the Conllli,sion's regulations llllder the Act. See,!:.!.·• 16 U.S.C. §§824b, 824c, 825d and SZSq; 15 U.S.C. §7I7lc. Congresswoman Abzug, without citing any authority for the proposition, suggested that the Commission had no discretion to delete individual items on an agenda without notice. The Commission's proposed procedure would result in the announcement of items for Commission consideration, even though the staff work might not have been completed at the time of the announcement. To eliminate flexibility with respect to deletions of agenda items would serve no useful purpose, while creating additional administrative burdens. The proposed procedure gives adequate notice to the public that a particular matter may be considered at a meeting. The a2enda is subject to further chP.ck with thP agency contact person designated in the notice, We therefore believe that retaining the proposed procedure best serves the needs of the public. We recognize that a majority of the Commission's meetings may properly be closed to the public pursuant to exemptions 4, 8, 9A or 10 of the Act or any combination thereof. In such a situation, the agency is authorized to provide by special regulation for the closing of meetings under S U.S.C. 155Zb(d)(4), 90 Stat. 1241, 1243. Certain procedural and informational requirements of the Act do not apply to any portion of a meeting closed under such special regulations. This Commission has been in the vanguard in its commitment to a policy of open meetings since the adoption of Administrative Order ~o. 160. While we do not preclude the possibility that at some future time due to changing conditions the Commission may find it appropriate to provide a more streamlined   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  106 Docket So. RM77-4  - 5 -  mechanism for closing meetings,we decline to do so at the present time. Ex Parte Communications The Commission's proposal to modify its rule regarding ex arte communications in light of the Act and the legi's ative history thereof was the focus of considerable comment. Most comments were critical of the Commission's current rule and the proposed rule, arguing that both were unduly restrictive and should be revised to track the language of Section 4 of the Act. Substantive comments are responded to hereafter.  1  Several respondents commented that the proposed rule was in conflict with the Act because the proposed rule, though less restrictive than the current rule, was more restrictive than and, it was argued, in conflict with the Act. We recognized, and so announced, in our notice of rulemaking that the present rule served to "impede unnecessadly the conduct of Commission business by prohibiting generally all contacts between Commission employees and any interested person in any contested on-the-record proceeding. At the same time, we recognized that Section 4 of the Act established a floor, not a ceiling, for prohibited ex parte communications. Thus, the Act would supplement more stringent restrictions against ex pahte contacts which an agency may have issued priorto t e Act. H.R. REP. NO. 94-880, Part I, 94th Cong., Zd Sess. 19 (1976). To the extent that our proposed ex parte rule continues to be more restrictive thanthe minimum required by the Act, we believe that it serves a valid purpose in preventing even the appearance of improper contacts between those within!/ and without the  !7  Several respondents expressed concern that improper contacts may occur between trial staff and advisory staff in the absence of an express prohibition and of separation of function within the staff. We do not believe that further actions are necessary in this regard since we construe 18 C.F.R. §l.30(f) as prohibiting improper contacts between different staff elements. Thus, any Commission employee who participates in a substantial manner in a contested on-the-record proceeding should enter a formal appearance in that proceeding, whether or not appearing as a witness or as staff counsel, and should thereafter refrain from improper contacts with th .. aJvisory, i.e., decisional, staff.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  107 Docket No. RM77·4  • 6 •  agency. To the extent that the proposed rule would allow limited, informal discussions between staff coun· sel or certain Commission employees and counsel for parties to proceedings before the Commission, we believe that the relaxation of our pr.esent rule in this regard would have the salutory effect of expediting the disposition of Commission business without diminishing the integrity of the decisional process. In any event, non-unanimous settlement proposals would be required to be served upon all parties to a proceeding for such action as they may consider appropriate prior to any formal submission to the Commission. 5/ Even after the filing of proposed settlement-agreements with the Commission, our practice is to allow submission of comments on the proposal before any action is taken by us. Given the existence of these safeguards against the unfair treatment of any party to a proceeding before this Commission, we cannot believe that such a practice can be reasonably considered to erode public confidence in the administrative process. Several respondents suggested that the proposed definition of~ rarte contacts should be revised to exclude requests or status reports. We encourage such requests to be made to the Secretary 6/. In light of the Act, which expressly excludes-requests for status reports on any matter or proceeding covered by the Act as being an ex earte contact, we will not include such requests wITh1n our definition of ex par~ c~ntacts. s. REP. NO. 94•1178, 94th Cong., 2d 5ess. (1976); H.R. REP. NO. 94·1441, 94th Cong., 2d Sess. 29 (1976). At the same time, we wish to make it clear that we will not allow such a request to be used as an indirect or subtle effort to influence the substantive outcome of a covered proceeding. In doubtful cases, Commissioners and staff shall treat the communication as ex earte so as to protect the integrity of the decision· iiiak1ng process. H.R. REP. NO. 94·880, Part I, 94th Cong., 2d Sess. 20·21 (1976).  9  Unaccepted proposals of settlement may continue to be privileged and shall not be admissible in evidence against any counsel or person claiming such privilege pursuant to 18 C.F.R. §1.lS(e) (1976).  §./  ~ . hi.·, 18 C.F.R. §3.lOO(b) (1976).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  108 Docket No. RM77•4  • 7 •  It was·a1so suggested by sever~l respondents that the proposed exemption (vi) to the ex parte rule should eliminate the prohibition against contacts with decisional employees made after reasonable prior notice to and consent of all parties. In order that we not preclude legitimate contacts between the Commission and its staff and outside interested persons, we herein eliminate the limitation. We do so since it is our belief that the decisionmaking process is protected in instances where all parties have been given reasonable prior notice and have unanimously consented to certain communications. Alabama Power Company et al. suggested that the definition of an ex parte communication be modified to clarify that such acommunication is prohibited only when it is relative to the merits of an on-the· recor~ proceeding pending before the Commission. We agree that such is the purpose of Section 4 of the Act, H.R. REP. NO. 94·880, Part I, 94th Cong,, 2d Sess. 19·20 (1976), and our proposed rule. Accordingly, our rule will be clarified as suggested. The Executive Committee of the Federal Power Bar Association (Association) and several participants at the public conference suggested that we define who is a decisional employee with greater precision. We consider this to be an appropriate request and will direct the Commission's Secretary to prepare and issue a list of decisional employees who are to be protected from non-consensual ex partj contacts. Such a list cannot, however, becons1 ered as elimi· nating the burden upon outside persons to inquire of staff members whether they are decisional employees in a particular proceeding. Similarly, a member of the staff not listed as a decisional employee who acts in that capacity with respect to a particular proceeding should so inform any interested outside person attempting to make an!!.! parte contact. This responsibility of the decisional staff is the analogue of the responsibility of the trial staff to make an appearance in a particular proceeding in order to inform the public and the decisional staff that they will not thereafter be involved in the decisional process. See,!..:..&·• Tr. 5. Having   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  109 Docket No. RM77-4  - 8 -  voluntarily made or entertained prohibited ex pfrte communications, an employe·e will be prohibited rom future participation in the decisional process of the relevant pending on-the-record proceeding. See, !.:J.•• Tr. 50-51. The Association also suggested that the Commission clarify those proceedings covered by the ex pirte prohibition.· We believe that the proposearu e sufficiently defines the scope of the prohibition to cover any proceeding "required by statute, constitution, published Commission rule or regulation or order in a particular case, to be decided on the basis of the record of a Commission hearing . • • . " Edison urged that we modify the proposed rule to eliminate the provision for triggering the prohibition by the filing of protests and notices to intervene in a particular proceeding. We do not believe that this provision creates any additional difficulties for the public since it parallels the definition of "contested on-the-record proceeding" in the current rule. More importantly, however, there are sometimes unavoidable, but lengthy, intervals between the filing of protests or petitions to intervene and any notice for hearing which may be issued in a particular proceeding. In such instances, we do not believe that such delays, unavoidable though they may be, should serve to erode public confidence in the decisional process by effectiv•ely preventing protestants and intervenors from being informed about and participating at all stages of a pending proceeding. The Commission finds: (1) The notice and opportunity to participate in this rulemaking proceeding with respect to the matters presently before this Commission through the submission in writing, and presentation at a public, on-the-record' conference held on Februarr 24, 1977 of data, views, comments, and suggestions 1n the manner described above, are consistent and in accordance with the procedural requirements prescribed by 5 U.S.C. 1553.  (2) Good cause exists for making the amendments herein adopted effective immediately upon issuance.  35-867 0 - 79 - 8   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  110 Docket No. RM77-4  - 9 -  (3) It is necessary and appropriate for the administration of the Government in the Sunshine Act, the Federal Power Act and the Natural Gas Act, that the Commission's General Rules be amended as herein provided. The Commission, acting pursuant to the authority granted the Federal Power Commission by the Federal Power Act, as amended, particularly Sections 308 and 309 (49 Stat. 8S8, 8S9; 16 U.S.C. 825g, 825h), by the Natural Gas Act, as amended, particularly Sections 1S and 16 (S2 Stat. 829, 830; 1S U.S.C. 717n, 7170), and by Pub. L. No. 94-409 (90 Stat. 1241) ~ : (A) Part I --- Rules of Practice and Procedure Chapter I, Title 18 of the Code of Federal Regulations, is amended as follows:  1. Section l.l(c)(l) is revised to read as follows: §1.l (c)  The Commission * * * * * Sessions.  * * * * * (1) Public. Public sessions of the Commission will be held after due notice as ordered by the Commission. (See §§1.3 and 1.3a). * * * * * 2. Section l.2(a)(l) is revised to read as follows:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  §1.2  The Secretary.  (a) Official records. (1) The Secretary shall have custody of the Commission's seal, the minutes of all action taken by the Commission, the transcripts, electronic recordings or minutes of meetings closed to public observation, its rules and regulations and its administrative orders.  * * * * *  111 Docket No. RM77-4  • 10 •  3. Immediately following section 1.3, a new section 1.3a, Notice and procedures for Commission meetings, is added. Section 1.3a reads as follows:   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  11.3a Notice and procedures for Commission meetings. (a)  Definitions.  In this section:  (1) "Agency", as defined in 5 U.S.C. 551(1) as" . . . each authority of the Government of the United States, whether or not it is within or subject to review by another agency, . • . " includes " •• , any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory a11;ency [S U.S.C. 552(e)J which is headed by a collegial body composed of two or more individual members, a majority of whom are appointed to such position by the President with the advice and consent of the Senate, and any subdivision thereof authorized to act on behalf of the agency; (2) "Meeting" means the deliberations of at least the number of individual members of the Federal Power Commission required to take action on behalf of the Commission where such deliberations deter· mine or result in the joint conduct or disposition of official Commission business, but does not include deliberations required or permitted by subsections (d)(3) and (f) of this section; (3) "Member" means an individual who belongs to the collegial body heading the Federal Power Commission; and (4) "Staff" includes the employees of the Federal Power Commission other than the five Commissioners.  112 Docket No. R~77·4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  · 11 ·  (b) Open meetings. (1) Every portion of every meeting of the Federal Power Commission will be open to public observation subject to the exemptions provided in subsection (d)(l) of this section. Open meetings will be attended by the Commissioners, certain Commission staff, and any other individual or group desiring to observe the meeting. The public will be invited to observe and listen to the meeting but not to participate nor to record any of the discussions by means of electronic or other devices or cameras. Documents being considered at Commission meetings may be obtained subject to the procedures and exemptions set forth in section 1.36 of this Part. (2) Commission members shall not jointly conduct or dispose of agency business other than in accordance with this section. (c) Physical arrangements. The Secretary shall be responsible for seeing that ample space, sufficient visibility~ and adequate acoustics are provided for public observation of the Commission meetings. (d) Closed meetings. (1) Meetings will be closed to public observation where the Commission properly determines, according to the procedures set forth in paragraph (3) of this subsection, that such portion or portions of the meeting or disclosure of such informa· tion is likely to: (i) disclose matters that are (A) specifically authorized under criteria established by an Executive order to be kept secret in the interests of national defense or foreign policy and are (B) in fact properly classified pursuant to such Executive order; (ii) relate solely to the internal personnel rules and practices of an agency;  113 Docket No. RM77-4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  · 12 -  (iii) disclose matters specifically exempted from disclosure by statute (other than S U.S.C. 552), provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholdin1 or refers to particular types of matters to be withheld; (iv) disclose the trade secrets and co111111ercial or financial information obtained from a person and privileged or confidential, which may include 1eological or geophysical information and data, including maps, concernin1 walls; (v) invelve accusin1 any person of a crime, or formally censuring any person;  (vi) disclose information of a personal nature where disclosure would constitute a clearly unwarranted invasion of personal privacy, includin1 personnel and medical files and similar files; (vii) disclose investigatory records compiled for law enforcement purposes, or information which if written would be con• tained in such records, but only to the extent that the production of such records or informa• tion would (A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an impartial adjudication, (C) constitute an unwarranted invasion of personal privacy, (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforce· ment authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (E) disclose investigative techniques and procedures, or, (F) endanger the life or physical safety of law enforcement personnel;  114 Docket No. RM77·4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • 13 •  (viii) disclose information contained in OT related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions; (ix) disclose information the premature disclosure of which would··· (A) in the case of an agency which regulates currencies, securities, commodi· ties, or financial institutions, be likely to (i) lead to significant financial speculation in currencies, securities, or commodities, or (ii) significantly endanger the stability of any financial institution; or (B) in the case of any agency, be likely to significantly frustrate implementation of a proposed agency action, except that subparagraph (B) shall not apply in any instance where the agency has already disclosed to the public the content or nature of its proposed action, or where the agency is required by law to make such disclosure on its own initiative prior to taking final agency action on such proposal; or (x) specifically concern the Commission's issuance of a subpoena, or the Commission's participation in a civil action or proceeding, an action in a foreign court OT international tribunal, or an arbitration, OT the initiation, conduct, or disposition by the Commission of a particular case of formal agency adjudication pursuant to the procedures in 5 U.S.C. 554 or otherwise involving a determination on the record after opportunity for a hearing. (2) Commission meetings shall not be closed pursuant to paragraph (1) of this subsection when the Commission finds that the public interest requires that they be open.  115 Docket No. RM77-4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  - 14 -  (3) (i) Action to close a J!leeting, or portion thereof, pursuant to the exel!lptions defined in paragraph (1) of this subsection shall be taken only when a majority of the entire membership of the Commission votes to take such action. A separate vote of the Commission members shall be taken with respect to each Commission meeting a portion or portions of which are proposed to be closed to the public or with respect to any information which is proposed to be withheld. A single vote may be taken with respect to a series of meetings, a portion or portions of which are proposed to be closed to the public, or with respect to any information concerning such series of meetin11s, so long as each meeting in such series involves the same particular matters and is scheduled to be held no more than thirty days after the initial meeting in such series. The vote of each Conmission member participating in such vote shall be recorded and no proxies shall be allowed. (ii) Whenever any person whose interests may be directly affected by a portion of a meeting requests that the Commission close such portion to the public for any of the reasons referred to in paragraph (d)(l)(v), (d)(l)(vi), or (d)(l)(vii) of this section, the Commission, upon request of any one of its members, shall vote by recorded vote whether to close such meeting. (iii) Within one day of any vote taken pursuant to subparagraph (d)(3)(i) or (d)(3)(ii) of this section, the Secretary of the Commission shall make publicly available a written copy of such vote reflecting the vote of each member on the question. If a portion of a meeting is to be closed to the public, the Secretary shall, within one day of the vote taken pursuant to subparagraph (d)(3)(i) or (d)(3)(ii) of this section, make publicly available a full written explanation of the Commission's action closing the portion together with a list of all persons expected to attend the meeting and their affiliation. The information required by this subparagraph shall be disclosed except  116 nockct No. RM77·4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  · 15 ·  to the extent that it is exempt from disclosure under the provisions of subsec· tion (d)(l) of this section. (e) Transcripts. (1) Prior to a determination that a meeting should be closed pursuant to subsection (d) of this section, the General Counsel of the Commission shall publicly certify that, in his or her opinion, the meeting may be closed to the public and shall state each relevant exemptive provision. A copy of such certification, together with a statement from the presiding officer of the meeting setting forth the time and place of the meeting, and the persons present, shall be retained by the Secretary of the Commission as part of the transcript, recording, or minutes required by subsection (e)(2) of this section.·  (2) The Secretary shall maintain a complete transcript or electronic recording adequate to record fully the proceedings of each meeting, or portion of a meeting, closed to the public, except that in the case of a meeting, or portion of a meetin~, closed to the public pursuant to subsections (d)(l)(viii) (d)(l)(ix)(A), or (d)(l)(x) of this section, the Secretary shall maintain either such a transcript or recording, or a set of minutes. Such minutes shall fully and clearly describe all matters discussed and shall provide a full and accurate summary of any actions taken, and the reasons therefor, including a description of each of the views expressed on any item and the record of any roll-call vote (reflect· ing the vote of each member on the question). All agenda documents considered in connection with any Commission action shall be identified in such minutes. (3) The Secretary shall maintain a complete verbatim copy of the transcript, a complete copy of the minutes, or a complete electronic recording of each meeting, or portion of a meeting, closed to the public, for a period of at least two years after such ~eeting,  117 Docket No. RM77-4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  - 16 -  or until one year after the conclusion of any Commission proceeding with respect to which the meeting or portion was held, whichever occurs later. (4) Within a reasonable time after the adjournment of a meeting closed to the public, the Commission shall make available to the public, in the Office of Public Information of the Commission, Washington, D. C., the transcript, electronic recording, or minutes [as required by paragraph (2) of this subsection] of the discussion of any item on the agenda, or of any item of the testimony of any witness received at the meeting, except for such item or items of such discussion or testimony as the Director of Public Information determines to contain information which may be withheld under subsection (d) of this section. Copies of such transcript, or minutes, or a transcription of such recording disclosing the identity of each speaker, shall be furnished to any person at the actual cost of duplication or transcription [See §3.102]. (5) The determination of the Dir~ctor of Public Information to withhold information pursuant to paragraph (4) of this subsection may be appealed to the Chairman of the Commission, in his capacity as administrative head of the Commission pursuant to Section 1 of Reorganization Plan No. 9 of 1950. The Chairman, or officer designated pursuant to section 3b.224(f) of this subchapter, will make a determination to withhold or release the requested information within twenty days from the date of receipt of the request for review (excluding Saturdays, Sundays, and legal public holidays). (6) For an extension of the time limit prescribed by subsection (e)(S) of this seciton, the provisions of section l.36(f)(3) of this part shall apply. (f)  Public announcement.  (l)  Except to  118 Docket No. RM77-4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  · 17 -  the extent that such information is exempt from disclosure under the provisions of subsection (d) of this section, in the case of each meeting, the Secretary of the Commission shall make public announcement at least one week before the meeting, of the time, place, and subject matter of the meeting, whether it is to be open or closed to the public, and the name and telephone number of the official designated by the Commission to respond to requests for infomation about the meeting. Such announcement shall be made unless a majority of the members of the Commission determines by a recorded vote that Commission business requires that such meeting be called at an earlier date, in which case the Secretary shall make public announcement of the time, place, and subject matter of such meeting, and whether open or closed to the public, at the earliest practicable time. (2) The time or place of a meeting may be changed following the public announcement required by subsection (f)(l) of this section only if the Secretary publicly announces such change at the earliest practicable time. The subject matter of a meeting, or the determination of the Commission to open or close a meeting, or portion of a meeting, to the public, may be changed following the public announcement required by this subsection only if (i) a majority of the entire membership of the Commission determines by a recorded vote that Commission business so requires [as for example, pursuant to subsection (d)(3)(ii) of this section] and that no earlier announcement of the change was possible, and (ii) the Secretary publicly announces such change and the vote of each member upon such change at the earliest practicable time: Provided, That individual items which have been announced for Commission consideration may be deleted without notice.  119 Docket No. RM77-4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  - 18 -  (3) The "earliest practicable time", as used in this subsection, means as soon as possible, which should in few, if any, instances be later than the commencement of the meeting or portion in question. (4) The Secretary of the Commission shall use reasonable means to assure that the public is fully informed of the public announcements required by this subsection. For example, such announcements may be posted on the Commission's public notice boards, published in official FPC publications, or sent to the persons on a mailing list maintained for those who want to receive such material. (5) Immediately following each public announcement required by this subsection, notice of the time, place, and subject matter of a meeting, whether the meeting is open or closed, any change in a preceding announcement, and the name and telephone number of the official designated by the Commission to respond to requests for information about the meeting shall also be submitted by the Secretary of the Commission for publication in the Federal Register. (6) Following each Commission meeting, the Secretary shall issue a list of Commission actions taken which shall become effective as of the date of issuance of the related or·der or other document, which the Secretary shall issue in due course, all in the manner prescribed by the Commission under the Natural Gas Act, Federal Power Act, or other legal authority.  * * * * * 4.  Section l.4(d) is amended as follows: a. Paragraph (1) is amended by adding two new definitions to the second sentence.  120 Docket No. RM77-4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  - 19 -  b. Five new subparagraphs (v), (vi), (vii), (viii), and (ix) are added to paragraph (2). c. Paragraph (3) is amended by the addition of a phrase to the first sentence and by the addition of two additional sentences. d. Paragraph (4) is amended by deleting the fourth sentence. e. Paragraph (6) is redesignated as paragraph (7) and a new paragraph (6) is added.  f. Newly designated paragranh (7) is completely revised. Section l.4(d), as amended, reads as follows: 11.4  Commission.  Appearances and practice before the It  (d)  * * * *  Ex parte communications.  (1)  * * *  For the purposes of this paragraph, the term "ex parte communication" means an oral or written communication relative to the merits of an on-the-record proceeding nending before the Commission which is not on the public record and with resnect to which reasonable prior notice to a11· parties is not given,but it shall not include requests for status reports on any matter or proceeding covered by this section; the term "decisional employee" means a Commissioner or member of his personal staff, an administrative law judge, or any other employee of the Commission who is or may be reasonably expected to be involved in the decisional process of the proceeding; the term "contested on-the-record proceedings" means* * *  (2) The prohibitions contained in paragraph (n)(l) _of this section do not apply to a commun1c1,t1on:  121 Docket No. RM77·4   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  • 20 •  * * * * * (v) When the communication is between the staff counsel assigned to the proceeding or, in the presence of or after coordination with such staff counsel, any other employee of the Commission (except a decisional employee) and any party or counsel to any party or parties to the proceeding or, 1n the presence of or after coordination with such counsel or party, and agent of any such party: Provided, That any employee of the Comm1ss1on who may reasonably be expected to participate in the decisional process may waive such participation by entering a staff appearance in the proceeding: Provided further, That non-unanimous settlement offers shall thereafter be served on all participants in the proceeding prior to the submission of such offers to the Commission; (vi) Which ail the participants agree may be made on an ex parte basis;  (vii) Related to routine safety, construction, and operational inspections of project works by the Commission staff not undertaken to investigate or study a matter pending in issue before the Commission in any on-the-record proceeding; (viii) Related to routine field audits of the accounts or any books or records of a company subject to the Commission's accounting requirements not undertaken to investigate or study a matter pending in issue before the Commission in any on-therecord proceeding;  122 Docket No. RM77·4  - 21 •  (ix) Which relates solely to a request for supplemental information or data necessary for an understanding of factual materials contained in documents filed with the Commission in a proceeding covered by this subsection and which is made in the presence of or after coordination with counsel, except a communication with a decisional employee, in the absence of waiver of participation. (3) All written communications prohibited by paragraph (d)(l) of this section, all sworn statements reciting the substance of all such oral communications, and all written responses and sworn statements reciting the substance of all oral responses to such prohibited communications shall be delivered to the Secretary of the Commission who shall place the communication in public files associated with the case, but separate from the record material upon which the Commission can rely in reaching its decision. The Secretary shall serve such communications upon all parties to the proceeding. The Secretary shall also serve a copy of the sworn statement to the communicator and allow him a reasonable opportunity to file a response. (4) A Commissioner, member of his immediate staff, Administrative Law Judge, or any other employee of the Federal Power Commission who receives an oral offer of any communication prohibited by paragraph (d)(l) of this section shall decline to listen to such communication and shall explain that the matter is pending for determination. If unsuccessful in preventing such communication, the recipient thereof shall advise the communicator that he will not consider the communication. The recipient shall prepare a sworn statement setting forth the substance of the communication and the circumstances thereof within 48 ·hours and deliver the statement to the Secretary of the Commission i~r compliance with the procedures established in paragraph (d)(3)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  123 Docket No. RM77·4  - 22 ..  of this section. * • * * *  (6) Upon receipt of a communication knowing· ly made in violation of paragraph (d)(l) of this section, the Commission, Administrative Law Judge, or other employee presiding at the hearing may require, to the extent consistent with the interests of justice and the policy of underlying statutes, the cormnmicator to show cause~ his claim or interest in the proceeding should not be dismissed, denied, disregarded, or otherwise adversely affected on account of such violation. (7) The prohibitions contained in paragraph (d)(l) of this section shall apply from the time at which a proceeding is noticed for hearing or the person responsible for such communication has knowledge that it will be noticed for hearing or at the time at which a protest or a petition or notice to intervene in opposition to requested Commission action has been filed, whichever occurs first.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  * * * * *  5.  Section 1.36 is amended as follows:  a. Subsection (a) is amended by adding a new sentence immediately following the second sentence. b. Paragraph (14) of subsection (c) is redesignated as paragraph (15) and a new paragraph (14) would be added. c. Subparagraph (iii) of the newiy designated paragraph (15), in subsection (c), is revised. Section 1. 36, as. amended, reads as follows: §1.36  Public information and requests. * * * * *  124 Docket No. RM77•4 (a)  · 23 · Notice of procwdings.  * * *  Notice of applications for certificates of public convenience and necessity under section 7 of the Natural Gas Act is provided for by §157.9 of this chapter. Notice of public sessions and proceedings and of meetings of the Commission is provided for by 111.3 and 1.3a of this chapter.  ***  (c)  * * * * * Public records.  **·*** (14) Transcripts, electronic recordings, or minutes of Commission meetings closed to public observation containing material non· exempt pursuant to 11.3a of this Part. (15)  All other records of the Commission  except for those that are:  * * * * * (iii) Specifically exempted from disclosure by statute (other than S U.S.C. 552b), provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld; • * * * *  (B) Section 3.102(b), Part 3··Organization; Operation; Information and Requests; Miscellaneou·s Charges; Ethical Standards, Chapter I, Title 18 of the Code of Federal Regulations is amended by adding a new sentence immediately following.the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  125 Docket No. RM77-4 third sentence. as follows:  - 24 As amended, !3.102(b) reads  §.3.102· Public information requests, and assistance; miscellaneous charges.  * * * * * (b) ***Any person may obtain a copy of the schedule of fees by requesting such schedule from the Office of Public Information in person, by telephone, or by mail. Copies of transcripts, electronic recordings, or minutes of Commission meetings closed to public observation containing material non-exempt pursuant to §l.3a of this Part are available to the public at the actual cost of duplication or transcription. * * * * * * *  111:  (C) The Secretary shall issue a list of employees ussually participating in the decisionmaking process, which is to be updated periodically. (D) The Secretary shall cause prompt publication of this order to be made in the Federal Register. By the Commission. (SEAL)   35-867 0 - 79 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Kenneth F. Plumb, Secretary.  - 9  126 Docket No. RM77-4  Attachment A  RESPONDENTS IN DOCKET NO. R.~76-24 American Bar Association Cities of Adrian, Minnesota, Et al. Columbia Gas of Kentucky, Inc:-;- n al. Consumers Power company The Dayton Power and Light Company Delmarva Power and Light Company Executive Committee of The Federal Power Bar Association FPC-Bureau of Natural Gas FPC-Office of Administrative Law Judges FPC-Office of Economics, Bureau of Power, Office of the General Counsel, and Office of Special Assistants Georgia Power Company Gulf Power Company Interstate Natural Gas Association of America The Montana Power Company Northern Natural Gas Company Pacific Power and Light Company Phillips Petroleum Company Power Authority of the State of :1ew York Public Service Commission of the State of New York Public Service Company of New Mexico Public Service Electric and Gas Company Southern California Edison Company Tucson Gas and Electric Company Wisconsin Municipal Electric Utilities   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  127 Docket No. RM77-4  ATTACHMENT B  RESPONDENTS IN DOCKET NO. RM77-4: Cong. Bella Abzug Alabama Power Company,§!!!_.  Columbia Gas Transmission Corporation, Et al. Consumers Power Company Executive Committee of the Federal Power Bar Association FPC, Bureau of Natural Gas HEW, Virginia H. Knauer, Director, Office of Consumer Affairs Interstate Natural Gas Association of America Northern Natural Gas Company Southern California Edison Company Tenneco Oil Company   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  128 Docket No.. RM77-4  Attachment C  Participants in Public Conference in Docket No. RM77-4 held February 24, 1977 PRESENT: ROMULO L. DIAZ, JR., of the Commission, presiding WILLIAM I. HARKAWAY, 17S0 Pennsylvania Avenue, N.W,, Washington, D.C. 20006, on behalf of the Federal Power Bar Association JEROME J, MCGRATH, JOHN ff. CHEATHAM,III, of the Interstate Natural Gas Association, on behalf of the Interstate Natural Gas Association WILLIAM G. PORTER, JR., of Porter, Stanly, Platt & Arthur, 37 w. Broad Street, Columbus, Ohio, on behalf of Alabama Power Co., et al. RICHARD M. ME?.lRIMAN, of Reid & Priest, 1701 K Street, Northwest, Washington, D.C. 20006, on behalf of the Federal Power Bar Association FRANCIS J. WALSH, 1101 17th Street, Northwest, Washington, D.C., on behalf of Union Texas  c.  R. TILLEY, of Columbia Gas System Service Corporation, 162S I Street, n.w., Washington, D.C, 20006, on behalf of Colw:ibia Gas System Service Corporation and Columbia Gas Transmission Corporation FREDERICK T. SEARLS, of Debevoise and Liberman, 806 15th Street, Northwest, Washington, D.C. 20005, on behalf of Alabama Power Company, et al. THOMAS F. RYAN, JR., 321 15th Street, Northwest, Washington, D,C, 20005, on behalf of himself KENNETH RICHARDSON, JOSEPH J. SOLTERS, WILLIAM BAGLIEBTER, ROBERT SCARBROUGH, LILO SCHIFTER, H. H. HAMMOND, WILLIAM W. LI~DSAY, of the Federal Power Commission, on behalf of the Federal Power Commission   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  129  Docket No. R.~77-4  - 2 -  Attachment C  MARY JANE KLIPPLE, Room 500, 1101 17th Street, N.W., Washington, o.c. 20036, on behalf of Foster Associates CARL W. ULRICH, of Chapman, Gadsby, Hannah and Duff, 1700 Pennsylvania Avenue, N.W., Washington, o.c. 20006, on behalf of Colorado Interstate Gas Company GEORGE L. WEBER, of Consolidated Natural Gas Service Co., Inc., 1101 16th Street, N.W. Washington, o.c., on behalf of Consolidated Natural Gas co. WILLIAM WARFIELD ROSS, 1320 19th Street, N.W., Washington, o.c. 20036, on behalf of the Administrative Law Section, American Bar Association HARRY L. ALBRECHT, 1120 Connecticut Avenue, N.W., Washington, o.c. 20037, on behalf of Natural Gas Pipeline Co. ANTHONY O. PRYOR, P.O. Box 2511, Houston, Texas 77001, on behalf of Tennessee Gas Pipeline Co. MORTON L. SIMONS, of Simons & Simons, 1629 K Street, N.W., Washington, D.C. 20006   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  130 APPENDIX C  April 7, 1977 General Counsel Certification  1 hereby certify that a meeting on El Paso Alaska Company, et al., Docket Nos. CP75-96, et al. and Order Providing for ruspension of Procedures and l'rescribing Procedures Pursuant to.the Provisions of the Alaska Natural Gas Transportation Act of 1976, Docket No. RM77-6 may be properly closed to the public pursuant to 5 U.S.C. 552b and 18 C.F.R. §l.3a(d). Inasmuch as the purpose of the meeting is to discuss information, the premature disclosure of which would be likely to lead to significant financial speculation in currencies, securities, or commodities or significantly endanger the stability of any financial institution or be likely to significantly frustrate implementation of a proposed agency action; or concerns discussion of the conduct or disposition of a particular case of formal agency adjudication pursuant to the procedures in 5 U.S.C. 554 or otherwise involving a determination on the record after opportunity for a hearing, the meeting falls within exemptions to the open meeting requirements, specifically 5 U.S.C. 552b(c)(9)(A) and (B), 18 C.F.R. ll.3a(d)(ix)(A) and (B), and 5 U.S.C. 552b(c)(l0~, 18 C.F.R. ll.3a(d)(x).  ~  w~----1  Drexel D. Journe General Counsel  July 21, 1977  General Counsel Certification I hereby certify that an administrative meeting to follow the Commission's regular public meeting on July 26, 1977 may be closed to the public pursuant to 5 U.S.C. 552b and 18 CFR 8 l.3a(d). The purpose of the closed meeting is to discuss pending civil litigation; the initiation, conduct or disposition of pending agency actions subject to the procedures of 5 U.S.C. 554 or otherwise involving a determination on-the-record after opportunity for a hearin~; 'internal personnel rules and practices of the Commission; and other administrative matters which may be properly closed to the public. Thus, meeting falls within the exemptions to the open meeting requirements, inc§luding .. 5 U.S.C. 552b(c)(2), (9) (B), and (10); 18 CFR l.3a(d)(ii), (ix)(B), and (x).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ~ { 'D~'--"--  !Jrexe1.T. Jourr,xey General Counsel-  ----~7  131 August,11, 1977 General Counsel Certification I hereby certify that an administrative meeting to follow the Commission's regular public meeting on August ll, 1977 may be closed to the public pursuant to 5 u.s.c. 552b and 18 CFR S l.3a(d). The purpose of the closed meeting is to discuss pending civil litigation; the initiation, conduct or disposition of pending agency actions subject to the procedures of 5 U.s.c. 554 or otherwise involving a determination on-the-record after opportunity for a hearing; internal personnel rules and practices of the Commission; and other administrative matters which may be properly closed to the public. Thus, meeting falls within the exemptions to the open meeting requirements, including 5 U.S.C. 552b(c) (2), (9) (B), and (10); 18 CFR S l.3a(d) (ii), (ix) (B), and (x).  Acting General Counsel September 15, 1977 Acting General Counsel Certification I hereby certify that an administr~tive m7eting to follow the Commission's regular public me 7ting on September 16, 1977 may be closed to the public pursuant to 5 u.s.c. 552b and 18 CFR S l.3a(d). !he p~rpose of the closed meeting is to discuss pending civ~l litigation; the initiation, conduct or proposition of pending agency actions subject to the proced~res of 5 us c 554 or otherwise involving a determination o~-th;-record after opportunity for a hearing! . internal personnel rules and practices of the Commission; and other administrative matters which may b 7 P:operly closed to the public. Thus, meeting falls wi~hin tJ:ie exemptions to the open meeting requirements, including 5 U,S,C. 552b(c) (2), (9) (B), and (10); 18 CFR S 1.3a(d) (ii), (ix) (B), and (x).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ~-<Ld Robert W. P e ~ ~ Acting General Counsel  132 APPENDIX D October 18, 1977 Acting General Counsel Ce,rtification I hereby certify that an administrative meeti~g to follow the Commission's regular.public meeting on September 16, 1977 may be closed to the public pursuant to 5 u.s.c. 552b and 18 CFR S l.3a(d). The purpose of the closed meeting is to discuss pending civil litigation; the initiation, conduct or proposition of pending agency actions subject to the procedures of 5 u.s.c. 554 or otherwise involving a determination on-the-record after opportunity for a hearing; internal personnel rules and practices of the Commission; and other administrative matters which may be properly closed to the public. Thus, meeting falls within the exemptions tQ the open meeting requirements, including 5 U.S.C. 552b(c) (2), (9) (B), and (10); 18 CFR S l.3a(d) · (ii), (ix) (B), and (x).  ~~ll',< . Robert W. Perdue Acting General Counsel  November 17, 1977 CERTIFICATION OF GENERAL COUNSEL I certify that the Federal Energy Regulatory Commission is authorized under 5 U.S.C. 552b(c) (10) to consider in a closed meeting matters relating to the Commission's position on consideration of the application for certiorari to the Supreme Court in Greene County Planning Board V•  !..:!.:..f. •   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  133 INTERSTATE COMMERCE CO:M:MISSION  Senator CHILES. Our next witness will be Mr. Daniel O'Neal, Chairman of the Interstate Commerce Commission. Mr. O'Neal has been with the Commission since 1973, and has served on all the Commission's divisions, and was the agency's Vice Chairman in 1975. Mr. O'Neal, we thank you for taking time to be with us this morning. We will insert your prepared statement in the record in full. We will appreciate it if you would now summarize that statement for us. TESTIMONY OF DANIEL O'NEAL, CHAIRMAN OF THE INTERSTATE COMMERCE COMMISSION; ACCOMPANIED BY MARK EVANS, GENERAL COUNSEL  Mr. O'NEAL. Yes, sir, we have a longer statement, Mr. Chairman, that we have submitted for the record. I am pleased to be here today to present the views of the Interstate Commerce Commission on the ~unshine Act. Our experience since the act took effect 9 months ago has been favorable. Although the provisions of the act have limited, to a certain extent, some of our prior flexibility in terms of the timing and agenda of our meetings, we have had no serious problems of implementation. The vast maority of our meetings since March of this year have been open to the public, and many have been attended by the public and members of the media. The act has gone far toward achieving the congressional purpose of increasing the public awareness of, and confidence in, the decisionmaking process. Shortly after it was signed into law, the Commission moved to implement both the spirit and the letter of the act. We believe that our sunshine regulations and our interpretation of them with respect to specific meetings clearly illustrate that the Commission has willingly complied with the act's provisions. Since our regulations were adopted, 81 percent of all meetings held by the Commission and its divisions have been completely open to public scrutiny, and portions of some of tiie remaining 19 percent of our meetings also have been open. Not only have most of our recent meetings been open, but also there have probably been more total meetings since implementation of the act. It certainly has not created major impediments to our holding meetings. Although the number of meetings we hold has been rising, I must mention that notation voting-voting in writing without a meeting being held-is still the principal means through which we dispose of most of our workload. The Commission and its divisions vote on a large number of cases through this technique, and frequently do so on rather short deadlines. We feel that notation voting is a necessary tool to deal with the Commission's workload. In addition to opening most of our meetings, we have voluntarily released the transcripts of several of our closed meetings, even when the act would have permitted us to withhold disclosure of the transcript. The entire transcripts of 4 of the 10 closed Commission meet https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  134 ings have been released, while 2 of the other transcripts were partially released. One of those released transcripts was of our closed meeting in which we determined to suspend tariffs of the Alaska pipeline system. We were not required to release that transcript, but we determined that the release would serve the public interest and would be of value to all parties with an interest in the case. The Commission has gone beyond the literal requirements of the act in other ways besides the release of the transcripts. For example, the Commission has attempted to dissem.inate widely our public notices of meetings by maintaining a mailing list of persons who have requested notice of our meetings, and by making copies available to the press, including the trade press. Also, our regulations permit any person to petition the Commission to open a meeting proposed to be closed. Also, I might add, as well, that the Commission has opened its notation votes to the public, including the narrative portion of any vote. Although I believe the Commission has successfully implemented regulations which comply with the provisions of the act with no major problems, we have experienced some difficulties of which I think you should be aware. These relate principally to determining what is or is not a meeting of the Commission within the meaning of the act, and to adapting to the 1-week notice requirement in establishing an agenda for the meetings. As Chairman of the Commission, for example, I have felt an increasing need to meet regularly, but informally, with other members of the Commission to exchange general information concerning matters affecting the agency and to discuss general problems concerning the Commission's operation. For the most part, I would have no hesitation about openi~ such informal sessions to public observationalthough in a1l candor I expect that the effectiveness of this kind of meeting would be somewhat reduced if it were exposed to the public. The problem that we see has been one of notice. The act requires ! week's advance notice of the subiect matter of each meeting. Yet, the kind of informal session that I have in mind does not lend itself to a defined agenda. · I am advised that if the discussion of such sessions were kept tentative and exploratory, sessions could be held without attempting to formulate an agenda. Regardless of whether such sessions may properly be considered as outside the act's scope, I am inclined to think we can adequately comply with the act's spirit by nuhlicly announcing at least 1 week in advance that we propose to hold such an informal session-possibly in my personal .office oyer coffee-and that the sessions would be open to the public. Senator CHILES. How much room does your personal office have, and how much coffep do vou have? give it a try, and see how many people show up. Mr. O'NEAL. We Senator CHILES. Well, personally I think that it is good that you would go ahead and publish notice of such a meeting, unless the place where you are going to have it is unavailable to the public and not   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  will  135 really open to them. I:f so, I think you are running the risk that it is still sort of closed. Your own office might be a little foreboding to people, and might not be. I do not know what your office looks like. Mr. O'NEAL. I do not th1nk my office would be foreboding actually. The thought is that we would like to have some informal exchange of information. There are a lot of things that happen at the Commission that I know about that the rest of the Commissioners do not. I would like to keep them better informed. Senator CHILES. I think those things are valuable. I think they also could be valuable to the public to get some kind of feeling for what is going on. People tend to think, and continuously say there won't be the same kind of a frank discussion if you have public scrutiny. I know something about how human nature is in discussions like that, and after havmg seen what happened in Florida and up here in our markup sessions, which W<.' ns<.'d to close, thrre is no <liff<.'r<.'ncc in the quality of the discussions. You forget that anybody is around you, and if you have got the courage of your conYictions yon stand there and argue fully. An~ if you do not have courage, then you are not worth your salt to start with. But those people that do, before long find that if their voices are going to mean anything, they are going to have to argue their convictions. And the same things that happened before, as far as taking off your coats and calling people by first name, all of those things that people said would all be done away with once we opened up the markup sessions, just have not happened. You go right back to doing business the way yon always did it. Mr. O'NEAL. ,ven, I think our experience has been similar in the regular meetings that the Commission has. I think the first meeting that we had under the Sunshine Act was very quiet, but since we have had more and more experience, the members are much more open in what they say. The only area where there is some restraint is, I think, when you start talking about personnel. Obviously, the framers of this act contemplated that those matters should not be discussed publicly, and sometimes, no matter what you are talking about when you are talking about the work of an agency, you tend to drift off into discussions about personnel. That is what I mean when I say there may be some restraint in that area, and since we do not know what the agenda would be really, we cannot be very specific. It would be difficult to identify what might be closed. . So that is really what I am getting at. I really do not think that this is g?ing to be an overwhelming problem, and at least I am willing to try it and see what happens. I:f we need to make some adjustment, and if we think there n~eds to be a change in the law or something, we can come back to you with recommendations. In sum, in spite of a few problems, I believe the Commission has properly balanced the right of public access against individual rights and the necessity for efficient and effective performance of its responsibilities. I would like to mention that a thorough review and re-evaluation of our sunshine regulations will take place on or about the anniversary   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  136  date of the regulations. Included in this re-evaluation will be consideration of the recommendations recently made by Common Cause, some of which may have merit. As one example, Common Cause has suggested that minutes be kept of open meetings which is a matter we will likely consider in our reevaluation of the regulations. I should say we do keep notes now and give copies to members of the public on request. We are not keeping a transcript of those meetings nor do we always keep detailed notes. Incidentally, I should mention here that the regulations we have in effect now treat committees of Commissioners that are not authorized to act for the Commission as outside the act, and, therefore, not subject to the notice requirements or any other provisions of the Sunshine Act. I had some doubts about that provision when it was first put in the regulations, and since that time every committee meeting we have had-there have only been about two or three-have been open. We have gone back to the General Counsel specifically on this matter, and he agrees with me that the act would cover these kinds of meetings. By the way, I do not think I introduced the General Counsel. This is Mark Evans, who is our General Counsel. That concludes my brief statement, and we would be happy to try to answer any questions which you might have. WHEN IN DOUBT, OPEN  Senator CHILES. Well, certainly there is some doubt as to what a meeting is: One thing ~s cl_ear, however, that the mer~ set.ting of a gathermg Is not determmatwe as to whether the gathermg IS a meeting under the purposes of the act. Discussions held in the boardroom or the Chairman's office are not the only gatherings covered. Conference telephone calls, meetings outside the agencies, are equally subject to the agency's business being discussed. You referred in your testimony to a meeting which the majority of the members of the ICC attended. This was hosted by the National Industrial Traffic League. You state that it was a working conference and luncheon to permit an informal exchange of views on informal developments in transportation regulations. That description sounds to me as if the discussion could have involved some agency business, in view of the fact that the Interstate Commerce Commission regulates transportation. Before the Commission decided to attend, it must have seemed likely or at least possible that s_uch agency matters might come up and be discussed. In fact, your testimony reflected such concern. The Sunshine Act clearly instructs that when in doubt, open. In view of the doubt that obviously existed as to whether the Sunshine Act might apply or not, it would seem to me that you should have consider~d it a meeting and given notice and opened it up for observation. You know, one of the purposes of the act, to me the strongest purpose, is to quell public distrust. I have always found, myself, that at the closed meetings that I attended, nothing went on that was i1legal, immoral, improper, and that the public should not really have   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  137 been privy to. It was the closing of the door that made it so bad, that the public could wonder what went on. It seems to me that when people can wonder what the Interstate Commerce Commission is doing across the street meeting with some group, that that is the danger. Mr. O'NEAL. Mr. Chairman, you have just described this meeting perfectly. There was nothing that occurred there that could not have been discussed in the pubhc view. I never considered the meeting as a secret meeting. I consider the meeting as a mistake, I wish we had not done it. We won't do it again. Senator CHILES. Well, we learn through those mistakes. I do not mean to say that we are not going to learn a lot. Some of them I am still learning from. Mr. O'NEAL. If you want to get into the question of whether we treated that meeting properly, I would like to give the General Counsel an opportunity to speak on that. Senator CHILES. Well, good. Mr. O'NEAL. Well, I consider it a mistake, but I did and do not consider it illegal, and just for the record, I want to make that very clear. Senator CHILES. Fine, I will accept that. I think there are exemptions, as we said when we put these exemptions in here, that people can use if they want to close many meetings that would not have to be closed, and really should not be closed. But they can take that exemption and close the meeting. On the other hand, we did put the exemptions in areas in which there was some strong public purpose to close. Otherwise, perhaps we would not have gotten the act passed to start with, because people could say, well, wait a minute, this means that banks will go under, or people's reputations will be dishonored. Of course, it depends on how they are used, whether we end up with something that is valid or not. I do not want to get into a legal discussion because you probably could defend the closing of the meeting on a legal basis. That is why we put in the other consideration that after you find that you have a valid reason, what is the overriding public interest. XOTATIOX VOTING  REVISITED  One of the primary aims was to cast light on the Federal agency decisionmaking process in order to increase public understanding on how agency policy operates. In your statement you indicated that most of your workload is disposed. of by not3:tion votin~. Such voting is in writing, on the basis of written material, as I understand, and, of course, we do not prohibit that. How: does ~he public understand what took place in those meetings? What 1s available for them to look at later? You told me something about that, but I want to get that clearer in my mind. Mr. O'NEAL. Well, the way these cases are handled, there are several thousand ca~es voted on by the Commission every year in this way. The material that goes into the decisionmaking process, memos from the staff and so forth, are c.irculat.ed to each office.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  138 Usually there is a vote dat~ b~ w~ich_ votes are requested to be submitted. The members vote by md1catmg m a memorandum any changes they think ought to be made and, if there is a dr~ft. circulat~on, any ideas they have on the issues and then they also md1cate wluch way they vote. . Many votes are issued with "I vote to do tl.1is subject to the followmg changes." All of that material, that is the voting material, shows what the member feels about the issue, not just whether he is for it or against it, and this is made available. This policy was initiated as a part of our regulations under the Sunshine Act. Now, the way we read the Freedom of Information Act, which I think is the only act that would apply to the notation voting, only the votes-that is, an indication of whether you voted for or against it-would have to be made public. But we have gone way beyond that and have also made the narrative discussion of the members' positions available as well. Senator CmLEs. I think that is good, especially since you are using it in such a large number of cases. Do you place any specific limits on the types of matters that are disposed of by this method as opposed to an open meeting 1 Mr. O'NEAL. Well, I believe this gets into a basic question about the whole philosophy of how the agency has disposed of a lot of questions in the past. I think originally notation voting was designed to be used only in the less significant, the mundane, the routine cases. My opinion is that there has been a tendency to use it for more important cases as well. What I have been trying to do in the last several months is move us away from that posture and start considering more of the more significant cases in conference, because I think that that is where they should be discussed. I think you have a better collegial interchange when the members are all present and can discuss the various issues that aro presented. That is not just a sunshine issue. This is an issue that relates to the whole management by the agency of our entire decisionmaking process. ,ve said in the statement that we :felt that there are more meetings being held now than there were before. I am reasonably comfortable that is accurate. But also I know it is tme that we are taking up more significant issues in conference than we did in the past. Senator Cn1L1,s. ,vell, it would seem important from the sunshine aspect to have the coIIegiate discussion. However, we did not prohibit notation voting because, again, we wanted agencies to be able to handle routine matters in that manner. If notation voting is being used as a way of getting around meetings on important decisions, then I am sure the Congress will have to try to clo something about it. Mr. O'NF..\L. ,ven, I want to say we are not using it to get around the Sunshine Act. In fact, I think as we have indicated in the statement, that for our agency this act has been beneficial in many ways. I will continue to moYe the more important issues before the Commission to handle in conference.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  139 WHO  IS GUARDING THE PUBLIC INTEREST?  . Senator 9H~LES. We disc~ssed the fa~t th~t even tho;ugh a discuss10n falls w1thm one of the listed exempt10ns 1t could be m the public's interest to open such a meeting. Judging from your concurrence to ICC's implementing regulations, I believe you would agree with this approach. You exhibit deep appreciation for the fact that it often may be in t~e public interest to open a meeting that would fit under the exempt10n. You pointed out that closing meetings to avoid financial speculation ~ould ~ml~ heighte~ specul_ation. I am afraid the public interest cons1derat10n 1s often shghterl, if not overlooked entirely. What steps have you taken in regulation to highlight this overriding concern in the law regarding the public interest considerations when your Commission is deciding whether to close a meeting or not 1 Mr. O'NEAL. Well, I am not sure if I could point to any specific statement or guideline that we use, but I think we are well aware, at least I am, of the thrust of the act which is certainly to err in favor of openness, and that is the philosophy I try to follow, at least when I am voting. Senator CHILES. Do your regulations require that the General Counsel make some recommendation in regard to this item i Mr. O'NEAL. Well, the General Counsel, of course, must certify whether a meeting can be closed. There is nothing in the regulations that requires us to check with the General Counsel ahead of time on just the general issue of whether or not a meeting should be closed. I can say as a matter of practice that this is done. Senator CHILES. Our concern is that most of the regulations require the General Counsel to certify that a meeting may be closed, that it will fit within 1 of the 10 exemptions. It seems, however, that you should also have some provision and somebody to take cognizance of the public interest consideration. The General Counsel might say you could close it, but is there still overriding reason to open that meeting~ If no one ever looks at that, then anytime it falls within 1 of the 10 exemptions and the General Counsel agrees, the meeting is closed. So we are trying to find out if there is some highlighting of the public interest. One of the agencies requires a two-step process in its regulations. Mr. EVANS. Senator, it ma.y be worth mentioning that the practice in our agency is that the General Counsel's certification is only requested when a member decides he would like to propose that the meeting be closed. There are many occasions where agenda topics are proposed which could be held in closed session, but the Commissioner who proposes it does not propose that the meeting be held in a closed session. In these cases the question whether it should be closed is never even a,pproached. The only time my certification is requested i~ ,yhen s_omeone wants a meeting to be closed, 1and then every Comm1ss10ner 1s aware-and frequently I have made them aware in the course of memorandums that I have writ.ten-that they can always open a meeting in the public interest that could otherwise be closed. I think that this public interest   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  140 aspect is reflected in the votes of the Commission as to whether to close a meeting. Although it is not in the regulations, it is certainly part of the practice of the agency. Senator CHILES. Then you only certify when one of the members asks that a meeting be closed? Mr. EvANS. That is right. Senator CHILES. I would still feel more comfortable even when that step is taken if someone then took up the matter of the public interest: All right, it can be closed, member A wants it closed, is there still prevailing public reason why it should not be closed? Mr. O'NEAL. Well, I think this is something that is discussed. I£ this is handled in a notation vote, I would usually express my view on whether I thought it should be opened or closed. Senator CHILES. I wish you would consider that when you are looking at your regulations. Mr. O'NEAL. We certainly will. I will take a look at adding that step. I guess we have not :focused much attention on it because I do not really think it has been a problem. I think that the issue has been confronted in each case so far as I am aware. Senator CHILES. The item that we have raised also is the inability of the public to understand what is going on in many of the meetings because of the technical jargon and the way the agenda is written. What has the agency done in this regard? . Mr. O'NEAL. Well, we have followed, I guess, an uneven practice. In some cases we have made documents available ahead of time before the meeting. Prior to every open meeting our office of Public Information gathers together all the information it can find and puts together a packa~e for issuance to the press. In every case we make it known that staff members are available to discuss the issues after the meeting in case anybody is interested in what happened, and do not know what happened. I think we have not :followed a practice, though, of making public every staff document that has been used by the Commission in these meetings. Some hav(' hPen rplensP<l upon req1H'st. anrl others have not. So I guess this is another area for our reevaluation of the regulations. Senator CHILES. How do you treat the recording of your open meetings? Mr. O'NEAL. The recording of them, in what way? Senator CHILES. Do you prohibit the u~e of tape recorders? Mr. O'NEAL. No. There is nothing in the regulations that says anything about recordings or photographs or cameras. Senator CHILES. You referred in your testimony to a closed meeting held in June of 1977 concerning the Alaska pipeline system. You stated that you released the transcript of this June meeting in August of 1977, even though the act did not require the release of discussions because it fell within one of the act's exemptions. I think you noted that you released it 'because of the great public interest in it. I am just wondering, with that great public interest, why was the meeting closed to start with, and what did the 6 weeks' delay accomplish? ,vhy couldn't the meeting have just been held openly? Why wouldn't public interest have allowed the meeting to be held in the open to start with?   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  141 Mr. O'NEAL. Some of the members feel that the meeting should have been open. There was discussion on that very point. The major reason the Commission majority decided to close the meeting was that this was a case in whicJh there was a fairly highly charged atmosphere around the case. There were a lot of people who probably would show up at the meeting, and that it might be diffioult to maintain an orderly discussion on this issue. The issues were thoroughly discussed, though, and the transcript was, as I said, made available. Now one thing we will be looking at as we reexamine the regulations is the speed with which we review the transcription this kind of a case, and decide whet her or not to release it. I think that delay from June to August is probably a little bit longer than it should be. I think we could probably speed that up. Senator CHILES. ,vell, it seems to me that those issues, those reasons that you cited, could be very persuasive to somebody who is there. Those are the kind of meetings that the public ought to see. It seems to me that the transcript was interesting. In other words, the economy of the country was not going to collapse. There was not going to be a bank failure because of it. It was the fact that it ,rns gomg to be a tough decision, and a lot of things you might prefer no one ever know about. But really, when we are talking about this kind of government tha,t belongs to the people, I think they are entitled to me that. I t!hink that is very beneficial for them to see. You might have had a little television there at that meeting, I expect you would have had some. Mr. O'NEAL. I think we would have. Well, I personally agree with what you are saying-Senator CHILES. And 6 weekis later reading about it in a transcript is very sterile. Mr. O'NEAL. Yes, that is true. But so far as exposing the public to what went on, I think it doe,s do that, but, of course, there is not as much coverage when you have a transcript released ais there is when television is covering the proceeding. Senator CHILES. Well, all the stories were written before that 6 weeks from leaks and other sources. Mr. O'NEAL. Well, the Commission's order in the case-which fully explained the basis for our decision-was issued immediately after the session. We also held a news conference to explain what the Commission had done. So, as far as knowing what ha.ppened and whai the end result was, I think that was probably adequate. Senator CHILES. Was the public interest served by closing that meeting? Mr. O'NEAL. ,ven. I am in an awkward position on this one. Senator CHILES. Well, give me your view. Mr. O'NEAL. I voted to open the meeting, and one other member, Vice Chairman Clapp, also voted to open the meeting. I did feel, however, that the majority had a legitimate arg,iment for closing. The case involved very important issues, and I think the members were concerned about any possible disruption in the meeting that might have caused us to have a decision that was not thoroughly thought through.   35-867 0 - 79 • 10 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  142 Senator CHILES. You mean some of your Commissioners felt they might have been intimidated if they had the meeting-Mr. O'NEAL. Well, you know, the atmosphere if there were television involved, for example, or if there was a huge crowd, I think, does raise a question as to whether the members are going to be able to think of all the issues that really should be raised in a case like that. That was a complicated case. The Commission took an approach that was somewhat different than it had taken in the past, and not all the members were thoroughly :familiar with the direction we were going in until we had a good discussion at the meeting. Furthermore it was clear that the case would be thoroughly litigated and there was concern about inadvertently contributing to the litigation issues. The case is currently before the U.S. Supreme Court. So, I just think it was a close case on the question of opening or closing the meeting. I will be glad to supply a copy of the press release relating to this which we issued when we released the document. Senator CHILES. Well, it just seems to me to be exactly the kind of meeting that the public could have been educated by, and could have understood something about how your agency works. I dare say very few people understand very much about the Interstate Commerce Commission, and yet it has tremendous power over our lives through the regulations that you have adopted. And now you are talking about regulatory reform, and about whether you should go into many areas. All of that really could have been such an educational thing. I am just disappointed that the public was denied that, because I think this Government belongs to them, belongs to the people. It does not belong to your members. It does not belong to us in the Congress, and somehow we continue to take it on ourselves to act as if we know what is best for them. e will spoon feed them or we will give them what is best. Then we wonder why they do not trust us, and why we have this miserable rating of public confidence. I think a lot of it, we bring about by our own actions. We thank you very much for your testimony. Mr. O'NEAL. Thank you. [The prepared statement of Mr. O'Neal follows:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ,v  143 SUMMARY STATEMENT OF CHAIRMAN O'NEAL November 29, 19·77 Mr. Chairman, Members of the Subcommittee: I am pleased to appear before you today to present the views of the Interstate Commerce Commission on a subject of considerable interest both to the Congress and to the public the Government in the Sunshine Act.  The Sunshine Act was a  substantial legislative achievement, and I am glad to be able to report that our experience since it took effect nine months ago has been favorable. Although the provisions of the Sunshine Act have limited to a certain extent our prior flexibility in terms of the timing and agenda of our meetings, we have had no serious prob_lems of implementation.  The vast majority of our meetings since  March of this year have been open to the public, and many of those meetings have been well-attended by members of the public and representatives of the media.  The discus-sion at the open  meetings has frequently been lively.  In our judgment, the  Act's open-meeting_requirement has gone far toward achieving the Congressional purpose of increasing public awareness of and confidence in the collegial decision-making of Federal agencies. Shortly after it was signed into law, the Commission moved aggressively to implement both the spirit and the letter   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  144 of the Sunshine Act.  We believe that our Sunshine regulations  and our interpretation of them with respect to specific meetings clearly illustrate that the Commission has willingly complied with the Act's provisions. Since our regulations were adopted, 81 percent of all meetings held by the Commission and its divisions have been completely open to public scrutiny, and portions of some of the remaining 19 percent of our meetings have also been open. Not only have most of our recent meetings been open, but also there have probably been more total meetings since implementation of the Act.  The Act certainly has not created any major impedi-  ment to our holding meetings. Although the number of meetings we hold has been rising, I should mention that notation voting -- that is, voting in writing without a meeting being held -- is still the principal means through which we dispose of most of our workload.  The  Commission and its divisions vote on a very large number of cases daily through this technique, frequently on short deadlines.  We feel that notation voting is a necessary tool to  deal with the Commission's workload. In addition to opening most of our meetings, we have voluntarily released the transcripts of several of our closed meetings, even when the Act would have permitted us to withhold disclosure of the transcript.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -  The entire transcripts of four 2 -  145 of the ten closed Commission and division meetings have been released, while two of the other transcripts were partially released.  One of these released transcripts was of our  closed meeting in which we determined to suspend tariffs filed by owners of the Trans-Alaska Pipeline System.  We were not  required by the Sunshine Act to release this transcript.  We  determined, however, that its release would serve the public interest and would be of value to all parties with an interest in the case as well as the public. The Commission has gone beyond the literal requirements of the Act in other ways besides the release of transcripts. For example, the Commission has attempted to disseminate widely our public notices by maintaining a mailing list of persons who have requested notice of our meetings.  Also, our regulations  permit any person to petition the Commission to open a meeting proposed to be closed. Although I believe the Commission has successfully implemented regulations which comply with the provisions of the Sunshine Act with no major problems, we have experienced some difficulties of which I think you should be aware.  These dif-  ficulties relate principally to determining what is and what is not a meeting of the Commission within the meaning of the Act and to adapting to the one-week notice requirement in establishing an agenda for our meetings.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -  3 -  146 As Chairman of the Commission, for example, I have felt an increasing need to meet regularly but informally with the other members of the Commission to exchange general information concerning matters affecting the agency, and to discuss general problems concerning the Commission's operation.  For  the most part, I would have no hesitation about opening such informal sessions to public observation -- although in all candor I expect that the effectiveness of this kind of meeting would be somewhat reduced if it were exposed to the public. The problem has been one of notice.  The Act requires one week's  advance notice of the subject matter of each meeting.  Yet, the  kind of informal session I have in mind does not lend itself to a defined agenda.  I am advised that, if the discussion at such  sessions were kept tentative and exploratory, the sessions could be held without attempting to formulate an agenda. Regardless of whether such sessions may properly be regarded as outside the Act's scope, I am inclined to think we can adequately comply with the Act's spirit by publicly announcing at least one week in advance that we propose to hold such an informal session -- possibly in my personal office over coffee -- that the session will be open to the public, and that the subject matter of the meeting will be general matters of common concern to the members of the Commission but will not include discussion of any specific pending proceeding or formal agency action.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  - 4 -  147 One recent session, highlighted in the recent Common Cause study of Sunshine Act compliance, also warrants the Subcommittee's attention.  It illustrates the extent to which  reasonable persons may disagree over the meaning of the word "meeting,"  The National Industrial Traffic League, one of  the leading representatives of the Nation's consumers of transportation services -- the shipping public -- invited the members of the Commission to attend a working conference and luncheon sponsored by the League's officers to permit an informal exchange of views on general developments in transportation regulation.  Before accepting the invitation, I consulted with  'the Commission's General Counsel at some length concerning whether attendance by a majority of the Commissioners at such a conference would contravene the Sunshine Act's provisions. We ultimately concluded that the Act would not apply because the conference would not be a meeting within the Act's definition -- that is, it would not involve deliberations by members of the Commission that would determine or result in the joint conduct or disposition of official agency business. Since it was our understanding -- which later proved correct -- that the discussion at the League's conference was to be general and informational, with no discussion of any   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -  5 -  148 matter likely to be pending before the Commission, we concluded that the session was not within the Sunshine Act's coverage.  Common Cause strongly disagrees with that  legal conclusion, although its study does not reflect the analytical basis of its disagreement.  I am satisfied that  the Commission's attendance at the League's conference did not violate the provisions of the Sunshine Act. In sum, in spite of a few problems, I believe the Commission has properly balanced the right of public access against individual rights and the necessity for efficient and effective government performance of its responsibilities. So far I have been talking about the open meeting requirements of the Sunshine Act, which I believe are probably of foremost concern to this Subcommittee.  I would now  like to make brief mention of the second major provision of the Act -- the section regarding ex parte communications. This section amends the Administrative Procedure Act by expressly prohibiting any ex parte contact between agency members or decisional employees and persons outside the agency regarding the merits of any formal Commission proceeding.  This same  prohibition, as you may know, has long been a part of the Interstate Commerce Commission's Rules of Practice and its Canons of Conduct (for Commission personnel), and thus as far as this agency is concerned, the Act has made little if any substantive change.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -  6 -  149 Finally, I would like to mention that a thorough review and re-evaluation of our sunshine regulations will take place on or about the anniversary date of the regulations.  Included in this re-evaluation will be consideration  of the recommendations recently made by Common Cause, some of which may have merit.  As one example, Common Cause has  suggested that minutes be kept of open meetings, which is a matter we will likely consider in our re-evaluation of the regulations. Thank you for this opportunity to comment on the Sunshine Act, and I will be glad to respond to any questions you may have.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  150 Senator CHILES. Our next witness will be Mr. Fred Favor of the Local and Short Haul Carriers National Conference. Mr. Favor, to use your own words, your association is mostly comprised of the "Mom and Pop'' family businesses who are involved in teh local hauling and pickup and delivery services. That is correct, is it not? Mr. FAVOR. Yes, sir. Senator CHILES. So your members are mostly small businessmen and ·women. I appreciate the care and concern that went into your opening statement. "\Ve will insert it in the record in full. I want to ask you to condense your presentation to us, if you will, in our interest of time. Perhaps if you sta,rt on page ~. since you outline there the frustrations that you were ha Ying in meeting with the ICC, and the apparent treatment that others seemed to enjoy. Then I think by the time you get to page 6 you will have outlined your case or our interest in your case clearly. Mr. FAVOR Mr. Chairman, we do have a 2½- to 3-page statement which does exactly what you stated. Senator CHILES. Fine.  TESTIMONY OF FRED G. FAVOR, EXECUTIVE DIRECTOR, LOCAL AND SHORT HAUL CivtRIERS NATIONAL CONFERENCE, ACCOMPANIED BY EVERETT HUTCHINSON, ATTORNEY Mr. FAVOR. l\fay I introduce on my right Mr. Everett Hutchinson of the law firm in Washington of Fulbright & Jaworski, which represents the conference on some matters. l\Ir. Hutchinson is a former Commissioner at the ICC, from 1955 to 1965. He sened as Chairman in 19(Hi1 and was Deputy Under Secretary of Transportation in 1967 undl'r President ,Johnson. His firm has been working for us over 2 years now, on some of these matters. On my left with the law firm also, is David Sutherlund. Our experience with the Interstate Commerce Commission the last few years has raised fears that this agency is seeking to abandon its congressionally mandated role. "\Ve believe the agency is in part misusing the Sunshine Act to accomplish administratively what Congress has not sanctioned. It is now nearly impossible to obtain two-way communication at the Commission. We believe that this is contrary to the intent, if not the letter, of the Sunshine Act. This subcommittee is aware of the conference's efforts to meet face to face with the ICC in an honest effort to discuss the philosophies behind the regulatory changes. "\Ye requested this by letter dated August 1, 1977, and on August 16, 1977, the ICC Chairman by letter declined to grant the forum request, suggesting that we testify instead at one of the six regional hearings on a limited subject. On August 17, 1 day after an ICC ethics debate, six of the eight Commissioners held a private meeting and a luncheon with the officers of a majo:r: shippers associa.tion in a "\V'ashington hotel. "\V'hile the Commission may or may not have intended to violate the Sunshine Act, the fact that the Chairman granted that private meeting while refusing the small business truckers an open meeting was discriminatory.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  151  The August 17 meeting received extraordinary attention by him, as we pointed out in our complete statement. A vote was-no vote was taken on our request. He also asked for advice from the ICC General Counsel who said the private meeting in a hotel was not an agency meeting and therefore not under the purview of the Sunshine Act. It was this discrimination by the ICC against the small businesses that prompted us to seek details and documents from the ICC under provisions of the Sunshine Act, and the Freedom of Information Act. The shippers request to the ICC was dated August 5, 1977, we understand, 4 days after our request for an open meeting. The topics discussed were major transport issues, some before the Commission. I might add parenthetically here, Mr. Chairman, that we did ask for summaries of discussion copies in our Freedom of Information filing. "\Ve received nothing except the chairman's assertion that no substantive issues were discussed, and that nothing in the way of business coming before the Commission was determined. Attached to our complete statement is a roughly chronological statement of events, and we ask you to jutaxposition these against a single August 5 letter which got immediate results for a more powerful group. Our listing you will note is four pages long. In addition, we ask that certain materials which we submit and which are too voluminous for photocopying be made part of the record. I have them here.'  On August 20, the ICC issued a press release announcing that a hearing on trucking regulation would begin November 10. Even though we had sought such a meeting for several weeks-we were never officially informed that the meeting sought had been scheduled, although the ICC press release specifically mentioned our conference as one of those organizations which wished to be heard. Deadline for participation notices to the ICC was October 27. Press coverage appeared on October 24. In fact, we were not furnished ground rules for our portion of the November 10 hearings, when we finally learned that we had a portion of it, until November 2, much too late to circulate the word properly. vVe proceeded as best we could. After the August 17 meeting the details were disclosed in the press, we had written each Commissioner asking whether the conference should be granted an open forum. Two did not respond, and we have been unable to obtain a satisfactory reason as to why they did not. In addition to the circumspect behavior the August 17 meeting represents, it appears that a negative result of the Sunshine Act has been to cause agencies to stifle communication rather than facilitate access. We thank you for your attention and the opportunity to voice our concern. Senator CHILES. I thank you for your statement. Mr. O'N eal, the Chairman of the ICC, noted in his statement that by having a meeting with the National Industrial Traffic League, the agency was making a legitimate effort to make themselves more accessible to members of the transportation community. I take it you would agree with that as being a good goal for the ICC 1 Mr. FAVOR. Yes, sir, Mr. Chairman. ·we say so in the complete statement that we object to no one meeting with the Commission, even 1  See attachments to Mr. Favor's prepared statement.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  152 under the circumstances that occurred on August 17. We just feel there should be the same access to everyone else. Senator CHILES. Well, I certainly wish you luck in getting your meeting with the ICC, and if you are successful, I certainly hope that that meeting is held in public. Mr. FAVOR. Well, we did get a meeting of sorts. It was not as we requested. We wanted an open two-way discussion-type meeting, and got a hearing instead or what amounted to a hearing, so we did not get what the NIT League got on August 17 in being able to discuss informally some of the problems. Senator CHILES. Well, I think there is value in the type of meeting that you are talking about. Sunshine would not try to prohibit that, but we would like 1t to be in the open when there are discussions, especially with ingroups which the agency is regulating. We think it could be beneficial to the groups and to the regulatory agency, but we think the public is also entitled to be able to view that meeting, and know what ta;kes place just as I think they should have been able to do in the meeting across the street. I hope you will be successful in the future in getting some kind of discussion with the ICC, and I hope it will be public as I said. Mr. FAVOR. We agree, Mr. Chairman, and I might point out that one of the reasons we wanted an open meeting was that we felt that full disclosure would come out on our side. Senator CHILES. Thank you, sir. Mr. FAVOR. Thank you. [The prepared statement of Mr. Favor follows:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  153 STATEMENT of The Local and Short Haul Carriers National Conference before the Subcommittee on Federal Spending Practices and Open Government U, S. Senate Committee on Governmental Affairs November 29, 1977  The Local and Short Haul Carriers National Conference welcomes this opportunity to testlfy regarding its experiences connected with the implementation of the ''Government ln the Sunshine Act" which became effective March 11, 1977. This organization -- a small trade association located In Washington, C, C. -- represents small for.:hlre trucking companies, many of which are "mom and pop" family businesses classified by the Interstate Commerce Commission as Class III motor common carriers enga~ed in pickup and delivery services in metropolitan areas as well as In rural communities.  Since we represent truckers, some Federally regulated  and some not, our experience with the Government In the Sunshine Act Is in this case limited to the Interstate Commerce Commission which grants certificates of authority to operate to many of our members, or registers state certificates of intrastate for-hire common carriers.  "Common carrier" means the trucker Is required  to serve everyone-upon demand, similar to the way taxicabs are legally obligated In the District of Columbia. The Conference also represents those for-hire exempt carriers that operate solely in commercial zones exempt from regulation. Our experiences with the Interstate Commerce Commission in the past several months have raised grave fears and doubts that this oldest of Federal agencies, the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  154 .original consumer Interest agency, ls seeking to abandon Its role as regulator to the great detriment of small businesses and the quality of life In rural America and urban center cities, and ls, In part, misusing the Sunshine Act to accomplish administratively what Congress has not sanctioned. It Is now nearly lmposslbl~ to obtain two-way communication at the Commission. Office appointments are difficult to get. Oral hearings are rare. Large Informal meetings are certainly not routinely granted. And witnesses are precluded from asking questions of commissioners at public hearings. We do not wish to Involve this subcommittee In the substantive Issues of our problems with the Commission. They are more properly within the jurisdiction of other Congressional committees. We would merely point out that whatever the merits of any one of the Commission's proposals to lessen regulation, the proposals In the aggregate achieve the very result which Congress has refused to enact.  Certainly  there are adequate Indications that the ICC Chairman does not wish to give the Congress an opportunity to react to agency actions. We believe that this Is contrary to the Intent, If not the letter, of the Sunshine Act, which Is to p~ovlde more access to the governmental process. As a small business Industry, we have long been concerned with the regulatory decisions of the ICC, but recently most seriously with Its arbitrary recommendation that exempt commercial zones be expanded In blanket fashion nationwide. There was no public outcry for such action, no sound factual data upon which to base It; just a 5-4 vote of commissioners (taken after one member known to oppose It had resigned) that such a change ought to be made.  In rushing to what appeared to be a  pre-determined decision the C_ommission denied numerous and frequently-made requests for an oral hearing, Including one from the Conference. While the decision (Ex Parte No. MC-3 7, Sub-No. 26) ls currently before a Federal court for review. it points up to a great degree the ongoing attempt of the ICC to reduce its workload   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  155 by wldenlng lts areas of non-involvement. Thls ls ln disregard of the statutory responslblllty lmposed by Congress upon the Commlsslon. The fact ls for-hlre truckers now operatlng ln the exempt commercial zones actually are seeklng regulatlon and the stablllty lt would brlng to local frelght transportatlon servlce for the consumer. This subcommlttee we know ls already aware of the Conference's efforts to meet face-to-face wlth the ICC ln an honest effort to discuss the pollcy and philosophy behlnd the Commlsslon's recent regulatory changes and how those changes lmpact upon local and short haul carrlers whlch are largely small buslnessmen. We sought a forum to provlde two-way communlcatlon and we wanted lt open to the publlc. We made our request ln a strongly worded letter whlch articulated local and short haul truckers' frustrations at belng deregulated out of business by a Commlsslon whlch seemed elther unaware or uncarlng. Thls letter was sent on August 1, 1977. On August 16, the ICC Chairman by letter decllned to grant the Conference lts requested forum, suggestlng instead that we testlfy at one of slx reglonal hearlngs on a Umlted subject scattered across the nation. As one of our companles put it, that was tantamount to a veterlnarlan' s saylng: "Your horse ls slck? Well, we're having a meetlng ln Dallas to discuss vertebrates next week." On August 17, 1977 -as disclosed by the Washington Star -- one day after an ICC ethics debate, slx of the eight commissioners held a private meeting and luncheon with the officers of a major shippers assoclatlon in a Washington hotel. The agenda we learned later contained several items of major concern to us which were before the Commission. While the Commission Chairman may not have intended to violate the Sunshine Act, the fact that he granted that private meeting while refusing the small business truckers an open meeting was discriminatory. What added to our concerns ls that one commissioner wrote us that the Chairman normally does not poll fellow commissioners regarding meetings such as the forum   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  156 we requested. Yet, the Chairman wrote us that he polled the other commissioners regarding the shipper meeting, pointing at least to the fact that this meeting received extraordinary attention by the Chairman. He also asked for advice from _the agency general counsel who opined that the private meeting In a hotel was not an "agency meeting" and therefore not under the purview of the Sunshine Act.  He attended the  meeting and luncheon with the commissioners. It was the dtscrtmtnatton by the ICC against the carriers we represent that prompted us to seek details and documents from the ICC under the provisions of the Sunshine Act and Freedom of Information Act. This was after the ICC Chairman wrote us on September 7, 1977 denying that he had closed the door on the forum request, contending that the shipper meeting was neither private nor unfair, and promising to see that the local and short haul trucking industry receives proper attention. Curiously, the Conference never received the original of that letter. What we did receive was a hand-delivered photocopy on September 9, 1977, wtth a note from the Chairman's office which said the letter was malled on the 8th but that the Chairman felt It should have been hand-delivered.  Neither did the Conference receive a copy  of the letter to the Commission from the shipper group Inviting the commissioners to the August 17 luncheon which the Chairman said was enclosed with his letter of September 28 responding to our Sunshine Act lnqulry.  The shipper request to the  ICC was dated August S·, •1977, we understand, four days after our r~quest for a forum.  The topics to be discussed at the shipper meeting, billed as "The Second  Annual Report to the Interstate Commerce Commission, The Shipper's Viewpoint on Transportation," dealt with major transport issues. ICC Secretary Homme provided us a few more details concerning ICC counsel's opinion that the August 17 meeting was not an "agency meeting" because It did not Involve "deliberations (that) determlne(d) or result(ed) in the Joint conduct or dts-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  157 position of official agency business." (We were not provided materials upon which that opinion was based.) Yet, the ICC, in particular Its Chairman, has been under attack by the motor carrier Industry for having prejudged these vttal transport issues. To add to the Importance of what transpired at tbe ICC-shipper meeting, the companies of at least two of the shipper association officers are members of the Committee Urging Regulatory Reform for Efficient National Trucking (CURRENT) an association whose goals, we believe, are to deregulate for-hire truck transportation, particularly the small business segment of It, so as to achieve further concentration of control of pricing to their advantage as large and powerful business concerns. This meeting behind closed doors thwarted the concept of Government In the Sunshine. Though we still aren't finished with our saga about trying to gain an open meetIng with the Commission, let us point for a moment to the Commission's unique procedure in officially announcing in the Federal Register Its Sunshine meetings. In  at least three Instances, the ICC has caused to be published In the Federal Register Sunshine meeting notices after the actual meeting date. The ICC In the September 22, 1977 Issue of the Register announced the agenda for a September 20 meeting which was to be_partlally open and closed. The Register noted it received the agenda for publication at 4:21 p.m., September 19. Secondly, In the September 28 Issue of the Register, the agenda for a 3 p.m., September 26 meeting (closed) was filed at 10:07 a.m. of the meeting day. In the September 20 issue of the Register, the ICC announced  a 3 p. m. September 14 meeting which has been filed for publication on September 16. More recently the ICC caused to be published what we consider to be a classic. The case involved was Ex Parte MC-343, Nationwide Increased Freight Rates and Charges, 1977 for railroads. The item was an announcement of an oral hearing which .was.scheduled for November B. The ttem was. published In the November 8 Register and was submitted for publication November 7. The notice was dated November 2   35-867 0 • 79 • U https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  158 and among the warnings it posed was a filing deadline of November 4. While this item was not listed among the Sunshine meeting notices, we believe this example shows a clear fallure to observe the Sunshine Act.  Certainly the blame for such  flagrant abuse can be shoved onto the shoulders of anyone within the bureaucracy, but we think It also shows the basic disregard by the Commission for congressional mandates, including the National Transportation Policy. We fear the ICC is out to change policy affecting our industry as fast as possible and with as llttle interference from us as possible. But back to our saga ••• Unbelievable effort was required to obtain our own open forum at the Commission. Rather than relate It here, we are attaching a roughly chronological listing of major activities which we ask you to juxtaposition against the single August 5 letter which got Immediate results for a more powerful group.  In addition, we ask  that certain background materials which we submit and which are too voluminous for photocopying In the same quantity as this prepared statement be made a part of the record. On October 20, the ICC Issued a press release announcing that a Washington, D. C. hearing on trucking regulation would begin November 10. Even though we had for several weeks sought a Washington forum, we were never officially informed that the meeting sought had been scheduled, although the ICC press release specifically mentioned our Conference as one of those organizations which wished to be heard. Deadline for participation notices to the ICC was October 27. In one instance. the ICC called In the story to a weekly trade publication after closing hours on its deadline day.  Had a reporter not stayed late that day, the news (the ICC  version of it) might not have reached thousands of truckers. We were precluded from issuing a press release of our own not only by the timing but also for lack of   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  159 official word. In fact, we were not furnished ground rules for our portion of the November 10 hearing,when we finally learned we had a portion of lt, untll November 2, much too late to circulate the word properly to our carriers. In spite of .at least three earlier letters requesting the forum and an opportunity to be heart!, the Conference was required to repeat its request to the ICC Secretary's office by the deadline of October 27 to obtain needed hearing time. To some, these incidents may seem minor, lnslgnlflcant or at best th.e result of laxity. But we believe the Commission led by its new Chairman Is motivated by political considerations rather than dedication to regulate motor transportation for the benefit of the consumer as mandated by the Congress. We call your attention to the following: ---An effort by the Chairman to reduce the size of the ICC to seven  members. This has brought considerable pressure to bear on commissioners due for reappointment and, we believe, has forced others Into early retirement. Our members view this as reverse "packing" of the Commission. By law there are eleven required. ---Authorization by the Chairman of an ICC press release regarding Imposition of new time limits for considering cases before the Commission. The press release said the necessity of time limits reflected a unanimous opinion of the commissioners when' in fact they had not been consulted. The Chairman was forced to apology publicly for this by his peers. ---The frequency that the Chairman's name now appears on the headings of ICC press releases and reports in a reversal of previous procedures.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  160 ---A far too liberal speaking engagements policy which could explain office foul-ups. ---The Commission Chairman last month told a gathering of independent truckers that he is giving them priority status. At the November 10 hearing, after calling for a two-way exchange of Information, the Chairman advised "We aren't here to answer questions." Thus our hopes for an open and meaningful discussion of vital Issues were thwarted. Although we had been granted adequate witness time, the Chairman used our own tentative schedule, shortened for his convenience, to cut us off before statements could be completed adequately summarizing the rapidly occurring demise of small business in trucking. After the August 17 meeting details were disclosed in the press, we wrote each commissioner asking an opinion on whether or not the Conference should be granted a forum.  Two did not respond, and we have been unable to obtain a satisfactory  answer as to why they did not answer our inquiry.  It appears that one negative re-  sult of the Sunshine Act has been to cause agencies to shrink from the light of openness and to stifle communication rather than facilitating access. It should be recognized at this point that as a Conference we do not object  to the ICC or any other agency meeting with members of the Industry It regulates, the shippers served, and the consuming public. However, a dual standard of granting one group of major shippers a private full Commission audience on their turf and not granting an open two-way meeting for small for-hire trucking companies constitutes discrimination in violation of the National Transportation Policy. What we are saying is that there are strong indicators that the Commission has over reacted to political pressures for reform of the industry, is moving too fast   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  161 too soon without providing those affected adequate opportunity to be recognized and heard, and ts not adequately consulting Congress on the issues.  Based on our visit  with the ICC on November 10, we wonder If we were listened to by some commls- · sloners. We represent small motor carriers who are on the front line of this fight over regulatory policy. Local and short haul common carriers operate over 70 percent of for-hire trucks. Yet we estimate that only about 11 percent of those regulated carriers earn more than $1 million in annual gross revenues. Because of our generally small Individual company revenue size, we desperately need access to the Federal decision-making process to avoid being wiped out. We feel the Commission ls inhibiting this access and could better solve its workload problems by streamlining internal operations and seeking from Congress adequate funds and staff to do the job Congress has given It. We rely on an informed Commission and on fair competition in order to perform our role in the total transport effort. May we inject at this point a very real concern about the quality of life In America ... a recent Harrls survey shows that Americans feel the quality of their llves has worsened.  This is not news to us because we are the small businesses  which deal dally with other businessmen who are only too aware of the economies of llfe.  Prices and Inflation are too high.  Nation's needs are supplled by truck.  It is not an exaggeration to say that the  By disruption of truck transportation, the  bureaucracy will have succeeded in further reducing the quality of life.  It is not  truck rates that increase the cost of manufactured goods. Rather it ls fault of those who equate efficiency of production with quality of product. The local cartageman and short haul motor carrier already are the most efficient because of keen competition; to be otherwise would be fatal.  These carriers su.-vive because of service.  It would be wrong to attempt to defuse a consumer revolt against products by punish-  ing the guy who delivers the product.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  162 The efforts of this subcommittee in seeing to it that these issues obtain full disclosure in the public interest are appreciated. Thank you for your attention and the opportunity to voice our concerns.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Respectfully submitted,  ..JAUL-11.~IU:!1-Fred G. Favor Executive Director Local and Short Haul Carriers National Conference 1616 P Street, N. W. Washington, D. C. 20036  163 Local and Short Haul Carriers National Conference's recent efforts to be heard at the Interstate Commerce Commission  10-14-75  Formal request by Conference for an oral hearing In the commercial zone case. Denied.  4-14-76  Conference's oral hearing request reiterated.  8-1-77  Letter requesting Informal meeting with the Commission. Coples were furnished to Interstate Commerce Commissioners; All Members of Congress; Hon. Stuart Elzenstat, Assistant to the President for Domestic Affairs Policy, The White House; Hon. Bert Lance, Director, Office of Management and Budget; Hon. Brock Adams, Secretary of Transportation; Hon. A. Vernon Weaver, Administrator, Small Business Administration; Hon. Anthony S. Stasio, Acting Assistant Administrator for Advocacy and Public Communications, Small Business Administration; Mr. Bennett C. Whitlock, Jr., President, American Trucking Associations, Inc.; Mr. Robert Shertz, Chairman of the Board, American Trucking Associations, Inc.: Mr. C. James McCormick, Chairman, STRONG Committee, American Trucking Assoclatlons, Inc.; Mr. John M. Kinnaird, Vlce President, Gove·rnment Relations Division, American Trucking Associations, Inc.; Mr. John Lewis, President, National Small Business Association; Mr. Wilson Johnson, President, National Federation of Independent Business, Inc.: Mr. Lloyd Espinosa, President, National Conference of State Transportation Specialists; Mr. Paul Rodgers, General Counsel, National Association of Regulatory Utility Commissioners and Transportation trade press.  8-1-77  Letter requesting support of Small Business Administration sent to Honorable A. Vernon Weaver, Administrator.  8-1-77  Letters sent lndlvldually to the ICC commlssloners requesting support for the Informal meeting.  8-1-77  Letter sent to the president of the National Federation of Independent Business, Inc. seeking its support.  8-1-77  Letter sent to the president of the National Small Business Association seeking its support.  8-1-77  Letter sent to Honorable Brock Adams, Secretary of Transportation, request DOT to co-sponsor the Informal Washington meeting.  8-1-77  Letter sent to Honorable Stuart Eizenstat, The White House, requesting support for the ICC meeting.  8-1-77  Letter sent to Director, National Association of Regulatory Utility Commissioners, requesting Its support for the ICC meeting.  8-1-77  Letter sent to SBA Advocacy office head requesting support within SBA.  8-1-77  Press release on contents of August !, 1977 letter to ICC Chairman O 'Neal prepared and distributed.  8-3-77  Story published in dally Traffic World.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Denied.  164 8-3-77  Letters sent to the chairmen and members of the following Congressional committees seeking support for the ICC meeting: Senate Commerce, Science and Transportation Committee Senate Select Committee on Small Business House Interstate and Foreign Commerce Committee House Small Business Committee  8-3-77  Letter sent to legislative aide to Representative John B. Breaux In response to a telephone Inquiry concerning policy considerations regarding economic regulation of the small motor carriers.  8-9-77  Letter sent to over 200 members of the Short Haul Survival Committee, an ad hoc group of short haul motor carriers fighting the ICC's commercial zone decision, advising them of the August 1, 19 77, letter to the Commission. Story published In Transport Topics.  8-8-77  St_ory published In weekly Traffic World.  8-11-77  Conference staff met with three Small Business Administration advocacy aides.  8-10-77  Special bulletin malled to Conference members regarding developments.  8-10-77  Letter malled to 10,000 non-Conference local and short haul motor carriers advising them of developments.  8-12-77  Letter written to Chairman O'Neal by Small Business Administration supporting Conference request for a meeting.  Aug. 1977Nov. 1977  Hundreds of communications with ICC and members of Congress made by local and short haul motor carriers requesting support for the ICC meeting; hundreds of letters sent by members of Congress to·ICC on the matter.  8-16-77  Letter written by ICC Chairman O' Neal to Conference denying August 1, 1977, request for a public Informal meeting with the ICC.  8-17-77  Seven members of ICC and General Counsel met privately and had lunch wtth National Industrial Traffic League In response to an August 5, 1977, letter request.  8-22-77  Washington Star story published revealing August 17, 1977, ICC private meeting with National Industrial Traffic League.  8-23-77  Letter sent by Conference to Chairman O'Neal protesting this discriminatory treatment. Coples: same as August 1, 1977 letter.  8-23-77  Special bulletin malled to Conference members advising of developments.  8-24-77  Press release on contents of August 23, 1977, Jetter to Chairman O'Neal prepared and distributed.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  165 A second letter to each ICC Commissioner sent requesting support and statement of position on the matter. 8-24-77  A second letter urging support of the National Association of Regulatory Utility Commissioners sent to that organization.  8-25-77  A second letter sent to Honorable Brock Adams, Secretary of Transportation.  8-25-77  A second letter sent to SBA Administrator Vernon Weaver.  8-25-77  A second letter sent to Honorable Stuart Eisenstat, The White House.  8-25-77  Coples of Conference August 23, 1977, letter to ICC Chairman O'Neal given widespread Industry circulation.  8-23-77  Memorandum regarding developments sent to all members of the 95th Congress.  8-26-77  Story published In Wa shlngton Star.  8-25-77  Letter written to Conference by ICC Commissioner Murphy advising of circumstances under which a response by the Commission to the Conference's August 1 letter occurred.  8-26-77  Letter written to Conference by ICC Commissioner Gresham advising of his position.  8-29-77  Letter written to Chairman O'Neal by Honorable John Elliott, Commissioner, New Mexico State Corporation Commission.  8-29-77  Letter circulated to NARUC Committee on Motor and Air Carriers by National Association of Regulatory Utility Commissioners headquarters advising of Conference predicament.  9-1-77  Emergency meeting of Conference Board of Directors held In Chicago.  9-6-77  "Sunshine" open meeting of Commission monitored.  9-9-77  Freedom of Information Act and "Government In the Sunshine" Act request filed with ICC seeking details of the August 17 meeting between the Commission and the National Industrial Traffic League.  9-9-77  Press release on Freedom of Information Act filing prepared and distributed.  9-9-77  Letter from Small Business Administration received by Conference advising the agency will perservere at ICC on Conference's behalf.  9-2-77  Letter from Commission Vice Chairman Charles L. Clapp providing his position on Conference's requested meeting.  9-7-77  Letter from Commission Chairman O'Neal further stating his position.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  166 9-14-77  Letters written responding to both Vice Chairman Clapp and Chairman O'Neal, circulated to all commissioners.  9-12-77  Story regarding Freedom of Information Act and Sunshine Act filing published in Traffic World.  9-12-77  Story published in Transport Topics.  9-19-77  Conference filing made in Ex Parte No. MC-106 protesting imposition of a filing deadline while hearings being held reiterating Conference request for a Washington meeting.  9-19-77  Story published in Transport Topics.  9-21-77  Press release on Conference September 19 filing prepared and distributed.  9-22-77  Letter from ICC Secretary H. G. Homme, Jr., responding to Conference's September 9 Freedom of Information Act and Sunshine Act request.  9-15-77  Letter from Commissioner George M. Stafford stating his position.  9-27-77  Conference letter sent to Commissioner Stafford.  9-28-77  Letter sent to President Carter regarding urban policy.  9-28-77  Press release regarding letter sent to President Carter on urban policy as related to trucking prepared and distributed.  9-19-77  Story on possible Senate hearings regarding Sunshine Act aspects published in Traffic World.  9-29-77  Story published In Washington Star.  10-3-77  Story published In Traffic World regarding September 28 letter to President Carter. - - - - - ·  9-28-77  Letter from Chairman O'Neal further responding to Conference's Freedom of Information Act and Sunshine Act request for details of the August 17 ICC-NIT League meeting.  lQ-6-77  Conference letter sent to Chairman O'Neal responding to him, circulated to other commissioners and industry.  10-5-77  Press release prepared .and distributed on further details of August 17 meeting.  10-10-77  Story published in Transport Topics.  10-10-77  Story published In Traffic World.  10-20-77  ICC issues press release advising a Washington Conference on trucking regulation will be held November 10, 11, and 12.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  167 INTERSTATE COMMERCE COMMISSION, Washington, D.C., August 16, 197"'1.  Mr. JOHN E .WAGNER, President, The Local and Short Haul Carriers National Conference, Washington, D.C.  DEAR MR. WAGNER: Your letter of August 1, 1977, is indeed a strong indictment of many of the Commission's recent actions in the field of motor carrier regulation. I gather that you do not expect me to respond to, or even comment on, the many questions which you have raised, but rather that you seek a more open and general forum in which your members' problems can be aired. It may be, as you allege, that we have acted without full appreciation of the impacts of our actions upon the local and short haul motor carriers. If this is the case, that situation must be corrected. No one can be a stronger believer than I am in the principle that action by the government should be taken only when the consequences of the results are understood and predicted as accurately as possible. Your proposal for a day-long open conference on the situation of the local and short haul carriers is an interesting one. As you probably know, I have scheduled a series of public meetings on the general subject of motor carrier regulation, and you can assume from that action that public dialogue on regulatory questions has my strong support. I hope that your members will be able to participate in these hearings. Please accept this reply as being made on behalf of the entire Commission. Sincerely yours, A. DANIEL O'NEAL, Chairman. [From the Washington Star, August '23, L977]  ICC ETHICS DEBATE FOLLOWED  BY  A FREE LUNCH  (By Stephen M. Aug) Last Tuesday members of the Interstate Commerce Commission spent an hour and a half arguing over the ethics of allowing those affected by ICC decisions to buy their lunches. They didn't reach a formal decision, but a hint of their leanings might have come the next day, when they accepted cocktails and lunch from a shipper association. Six members of the agency trooped across Pennsylvania Avenue from the ICC building at 12th Street and Constitution Avenue to a private dining room at the Washington Hotel, where they dined with top officials of the National Industrial Traffic League after spending about 45 minutes in a private session discussing transportation. The NIT League is an organization that represents about 1,800 business firms, chambers of commerce and other organizations that are involved in transportation. The organization is frequently before the ICC urging it to reject higher rates for railroads or truckers. The meeting and luncheon were all the more unusual for other reasons. First, officials at both the Association of American Railroads and the American Trucking Association!! said their top officers have not had the benefit of private sessions with the commissioners as a ~roup. The NIT League is usually opposing actions proposed by members of both the AAR and the ATA. Second, officials at three other regulatory agencies say they do not meet privately with industry groups. At both the Civil Aeronautics Board and the Federal Communications Commission, officials said the agencies have met with industry groups to discuss mutual problems-but they have been public sessions at the agencies' offices. Advised of the nature of the NIT League meeting, CAB General Counsel James C. Shultz said that while he had not studied the situation, "it's fair to say that the general board practice for presentations of this nature would be through an announced meeting in the board's offices." Many regulators have become more sensitive in recent years to the propriety of meeting privately with groups that could be affected directly by agency decisions. As a result, practices such as the public meetings at the CAB and FCC have come about.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  168 Further, passage of the Government in the Sunshine Act also has made regulators more conscious of avoiding private sessions. The new law which went into effect early this year requires all multimember agencies to hold their meetings in public and give advance notice of their intention to meet. In this case, six of the eight members of the ICC, accompanied by the agency's chief lawyer, went to the NIT League session. James E. Bartley, executive vice president of the league, said similar sessions have been held in past years and they are "just sort of a review of legislative matters" and other transportation issues. "We do protest some rates that are published by the various motor carriers and railroads," Bartley said in an interview, "but our basic position is that the carriers be able to justify what rates they are seeking." He said no rate cases were pending. Bartley said the discussions considered ICC efforts to involve the public in the regulatory process, recommendations made by the commission staff to trim down federal regulation of trucking-which the league generally supports--comments about an ICC chairman's recent report to the ,vhite House, improvements in communications between ICC and the Department of Transportation and an invitation in the commissioner to attend the league's 70th convention in Chicago this year. ICC Chairman A. Daniel O'Neal is on vacation and was unavailable to comment on the meeting. The acting chairman, Charles L. Clapp, refused to make himself available to discuss the matter. Commissioner Robert C. Gresham, however, confirmed that the commissioners did not pay for their lunch. "We didn't pay for the damn thing, no it was strictly a freebie," hp said, "and that's what I'm saying. If we're going to cut it out, let's cut it out altogether. Let's don't have some one day and not the next." Gresham was strongly critical last week of the proposed new ethics rules which would not permit commissioners to accept free lunches except at conventions and similar sessions. Gresham said at the time that ICC members and employes are as honest "as you will find anywhere in government. Every one of them has good judgment-he knows what is right and what is wrong." The only commissioners who didn't attend the NIT league session were Dale W. Hardin, who has announced his intention to retire, and Alfred T. MacFarland, who is on vacation. Commissioner Rupert L. Murphy attended the working session, but left before lunch. Among those from the XIT League were Stanton SPnder. a Washington-based transportation expert at Sears, Roebuck & Co., and William K. Smith, a vice president for transportation at General Mills Inc., who also is chairman of the board of the U.S. Railway Association. Host for the meeting was J. Robert :uorton, president of the league and vice president for corporate transportation at Combustion Engineering Inc. Gresham contended that even under the new code of ethics it would he proper for the commissioners to accept lunch under the circumstances of the XIT League session. "They say if you are a participant in a working meeting you may accept food and drink se1Ted in connection with that mePting," Gresham pointed out. Commissioner Betty ,Jo Christian, who was among the most outspoken commissioners in favor of generally abolishing free lunches, agreed. She said commission employees should pay their share of lunch costs in restaurants, but luncheons in connection with working meetings are "entirely appropriate." Advised that such priYate meetings themselves are frowned upon by other agencies. she said. "certaiilly that's something we should think about." Mark L. Evans, ICC general counsel, said that before the commissioners agreed to meet with the league he looked into the propriety of accepting lunch and the question of whether the appearance of such a large number of commissioners (six out of the eight) would constitute an official meeting under the terms of the Runshine Act. Evans said he deto>rmined that accepting lunch was proper. And he ruled it was not an official ICC meeting because the XIT League president presided, and not the ICC chairman. Moreover. "it didn't invoke deliherations among the commisstoners. nor did it result in joint conduct ... or deliberations of official agency business. It was simply an opportunity for the commissioners to trade very general views over the future of transportation and regulation and the shippers viewIJoint."   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  169 THE LOCAL AND SHORT HAUL CARRIERS NATIONAL CoNFERENCE, Washington, D.C., August 23, 1977. Hon. A. DANIEL O'NEAL, Cha,irm.an, Interstate Commerce Commission, 12th and, Constitution Avenue NW., Washington, D.C.  DEAR MR. CHAIRMAN: The small, family-owned businesses this Conference represents were shocked and dismayed when you advised us on August 16, 1977, that you were not accepting our request for a meeting with the Commission. They were outraged when they learned that on the next day (August 17) the entire Commission present in Washington held such a meeting with the powerful National Industrial Traffic League. We are grateful that you correctly gauged our letter of August 1 as an indictment of Interstate Commerce Commission regulatory treatment of local cartage and short haul for-hire motor carriage, but, alas, we fear you once again have missed the point regarding our major complaint. The issue is dlscrimination by the Commission against a major, viable, indispensible segment of American transportation. It encompasses a great deal more than just the subject of entry into the motor carrier business. Your suggestion that we present our views at the six regional meetings is a near perfect example of the naivete or arrogance which led to our August I letter. We view these meetings as nothing more than a charade. We do not intend to be so easily side-stepped. Our segment of the trucking industry has been through these "transportation town meetings" before, most recently with the Department of Transportation, for example. Such meetings appear to be only exercises in symbolism for political and public relations purposes. Late last winter amid much fanfare DOT announced nine similar regional meetings. Only two have been held-both with severely restricted subject matter, format, and spokesmen selection-arousing suspicions that once an increase in the Administration's public approval rating was accomplished the rest were dropped. ·The Interstate Commerce Commission cannot regulate effectively in a vacuum from cloistered offices nor by use of mere window dressing. You are correct to gather that the local and short haul segment of the trucking industry wishes to voice its problems with the ICC at an "open and general forum." We are not of the opinion that six meetings scattered across the United States on such a broad subject as motor carrier entry regulations constitutes a satisfactory response to our request. Indeed, such an open and public forum as we seek would be similar to those the Commission has held in recent years on the subjects of agent-carrier relationships, productivity standards, owner-operators fuel crisis problems and restrictions on service by motor common carriers. Time allotted for the six regional meetings you refer to is woefully inadequate to obtain realistically meaningful data on the subject of motor carrier entry regulations, let alone the broad range of problems articulated in our August 1 letter. The thrust of the six public meetings you refer to is primarily on ways to simplify licensing (entry) procedures for trucking. Other announced topics on which informed comment is sought are ways in which the ICC can be of assistance to the small businessman, and ways to reduce regulatory lag. We submit here and now that the ICC can best help the small businessman by not deregulating him out of business and by granting his request to be heard adequately. Are all commissioners -going to be present at the six meetings? Are all policyinfluencing staff personnel going to be present? If not, how can these six meetings fulfill one of the prim;iry aims of our requested forum, that of educating the ICC commissioners and staff concerning what it takes to be an efficient and viable local cartage-short haul motor carrier? It was due precisely to this kind of Commission failure to pay substantive attention to the requests and problems of our segment of the trucking industry as exemplified by the 14 items listed in our August 1 letter that led to its being written in the first place. We remind the Commission, for example, that we pleaded unsuccessfully for an oral hearing in the commercial zone case. Since you support "public dialogue on regulatory questions," we respectfully request that you schedule, after consultation with the other commissioners, at least a one-day Washington, D.C. forum on the discrimination and indifference our industry sees in your agency's policies and trends. In fact, it would seem wiser and less expensive to   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  170 forego the regional meetings you propose until after our meeting at the Commission. 1Mr. Chairman, we reiterate our request for a Washington conference on the problems of the small for-hire trucking companies. Why cannot the request be granted as made~ Why has not it already been granted? The fact that it has not be{ln promptly granted demonstrates the primary point of our August 1 letter. · Unless the Commission is not as concerned about the public interest and the health of the nation's transportation system as it is your responsibility to be, there should be no question about granting the request. Why has there been? By copy of this letter we are respectfully requesting all members of Congress to help us determine answers to the above questions and to get to the bottom of what is going on at the Commission. •Mr. Chairman, since your August 16 letter states that it was made "on behalf of the entire Commission," we ask to be informed as to the vote among the commissioners on our August 1 proposal, not only as to numbers but also by name. We would remi.nd you that our request is for an open and public meeting with the Commission-not private. Your earliest response is requested. Sincerely, ,JOHN E. WAGNER, President. THE LOCAL .AND SHORT HAUL CARRIERS NATIONAL CONFERENCE,  Washington, D.C., September 9, 1977. Mr. H. GORDON HOMME, Acting Secrteary and Freedom of Information Officer, Interstate Commerce Commission. Washington, D.C.  DEAR SIR: Pursuant to the Freedom of Information Act, as amended, (5 U.S.C. and in line with the "Government in the Sunshine" Act (Pub. L. No. 94409), the Local and Short J;laul Carriers National Conference hereby requests the following information regarding the Commission's August 17, 1977 meeting with members of the National Industrial Traffic League (League) held at the Washington Hotel in Washington, D.C.: (1) the names of all commissioners in attendance at such meeting. (2) the names of all League officers and shipper representatives preiient .at such meeting ; (3) the name(s) of persons requesting such meeting and the name(s) of Commission officers giving approval for such meeting; ( 4) a copy of the official transcript of such meeting, or in lieu thereof, a summary of all matters discussed and considered at said meeting; and (5) with respect to (4) above, if a summary is provided we request that such summary disclose the following in summary form : (a) All discussions relating to matters pending before the Commission, i.e., rates, rulemaking proceedings. staff recommendations relating to motor carrier entry, and competition within the motor carrier industry; (b) All recommendations received from attendees (both public and private) regarding future Commission actions involving rates, rulemaking proceedings, motor carrier entry and competition; and ( c) All recommendations received from attendees (both public and private) regarding suggested amendments to the Interstate Commerce Act involving both procedural and substantive regulation of the motor carrier industry and other modes of transportation subject to the jurisdiction of the Commission. Should you determine that some of the information requested is exempt from disclosure, please advise us which exemption you believe covers the material not being disclosed. In addition, should a portion of any requested matter be considered exempt from disclosure, we trust that you will make every endeavor to disclose those portions which are "reasonably segregable" from the exempt matter. We, of course, reserve all rights to appeal any such determinations. We request that all fees for gathering and reproducing this information be specifically waived in light of the clear Congressional policy against ex parte communications in transacting government business. In this regard, we are certain that the Commission embraces the Brandeis maxim that with respect to government business "sunlight is the best disinfectant." § 552)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  171 If you have any questions hwolving this request please contact me at the above number. ,ve trust your reply to this request will be forthcoming with the ten working days provided by law. Sincerely, FRED G. FAVOR, Ea,ecutive Director.  INTERSTATE COMMERCE 0oMMISSION, Washington, D.C., September 22, 1977. Mr. FRED G. FAVOR, Ea,coutivc Direvtor, Local and Short Haul Carriers National Conference, Washington, D.C.  DEAR l\IR. FAVOR: Your letter of September 9, 1977, requested, under the Freedom of Information Act and the GoYermuent in the Sunshine Act, certain specified "information regarding the Commission's August 17, 1977 meeting with members of the National Industrial Traffic League." The Freedom of Information Act applies only to identifiable agency records. Although your letter requests "information" rather than "records," I have attempted to locate records that might be responsive to your inquiries. I have found one item: an agenda prepared by the National Industrial Traffic League and apparently distributed to all persons who attended the August 17 meeting. I enclose a copy of the agenda. The Commission's General Counsel has advised me that in his opinion the August 17 meeting was not an "agency meeting" under the Government in the Sunshine Act because it did not involve "deliberations [that] determine[d] or result[ed] in the joint conduct or disposition of official agency business," within the meaning of 5 U.S.C. 552b(a) (2). No transcript or electronic recording was made of the meeting, nor were any official minutes or summary prepared. Although I am not in a position to respond to your other inquiries, Ohairman O'Neal may be able to furnish some of the additional information you have requested. I have accordingly referred your letter to him for that purpose. Since the enclosed document is the only record I have been able to locate in response to your request, I do not believe that this letter denies any portion of your request. Nevertheless, I call your attention to 49 C.F.R. 1001.4, which provides a right of appeal to the Chairman of the Commission from a denial by the Secretary of any Freedom of Information Act request. Such an appeal must be filed within 30 days of the date of this letter. Sincerely yours, H. G. HOMME, Jr., Acting Secretary.  INTERSTATE COMMERCE COMllllSSION, Washington, D.0., September 28, 1977.  llr. FRED G. FAVOR, Ea,ecutivc Director, Looal and Short Haul Carriers National Conference, Washington, D.C.  DEAR MR. l!'AVOR: Acting Secretary Homme has referred to me your letter of September 9, 1977, requesting certain information concerning the August 17, 1977 meeting attended by seven Commissioners and officials of the National Industrial Traffic League. I will try to answer your questions. 1. The following Commissioners attended the meeting: Chairman O'Neal, Vice Chairman Clapp, Commissioner Murphy, Commissioner Brown, Commissioner Stafford, Commissioner Gresham, and Commissioner Christian. General Counsel EYans also attended. Commissioner Murphy did not attend the luncheon portion of the meeting. 2. I am informed that the following officers of the NIT League attended the meeting: J. Robert J\Iorton, President; W. K. Smith, Vice President; Stanton P. Sender, Treasurer; Donald Boyes, Chairman, Executive Committee; Harry D. Gobrecht, Vice Chairman, Executive Committee; John F. Donelan, General Counsel; James E. Bartlev, ExecutiYe Vi<'e President; .John A. McQuaid, Assistant to Executive Vice President; Jeffrey C. Kline, Dirertor of Economics. 3. Tht meeting was requested by James E. Martley, the League's Executh•e Vice President, in a letter to me dated August 5, 1977. I enclose a copy of that letter. After polling the other members of the Commission and after discussing the mat-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  172 ter with the Commission's General Council, I had my office notify the League that the Commissioners named above, together with the General Counsel, would attend. Each member of the Commission "approved" his or her own attendance at the meeting. The General Counsel advised me before I agree to attend the meeting that in their current form or as then proposed to be modified by a staff committee. He also advised me that in his opinion the meeting proposed by the NIT League would not be an "agency meeting" within the meaning of the Government in the Sunshine Act and that public notice therefore would not be required under that Act. 4. As Acting Secretary Homme's letter stated, the Commission made no transcript or official summary of the matters discussed at the meeting. Mr. Homme sent you a copy of an agenda prepared by the League and distributed to persons who attended the meeting. I believe that each topic on the agenda, though not necessarily in the order indicated, was covered in brief remarks, except that I do not recall hearing any comments on the "Status of USRA and Northeast Rail Reorganization." 5. The discussion was in all respects general and quite brief. As I stated in my September 7, 1977, letter to Mr. ,vagner, there was no discussion bearing on any specific proposals before the Commission. I do not believe that any recommendations were made concerning the topics to which you refer in your question (5). Some of the League officers may have referred to the League's publicly stated position on one or more broad regulatory issues, but any such references were general. The Commission members were given some written materials expressing the NIT League's policies. I enclose copies of those materials, all of which I believe were in the public domain at the time they were provided. Please let me know if I can be of further assistance. Sincerely yours, A. DANIEL O'NEAL, Chairman. THE LOCAL AND SHORT HAUL NATIONAL CoNFEBEN0E,  CARRIERS  Washington, D.C., October 6, 1977.  Hon. A. DANIEL O'NEAL, Chairman, Interstate Commerce Commission, 12th and Constitution Avenue N.Y., Washington, D.C.  DEAR MR. CHAIRMAN: Thank you for your September 28 letter furnishing certain information about the Commission's August 17, 1977, meeting with officials of the National Industrial Traffic League. We appreciate your effort to be responsive to our questions. As stated previously, we asked the questions, among other reasons, in an attempt to find out why you would consent so readily (August 5 invitation letter for an August 17 affair) to a private Commission meeting with the League and not agree to meet publicly with us, as requested by our letter of August 1, which predated the League's letter by four days. (Incidentally, a copy of that August 5 League letter was not among the enclosures in the envelope we received containing your September 28 letter.) While your letter answered some of our questions, it raised several others which are rather disturbing. We discuss them here, and in so doing, respectfully ask again for your positive response to our request for a mid-November meeting with the Commission. The Conference is disappointed that no transcript or official summaries were made of the August 17 meeting, particularly since several of those matters listed on the agenda for the meeting directly impact upon the small, family-owned for-hire trucking companies and are therefore vitally important to us. The agenda alone certainly includes serious Commission business topics of major importance to local and short haul carriers, as well as to the entire motor carrier industry. The subject of motor carrier entry, as one example, is of vital concern. Your statement not withstanding, the 39 recommendations of the Task Force are before the Commission. That topic, we note, was among the August 17 meeting agenda items. How can we be certain in view of the topical agenda sans transcript or summaries whether some members of the Commission have prejudged the issues regarding motor carrier entry and other Commission administrative deregulation matters as a result of the Augus-t 17 meeting, or as a result of other similar private meetings with League officials which may have occurred prior to August 17? We are surprised to note that   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  173 two of the five non-staff League officers in attendance August 17 are representatives of companies who are active members of CURRENT, an organization whose announced policies are, in our view, for the specific purpose of deregulating the for-hire •trucking industry. Our August 1 letter requesting an open forum at the Commission on the agency's policies regarding, among other things, the regulatory structure expressed our concerns about administrative deregulation. These issues of such grave national importance are hardly topics for private meetings with any special interest group. We have no way of knowing whether pro-deregulation spokesmen had already achieved their influencing of the Commission toward its current deregulatory policies and trends which are devastating the small carriers. Without transcript or summaries we have no way of knowing but that the August 17 meeting and luncheon were simply a generalized rehash of specifics covered previously and a "pat on the back" appreciation banquet of sorts for those who are reacting favorably to the deregulation arguments. In our opinion conduct such as the August 17 meeting represents totally thwarts the purpose of the Government in the Sunshine Act. That Act was designed to allow open air free exchange of ideas in government and was specifically enacted to prevent strong and articulate groups from unduly influencing governmental policy which impacts broadly on the general public. We hasten to reiterate, as Conference President John Wagner has said previously, that we have no quarrel with the Commission's meeting openly with League officials-even if some of them espouse deregulatory views. In fact, we encourage it; it would be unseemly of us to attempt to prevent such meetings. Rather we seek opportunity to present our views in Washington to what we would hope would be the objective ears of Commission decision makers, an opportunity that thus faF has been denied. A primary reason for our requesting information concerning the August 17 meeting was to determine from a due process standpoint whether we are being dealt with fully and fairly. Your September 28 letter presents no explicit guidelines for the granting of such private and public meetings, other than apparent caprice. We find it interesting and a telling commentary, for example, that the commissioners were individually polled concerning the August 17 meeting and not polled for our request for a meeting. This gives a dimension of importance to the August 17 meeting that belies the downplay you attempt to give it in the closing paragraphs of your September 28 letter. How do you think this discrepancy in polling of the commissioners makes the small carriers this Conference represents feel about the importance the ICC Chairman places upon their major public service transportation role? }'urther, there remain serious questions about the August 17 "agency meeting" decision, notwithstanding the opinion of Commission General Counsel, since we have not been provided the basis for his decision. The August 17 meeting does raise the spectre of concern. In view of the Washington Star stories (most recently the front page, right hand column item of Thursday, September 29, copy enclosed) and in view of a Senate subcommittee's expression of interest to the Conference in this matter, there is certainly substantial question as to whether the "agency meeting" decision is on ground as solid as your General Counsel would have you believe. Absent a granting of the Conference's request for a public ·washington meeting and a convincingly sincere commitment from you to the requisite level of objectivity in receiving our views at such a meeting, it is entirely natural for the Conference to continue to ask why one party is promptly granted a private Washington meeting by your office and a public meeting denied another. With all due respect, local and short haul carriers remain shocked and outraged by such inexplicable and discriminatory treatment. We appreciate your offer of further assistance. As stated, you can be most helpful by scheduling the public forum we request and committing yourself to the necessary level of objectivity. In our view, under the circumstances such actions are required by the responsibilities of your public office and the oath you took upon entering it. Finally, Mr. Chairman, we wish you to know that the Conference takes no pleasure in these exchanges of pointed letters, especially with a person occupying an office of authority that it is our normal tendency to direct a large measure of respect toward and to expect fairmindedness from in return. May we suggest the setting of a date for our requested Washington forum, a putting   https://fraser.stlouisfed.org 35-867 0 - 79 - 12 Federal Reserve Bank of St. Louis  174 away of linguistic swords and shields, and a mutual building of resolve to make the forum a positive, constructive event in the public service interest of sound transportation regulation. Sincerely, FRED G. FAVOR,  Ei/Jecutive Director.  Enclosure.  [From the Washington, Star, Sept. 29, 1977] U.S. AGE:VCIES CRITICIZED ON SECRECY CLOSED MEETINGS CONTINUE DESPITE 'SUNSHINE' LAW  (By Stephen 1\1. Aug) Despite the new law requiring government agencies to conduct their business in public, a substantial part of gO\·ernment decisions are still being made behind closed doors, a s~udy by Common Cause, a citizen lobby group, reported today. The study, which examined meetings held by 47 agencies covered under the "Govemment in the Sunsine Act" during the first three months the law was in effect, disclosed that only 37 percent of the 51 meetings held during the three months were entirely open to the public. Another 24 percent were partly closed to the public, and 39 percent were entirely closed. The study said that the most frequently used reason for closing the meetings was that discussions related to financial information that apparently might result in securities market speculation. Nevertheless, one agency closed a meeting on the grounds it was going to take up the question of whether to buy new furniture, and another held a private conference with a trade association and shortly afterward denied there was even a meeting. The new law, which went into effect in l\Iarch, requires all multimember government agencies-those run by two or more members-to hold all meetings in public. Meetings may be closed for any of 10 reasons-such as national security discussion, internal personnel rules, trade secrets, criminal investigations, private personnel matters and pending court suits. But the Common Cause report shows that most agencies are using the exemptions wherever they can simply as an excuse to close a meeting, rather than obeying the spirit of the new law which favors public decision making. The 73-page report singles out two agencies as examples of those organizations adapting to the new law only grudgingly. "'They view the act as a procedural budren to be circumvented when possible. They continue to conduct business as usual behind closed doors." The two are the Federal Reserve Board, whose chairman, Dr. Arthur Burns, fought vigorously in Congress to exempt the board from the law, and the Interstate Commerce Commission. The report pointed out that the Federal Reserve Board granted broad discretion in closing its meetings because exemptions in the law provide for holding closed sessions when they involve regulating financial institutions or when discussions would lead to premature disclosure of financial data and resulting speculation in securities markets. During the first three months the new law was in effect-llarch 12 through June 12 of this year-the Fed he1 d 37 meetings, of which 30 were entirely closed to the public, two were only partly open and five were entirely public. "The disproportionately large number of closed meetings are justified by the Fed on the grounds that matters of a sensitive financial nature were being considered by the board as permitted by the act," the report said. "But the fact that that board elected to close one of its meeting in order to consider a proposed office furniture design as well as the board's building reno~ation project raises serious questions about the Fed's willingness to comply with the spirit and meaning of the Sunshine Law." Theodore E. Allison, secretary of the board, objected to this characterization. He said that although Burns had vigorously fought application of the new law to some of the Fed's functions, "He's been just as Vigilant in his insistence that the Federal Reserve Board be diligent in observing the act."   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  175 Allison said the meetings on buying furniture and renovating the building were closed so that potential salesmen would not have advantages in competitive bidding. He said the meetings were reported and transcripts were available immediately after the meeting in the board's public reference room. "·We're in 100 percent compliance with the Sunshine Law.'' The ICC several months ago discussed one of the most important cases in its history in private-the agency closed its June 28 meeting when it determined tariff charges on the transportation of oil through the new Alaska pipeline. And just several days ago the commission held another closed meeting when it considered appeals from the oil companies which wanted to increase their rates on the pipeline. "Certainly a question of such national importance should have been considered in open session based on an agency finding that the public interest would be served by openness," the report said. The study also referred to a Washington Star disclosure of a private meeting and luncheon in which six ICC members met with top officials of a trade association last month. The ICC's general counsel said the session wasn't a meeting in the true sense of the word because no business was conducted. '"\Ve believe this is a perverse interpretation of the act," the Common Cause report says. The report said that while nobody denies the importance of an agency trying to gain understanding of the problems affecting the business they are charged with regulating, '"We doubt the wisdom or the propriety" of agency meetings held in private with officials of ··an association that has a clear and Yested interest in the outcome of agency decisions." ICC Chairman A. Daniel O'Neal said several weeks after the luncheon with the National Industrial Traffic League that while nothing directly before the commission was discussed at the luncheon, ••if I'd haYe thought about it a little more before accepting the invitation • • • I probably would have insisted it be made very public.'' Common Cause had praise for two agencies which it said appeared to be making every effort ··to provide the public with the fullest practical information regarding their decisionmaking process.'' It pointed out that Civil .Aeronautics Board has held nearly 70 percent of its meetings in the open and the agency's rules goYerning open meetings permit any person to petition the CAB to reconsider the closing of a meeting. The U.S. International Trade Commission, the report said, has gone ··beyond the literal requirement of the law to implement the spirit of open goYernment. It said the commission did not exercise the option of haying rules which would permit it to close m('('tings on an expedited hasis; it has required a complete transcript for all meetings whether open or closed, and has tried to widely publish its meeting notices through use of a mailing list. "'Most agencies have not gone beyond the minimum requirements in order to carry out the spirit of the legislation," the report says. ··Many agencies seem to be adapting to the act, but only grudgingly. They Yiew the act as a procedural burden to be circumvented when possible." The report includes a table showing the number of meetings that agencies ha,·e held, the number that have been closed and the various reasons. Among the agencies that haYe been making substantial use of the closed sessions are: The Export-Import Bank board of directors, which has held 26 meetings, all of them closed on the grounds trade secrets might be disclosed. Federal Home Loan Bank Board, 23 meetings, 12 entirely closed and 11 partly closed. Nuclear Regulatory Commission, 42 meetings, 20 closed, nine partly closed. Securities and Exchange Commission, 49 meetings, 31 closed, se,·en partly closed. Those agencies that haYe held no closed meetings include the Commodity Credit Corporation, Council on Emironmental Quality, Inter-American Foundation, Mississippi River Commission, National Commission on Libraries and Information Science, National Council on Education Research, National Mediation Board, Tennessee Valley Authority, Uniformed Services Unfrersity of the Health Sciences Board of Regents and the U.S. Postal Ser\'ice Board of Governors. Common Cause prepared the study for hearings before a Senate Governmental Affairs subcommittee that were to have been chaired by Sen. Lawton Chiles,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  176 D-Fla., the principal Senate sponsor of the Sunshine Act. The hearings were to have been held yesterday, but were canceled because of the Senate energy filibuster. Common Cause also had a few recommendations. These urge the President to require agency regulations to conform to the spirit of the Sunshine Act, and they would allow the use of cameras and tape recorders at meetings, require minutes to be kept of open meetings and transcripts of closed meetings and limit the use of a commonly used method to get around having an open meeting-the use of notational voting by which agency members write their votes on memorandums which are delivered by messenger from office to office, thus avoiding any need for a meeting. INTERSTATE COMMERCE COMMISSION, Washington, D.C., September 28, 19"17. l\Ir. FRED G. FAVOR, Emecutive Director, Local and Short Haul Carriers National Conference, Washington, D.C.  DEAR llR. FAVOR: Acting Secretary Homme has referred to me your letter of September 9, 1977, requesting certain information concerning the August 17, 1977 meeting attended by seven Commissioners and officials of the National Industrial Traffic League. I will try to answer your questions. 1. The following Commissioners attended the meeting: Chairman O'Neal, Vice Chairman Clapp, Commissioner Mur!phy, Commissioner Brown, Commissioner Stafford, Commissioner Gresham, and Commissioner Christian. General Counsel Evans also attended. Commissioner Murphy did not attend the Luncheon portion of the meeting. 2. I am informed that the following officers of the NIT League attended the meeting: J. Robert Morton, President; ,v. K. Smith, Vice President; Stanton P. Sender, Treasurer ; Donald Boyes, Chairman, Executive Committee ; Harry D. Gobrecht, Vice Chairman, Executive Committee; John F. Donelan, General Counsel; James E. Bartley, Executive Vice President, John A. lfcQuaid, Assistant to Executive Vice President; Jeffrey C. Kline, Director of Economics. 3. The meeting was requested by James E. Bartley, the League's Executive Vice President, in a letter to me dated August 5, 1977. I enclose a copy of that letter. After polling the other members of the Commission and after discussing the matter with the Commission's General Counsel, I had my office notify the League that the Commissioners named above, together with the General Counsel, would attend. Each member of the Commission "approved" his or her own attendance at the meeting. The General Counsel advised me before I agreed to attend the meeting that in his opinion attendance would not violate the Commission's Canons of Conduct, in their current form or as then proposed to be modified by a staff committee. He also advised me that in his opinion the meeting proposed by the NIT League would not be an "agency meeting" within the meaning of the Government in the Sunshine Act and that public notice therefore would not be required under that Act. 4. As Acting Secretary Homme's letter stated, the Commission made no transcript or official summary of the matters discussed at the meeting. :\Ir. Homme sent you a copy of an agenda prepared by the League and distributed to persons who attended the meeting. I believe that each topic on the agenda, though not necessarily in the order indicated, was covered in brief remarks, except that I do not recall hearing any comments on the "Status of USRA and Xortheast Rail Reorganization." 5. The discussion was in all respects general and quite brief. As I stated in my September 7, 1977, letter to Mr. Wagner, there was no discussion bearing on any specific proposals before the Commission. I do not believe that any recommendations were made concerning the topics to which you refer in your question (5). Some of the League officers may have referred to the League's publicly stated position on one or more broad regulatory issues, but any such references were general. The Commission members were given some written materials expressing the NIT League's policies. I enclose cO'[)ies of those materials, all of which I believe were in the public domain at the time they were provided. Please let me know if I can be of further assistance. Sincerely youni, A. DANIEL O'NEAL, Chairman.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  177 SECURITIES AND EXCHANGE COMMISSION  Senator CHILES. Our next witness will be the Honorable John R. ~vans of th~ Securities and Exchange Commission who protects ' mvestors agamst malpractices in securities. We are happy to have you before us. Your statement in :full will be inserted directly in the record. TESTIMONY OF JOHN R. EVANS, COMMISSIONER, U.S. SECURITIES AND EXCHANGE COMMISSION, ACCOMPANIED BY HARVEY L. PITT, GENERAL COUNSEL  Mr. EvANS. I will very briefly summarize my prepared statement. _I ~m pleased_ to have this opportunity to review with you the Commissions experience over the last 6 months in administering the Government in the Sunshine Act. With me today is Harvey L. Pitt, the Commission's General Counsel, w_ho is very knowledgeable with respect to the details of our experience. Immediately following the adoption of the Government in the Sunshine Act in September 1976, our Office of General Counsel began' the process of developing new rules and amending existing rules to carry out the purposes of the act. During the process, prior to adoption of the act, ,ve expressed our support for the act's objectives, but also our concern that certain of the burdens of compliance might outweigh tht> benefits of the act to the public. We knew that most of our meetings could not be open to the public given our broad-ranging prosecutorial and quasi-judicial functions, and the fact that even our rulemaking procedures often include discussions of active enforcement cases. Nevertheless, we were determined to comply, not only with the letter of the new law, but also with its spirit. Members of the Commission, our General Counsel, and other members of our staff devote a substantial amount of time to carry out the objectives of the Sunshine Act. Our General Counsel will not certify that a meeting may be closed unless the matters to be considered are clearly within one of the act's exemptions. On occasion, he has refused to certify that matters may be considered in a closed meeting, despite some strong views to the contrary, because of our commitment to implement the act fairly. In addition, even though our General Counsel has been prepared to certify that a meeting could be closed as a matter of law, the_ Commission has voted to open a number of meetings where we did not believe that a closed meeting was necessary. Since the act became effective on March 12 of this year, the Commission has held 150 meetings. We have been able to hold 60 of . these, or 40 percent of the total, open to the public. It is important to realize, however, that the number of items_ considered at these meetings varies greatly a~d that gener3:lly more items are considered in closed meetings than m open meetmgs; thus the 40 percent figure may not represent the percentage of items considered at public meetings.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  178 I believe that open meetings have been beneficial to the public and to the Commission. I say this because the comments we have received about our public meetings indicate that observers have often been impressed by the discussions and by the consideration afforded to opposing viewpoints on major issues, as well as by the overall competence and fairness of the Commission's deliberations. In light of our efforts to comply fully with the Government in the Sunshine law, we are wry concerned about an article which appeared in the Washington Star last week, which was based on a report prepared by the Library of Congress for this subcommittee. The article indicated "by and larµ;e, Federal agencies are ignoring the new Government in the Sunshi1w law.'' The Securities and Exchange Commission was singled out as "the agency that appears to make most use of closed meetings." The article also stated that the "SEC gave valid reasons for closing the meetings in only 43 of the 64 instances***." I cannot speak for any other agency, but I can assure you that we are not ignoring the law. I would also like to point out that while it may be true that we have clo5ed more meetings than other agencies, this is because the Commission has held substantially more meetings than other agencies. The Library of Congress figures indicated that 20 other agencies closed a greater percentage of their meetings than did the SEC. Moreover, the fact that a majority of Commission meetings were closed is, I am sure, no surprise to you or othe.r members of the congressional committees in which the Sunshine Act legislation was develc.ped. Indeed, the legislative history of the act indicates that because of our extensive enforcement activities and the potentially adverse impact of premature publicity on financial institutions and the public markets for securities, the majority of our meetings were expected to be closed, and that has been our experience. Finally, the conclusion of the Library of Congress report that valid reasons were not provided for closing 21 Commission meetinµ;s may be misleading. Although we cannot be certain as to the methods used by the Library of compiling its statistics, it appears that the analysis is based on a survey of the notices sent by agencies to the Federal Register. The Commission amends these notices whenever necessary, such as when the previously announced time or date of the meeting is changed. Usually, those short notices only set forth the change, and refer the public to the initial published notice for additional details about the meeting, including the applicable Sunshine Act exemptions. We have reviewed our records, and found there have been a total of 34 such amending notices, which contained no citations to exempt.ive provisions of the Sunshine Act. Virtually all of these notices were published to reflect schedule changes made after the regular weekly notices had been published, and involved either a chang-e in date for consideration of a matter scheduled earlier, a deletion of a scheduled hem, or the scheduling of an emergency matter that could not have been scheduled earlier. Our tabulation of these notices, the dates of the meetings, and the general description of the items considered can be made available to the subcommittee if you so desire.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  179  In any event, although we should have cited the exemptive provisions in these amendatory notices, as well as in the initial notices, I can assure the subcommittee that no matter is ever considered by the Commission without its first having been reviewed by the General Counsel for compliance with the act. 1~0 meeting is closed unless we are certain that one or more of the act's exemptions is applicable and that it is in the public interest to close the meeting in question. I believe that since the passage of the Sunshine Act the Commission has been successful in its endeavor to open a significant number of its meetings to the public, in keeping with the act's philosophy that, as a general rule, Government business should be conducted in the open. Actually, I believe we have been able to open more of our meetings than we thought we would be able to open at the time the act was approved. Our full statement calls to the attention of the subcommittee several important problems which we believe justify modifications in the act. To conserve time, I will not discuss these unless you prefer that I do. Senator CHILES. Thank you very much. I am happy to note from your testimony that the SEC is concerned with carrying out the objectives of the act and is devoting a substantial amount of time and effort to that end. Secrecy in Government tends to perpetuate public suspicion and abuse of power. Public knowledge of governmental action is essential to the democratic process. Government officials cannot be held accountable for their actions if no one knows what went on behind the closed doors. Federal agencies make decisions which affect all of us directly or indirecly. Until recently, the public has just had no opportunity to view the decisionmaking process. Sunshine's overriding purpose is to protect and preserve a citizen's rights to observe Government and learn how decisions are made. I notice from your opening statement such things as " [ t] he act recognizes * * * that the desirability of public access to this information must be balanced against the need to protect the rights of individuals and to assure the ability of government to carry out its responsibilities." I agree with you. It has never been our intention to destroy either our Government or the individual citizen. A few sentences later you say: "The other sections of the act provide a procedural framework which, at least in theory, is designed to protect the objectives of the act." [Emphasis added.] I just wonder from this, Would you say that your agency has a negatjve or positive view toward the act itself? Mr. EVANS. I would say we have a very positive view toward the act. The reason that we made the statement which you just read is that we think some of the act's procedures may impose a burden which by far outweighs the benefit to the public of those procedures. These are the areas we have suggested the subcommittee consider. Senator CHILES. We have been told that the general public does not seem to have taken advantage of the sunshine law, at least not in any considerble numbers. It seems that the lobbyists a.re at least in on it. Representatives of vested and regulated interests regularly attend the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  180 Commission's meetings and appear to be principal beneficiaries. We wonder if, in fact, there is some reason for this, whether it is because agency meetings are not widely reported in the media with some 200 meetings a month and 40-odd agencies involved. The logistics problem for even the largest newspaper, radio, and TV stations are obvious. Second, there is some question as to whether anyone but an experienced insider could understand what is happening. To what extent do you think trade talk and technical jargon interferes with the average person's understanding of the topics under discussion ? UNDERSTANDABLE MEETINGS Mr. EVANS. I think it can, on occasion, depending on the subject under consideration, interfere to a significant degree. The issues that we consider at the SEC are often technical issues, sometimes very technical. In the absence of an understanding of at least the basics of what we are considering, it would be very difficult in many instances for an average member of the public to understand what we are discussing. They do not have the memos we have received, and sometimes it takes months to get up to speed on some of the issues that we are considering. The uninitiated would probably not understand it very well. However, I do believe those who have an interest in the particular subject matter that is being discussed can understand what we are talking a.bout. We do not try to use unusual terms. We do not try to use jargon that is not understandable, and our attempt has been to try to provide enough information to people coming in to our meetings that they can at least understand the issues to be considered. Senator CHILES. I understand you try to distribute summaries of relevant background information pertaining to the agenda items. I think that is very helpful and necessary to allow the public to try to have some perception of what you are doing. Mr. EvANS. Yes, we have been doing that, and we may need to do more in that area. Some of the subjects we consider are rather complex, and a short review or brief description sometimes is not really sufficient to give an understanding of what we are discussing, but we do think it is usually helpful and a step in the right direction. Senator CHILES. Well, I think it is, and we would like to include some of those items in our record, because I think they do point out some lwlpfnl items. [Material referred to follows:] SECURITIES AND EXCHANGE COMMISSION  (Thurday, October 27, 1977-10 :00 A.1\1.-0pen Meeting Agenda) (1)  ITEM: APPLICATION FILED BY ISRAEL HOTELS INTERNATIONAL, INC., FOR AN EXEMPTIVE ORDER  Background  Israel Hotels International, Inc., a Delaware corporation engaged solely in the business of owning the land and buildings known as the Tel-Aviv Hilton Hotel, has applied for an order exempting the company from certain reporting requirements under the Securities Exchange Act of 1934.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  181 On January 4, 1977, all of the issued and outstanding stock of the company was acquired by Establishments Norima, Enkas, 1\Iachkim and Opil and all obligations attendant to its debt securities are guaranteed by the :State of Israel. (2) ITEM: APPLICATION FILED BY ICH CORPORATION FOR GENERAL RELIEF PURSUANT TO RULE 252 (f) UNDER REGULATION A  Background  ICH Corporation is an insurance holding company organized under the laws of the state of Missouri, whose common stock is listed on the American Stock Exchange. Through its subsidiaries, ICH Corporation is principally engaged in the sale of insurance and mutual fund shares. At present, the Regulation A exemption under the Securities Act of 1933 is unavailable to the company because of certain orders of permanent injunction entered against three affiliates. 'l'he company has requested general relief in this matter for the purpose of adopting a stock purchase plan under which certain insurance agents and managers of Ozark National Life Insurance Co., a 99.9%-owned subsidiary of ICH Corporation, may acquire common stock through annual purchases. (3) ITEM: ADVANCE NOTICE OF PROPOSED RULEMAKING CONCERNING DISCLOSURE OF CORPORATE DEBT SECURITY RATINGS  Background  The Commission will consider publishing an advance notice requesting comments on the possible disclosure of corporate debt security ratings in filings with the Commission under the federal securities acts. It has been the Commission's traditional policy not to permit disclosure of corporate debt security ratings in prospectuses and reports filed, but, issuers have been required to disclose the lowering of the rating of their debt securities in filings. However, based on staff considerations, letters from the public, literature authored by securities professionals and academicians, the Commission will now consider publishing an advance notice of possible changes regarding this and related issues. (4) ITEM: PROPOSED  AMENDMENTS TO FORJ\1 8-16: SHORT REGISTRATION FORM UNDER THE SECURITIES ACT OF 1933  Background  Comments have been received on the proposed expansion of the availability of Form S-16 for the registration of certain primary offerings, as announced in December, 1976. The Commission will now consider solicitip.g comments on proposals which would expand the usage of this short registration form to permit the registration of (1) securities being offered to the public for cash by certain issuers about which information is widely disseminated among the investing public and (2) securities being offered by issuers eligible to use the form to existing shareholders through either rights offerings or dividend investment plans. (5)  ITEM: PROPOSED AMENDMENTS TO REGISTRATION AND REPORTING FORMS, DISCLOSURE GUIDES AND RULES APPLICABLE TO FOREIGN PRIVATE ISSUES  Background  In December, 1976, the Commission solicited public comment concerning means of improving disclosures presently required by certain foreign private issuers under the Securities Exchange Act of 1934. The Commission will now consider requesting comments on amendments to the registration statement, periodic report and annual report forms used by certain foreign private issuers. These proposals would integrate the registration and annual report forms into a single form, which would be substantially similar in information content to those forms authorized for use by domestic and certain North American issuers. The periodic report form would basically be amended to require an English translation of materials filed with such reports. The Commission will also consider requesting comments on a proposed guide which require more extensive disclosure by certain foreign private issuers of management remuneration in registration statements filed with the Commission.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  182 (6)  ITEM; FREEDOM OF INFORMATION ACT APPEAL OF C, C. CLINKSCALES, III  Background  By letter dated June 16, 1977, C. C. Clinkscales, III requested access to the correspondence between the Commission and CBS, Inc. and RCA Corporation in 1976 and 1977 relating to the processing of each corporat:1on's proxy statements for its 1977 annual meeting. The lfreedom of Information Act Officer partially granted l\Ir. Clinkscale's request, however, certain materials were withheld pursuant to certain exemptions under the Act. Mr. Clinkscales has appealed from the determination of the Freedom of Information Act Officer. ( 7)  ITEM : PROPOSED AMENDMENTS FILED BY THE NEW YORK STOCK EXCHANGE CONCERNING SPECIALIST CAPITAL AND MANPOWER REQUIREMENTS  Background  On August 26, 1977, the New York Stock Exchange filed a proposed rule change which would eliminate its "three-man" unit rule for specialist firms and lower its specialist capital requirements to the greater of $100,000 or 25% of position requirements. In addition, the Exchange is proposing to rescind a rule which prohibits multiple specialists in a particular stock from entering limit orders into a combined limit order book.  MEETING ATTENDANCE  Mr. EVANS. You also mentioned the media and the extent to which they cover commission meetings. 1'Then we have items of significant public interest, I believe the media often does pick them up and report on them. Senator CHILES. They are in attendance at your meetings? Mr. EVANS. The media is in attendance at almost every meeting. Senator CHILES. I assume that the media for trade publications are present and they disseminate information to those within the trade. Mr. EVANS. Those are the ones that are generally there. The media for other news publications or general newspapers are generally there only when there is a major item of public interest, but I think that is the way we expected it to be. Senator CHILES. ,vhat about briefing papers and memorandums which the members use to guide their deliberations? Are those available to the audience? Mr. EvANS. No, they generally are not. Within those memoranda are statements of staff opinions and recommendations, the release of which may adversely affect the Commission. I am not aware that we have ever made these memoranda available to the public at large. Mr. PITT. I might add also that these memorandums are often more complicated and complex in their jargon than the actual meetings, so that in terms of advising the public o:f what was taking place, they would often not be very useful. Senator CHILES. I notice a number of agencies prohibit public recording of meetings. You require specific permission. Why do you require specific permission~ Mr. EVANS. We simply want to know if someone is going to record them. We do not ourslves record the discussions at our open meetings anymore because of the cost involved. We record our closed meetings, as the act requires, but we refrain from recording open meetings, and we would like to know if something is going to do it.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  183 We have had individuals ask us for permission, and we have never refused permission to record or to take pictures, but we want to be aware of what is going on at our meetings. Senator CHILES. What do you do about photographing? Mr. EVANS. The same procedure applies. They ask our Secretary, and he finds out how they would like to do it. I am not aware that we have ever turned down a request £or photographs, either. Senator CHILES. I am glad to note that the SEC publishes the SEC News Digest which once a week contains announcements of Commission meetings for the following week. However, you say that primarily those attending are representatives of the vested or regulated interests. Do you see that as a drawback to the legislation~ Mr. EvANS. That fact that they attend or that the public does not attend? Senator CHILES. The fact that the vested interests do attend. Mr. EVANS. As I indicated previously, I think they have been impressed with the way we make our decisions. The principal drawback is that we are frequently engaged in litigation and other types of controversies with such entities, and we have to be aware of the possibility that, in the context of such a c;ontroversy, a comment of a Commissioner or a member of the staff, as opposed to the final decision of the Commission, might be used against us. Accordingly, one of the recommendations we have made is that this sort of individual statements not be permitted when the Commission takes formal action. We would like any challenge to Commission action to be directed to the reasoning given by the Commission as a whole, not to any statement, perhaps made in an effort to provoke discussion, by any member of the staff or any memh<'r of tlw Commission. That is the principal drawback I see.  Otherwise, I think it is perfectly appropriate for them to be there and to see how we consider the issues and £or them to be aware of the reasons why we decide matters the way we do. I think it has been beneficial to them and to us. Senator CHILES. Well, generally when we say that the vested interests attend, many times we have people on both sides of the spectrum representing the vested interests, so that in itself makes for some kind of general flowing out of that information. Those attending might be adversary parties in many instances. Mr. EvANS. I think that is often true. We probably have some adversaries attending some of our meetings; generally, it would be mostly industry representatives of those whom we regulate or attorneys who have a specific interest in the area. We have had some attendees that have represented investors and the general public interest, but rather few in those categories. It might also be considered a drawback of the act that it increases the contacts between the regulators and the regulated industry, which might not promote the appearance of propriety that should always be maintained. · I do not think, however, that our Commission has ever been accused of making judgments that were particularly beneficial to the regulated interests that have been in attendance at our meetings. In fact, if anything, the comments by those who we regulate have been that they   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  184 wish we were more like other agencies and took more account of their desires in our decisionmaking. Senator CHILES. In testimony before a House subcommittee, the editor of Advertising Age stated that sunshine laws might have been beneficial to the general public. He testified that since there are often considerable delays between the time a vote is taken on a specific issue and the time that that decision is made public, the staff or Commissioners inside the agency or others have a readymade opportunity to make private use of the information. He did not name instances that it did happen; he just said it could. Why not stand up and tell the whole world or at least as many people as are willing to listen, what the decision is then and there? It would seem that that would save us an ocean of internal speculation and investigation, and it might make it quite clear that the Federal agency is not and cannot make improper use of inside information. Would you say that that could be true at times? Mr. EvANS. It could be true, yes. In our agency most of the decisions that we make are made public rather quickly. Injunctive actions, enforcement actions, decisions with respect to rulemaking are made public rather quickly. Of course, there are some things that cannot be ma.de public right away, such as a decision to begin a nonpublic investigation of an individual or a publicly-traded company. That would not be fair. Senator CHILES. One of the arguments against the open meetings was that it could lead to financial speculation or this kind of profitmaking by someone. It seems like that information always gets out at some time and many times it just gets out to insiders. But if everybody gets the same shot at the information, then it does not really add to that kind of speculation. Only when it can leak out or maybe by observing activities, someone can say: "I can tell what the Federal Reserve System is doing because I watch one person. I can tell by watching what one manager in the Federal Reserve System does and by what he starts to do, what the decision in a closed meeting has been." When somebody knows that they can take advantage of that, by allowing the general public to know what the decision was, the speculative effects would be eliminated. Mr. EVANS. We have had a very good record of not having "leaks" at our agency, which we are proud of, and the fact that we make things public as quickly as possible is also beneficial in that respect, I believe. The problem we often have is that we may be considering a matter such as suspending trading in a, security, for example, and someone listening to us could immediately take action on it, before disclosure to the general public could be effected. He would thus have an advantage by virtue of the fact that he was able to attend our meetings, whereas the geMral public does not have that ability, and he could make a profit on the knowledge he acquires. Ordinarily a trading suspension decision would be announced publicly within 10 or 15 minutes, sometimes earlier, so it is done immediately. The same approach exists with an enforcement action. We try to get announcements of such matters out as soon as practicabl~ because we are aware of the fact that leaks can occur and that would be unfair.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  185 Senator CHILES. I think that it is very important that you do that. Mr. PITT. There is one additional problem that we have noted, however, particularly with respect to injunctive actions, which is if they are publicly disclosed before the staff is ready to file its papers in court that we can then be the subject of lawsuits seeking to ward off our own action, and this gives an advance warning in some cases that is inappropriate. Mr. EVANS. vVe have also found in some cases where a person found out about our decision to bring an enforcement action, they would then try to dissuade us from the decision that we had made and try to give us additional reasons as to why we should not have made that decision. This can slow up the process to an unacceptable degree. Senator CHILES. In the footnote on page 8, you say that visitors to your meetings are asked who they work for. There is a registry, I guess, that you keep at the bottom of your elevator, or somewhere in the buildmg. Would you deny entrance to someone who refused to identify himself? Mr. EVANS. I don't know the answer to that. I think it is just a nonmandatory practice. vVe have had some problems with a bombing in one of our offices in Denver, and threats in some other offices, including the one here in vVashington, so we have a registry where the people who are coming in and do not have a pass sign their name, and indicate who they work for, and where they intend to go, so they won't wander through the agency. We keep the record for that purpose so that we will know where they are, and why they are there, but if someone said they would not tell us where they were from, I could not imagine we would refuse to have them come in. Perhaps Mr. Pitts is aware of our policy in this regard? Mr. PITT. So long as they can satisfy the security guard with proper identification. We have not had any problems in this regard. Most people are willing to tell us what their professional affiliations are. Mr. EvANS. Or if they do not have any. Senator CHILES. Commissioner Loomis in a letter to me dated September 13, 1977, commented that "the discipline which the act imposes, by requiring that open agenda items, and certain classes of closed items, be scheduled at least a week in advance, has assisted the Commission to plan its work flow and to anticipate regulatory matters which will require its consideration. A large percentage of our work involves investigatory and enforcement matters which * * * can always benefit from prompt action." The act allows for announcement at the earliest practicable time for emergency time sensitive matters. You are still concerned that the act does not provide enough flexibility to allow emergency enforcement of investigatory matters? Mr. EVANS. We suggest in our statement that for those matters that are of an enforcement nature where there is no question that they may and would be considered at a closed meeting, that perhaps it is unnecessary to have any notice because the notice itself is so general that we do not believe it provides anything that is helpful to the public. If there is another purpose for that, then it may be worth it, but I am not aware of any such purpose. We do not think the public gains very much from it and, as a matter of fact, we do have a lot of issues   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  186 that come up rather quickly that we need to make decision~ on and to the extent that we can cut down the time required to process those matters, it could be helpful to us. Senator CHILES. Thank you very much. [The prepared statement of Mr. Evans follows:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  187 STATEMENT OF THE HONORABLE JOHN R. EVANS, COMMISSIONER, UNITED STATES SECURITIES AND EXCHl\NGE COMMISSION, BEFORE THE SUBCOMMITTEE CN FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT OF THE SENATE COMMITTEE ON GOVERNMENT OPERATICNS, CN THE IMPACT OF THE GOVERNMENT IN THE SUNSHINE ACT. Mr. Chairman, Members of the Subcomnittee: I am pleased to have this opportunity to review with you the Comnission's exper1ence over the last six months in administering the Government in the Sunshine Act.  With me today is Harvey L. Pitt, the Comnission's General Coun-  sel, who has had a key role in assuring' our compliance with the Act and is very knowledgeable with respect to the details of our experience.  As  the Sub-  committee is aware, the Act was adopted to ensure, to the fullest practicable extent, public access to "information regarding the decision making process of the federal government."  ...!:J The Act recognizes, however, that the desireability  of public access to this information must be balanced against the need to "[protect] the rights of individuals" and to assure "the ability of the government to carry out its responsibilities."  ~  In order to allow the public the fullest possible access to the decision making processes of government, subsection (b) of the Act, 5  u.s.c. 552b(b),  provides, as a general rule, that, "every portion of every meeting of an agency shall be open to public observation." This general rule is subject to ten exemptive provisions, set forth in subsection (c), which defines those agency deliberations that may occur at a closed meeting. The other sections of the Act provide the procedural framework which, in theory, is designed to promote the objectives of the Act by imposing upon agencies certain requirements which must be followed, with respect to both "open" and "closed" agency meetings.  Immediately following the adoption of the Gov-  ernment in the Sunshine Act in September 1976, our Office of General Counsel  ...!:J 5 u.s.c. 552b, note. ~  5 U.S.C. 522b, note.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  188 began the process of developing new rules and amending existing rules to carry out the purposes of the Act. During the legislative process, we had expressed our support for the Act's objectives but also our concern that certain of the burdens of compliance might outweigh the benefits to the public. ·We knew that most of our meetings could not be open to the public given our broad ranging prosecutorial and quasiadjudicative responsibiltties and the fact that even our rule-making decisions often include discussions of active enforcement cases. Nevertheless, we were determined to comply not only with the letter of the new law, but also its spirit. During the last three months of 1976, our Office of General Counsel prepared an analysis of our meetings and found that an ·overwhelming nwnber of them contained matters that would be closeable under the Sunshine Act. We then began a trial period during which mentiers of the Commission were advised by the General Counsel's Office which matters on the COlllllission's agenda would be required to be open to the public by the Act.  Staff members were not advised of this exper-  iment in order that discussions would continue just as before.  In this way,  we could see what problems might arise if the meetings were public. After several weeks, this process was opened up to the staff so that we could all gain experience before the Act became effective.  On  the basis of that experience, we approved  rules that we believe fully inrplement both the letter and spirit of the Sunshine Act, and at the same time protect the Commission's need, in order to discharge its responsibilities properly and fairly under the federal securities laws, to prevent inproper public disclosure of exempt information. To carry out the objectives of the Sunshine Act, each member of the Commission, and the General Counsel, personally devotes a substantial amount of his time to ensure compliance with the Act. Our General Counsel will not certify that a meeting may be closed unless the matter is clearly within the contem-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  189 plation of one of the exenptions. On occasion, he has refused to certify a meeting as closed, despite some strong views to the contrary, because of our ccmnitment to implement the Act fairly.  On the other hand, even though  our General Counsel has been prepared to certify that a meeting could be closed as a matter of law, we have voted to open a number of meetings- where we did not not believe that a closed meeting was necessary. Since the Act became effective on,March 12, 1977, the Carmission has held 150 meetings.  we have been able to hold 60 of these, or 40 percent of the  total, open to the public.  I believe the open meetings have been beneficial  not only to the public, but also to the COlllllission.  I say this because the  comnents we have received about our public meetings indicate that the observers have often been impressed by the depth of discussion and the consideration afforded to opposing viewpoints on major issues by the C01llllission as well as the overall competence and fairness of the Carmission's deliberations. In this regard, I believe it is appropriate briefly to comment on a report prepared by the Congressional Research Service of the Library of Congress on "Sunshine Act Meetings" for the Senate Subconmittee on Federal Spending Practices and Open Government, concerning which an article appeared in the Washin~ ton Star on November 21, 1977. According to the author of that article, the report of the Library of Congress showed that the Securities and Exchange Commission was the agency that made the "most use of closed meetings" .and that the "SEC gave valid reasons for closing the meetings in only 43 [of 64] instances***" This -article also appeared to suggest that federal age~cies such as this C01llllission are "by and large*** ignoring the new Governmentin-the-Sunshine law." I do not believe that the report prepared by the Library of Congress supports all of the conclusions in the newspaper article.   35-867 0 • 79 • 13 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  However, apart from  190 that reservation, I do wish to call the following facts to the Subcalmittee's attention concerning the statistics compiled by the Library of Congress. First, while it may be true that the Securities and Exchange Cannission has more "closed" meetings than other agencies, this is primarily because the  Comniss:i.on has apparently-held substantially more meetings than other agencies. Even the"inCOO\'lete data upon which this report is based indicates that out of 46 agencies ·w11ose compliance with the Sunshine Act was evaluated·, the Securities and Exchange Cannission held the most meetings between March 24, 1977 and  Septend:ler 9, 1977, the time period under study. Moreover, the fact that a majority of Conmission meetings was closed is, I am sure, no surprise to the Congressional c<imnittees· in which the Sunshine Act legislation was developed. Indeed, the Senate Report accompanying the Government in the Sunshine Act noted this fact, in connection with its discussion of the provision allowing certain agencies to close their meetings by rule, pursuant to the modified procedure set forth in subsection (d)(4) of the Act, if a majority of that agency's meetings could be closed pursuant to certain of the exemptive provisions.  It stated that subsection (d)(4) "will largely  apply to agencies which regulate financial ins1citutions, securities, or commodities, and which will often have to conduct their sensitive business in private, and  on short notice***" The report further indicated that the Securities  and  Exchange Cannission was among those agencies which would be permitted to  issue regulations pursuant to these provisions, because a majority of its meetings were expected to be closed. s. Rep. No. 94-354, 94th Cong., 1st Sess. (1975) at 28-29. The Cannittee's expectation at the time it considered this legislation has been verified by our subsequent experience. In addition, the Library report inplies that for 21 of our closed Cannission meetings held between March 24 and Septeniler 9, 1977, valid reasons for closing   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  191 these meetings were not provided. Although we cannot be certain as to the methods used by the Library in compiling its statistics, it appears that the Library's analysis is based on a survey of the notices sent to the Federal Register, for publication pursuant to subsection (e)(l) of the Act, 5  u.s.c.  552b(e)(l).  'l'he COlllllission supplements its.regular weekly notices with amending notices whenever necessary,. such as when the previously announced time or date of a meeting is changed. Usually, these short ameridatory notices simply set ·forth the change, arid refer the reader back to the initial notice for additional details, including the Sunshine Act exemptions which the Conmission had invoked. we have reviewed our records and have found that there have now been 34 of these notices which contained no citations-to exemptive provisions of the Sunshine Act. Virtually all of these notices wer~ for schedule changes made after the regular weekly notices had been sent, and involved either a change in date for consideration of a matter scheduled earlier, a deletion of a scheduled item, or notice of an emergency matter that could not have been scheduled earlier. Our tabulation of the notices, the dates of the meetings, and a general description of the items considered is available to the Subcommittee if you desire. In any event, although we should have cited the exemptive provisions in these amendatory notices, as well as in the initial notices, I categorically assure the Subconmittee that no matter is ever considered by the Conmission, regardless of whether it is scheduled for an open or closed  Conmission meeting, without its first having been reviewed by the General Counsel for conq;>liance with the  Act.  No meeting is closed unless we are certain that  one or more of the exE!ll9tions is applicable, arid that it is in the public interest to close the meeting in question. Before I leave this subject, I would also like to call to the attention of the Subconmittee the fact that a review of the Library's report indicates that a nuntler of agencies have a higher percentage of closed meetings than we   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  192 do.  I believe that, since the passage of the Sunshine Act, the Conmission has  endeavored, successfully in large measure, to open a significant number of its meetings to the public, in keeping with the Act's philosophy that, as a general rule, government business should be conducted in the open. Inasnudl_as this Subcocnnittee is _holding oversight hearings on the administration of the Act for the first time, we have been asked to bring to the attention of the Subconmittee those pi;iJblems-technical, procedural and substantive--which seem to us to call for some nooification of the Act. Because a primary responsibility of the Conmission is to assure appropriate disclosure of material facts bY those persons to whom the investing public entrusts its capital, we are naturally sympathetic to the principal objective of the Act, to bring the fullest practicable information to the public regarding the decision making processes of the federal government. Nonetheless, we also have a responsibility, imposed bY the Congress, to protect the investing public, and we believe that we must maintain our ability to meet that responsibility. Whenever the ability of the Conmission to act is impeded for the sake of inflexible procedural requirements which, while theoretically designed to assure the public access to information about its government, do not in fact perform this function, the Conmission would be remiss if it did not report to you its concerns. Subsection (e)(l) of the Act, 5 u.s.c. 552b(e)(ll, provides for the scheduling and public notification of agency meetings.  It states:  "In the case of each meeting, the agency shall make public announcement, at least one week before the meeting, of the time, place and subject matter of the meeting, whether it is to be open or closed to the public, and the name and phone number of the official designated bY the agency to respond to requests for information about the meeting. Such announcement shall be made unless a majority of the ment,ers of the agency determines bY a recorded vote that agency business requires that such meeting be called at an earlier date, in which case the agency shall make public announcement of the time, place, and subject   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  193  matter of such meeting, and whether open or closed to the public, at the earliest practicable time." Subsection (e)(3) of the Act provides for publication in the Federal Register of · the notice required by subsection (c) (1).  In general, our rules require that  notices of prospective open meetings be posted on the public information board in the lobby of the Securities and Exchange Conmission at least one week prior to the consideration of -any matter listed therein. These notices are also submitted at that time  to  the Federal Register for publication. This announcement  contains a brief description of the subject matter to be discussed, the date, place and time at which the Conmission will consider the matter, whether the ~eting, or any portion of it, will be open or closed, and the name and telephone number of a CCllTl!lission official designated to respond to requests for information· concerning the meeting at which the matter will be discussed. Should the Conmission determine, by recorded vote, that earlier consideration of any matter not previously posted is necessary, a public announce~nt is made, posted in the lobby, and sul:Jnitted to the Federal Register at the earliest practicable time. In addition, the Wednesday edition of the Conmission's daily publication, the "SEC News Digest,• contains announce~nts of CCllTl!lission meetings, both open and closed, for the following week, and revises that information as soon as practicable when changes in the previously announced schedule are made. The "SEC News Digest" has a current circulation of over 3,000, and is subscribed to by many persons who regularly follow the Conmission's activities. Moreover, in order to allow the public to understand better the discussion at open meetings, the Conmission has informally begun to distribute SUl!lllaries of relevant background information pertaining to agenda items to attendees at these meetings. We have previously sul:Jllitted a nuntier of these SUl!lllaJ:ies mittee's information.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  to  your staff_for the Subcom-  194 In spite of these efforts, if the extent to which members of the public attend open Comnission meetings is any measure of how successful the notice and dissemination provisions of the Act have been in involving the general public in the work of the Comnission, then we DRlSt conclude that they are not working as expected. Based on.a. review of the affiliations of persons who attend Ccnmission meetings, it is apparent that it is the representatives of vested and regulated interests who regularly attend Comnission meetings and who are, therefore, the primary beneficiaries of the Act. _:/  We  do not think that this problem can be solved  merely by increasing the time between the publication of the notice and the meeting. In fact, because our investor constituency is located throughout the United States and  because these people do not, for the most -part, have the resources to come  to Washington whenever the Conmission discusses a matter in which they have an interest, it is doubtful that significant nuntiers of investors would attend agency meetings regardless of how much advance notice was provided. The effects of this are unfortunate. Those persons who attend our meetings are persons who will be subject to the regulations or other agency actions we often discuss at open meetings. The information gained at these meetings often amounts to litUe more than the Conmission inquiring into the legal authority available to it to protect the public interest. Questions may be posed, or doubts expressed, for the sake of discussion. There is no exenption available for such discussions, and yet, those present at our meetings may seek to utilize such candid discourse in seeking to vitiate our efforts to protect the public. We believe that, at. a rninilrum, therefore, the Act should make clear what the law already isthat conments by individual Comnissioners or staff members may not be used against the agency: only the agency's prepared explanation of its action should serve as the basis for any judicial challenge to the agency's action.  _:/ All persons attending open Comnission meetings register at the reception desk in the lobby of the Ccmnission's building, where they receive a building pass. These persons are requested to state, inter alia, their professional affiliation, if any. -- --   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  195 In the Conmission's view, the procedural requirements of the Act relating to closed Conmission meetings place too great a burden on the C0111Dission, when compared with the public benefits received. One of the principal reasons for the difficulties created for the Conmission  by the Act relates to the treatment required to be accorded matters ex~t from the  open meeting requirements of the Act., As discussed above, a large percentage of  our work involves investigatory and enforcement matters which often require prompt action. ~  While subsection (d)(4) of the Act, S  u.s.c. SS2b(d)(4), eliminates  of the procedural hurdles attendant upon the consideration of enforcement  matters, the Act has nevertheless significant;J.y hampered the C0111Dission's ability to deal with some emergency enforcement problems. Y For example, frequently the Conmission must consider the issuance of a subpoena, the filing of a ~laint to enjoin an ongoing fraud, or the COIIU11eilcement of a federal investigation upon very short notice because of the nature  Y  Because the Comnission is an agency a majority of whose meetings may properly be closed pursuant to Ex~tions 4, 8, 9(A) or 10, it need not follow the full procedural requirell'ellts of subsections (d)(l), (2), and (3) and subsection (e). See S  u.s.c. 552b(d)(4), which provides:  "Any agency, a majority of whose meetings may properly be closed to the public pursuant to paragraph (4), (8), (9)(A), or (10) of subsection (c), or any combination thereof, may provide by regulation for the closing of such meetings or portions thereof in the event that a majority of the members of the agency votes by recorded vote at the beginning of such meeting, or portion thereof, to close the ex~t portion or portions of the meeting and a copy of such vote, reflecting the vote of each mentier on the question, is made available to the public. The provisions of paragraphs (l), (2), and (3) of this subsection and subsection (e) shall not apply to any portion of a meeting to which such regulations apply: Provided, That the agency shall, except to the extent that such information is ex~t from disclosure under the provisions of subsection (c), provide the public with public announcement of the time, place, and subject matter of the meeting and of each portion thereof at the earliest practicable time." The Comnission has implemented rules as authorized by this subsection. 17 CFR 200.405.  ~   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  196 and volatility of the matter involved.  The requirement of the Sunshine Act  that a notice be published, a vote held, and the General Counsel's certification obtained in order to engage in such deliberations often entails procedural steps which seem to do little to further the Act's goals.  Since the Conmission must  delete all identifying details from the public certification and public notice concerning meetings in this category, the notices which are released afford the public little, if any, ;eal knowledge-with respect to the Conmission's deliberations concerning law enforcement matters. Even when no emergency attends the COJlll\ission's consideration of a law enforcement matter, the procedural requirements of the Act appear to make little sense from the vantage point of the general public, since identifying characteristics must be deleted from the public notices.  The problem  is compounded should the ColllDission need to change its schedule for any reason. The procedural steps necessary to effect a COlll1lission vote to modify an earlier Commission vote, and to publish a ?otice superceding a previously published notice in the Federal Register and in the Co111Dission's "News Digest," appear pointless when little of substance is revealed to the public in any event. The Co111Dission believes that its business could be facilitated, with no attendant interference with the goals of the Sunshine Act, if subsection (d)(4) of the Act, 5 u.s.c. 552b(d)(4), were amended to permit agencies to close deliberations within the exemptions set forth in that subsection solely by rule and without the public notice requirements presently set forth in  the proviso to subsection (d) (4).  As  noted above, since most law enforce-  ment matters fall within these exemptions, the notice requirements burden the Commission but do not appear to assist the public in any meaningful way. Moreover, in the Conmission's experience, it would better serve the apparent purposes of Exemption 4 if it were dropped from the list of those exemptions included in subsection (d)(4) and if it were replaced by Exemption S. Exemption 4 concerns the disclosure of"*** trade secrets and commercial or financial   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  197 information obtained from a person and privileged or confidential." The legislative history indicates that, "This paragraph applies to meetings which disclose trade secrets or financial or c011111ercial information obtained from any person where such trade secrets or other information could not be obtained ·by the agency·without ·a-pledge of confidentiality  or where such information must be withheld from the public in order to prevent substantial injury to the competitive position of the person to whom the information relates." s. Rep. No. 94-354, 95th Cong., 1st Sess. at p. 23.  Exemption 5, on the other  hand,  "covers meetings which accuse an individual or corporation of a crime, or formally censure such person. An agency regulating financial .or security [sic) matters may wish to censure a firm for failing to live up to its professional responsibilities, or an agency may consider whether to formally censure an attorney for his conduct in an agency proceeding. Opening to the public agency discussion of such matters could irreparably harm the person's reputation. If the agency decides not to accuse the person of a crime, or not to censure him, the harm done to the person's reputation by the open meeting could be very unfair." S. Rep. 94-354, supra, at 22.  Insofar as the Commission's experiences is con-  cerned, we believe that Exemption 5 bears a closer relationship to the other exemptions enumerated in subsection (d)(4) and should replace Exemption 4 in that provision. We also suggest that the requirement of subsection (f)(l) of the Act, 5  u.s.c.  552b(f)(l) -  that a verbatim transcript or recording be made of  Comission meetings. closed pursuant to subsection (d)(4), 5  u.s.c.  552b(d)(4) -  ought to be eliminated, or at least modified. Not only does this requirement add significantly to the cost of these meetings but, in addition, it exposes agencies to the threat of burdensome litigation designed to afford the target of a COl!lllission investigation some delay, even if it is extremely unlikely to result in the release of any significant information to the public. There is   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  198 also some danger of frivolous and dilatory litigation seeking, for purposes unrelated to the Sunshine Act, to obtain these transcripts or recordings in order to frustrate law enforcement actions.~  On  the other hand, the detailed  requirements prescribed by subsection (f)(l) of the Act, 5 U.S.C. 552b(f) (1), with respect to minutes of agency meetings as a substitute for transcripts (in the case of meetings·-closed pursuant to Exemptions· 8; 9A, or- 10) make it· entirelyilrpractical to maintain minutes. Accordingly, at the present time, we feel we have no real alternative but to prepare a,."verbatim recording of all closed Caitmission meetings.  As  we previously indicated to the subconmittee, these problems  could be resolved if the fourth sentence of subsection (f)(l) were amended to read: "Such minutes shall fully and clearly describe all agenda items discussed and shall provide a full and accurate summary of all actions taken and the record of any roll-call vote, reflecting the vote of each member on the question. Similarly, if this suggestion is adopted, we urge that the use of minutes be expanded to include discussion exempt from public observation pursuant to Exemption 5 of the Act. Alternatively, we suggest that the statute should make it clear that under no circumstances should access to  any  transcript required  to be maintained by the Act be provided to those who are the subjects of actual  or potential law enforcement activity. Agency action should be justified by reference to what the agency as a whole has done and what reasons the agency has stated to support its action.  This has always been the law, and it would not be appro-  priate for an off-hand remark or oonment by  ~  any  individual C0111Dissioner or member  The C0111Dission's experience under the Freedom of Information Act has been that suits under that Act have occasionally been instituted to enjoin C0111Dission investigations or enforcement action until insubstantial claims under the roIA are finally resolved by the courts. While we have not yet had any lawsuits filed against us under the Sunshine Act, and do not anticipate massive litigation arising under it, we are concerned that at least some parties may attenpt to use the Act to delay or imipede the effectiveness of particular Comnission decisions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  199 of the staff to be used against the Cam1ission as a whole. In addition, the Cam1ission is concerned that the failure of subsection (f)(l) expressly to provide that, in addition to the agency's General Counsel or chief legal officer, his or the agency's designee may result in a legal ·challenge to agency action. taken at·-~ meeting held in circumstances ~ere the General Counsel was himself unable to provide the certification required by the Act. While we agree that the power to certify that an agency meeting may be closed should be restricted to responsible legal officers of the agency, we do not believe it was Congress' intention that agency work cease unless  it could be shown that the the General Counsel was on business or on vacation. The Conmission has implemented a procedure pursuant to which the next senior ment>er of the General Counsel's staff performs the certifications when the General Counsel is physically absent from the Office.  Beyond  this, the rule  provides for a chain of corrmand by rank and seniority. See 17 CFR 200.21. But, we reconmend to the Subconmittee that the statute be amended to provide specifically for a similar procedure to be employea when the General Counsel's time can be spent more profitably on matters of significant importance to the public, thus ensuring that the statute does not inadvertantly create technical grounds for objecting to agency action which the Congress clearly never intended. The COJ1111ission also believes that the requirement of subsection (d) (5) of the Act, 5  u.s.c;·  552b(d)(SJ -  that "a full written explanation" of the  agency action to close a meeting dealing with enforcement related matters be provided an  is impractical, particularly in light of the statute's recognition  explanation should not include any exempt information.  As  a practical  matter, there would appear to be little which can be said by way of explanation, beyond citation to the particular exenption involved, which   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  200 would not reveal exelli)t information. Accordingly, subsection (d)(S) would appear to serve little useful purpose with respect to law enforcement related matters and we suggest it should be eliminated. Finally, we understand that the Federal Reserve Board has reconmended ~ t the Act be amended .to. provide a specific exe111>tive,provision to permit agencies to close meetings at which discussions of pending or proposed legislation will occur.  We  concur in that rec~ndation. We believe the public  interest is best served by full and frank discussions on the many legislative proposals that are referred to us for comnent. Such discussions may not occur in a public meeting for fear that one's statements may, at a later time, be used against the agency in some other context: We hope that these comnents will be helpful to the Subc:01111\ittee in its  efforts to provide mre meaningful information to the public about the workings of its government while not adversely affecting the ability of the government to carry out its responsibilities. This is a goal which the Conr mission wholeheartedly supports.  Mr. Pitt and I will be pleased to attempt  to respond to any questions the merrtiers of the Subc01l11\ittee may have.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  201 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES Senator CHILES. Our next witness will be Mr. Richard Berg, Executive Secretary of the Administrative Conference of the United States. Under the Government Sunshine Act, the administrative conference is assigned with assisting agencies subject to the act in carrying out their duties. This morning we anticipate hearing the results of those consultations and hearing what the Conference has done to assist and guide the agencies in carrying out the law.  TESTIMONY OF RICHARD K. BERG, EXECUTIVE SECRETARY, ADMINISTRATIVE CONFERENCE OF THE UNITED STATES, ACCOMPANIED BY STEPHEN KLITZMAN, STAFF ATTORNEY Mr. BERG. Thank you, Mr. Chairman. I am Richard Berg, Executive Secretary of the Administrative Conference of the United States, I would like to present my colleague, Stephen Klitzman, who has worked with me on all Sunshine Act matters from the very beginning. Senator CHILES. Thank you, sir. We will include your statement in full in our record, and we would appreciate it very much, in the interest of time, if you could digest that. Mr. BERG. Well, I will certainly do so. I would like at the start to emphasize one point both about my testimony today and the interpretive guide that has been cited in the hearing earlier. The Conference is a body of 90 members which opera.tes in parliamentary fashion. The activities with respect to the Sunshine Act have been performed by the staff of the Office of the Chairman. I am testifying on behalf of the chairman's office, and the interpretive guide is a publication, will be a publication of the chairman's office, and in neither case does this necessarily represent the views of the full body, which has never had an opportunity to pass on the sunshine matters. Now, the act required in the 6 months between the enactment of the Sunshine Act and its taking effect that the agencies promulgate regulations after consultation with the chairman's office, with our office. Pursuant to the mandate of the act we engaged in these consultations with nearly all of the 47 affected agencies through informal meetings, through circulation of draft regulations and other material, through commenting in writing and orally on their regulations, and through responding to their questions. We also attempted to serve as a clearinghouse for Sunshine Act information, and I hope that we performed some service in that respect. ·when this consultation activity was at an end, we turned to collecting in a single body of work the substance of our act,ivity and the learning which had been genera.ted. Out of this effort we developed an interpretive guide to t!he Government in the Sunshine Act, which we circulated in a tentative version last May to all the n,ffected agencies and interested groups and to the staff of this subcommittee. We received many worthwhile comments, and we have been revising the guide accordingly. We have submitted the final manuscript :for publication, and we expect the guide to come out sometime in the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  202 winter. We hope that it will be helpful to the agencies, to Congress, and to the interested public. We have not, since the effective date in March attempted to act as a watchdog or monitor on implementation of sunshine. vVe are not prepared to discuss the experience of agencies generally or of particn1:ar agencies under sunshine. Fortunately, a number of significant agencies have testified already. On the basis of our work, though, we can point to a number of particular problem areas which occur to us as worthy of attention. These are in .the general categories of public observation, public understanding, public notice, and public access. The questions about public observation have been alluded to in the hearing earlier, principally, the question whether recording and photography will be allowed at agency open meetings. We have pointed out to the agencies the relevance of Administrative Conference Recommendation 72-1, Broadcast of Agency Proceedings [C:FR § 305.721], which I might add, was adopted m 1972, not with sunshine pa~ticularly in mind, but with a view premised on the belief that media coverage of administrative proceedings would enhance public understanding of such proceedings, and should be encouraged subject to appropriate limitations and controls. The Department of Justice has also urged the agencies to permit nonobtruslve sound recordings as well as the taking of notes and nonflash pictures. I do not believe there has been any problem about the taking of notes. With respect to public understanding, this is also a question that a number of previous witnesses have touched upon. If, in the course of meetings, the agency personnel obscure the discussion with a mass of jargon and statutory citations, then much of the value of the open meeting provision will be lost. At least a few agencies have taken positive steps .to assist members of the public to understand and follow the course of their meetings. A number of the agencies have testified as to their experience in this regard. In addition, I would like to point to the Federal Com munications Commission, which has published a brochure entitled "A Guide to Open Meetings." This details room arrangements, locating key personnel, describes voting procedures and terminology, and offers other information about Commission procedures. The International Trade Commission has also taken steps in this direction. In fairness to the agencies, it should be recognized that they frequently deal with highly specialized subject matter, and they cannot be expected to make complex matters simple for the benefit of members of the general public. Indeed, I suggest that the agencies' principal goal should be to make their proceedings comprehensible to members of the interested public, that is to say, those who have followed the course of the agencies' business and are familiar with the general nature of the agencies' work. I suspect that those are, in fact, the people who are attending these meetings. It would probably be useful for agencies to have more specific information about exactly who their publics are because this will, of course, affect the amount and nature of the information that they make available to the public who attend.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  203 There have been questions about public notice. To make meaningful the right to attend an agency meeting, we have pointed out to the agencies that the Sunshine Act encourages the widest possible circulation of meeting information. There is a requirement for publication in the Federal Register, but this, in many cases, because of tho time factor, will be inadequate notice, and the agencies have been made aware of the fact that Federal Register publication is only part of their duty of public notice. We have encouraged them and this committee has encouraged them to use their imaginations in finding other means of communicating with their interested public. Here again, it is important for the agencies to know who their interested publics are. The timing of agency notices, the 7-day requirement is that the agencies must submit notice to the Federal .Register 7 days in advance of the meeting. Of course, this does not mean that the notice will appear in the Federal Register 7 days in advance. In fact, there is frequently a 3or 4-day lag, and to deal with this problem, the Federal Uegister people have been imaginative, I think, in working with the agencies on methods of speeding up the transmission. There is, in my testimony, reference to a short-form notice which can be sent, by telecopy equipment or by hand delivery, which will cut down on the turnaround time between submission and publication. However, you do lose on the amount of information which can go into the notice, and I think that part of the problem which has been alluded to in the testimony earlier about the failure of the agencies adequately to explain the grounds for closing has arisen from the fact that the so-called short-form notice contains the bare minimum of what the statute requires. The statute does not require that the Federal Register notice include the ground for closing, but merely whether or not the meeting is to be closed. Of course, the notice does include the name and phone number of the contact person, so anyone who has any interest in knowing why a particular meeting is being closed can find out by making a phone call. I think that this problem has led to a certain amount of misunderstanding. Finally, I would like just to touch upon the question of public access to meeting records. The act requires, as you know, that recordings or transcripts be made of all closed meetings, and that thereafter the agency must make all nonexempt materials available to the public. There has been a question and a divergence of views in tho agency regulations as to whether the agencies must go through the proceHs of, in effect, declassifying the transcript or the recording in advance, or only upon request of members of the interested public. We have pointed out to the agencies, and I think the legislative history is very clear on this point, that there is a positive duty to go through this material as promptly as possible upon completion of the meeting, and to make that material public, available to the public, and not simply wait for a request. A number of agencies, particularly the smaller agencies where there has not been a great demand for access to those materials, feel that   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  204 this may be somewhat unreasonable, but the act and the legislative history seem to us to be clear in imposing that responsibility. Finally, there has been a fairly technical problem as to the interaction of the procedures of the Freedom of Information Act and the Sunshine Act. "\Ve gave considerable thought to this problem in the course of our perfecting the guide, and it is our conclusion that with respect to the processing of requests for access to transcripts and recordings, the agency should apply Freedom of Information Act procedures rather than devise procedures relying solely on the Sunshine Act. The principal point of difference here will be the question of the time limitations. The Sunshine Act provides no specific time limitations on handling requests for access. The Freedom of Information Act does. The Freedom of Information Act time limits should be applied. These are just a few of the legal and technical problems that we see, and by working with the agencies we have attempted to be helpful and hope to continue to be helpful. We look forward to working with this subcommittee in any future evaluation and amendment of the Sunshine Act. Thank you. Senator C:mLES. Thank you. A MEETING IS A MEETING IS A MEETING •  I note that the Administrative Conference has narrowly construed the definition of meeting. I just wonder if there is a difference between the definition as set forth in the .Administrative Conference's writings and the definition of meeting that Barbara Babcock, an Assistant Attorney General, sent a letter to the agencies on April 19, in which she wrote that several agencies define the term meeting in such a way as to limit the joint deliberations which are subject to the act. She goes on to urge agencies to avoid ultimately fruitless litigation and take a broad view of what constitutes a meeting. Thus she suggests that the term meeting is broadly defined. It would appear that they are taking a more broad definition of what constitutes a meeting than your interpretation. I was wondering if you agree with that. I notice, for example, the preliminary deliberations, briefings, all those items are pretty well covered within the definition of meeting. Mr. BERG. Senator, I am aware of the Department of Justice letter. In fact, in fairness to all concerned, we have included it as an appendix in the final version of our guide, but I must say, I do disagree with it. I think that it does not give adequate consideration to the lengthy and the tortuous legislative history that went into formulating the definition of meeting. The term "meeting" is defined as "deliberations" of the required number of agency members, "where such deliberations determine or result in the joint conduct or disposition of official agency business." And practically every word there was wrestled over in the course of the legislative history. The proposition which I think is the alternative proposition, alternative to our definition, is the proposition that any discussion of   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  205 agency business by a quorum is a meeting. If that is what was meant, there was a lot easier way to say it. But, in £act, the term "deliberations" is used, and in the legislative history given some weight. The term "joint conduct" is used and given some weight. The terminology, "determine or result in," was substituted in conference for the term "concern," and the legislative history indicates that all these word choices were made in attempts to narrow somewhat the concept 0£ "meeting," with the idea, as I understand it, of focusing in on the exchanges which lead to the agency decisions, which are primarily directed to the agency decisions and part of the decisionmaking process. It seems to me, therefore, that it is clear that there was some attempt to exclude very preliminary exchanges. There is this passage in the Senate report [p. 19] which a previous witness referred to--concededly referring to discussions between two members-which lends credit to the view that preliminary discussions are not within the meaning 0£ the definition of meeting. Senator CHILES. Well, you state in the guide that your treatment of meetings has much to recommend it m terms of the practical problems of the day-to-day operations in agencies. Mr. BERG. That is true. I certainly try to keep in mind the practical problems. Senator CHILES. Well, I do not think the purpose of the act was really to take care of the day-to-day operations of the agencies. I think the overall purpose of the act, the overriding purpose, is to open up Government. If I would have issue with the definition, it would be that you have gone further to accommodate the day-to-day practical operations 0£ the agencies, rather than to err on the side of openness. Mr. BERG. Well, the question of what they should do when in doubt is one thing, and I would fully agree that when in doubt, the act encourages them to err on the side of openness, and this is true with respect to briefings and all these other categories. But before you can be in doubt, you have to have some idea of where the line is that you are in doubt about, and I think that before the agencies can :focus in on these close questions 0£ what is a meeting and what is not a meeting, you have to have some idea of where the line of demarcation is. Otherwise, your doubts will keep proceeding further and further to the outer limits. There are practical needs. There are particularly practical needs in the case of the three-member agencies. We had witnesses from a threemember agency here this morning. There are many of these agencies. I presume that you get two members talking to each other, and you do not want to encourage them to talk about something frivolous. It would be nice if they spent their working day focusing in on working matters. So, how do you handle these things if you take the position that every discussion of agency business, however preliminary, is a meeting? How do the agencies live with this? I confess I do not know. . Senator CHILES. Well, maybe that is what we are going to find out more abont, if we ever get any litigation on this subject. "'\Ve thank you very much for your testimony today, and your work with regard to the act. [The prepared statement of Mr. Berg follows:]  35-867 0 - 79 - 14 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  206 STATEMENT OF RICHARD K. BERG, EXECUTIVE SECRETARY ADMINISTRATIVE CONFERENCE OF THE UNITED·ST}.TES Oversight Hearing on the Implementation of the Government in the Stmshine Act Before the Senate Subcommittee on Federal Spending Practices and Open Government Senate Committee on Governmental Affairs November 29, 1977 We appreciate the opportunity to testify before this Subcommittee today.  I am Richard K. Berg, Executive Secretary of the Administrative Conference, and this is Stephen Klitzman, a staff attorney at the Conference.  Together,  we have been working since September 1976 on Sunshine Act matters and most recently, on preparation for this hearing. As  you know, the Administrative Conference of the United States -- a  permanent, independent Federal agency -  has as its mission the improvement of  the administrative procedures of all Federal departments and agencies.  The pur-  pose of the Conference, simply stated, is to assist the agencies and the Congress in the development of procedures that provide greater fairness and expedition for participants in the administrative process, more effective attainment of the agencies' goals, and lower costs to taxpayers.  The members of the Conference have  special expertise on questions of administrative law and procedure. A body of approximately 90 members, the Conference speaks through its formal statements and recommendations, adopted at se:ni-annual plenary sessions.  The  Conference as a body has not taken a formal position on "government in the sunshine."  Rather, its working arm, the Office of the Chairman, testified on the  legislation and consulted with the agencies in the preparacion of their regulations under subsection {g) of the statute.  Therefore, the views we are exvressing  are those of the Office of the Chairman on a matter which has not been considered by the Conference.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  207 At the outset, we woull like to describe briefly the nature of the consultative role of the Office of the Chairman in the promulgation of agency regulations implementing the Sunshine Act, doing?  What have we done?  What are we  Pursuant to the mandate of subsection (g) of the statute, we consulted  with nearly all the 47 affected agencies between October 1976 and March 12, 1977, the effective date of the Act.  First, we circulated a letter describing our  view of the consultative function, and an outline or checklist of what we thought the agencies should seek to cover in their regulations.  Subsequently, we con-  ducted a series of informal meetings attended by representatives of most of the affected agencies, circulated draft agency regulations and memoranda prepared by other agencies, responded to telephone inquiries, submitted written comments to a limited degree on proposed regulations, and, generally, served as a clearinghouse for information and informal advice on the Act. Out of this consultative activity we developed an Interpretive Guide to the Government in the Sunshine Act,  A tentative version of this guide was  circulated last May to the agencies and interested groups, including the staff of this Committee, and we solicited ;,.nd received comments and criticisms,  We  have been working intermittently on a revised version, and we just recently turned the manuscript over to the General Services Administration for graphic design and printing by the Government Printing Office.  We are optimistic that the  printed Guide will be available for general distribution well before March 12, 1978, the Sunshine Act's first birthday of effective operation.  A compendium of  materials drawn from our consultative efforts, as well as from the published legislative history and agency regulations, the Guide should be useful to the agencies, as well as the courts, the Congress and members of the public.  The  Guide does discuss differing agency approaches to the procedural obligations imposed by the Act, and occasionally cites examples of what we consider to be   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  208 "better" agency practices in dealing with particular procedural problema. Hence, it should be of some utility in any analysis and subsequent amendment of the current statutory requirements.  We have not in the ;,ast and do not now function as a "watchdog" or monitoring office on day-to-day agency implementation of the Sunshine Act.  That  function might usefully be performe.d by some government office, but to date, it has not been undertaken by the Office of the Chairman of the Administrative Conference,  Hence, we cannot testify in any detail as to how the agencies are  in fact implementing the statute and their own regulations, However, on the basis of our work for the Guide, on some limited attendance  at agency meetings, on our own reading of the Federal Register and other publications, and on a reduced but continuing number of agency queries and consultations, we are able to offer some comments on a few of the problem areas indicated  by agency regulations and practice. As you are aware, the· Sunshine Act is a very specific statute that does not grant the agencies much opportunity to increase their discretion by regulation. Therefore, the majority of agencies appear to have played it safe, and their regulations, by and large, track the provisions of the Act.  On  significant  matters, for example, such as the definition of "meeting" and the exemptions, the regulations mirror the language of the statute. Nevertheless, there are some agency variations and practices which are worth noting.  Our focus is on four areas which should most concern the public:  public  observati.on, public understanding, public notice, and public access.  Public Observation.  One question on which the agencies have been sharply  divided is whether to permit the public or press to photograph, televise or tape record meetings.  Soille agencies freely permit the use of tape recorders and  cameras during the meetings, other-:require permission to be sought in advance,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  209 ~hile others bar use of cameras or recording devices entirely.  No agency, so  far as we kn~ restricts the right to take notes at a meeting. The Act does not define "public observation," nor does it expressly confer a right to record, photograph, or televise an open meeting.  It remains an open  question whether the right to do so in a manner which does not disrupt or interfere with the meeting is part of the right of observation. We have pointed out to the agencies the relevance of Administrative Conference Recommendation 72-1, Broadcast of Agency Proceedings.  The recommendation  is premised on the belief that radio-television coverage of many administrative proceedings will enhance public understanding of agency proceedings and should be encouraged "subject to appropriate limitations and controls."  The Department  of Justice has also urged agencies to permit "non-obtrusive" sound recordings,  as well as the taking of notes and non-flash pictures.  I might note that al-  though the agencies are not required by the Sunshine Act to record their open meetings, the prospect of recordings in the hands of the general public is likely to induce agencies to make their own recordings as protection in the event that  a dispute arises as to the events of the meeting. Public Underst~nding.  The Sunshine Act does not require an agency to permit  members of the public to participate in an open meeting -- merely to attend, to  listen and to observe.  The value of such observation, at least to members of  the general public, can be negated if agencies make no attempt to explain their  business, or worse, obscure the course of discussion in a confusing m~ss of agency jargon and statutory citations.  At least a few agencies have taken seeps  to assist members of the public to understand and to follow the course of their meetings.  The Federal Trade Commission, for exampl~, makes available before   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  210 each open meeting a summary of the matters on its agenda in order to facilitate public understanding of the discussion.  The Federal Communications Commission  has published a brochure entitled, "A Guide to Open Meetings."  It includes a  room arrangement which locates key agency per&onnel, describes their functions, explains voting procedures and terminology, and offers other information about Commission procedures under the Sunshine Act.  And the International Trade  Commission distributes to its public observers the non-confidential portions of documents discussed at its open meetings. In fairness to the agencies it should be recognized that they frequently deal with highly specialized subject matter, and they cannot be expected to make complex matters simple for the benefit of members of the general public. Indeed, I suggest that the agency's principal goal should be to make their proceedings comprehensible to m~mbers of the "interested public," that is to say,  to those who have some ongoing interest in and familiarity with the work of the agency, for I suspect that the great majority of observers of these meetings fall into this category. Public Observa~ion, Public Understanding, and Notation Procedure.  Both  public observation and understanding of an agency's decisionmaking process will obviously be diminished if the agency decides to conduct more of its business by written circulation of agenda items i11stead of in an open, or even closed, meet-  ing.  lie have cautioned the agencies in the infoI'l'lal gatherings we held in 1976,  in consultations, and in the Intetpretive Gt1ide th,it to comply with the spirit of the Sunshine Act they should refrain from excessivf¼ reliance on notation prcceCure.  It's difficult to determine whether the agencies are using notation  voting procedures more now thar~ they di.d before the Sunshine: Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  But we do  211 believe that a consensus has developed among the agencies that at the very least, their public image will suffer if they switch to notation voting with respect to items which in the past were disposed of at meetings. Of course, many Sunshine agencies have long used notation voting, often for disposition of routine, non-controversial agency business.  Notation procedure  is also frequently the most effective means of securing a final "sign off" on a formal agency opinion or other document.  In short, notation procedure can perform  a valuable function in permitting meeting t:llne -- usually in short supply -  to be  reserved for those matters which can most profit from a collegial exchange. Some agencies have demonstrated their sensitivity to the possibility that notation procedure might be abused by detailing the circumstances and procedures under which they expect to conduct business by circulation of documents. for example, to the regulations of the ICC, FTC, and SEC.  I refer,  These agencies provide  for recording the votes of each Commissioner on each agenda item conducted by notation procedure and in the case of the ICC, to make these votes "or other statements of position" available to the public.  Moreover, both the FTC and SEC  are codifying an apparently long-standing practice which has slso been the practice at the Federal CoDDDunications Commission, i.e., allowing a Commissioner to place on the meeting agenda any written matter circulated to the members for consideration and voting by notation procedure. These procedural checks on the use of notation procedure are designed, in the words of the FTC, "to insure that Ythif practice of 'business by circulation' is understood by the public and to demonstrate good faith in complying with the Act."   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  212 Public Notice.  To make meaningful the right to attend an agency meeting,  we have repeatedly pointed out to the agencies that the Sunshine Act encourages  the widest possible circulation of meeting information.  Meetings will be  effectively open only to those interested persons who receive adequate and timely notice of them.  As  one agency regulation put it, "The provision for comprehensive  public notice of agency meetings is the keystone to fulfillment of the Congressional policy expressed in the Act." How has this public notice principle fared in agency practice?  First of all,  with regard to the timing of agency notice, we believe that public announcement seven days in advance of the meeting, as required by subsection (e)(l), frequently will be inadequate notice, particularly because of the time lag between submission to and publication in the Federal Register.  (Normally, a document is published  in the Federal Register on the third work day after it is received.  The_ Federal  Register, however, has adopted a special format and procedure for expedited service on Sunshine meeting notices.  This format.has affected the contents  of agency notices, and we will consider it when we review· the contents of agency notices.)  Consequently, in our Guide and our consultations, we have advised  the agencies to provide longer notice whenever possible and to use additional means of notification so as to reach interested persons more quickly and effectively than Federal Register notice.  Another problem related to the timing of agency meeting notices arises in subsection (e)(l). It allows an agency to shorten the one-week advance notice of its meetings if  "a majority of the members of the agency" votes by recorded vote "that agency  business requires" the meeting to be held with less than seven days notice.  In  such a case, the requisite public announcement of the t:l.me, place, subject matter, and open-closed status of the meeting must still be provided "at the earliest  practicable ti.me."   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  213 Legislative history indicates that this "escape clause" allowing for shorter notice is not to be relied upon routinely but should be primarily used to deal with emergency, late-breaking items. A few agencies reflect this emergency emphasis in their final reguiations  implementing 5 U.S.C. §552b(e)(l).  Most, however, merely repeat the statutory  language and do not emphasize the emergency nature of the clause.  A review of  Federal Register Sunshine notices reveals extensive reliance on this short notice procedure. In our Guide, we take the position that the better agency practice would be to place procedural limits or impose criteria on the use of the shorter notice, "escape clause" of subsection (e) (1).  For example, the Federal Communi-  cations Commission provides in the announcement of any last minute meeting the  vote of each agency member on the decision to give less than seven days notice.  The announcement will also "specify the nature of the emergency situation if it is not clear from the subject matter."  47 C.F.R.  §  0.605(e), 42 F.R. 12864, 12868.  When the International Trade Commission calls a meeting on short notice, it will "apprise interested members of the public that such an 'emergency' meeting is being held" by promptly posting public notices on agency bulletin boards, immediately  sending out copies of the notice to a mailing list and "when advance notice is very short, [b]y telephoning interested and affected persons."  42 F.R. 11242 •  Concerning t h e ~ of public notice, subsection (e)(3) requires that, immediately after each public announcement required by subsections (e)(l) and (e)(2), the agency must submit for publication in the Federnl Register, notice of the time, place, and subject matter of a meeting, whether the meeting is  open or closed, change in any of these items, and the name and phone number of an agency person to contact for additional information.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  These seven items  214 are the minimum contents of the meeting notice, to be published in the Federal  Register whether the meeting is to be open or closed, unless the meeting is  covered by the expediting procedures of subsection (d)(4).  A few agencies  include in their Federal Register notices information required to be made public by subsections (d)(3) and (f)(l), such as the votes of members on closings, explanations of closings, lists of expected attendees and the certifications of the General Counsel.  Some agencies have also included in (e)(3)  notices a paragraph informing the public of the procedure to request a closing  under subsection (d)(2). These additional items of information are not required to be published in the Federal Register, nor are they included in the standard format for expedited publication of meeting notices announced by the Federal Register as a means of  cutting the tim:a lag between submission and publication of notices.  This  11  short  form notice" includes only the minimum information required by subsection (e) (3). Hence, it is misleading to suggest, as did the Library of Congress survey  of Sunshine Act meetings listed in the Federal Register between March 24 and September 9, that because relevant "exemptive provisions were cited in only 193  of the 527 meetings that were fully or partially close~Je-agencies are not complying with the explanation requirements of the law and are trying to "get around the law" or away with something.  In fact, subsection (e)(3) does not  require such explanation in the Federal Register notice, nor does the short  form Federal Register notice permit it. The publication of the additional information cited in subsections (d)(3) and (f)(l) does, of course, provide the public with a fuller explanation and  more complete notice of closed agency meetings.  Where an agency opts not to  submit a notice in the standardized format, it would be practical and efficient   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  215 to issue a single document complying with subsections (d)(3) and (e)(3), and referring as well to the General Counsel's certification required in subsection (f)(l).  Agencies submitting short form notices to the Federal Register  should issue and make available the (d)(3) information -- members' votes, explanations of closings, and lists of expected attendees -- using bulletin boards, press releases, or whatever additional means of notification or public announcement they have adopted.  While the certification of the General Cousnel  need not be published in the Federal Register, it too should be issued or made available by the agency. 14 C.F.R.  §  See, ~ . regulation of the Civil Aeronautics Board,  310b.4, 42 F.R. 14681.  Public Access to Meeting Records.  A key provision of the Sunshine Act is  the requirement in subsection (f) that agencies naintain recordings, transcripts, or, under certain circumstances, detailed minutes of each closed meeting.  These  meeting record materials must promptly be made available to the public, although the agency is, of course, entitled to delete those parts of the discussion that dealt with exempt information.  A number of practical and legal problems deriving  from this requirement have come to our attention.  First, some agencies were  reluctant to undertake the task of editing the meeting record materials before a request for such materials was received.  It is perhaps understandable that an  agency, particularly one of the less prominent agencies, might feel that the work involved in deleting exempt material from a transcript or recording might well await the unlikely event of a request from a member of the public.  However,  we think the Act is clear -- and we have so advised the agencies -- that there is a duty to provide an edited version of the meeting record, whether transcript, recording or minutes, in advance of a request.  This does not mean, of course,  that an agency should not review or reconsider its decisi.ons to delete material in the light of particular requests, or, indeed, the passage of time.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  216 The handling of requests for meeting records raises another fairly technical problem -- the interrelationsnip of the Sunshine Act and the Freedom of Information Act.  Subsection (k) in the Sunshine Act says, of course, that nothing in the open  meeting provisions of the Act "expands or limits" rights under the Freedom of Informatio~ Act, except that the Sunshine Act exemptions rather than the FOIA exemptions shall govern the disposition of requests for meeting record material. Now there has been some disagreement among the agencies as to whether the proce-  dures for handling Freedom of Information Act requests should be applied to these requests under the Sunshine Act.  Some agency regulations expressly refer to or  incorporate FOIA procedures, others set up a separate set of procedures, while  still others do not really say how they plan to handle requests for meeting record materials.  The principal question at issue here is whether the time  limits in the FOIA for handling requests -- 10 working days for initial disposition and 20 working days on appeal -- will apply to Sunshine Act req1..ests.  We  did not advise the agencies on this point last winter and it was not dealt with in the tentative version of our Guide.  However, we have come to the conclusion  that FOIA procedures, both at the agency level and on judicial review, should govern these requests for meeting records.  We believe this is what Congress  intended, and we do not see that the result creates any particular practical problems.  This is not to say that the agencies must process requests for meeting  records in precisely the same way they process ordinary FOIA requests.  But we  do believe that their procedures must accord with the requirements, particularly  the time limits, of the FOIA. Conclusion.  These are just a few of the legal and practical problems we have  identified as part of our consultative role in the promulgation of regulations  implementing the Governm~nt in the Sunshine Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  217 We have attempted to be as helpful as possible to the agenci~s and to the cognizant Committees of Congress, and we believe our Interpretive Guide will be of additional assistance.  Finally, we look forward to working with the Subcommittee on Federal Spending Practices and Open Government and the Committee on Governmental Affairs  in any future evaluation and amendment of the Government in the Sunshine Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  II II II  218 OFFICE OF MANAGEMENT AND BUDGET  Senator CHILES. Our final witness today is Mr. "\Vayne Granquist, Associate Director for Administrative Management in the Office of Management and Budget. It would seem to me that if there is any message from previous witnesses, it would be that there is a firm need for guidance and management. Frankly, I nm plens<'rl to hear what guidance we are going to receive. TESTIMONY OF WAYNE GRANQUIST, ASSOCIATE DIRECTOR FOR ADMINISTRATIVE MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET, ACCOMPANIED BY ROBERT BEDELL, ASSOCIATE GENERAL COUNSEL  Mr. GRANQUIST. Thank you, Mr. Chairman. With me today is Mr. Robert Bedell, Associate General Counsel. We are pleased to be here today to discuss the Government Sunshine Act and to answer questions that the subcommittee may have. As the prime sponsor of this legislation, you, Mr. Chairman, know of this administration's longstanding interest and involvement with the field of information practices, including the Government in the Sunshine Act. As you know, long before he became President, President Carter endorsed the concept of more "sunshine" on our Government's processes. His commitment to that principle is fundamental. For President Carter, the openness of our governmental processes is not a procedural hurdle to be dealt with during decisionmaking, it is an essential element of his approach to governing. In an address before the Federal Bar Association in May-at which I believe you also spoke, Mr. Chairman-Robert J. Lipshutz, the President's Counsel, summarized President Carter's views on openness as follows : Plainly if you believe in the competence and compassion of the American people, you will want to remove whatever barriers separate those people :from their government. One of those is secrecy-that secrecy which too often arises from fear of the people's good sense and judgment.  The Government in the Sunshine Act was enacted in the fall 1976 and became effective this past March. Its purposes are as bold and revolutionary for the meetings of those agencies it covers, as the Freedom of Information Act was over 10 years ago with regard to the availability of Government records. Like the Freedom of Information Act in another area, the Government in the Sunshine Act stands on its head the previous general policy of these agencies by declaring that their business meetings shall be open to-and for-the public, unless one of the specific statutory grounds for closing is found to exist and is also determined to override the public interest in holding a meeting in the sunshine. No one expected that this fundamental change in the way the covered agencies conducted their business would occur overnight or without continual diligence. It is apparent, in that regard, that the commitment you demonstrated during the passage of the legislation has not diminished with its signing. These hearings should accomplish much in determining what changes in procedure or regulation would better implement the purposes of the act. Our view of the agency implemen https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  219 tation has been limited, but our initial impression is that although much has been done, we can and should expect more. Our impression also is that the difficulties lie less with the wording of the act than they do with the attitudes of some agencies toward the act's implementation. 8tatistical representations of the number of meetings held, open, closed or partially closed cannot answer all questions about the implementation of the act. Exemptions were clearly spelled out in the legislation. Nevertheless, the first quarter operating statistics compiled by Common Cause and published in its report of September 1977, "Shadows Over the Sunshine Act," reinforce the need to watch carefully for a trend to a greater proportion of open meetings. This administration is totally committed to the goals and principles of the Government in the Sunshine Act. We shall follow the implementation of the act carefully and continue to review the performance of covered agencies. It is our hope that in the near future the statistics with regard to agency performance will obviate the need for major changes. vVe at 0MB shall keep in close touch with these developments and will be anxious to continue to work with you and your staff on this legislation. Like the related Freedom of Information Act, the Federal Advisory Committee Act, and the Privacy Act of 1974, the Government in the Sunshine Act relies on each agency to interpret and implement their provisions. The Advisory Committee Act and the Privacy Act, however, provide for a single agency to assume some oversight role and to issue interpretive guidelines. We would consider organizational alternatives such as this to be appropriate for inclusion in the Sunshine Act should agency performance over a longer period of time prove unsatisfactory. We would urge caution, however, in moving too quickly with such organizational changes, since the Sunshine Act recognizes, by addressing itself to each agency, that the differing circumstances in which each agency operates make general solutions difficult. It seems to us, also, that the overall goal of this legislation and the President's commitment to openness in Government is best served by insuring that each agency make openness an integral part of its procedures and be held accountable for its actions in that regard. We would be concerned that the covered agencies not view the act as the fundamental responsibility of an organization other than itself. That, after all, is the principle of Cabinet government so often stated by President Carter-that his appointees are responsible and acco~u_itable for carrying out their programs in accordance with the policies of the administration and the clear intent of the Congress and the law. I will be pleased to respond to questions, Mr. Chairman. Thank you. Senator CHILES. Mr. Granquist. I asked most of the other witnesses if they would give me a brief summary of their statemen~s, and put their statements in full in the record, so we would have time to ask questions. I did not have to make that request of you because your statement was not quite that full. I am delighted to hear the continnation of the President's commitment to open Government and to sunshine. I must sav that I am tremendously disappointed to find that we are going to take a cautious approach.' How lonl2'. would an administration that is elected for 4 years be cautious? "\Ve are now one-fourth  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  220 through that administration. We are into the month of December now, and I wonder how long we luwe to be cautious. I read your remarks, and then I look and see a transcript of "Meet the Press" with guest Jimmy Carter, Presidential Candidate. This occurred on July 11, 1976. In answer to a question ,Jimmy Carter, then candidate for the Presidency, said that he would 11ave the strongest possible commitment as President to protect the right of the press to speak freely. He said: ... I favor strong sunshine laws. One of the first acts I intend to take if I am elected President is by executive order to open up as many of the deliberations of the Executirn Branch of Government as possible, and I would join in with the efforts that hani been pursued b~· Senator Stone and Senator Lawton Chiles of Florida and others to pass a comprehensiYe sunshine law for the whole federal government. So everything I do as President will be designed, within the bounds of rationality, to open up the deliberations of government to the people through the press.  Senator CHILES. I read that and then I hear words of caution. That concerns me a little hit. You state: We would consider organizational alternatives such as this to be appropriate should agency performance over a longer period of time prove unsatisfactory. We would urge caution, however, in moving too quickly with such organizational changes.  This is followed by lnnguage on the principle of Cabinet Government. Everybody has to stand on his own. ,vhat this act needs is some Executive leadership. ,vhat I thought we were going to get from this President was that kind of Executive leadership. I do not find that in the statement that yon have gi,·en me today from OBM. Mr. GRANQUIST. Let me distinguish between two matters, Mr. Chairman. I did not come here, obviously, to defend the administration's record in the broadest concept of "openness of Goye111ment." I can give you a couple of examples that I am personally familiar with, and that we are working with at 0MB. One, is the President's reorganization project, some efforts of which I have under my jurisdiction. There we are workin~ in a very open manner. We are holding public meetings and consulting openly with a broad range of the public and the Congress. Another example of the openness of this administration is the fact that we have just published in the Federal Register this week for the first time, I believe, in history, a draft Executive order which we would hope to issue later this year on regulatory policy and process. The goal of that Executive order, which has been approved by the President in principle, is to indeed open the regulatory process to the public int~rest. It will require that agendas of regulatory actions be published semiannually, it will ask that the public be fully informed of pr?gress_ made in. regulatory activity, by asking that work plans be utilized m managmg that process, and that the general thrust of regulatory activity be one that involves public participation. In terms o-1. the implementation of the Sunshine Act itself, the thrust of my remarks is really this: ,ve would like to continue to work with your committee to see if, in fact, the trend is a trend towards closing committee meetings and see if there are institutional changes we   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  221 could help to undertake which would help to make the act more effective. " 7 e should recognize also that we are dealing here with basically independent regulatory commissions, and we are sensitive to the executfre branch relationships to those agencies. Senator CHILES. "\Yell, it seems that 0MB is, as the Office 0£ Management and Budget, usually the arm 0£ the President implementing and carrying out Executirn ordns. They come out 0£ 0MB normally 1 do they not? We have got somebody in the Attorney GeneraFs office saying: "I£ I have got to defend a lawsuit against you, I hope you will have a broad definition 0£ the mml meeting." I was delighted to see that kind of letter. But, that is someone who says: "I han got the responsibility 0£ defending you in a lawsuit, and I hope to be successful." But I do not find any voice in the executive branch that says: "vVe are going to monitor, and we want a report 0£ hmv many meetings that are open, and closed, and why. "\Ve are interested, and it is the focal point 0£ this administration that meetings be opened." Has that message gone out? Are the agencies and commissions so independent that the President 0£ the United States should not speak to them or that OlfB should not speak to them as the management arm 0£ the President 0£ the United States? I£ they are that independent, then I wonder how we are going to perform a role 0£ leadership. Mr. GRANQuIST. Let me say, Mr. Chairman, that these hearings will be very helpful in both the testimony the witnesses and the material submitted £or the record. They do, sir. Senator Cnn,Es. And I lrn,·e always thought 0£ 0MB as being that agency 0£ the Go,·ernment ,vhich coordinates Presidential acti,·ity and directirn as it applies to the executirn branch. And now today I find that 0MB is just going to continue to monitor sunshine or watch it with interest and read the reports with interest and caution. Certainly, from my hearing today, we get a mixed sort 0£ bag 0£ reports 0£ what is happening, both from the Common Cause report and from the Library 0£ Congress report, which ,vas done £or us. I do not think we can sit back and say that the act is working with any tremendous degree 0£ success. And now I find that there is no Executive leadership, and that 0MB does not intend to perform that role. T£ 0MB is not going to perform that role, I do not know where leadNship is going to come from. I do not know whether anyone else has h1wn designated. I a!fl delighted to hear 0£ the Executive order that you are working on w1tl_1 regard to regulatory agencies. Do you know 0£ any other Ex~cutiv~ orders that have come down to open up as many 0£ the dehberat10ns 0£ the executive branch 0£ Government as possible? Mr. GRANQUIST. I am not personally aware of any. Senator CHILES. "\Yell, I do_ not know of any either at this time. It seems that we do not han someone in the executive branch who is goin!! to monitor the act. ,,re han O"Ot the Administrative Conferen_ce whic_h is writing treatises of what they think the act means. We will certamly take your comments on the testimony quite seriously, ancl   35-867 0 - 79 • https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  15  222 I really mean that we will work closel~ with your ~taff, and this committee, and yourself to see what possible alternatives there are and explore what can be done toward the end of more effective implementation of the Sunshine Act. At this particular stage, we are not prepared, and that is why I used the words •'with caution," to endorse any specific changes. Senator CHILES. Well, Mr. Granquist, let me say that I hope you will take this quite seriously. I want you to know that I am going to take the statement of 0MB quite seriously, too. Those comments of caution I am going to take quite seriously. I hope after you have had a chance, and after the office has had a chance to digest this, we will have an opportunity to discuss this further. I look forward to that. I do not think the President of the United States intends to go back on the promise that he made in this regard. I do not think that he would want to approach with caution a matter like this. I do not think that he would be afraid to say to the other agencies and commissions, even though they may be independent, that he would be afraid to express the feelings that he has so strongly expressed before in regard to open Government. I look forward to seeing how that is going to be expressed. It seems to me the Office of Management and Budget is the logical place for such leadership to originate. If it is not, then maybe there has to be som1; other kind of agency. Under ~he circumstances, I will say we are gomg to complete our hearings, but I want to recess these hearings because I think we are going to have further discussions in this regard. Thank you very much. Mr. GRANQUIST. Thank you, Mr. Chairman. [Whereupon, the hearing was reces~md at 12 :30 p.m.]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  OVERSIGHT OF THE GOVERNMENT IN THE SUNSHINE ACT-PUBLIC LAW 94-409 TUESDAY, JUNE 13, 1978  U.S. SENATE, SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT, COMMITTEE ON GOVERNMENTAL AFFAIRS, Washington, D .0. The subcommittee met, pursuant to notice, at 9 :30 a.m., in room 2288, Dirksen Building, Senator Lawton Chiles ( chairman) presiding. Present: Senator Chiles. Staff members present : Ronald A. Chiodo, chief counsel and staff director; Janet R. Studley, counsel; Robert F. Harris, deputy staff director; and Christine Sheridan Betts, chief clerk. Senator CHILES. It has been more than 6 months since our subcommittee recessed its first oversight hearing on the Government in the Sunshine Act. In November 1977, Wayne Granquist testified that 0MB was carefully following the implementation of the act and continuing to review the performance of covered agencies. He also said 0MB can and should expect more than the agencies had done to date. However, at that same hearing, it became clear that 0MB had in fact taken no action to follow the implementation of the act, and was learning for the first time that day what was happening in agencies covered by the act. We didn't adjourn that hearing last November; I simply recessed the hearing because we were very disappointed in what little we heard from 0MB regarding its role in the management of sunshine. I knew that I wanted and needed to have further, more detailed discussions with the Office of Management and Budget in this regard. A few months later, however, I did have the chance to talk about sunshine a little more. On March 16, at Jim McIntyre's confirmation hearings as the Director of 0MB, I received a firm commitment that 0MB would at last take a very active role in monitoring and advising the agencies on their implementation of the Sunshine Act. That was good news to me, and I was pleased then to learn that, finally, the President's commitment to open government was going to be realized. If there was one clear message that I received from our November hearings and from subsequent dealings with several agencies, it is that there is a dire need for guidance and management in the implementation of sunshine. The agencies are still having problems in adopting a spirit of openness in their conduct of the public's business. We have seen so many tortured interpretations of the act's key provisions, that I am beginning to think that we have an excess of paranoid commissioners and far too many general counsels out there with over-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (223)  224 active imaginations. Their purposes seem to be to maneuver around the act as much as possible. Some agencies still haven't figured out what a meeting is. In one instance, a meeting held outside of the agency's four walls was declared not to be a "meeting" under the act. I am still reading newspaper articles about agencies that are holding "briefings and information sessions" which are not considered to be meetings although information discussed lays the groundwork for future agency decisions. It is also alarming to hear of agencies that conduct public meetings, but the staff and the members are the only ones who can figure out what is going on because the commissioners are making a determined effort to -be cryptic. I asked to see some public certifications of closed meetings. One agency sent me an impressive stack of papers that closely resembled swiss cheese because of all the holes left by its general counsel's scissors. Now, these are very real problems. They are interfering with the act's proper operation. But, the problems are not insurmountable. They are merely problems in understanding the act that could be solved with some straightforward executive leadership and advice. This agency resistance is inconsistent with the overwhelming intent of the law to open up the whole decisionmaking process to the public. This pervasive attitude is also inconsistent with the President's own firm stand on openness and accountability in Government. Government in the sunshine has had a curious history. No one was too interested in it when we first started talking about it up here. I had a great deal of respcf't for the notion of open government after watching it work in Florida. I became firmly convinced tihat secrecy is not necessary to the effective resolution of conflicting views and interests. Secrecy does not enhance or improve how our Government works. On the contrary, secrecy, and the whole paranoid mentality that goes along with it, has severely hindered and damaged the integrity of this Government. After working hard, we finally convinced some of our fellow legislators that this was the case, and when this succeeded, the time was finally ripe for the Sunshine Act. Open government was a popular notion in the wake of atergate. ,vho could take a stand against it after we all saw what evil lurks behind closed doors. ,vell, as a result of Watergate, we have seen all sorts of reformsethics reform, budget reform, Government in the sunshine. Yet, the public's confidence is still low. I was at a hearing recently at which pollster Lou Harris testified. Mr. Harris' poll showed that the present confidence level in Government institutions is even 10\n'r today than n years ago, at the height of the ,vatergate scandal. It is clear that despite protestations of wanting to make Government more responsive, Government has not been more responsirn. At least our citizens don't think RO. Mr. Harris told us that people do not feel that C'J-Overnment has opened up to them significantly, despite our legislative efforts to bring the workings oft he bureaucracy into the sunshine. At today's hearing I hope we are going to begin to change this perception. And I sit here in anticipation of learning in detail what 0MB has done since our last oversight hearing 6 months ago to fulfill the President's commitment to sunshine. ,ve are delighted to ha Ye ,you here today, and with Mr. Granquist, and we are delighted to hear from you, sir.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ,v  225 Mr. McINTYRE. Thank you, Mr. Chairman. I have with me as you have mentioned, Mr. Wayne Granquist and Mr. Bill Nichols, also from the Office 0£ Management and Budget. Senator CHILES. We are delighted to have you here. Mr. NrcHOLS. Thank you. Mr. McINTYRE. We are pleased to appear before you today to testify on the Office 0£ Management and Budget activities with respect to the Government in the Sunshine Act. I have prepared testimony which I would like to submit for the record. Senator CHILES. Your testimony in full will be included in the record in anyway you would like it. TESTIMONY OF JAMES T. McINTYRE, DIRECTOR, 0MB; ACCOMPANIED BY WAYNE GRANQUIST, ASSOCIATE DIRECTOR AND WILLIAM NICHOLS Mr. McINTYRE. I would like to limit my opening remarks to a short summary 0£ the more salient points 0£ my prepared testimony. First 0£ all, I would like to say that the policy that underlies the Government in the Sunshine Act that the public is entitled to the fullest practical information regarding the decisionmaking processes 0£ the Federal Government, is one that we certainly support in this administration. The intent and purposes 0£ the act, to provide the public with such information while protecting the rights of individuals and the ability 0£ the Government to carry out its responsibilities, are also consistent with the administrntion's point of Yi<'w ahont openness in Government. We believe that the Sunshine Act is an important public policy. In £act, the President on June 9 sent a memorandum to the heads of departments and agencies 0£ the Government in which he asked 0MB to record the number 0£ meetings subject to the act, to note whether those meetings are open or closed, and i£ closed, to state the reasons for closing them. In effect, we were asked to compile information from which we can evaluate compliance with this act. This information will be passed along to the President and to the Congress with recommendations for whatever actions may be appropriate to meet the spirit as well as the letter 0£ the law. It is important that the agencies and the Congress note the President's and the Office 0£ Management and Budget's strong support of this act, and the principles for which the assistance 0£ good faith efforts is needed in its implementation. There is a useful and constructive role that the Office 0£ Management and Budget can play in evaluating compliance with this act. Accordingly, we have established a monitoring system to track and record the activities 0£ the agencies under the Sunshine Act. We intend to continue this tracking and reporting. We will work with the Attorney General to help assure that our litigating positions reflect the administration's policy. We will work with the agencies, the Attorney General, and the Administrative Conference 0£ the United States to insure adequate policy and legal guidance in the implementation 0£ this law. As I have indicated previously, we intend to report to the President and the Congress on the implementation 0£ the act by the various  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  226 agencies covered by it. We will also comment from time to time on agency practices and, where appropriate, recommend whatever actions may be necessary or appropriate to meet the spirit as well as the letter of the law. Our review of agency notices for the first 5 months of this year indicate the following. Mr. Chairman, I will read just slightly over a page of statistical information, which is covered in my pre:{>ared testimony, but I think it is important to highlight these statistics at this time. Some 47 a,gencies placed a total of 733 notices of meetings in the Federal Register; 29 percent or 211 of those notices were published 7 or more days before the scheduled date of the meetings; 85 percent or 627 were published on or before the date of the meeting, and 15 percent were published after the announced date of the meeting. Hence, 51 percent or 378 notices were for open meetings; 23 percent or 171 notices were for closed meetings; and 25 percent or 184 notices were for partly closed meetings. So, 16 agencies had only open meetings; 6 agencies had no totally open meetings; 74 percent of the notices for closed or partly closed meetings did not explain or cite a specific exemption of the act as a basis for the closing-: 9 agencies cited particular exemptions as the basis for closing meetings. The most frequently cited exemption was subsection 9, which was cited 81 times out of 258. The next most frequent were subsection 8, cited 47 times; subsection 10, cited 44 times, and subsection 1 cited 38 times. One agency cited only a provision of its own regulations as the basis for closing meetings. During this period, 380 notices of changes-either dav, time, or agenda-in previously announced meetings were published by 32 agencies. Only 34 percent of those notices were printed before the scheduled date of the meeting. Most of the change notices, in fact 84 percent, were to indicate changes in the agenda of meetings. Mr. Chairman, with this brief overview of what the Office of Management and Budget has done and what we intend to do, and with a brief recap of the statistical information gathered over the 5 months, I will conclude my testimony and answer any questions that you might have. Senator CHILES. At the outset, I am quite pleased with your statement and the steps that you and the President have taken toward clarifying the administration's commitment to sunshine and taking leadership roles. The President's memorandum which you cited and which was dated June 9, 1978, I think, finally puts the 'President on record not from a campaign promise, but now as the Chief Executive, of taking a commitment for openness and for sunshine. The Library of Congress has prepared a study at my request on sunshine covering the entire year. 1 A total of 2,177 sunshine meetings were held and 52 percent of these meetings were completely or partially closed-15 agencies closed 75 to 100 percent of their meetings; 1 agency sent in late notices 52 percent of the time; other agencies, 42 percent of the time. I find these figures to be truly disturbing. 1  See p. 395.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  227 These figures might not tell the whole story, but they indicate how open or closed our Federal agencies are. These studies reinforce what I have learned from our first oversight hearing and from subsequent encounters with the individual agencies, ·and that is that there is a critical need for 0MB active leadership. What is your personal view at this time of the agencies' compliance with the sunshine statute 1 Mr. McINTYRE. Mr. Chairman, from a review of the publications in the Federal Register, I think one could conclude that there are numerous efforts that could be made to improve the openness of Government. It is very difficult to tell without further evaluation exactly how many meetings might be involved, because the Federal Register data simply reflected the number of notices, so I think we are going to have to develop a better information system to give you any real recommendations and to give you some accurate evaluations of the agencies' compliance. It is my feeling that we have a legitimate role in trying to provide that type of suggestion for further compliance, and better information on complying with the Sunshine Act. INTERPRETIVE GUIDANCE FROM 0MB Senator CHILES. As I said at the outset after your statement, I think the President in his memo has made a strong effort toward fulfilling his long held commitment. Your testimony also reflects your concern for promoting the principles of the Sunshine Act, and I am very happy to see this administration taking a leadership role. I note that your testimony seems to center on gathering da.ta and developing statistical analysis of the agency sunshine activity. I think statistics are important and useful in identifying the overall trends. I feel, though, that in addition to the statistics, we certainly- need the interpretive guidance on a continuing basis, and you mention that in your statement. I certainly hope that as we get into the future endeavors of the 0MB, we are going to find that you are not going to be just gathering statistical data, because we can get some information through the Library of Congress and some others for gathering statistics. I hope that we are always going to have the leadership role played by 0MB and the interpretive guidance that I think is so necessary. Mr. McINTYRE. Mr. Chairman, I think I pointed out in my opening remarks that the President's letter or memorandum to the heads of the departments and agencies anticipated that the Office of Management and Budget would make recommendations with regard to compliance and to appropriate action to meet the intent or the spirit of the law. We do intend to do that. Senator CHILES. I am glad to learn from your testimony you expressed your views on matters where uniformity would be useful. Will these expressions include interpretive guidance on the act's provisions 1 I assume they will. Mr. McINTYRE. Yes; I think we will give some general guidance. We wi]] also try to !!'ive the agencies some suggestions as to the proper reports, reporting format, as well as general guidance on how we think the act was intended to be interpreted.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  228 Senator CHILES. And those would be on some kind of a cuntinuing basis. Mr. McINTYRE. That is right; we will certainly work very closely with the Department of Justice which is responsible for providing legal advice generally to the agencies of the executive branch of the Government. Senator CHILES. The Department of Justice expressed its views on certain sunshine issues in a letter last year to all agencies subject to sunshine and Justice stated and I quote: "Several agencies define the term 'meeting' in such a way as to limit the joint deliberations which are subject to the act. For instance we believe"-and I am quoting from Justice-do you have that so you can show that to him 1 Mr. McINTYRE. ,Ve do not have that. Senator CHILES. "For instance we believe that * * * a 'briefing session' should be included within the purview of regulations or practices applying the ter:n 'meeting' * * *. I suggest that you insure that the term 'meeting' is broadly defined." That letter goes on further and suggests that public observation include permitting observers to photograph and report an agency meeting. Moreover, Justice urges agencies to adopt a general practice of opening meetinl?S to the fullest extent practicable and on fully considering the public interest before closing any meeting. The definition of the trem "meeting" is extremely important to the proper interpretation of Sunshine Act. Now, it is clear to us and correctly so we think, that the ,Justice Department has interpreted the term "meeting" very broadly. ,vhat is your opinion or OMB's opinion on this matted And would you plan on conveying that i Mr. McINTYRE. I would defer with the Department of Justice on the legal interpretation of a meeting, and I would have to support the Department of Justice's position on how broadly to define meeting. We would make every effort to insure that the Justice Department's interpretation of the term "meeting" be disseminated widely and was brought to the attention of the appropriate agencies, but I am not in the business of giving legal advice, and I have to rely on the Department of Justice. Senator CHILES. I am delighted to hear, though, that you would plan to convey the interpretation of the Justice Department. Mr. McINTYRE. Absolutely. Senafor CHILES. I note the fact that 0MB does rely on the Justice Department in its interpretation to the agencies. Mr. McINTYRE. That would be within the scope of my authority. I might also mention, Mr. Chairman. that with respect to the interpretation of a~ncy regulations, I believe that the act also assigns the Administrative Conference of the United States some role in reviewing the regulations of the agelllcies in this regard, and we would also try to cooperate and coordinate the,;e activities with the conference. Because of their role in reviewing the sunshine regula,tions prior to publication, they do have a great deal of legal expertise which we could also put to use, I think. Senator CHILES. I think the act provides that the Admini,;trative Conference consulted in the promulgation of the rules and regulations, but I don't believe that the act gives them any role in regard to interpre https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  229 tation or any further role other than that they will be consulted in the promulgation of the rules and regulations. Common Cause has also expressed concern over the agency compliance with the Sunshine Act. The use of notation voting is an area of particular concern. Although ~here are legitimate use_s of the proced~re, 1t provides a clear opportumty for abuse and avoidance of holding meetings. Would you plan to monitor the agencies' use of notation voting to insure against the circumvention of the act? Mr. McINTYRE. To the extent that we could and it would be feasible, we would certainly try to do that. I think this goes to, Mr. Chairman, the collection of various types of information that would be required to evaluate the compliance of the various agencies with the act. MONITORING USE OF EXEMPTIONS-EVALUATING TRANSCRIPTS Senator CHILES. Common Cause is also questioning the agency's excessive use of exemptions, especially exemption 9-B-tha.t is the catchall exemption-and we have experienced difficulty with this particular exemption because many agencies are using it when no other exemption fits. In fact, in your testimony you note that that is one of the most frequently cited exemptions. I am happy to learn from your testimony that you will be ke{'ping track of the agency's use of exemptions and will evaluate whether they are used properly. It would seem to me that the only valid way to do this would be by reviewing transcripts of closed meetings. Would you conduct such reviews? Mr. McINTYRE. Well, l\fr. Chairman, I hadn't really thought about whether the proper way to evaluate the compliance for this particular exemption would be to review transcripts. It certainly is one way to rlevelop information and we will use every resource that we can to develop such information. We certainly will monitor the use of exemptions and if it is deemed that this method can be used, we would certainly be willing to come back and recommend changes to strengthen that provision of the act. Senator CHILES. I just cite looking at the transcripts because if you get a list and maybe in their notice they say we are closing the meeting and we are using 9-B, if someone, and that is a closed meeting-if someone didn't look at the transcripts of that closed meeting, there would be no way of knowing whether they have abused it or not unle&c; you send them a questionnaire and state: Have you abused the exemption process? Mr. McINTYRE. Mr. Chairman, that would certainly be one way that we might use to try to evalutc the compliance with the spirit of the law and the letter of the law, in eYaluating whether or not his exeption was being abused. Senator CHILES. I think that that would be some help to the agencies really, if they knew that there was somebody who was going to eYaluate these transcripts. Then I think they would know at the time they started to close a meeting whether, in fact, someone was going to be able to look at that and determine whether it was a valid use or not. I think that would help them very much in making tha,t initial deter-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  230 mination as to whether the public interest would be served in the closing of a meeting. Mr. MoINTYRE. We think the fact that the President sent out the memorandum to the agencies and put everyone on notice that 0MB will be looking at complianc.e with the Sunshine Act, that will also put everyone on notic.e and the agencies will take a closer look at tJheir compliance with the law. I think that tha,t is a very import,ant point. Senator CHILES. Absolutely. We think so. We just want the agency to understand that someone is not going to just look at the notice of their meetings and collect some statistical data based on that notice but that someone is going to look at, in fact, what took place in that meeting and determine whether the exemptions used were proper or not. You mentioned in your statement that you are now working with the Administrator of GSA to coordinate your monitoring effort. Could you tell us what envision is the relationship you would establish between the GSA and the Office of Management and Budget? Mr. MoINTYRE. Well, the GSA currently has a similar responsibility for monitoring the performance of advisory committees. We are currently undertaking discussions with the GSA to see if we might coordinate our effort to keep track of meetings. STAFF OOMMITMENT Senator CHILES. What would be OMB's direct staff commitment to sunshine? Mr. McINTYRE. Well, as you know, the monitoring effort has just been initiated. Because we are committed to holding down the size of the Executive Office of the President we are trying to see if there are other workin~ relationships, such as those outlmed with GSA, which can help mimmize the number of personnel that we might have to commit in OMB. I can assure you that we will do whatever is necessary to carry out the responsibilities that I have outlined to you today, and I believe that we can do them within our current resources. We are going to try. Senator CHILES. I certainly look forward to calling you personally any time I have a problem with sunshine, but there may be someone else in your shop that I might caU in case I miss you any time that I call. I'd like to know who will be directly in charge. How will the line responsibility go? Mr. McINTYRE. We1l, I will delegate the responsibility to Mr. Granquist to be the next in Jine for monitoring the Sunshine Act, so if you can't get me, call him. Senator CHILES. If I can't get him, who do I call? Mr. GRANQUIST. I am alwavs there. Mr. McINTYRE. If you can't get him, we will probably ask Mr. Bill Bonsteel, who works for Mr. Granquist, to do the day-to-day work on this along with some resources from our General Counsel's Office. Senator CHILES. Could you tell me at this time who does have the lead responsibility? That would be Mr. Bonsteel? Mr. McINTYRE. Yes, Mr. Bonsteel.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  231 Senator CHILES. And then the other people would be from your General Counsel's Office 1 Mr. McINTYRE. On an as-needed basis, yes, sir. In other words, if we develop the suggested guidance to the executive agency, we certainly want that to be cleared through our attorneys. Senator CHILES. Can you tell me right now what kind of staff commitment that you have 1 Mr. McINTYRE. As I said, Mr. Chairman, we have just gotten this effort underway. We don't know exactly how much of a commitment we are going to have to make. Currently I have assigned Mr. Bonsteel to do the day-to-day work under the supervision of Mr. Granquist. Senator CHILES. Under them, can we say we have anybody full time that will be working on sunshine 1 Mr. McINTYRE. If it takes a full-time person, then we will have to make that determination. At the current time, Mr. Bonsteel has been able to deal with the data collection that we have talked about. Senator CHILES. Currently all we really have is the data collection. We don't have anything else. Mr. McINTYRE. We are not monitoring transcripts yet; we are not doing some of the other things that will be necessary as a followup for our evaluation of agency performance and as we get into that, we will just have to see what types of staff commitments have to be made. But I can assure you that we will do everything we can, whatever is necessary, to carry out the responsibilities that I have outlined to you today. Senator CHILES. What do you envision 1 Mr. McINTYRE. Mr. Granquist can add to that, if you like, about his own activities. Mr. GRANQUIST. Mr. Chairman, as we get more data and get more of an impression about what the problems are, one of the first things I think we will do is convene a group of people, not necessarily all from 0MB, but people from throughout the Government, to look over the questions that have arisen and issue some guidance to agencies much along the lines that 0MB has within its Privacy Act responsibilities. That is an activity I see coming up in the next month or two. There will be questions of resources. but I think we can probablv work with GSA on a lot of the routine collection matters and use OMB's resources for policy determination. Whether that is one full-time person, or less, it is very difficult to say. Senator CHILES. Last March, as you know, Mr. McIntyre, I told you to let me know if you needed some additional resources to undertake sunshine oversight. Can you envision what GSA's staff commitment will be1 Mr. McINTYRE. We do not know that yet. Senator CHILES. When did vou think you will be in a position to tell the committee the details of-the agreement that you work out with Mr. Solomon i Mr. McINTYRE. I would say within a month. Senator CHILES. You also mentioned in vour statement that the President has asked the Attorney General and others to help. Can you tell us who are the others being referred to here i   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  232 Mr. McINTYRE. Basically, the others refer to the Office of Le~al Counsel within the Department of Justice which provides legal advice to the Yarious agencies with respect to interpretations of the law. That is principally who we are referring to. Senator CmLES. ·what role do ;)'OU see the Justice Department playing beyond having taken a posit10n that suits will not be defended if meetings are closed without good cause? Mr. McINTYRE. "Tell, I think that the Department of Justice, as I indicated earlier, will play a key role in providing legal advice to the agencies generally. Their responsibility for interpreting the law and for working with the effected agencies as well as with 0MB in developing interpretations and dealing in interpretatiYe difficulties, I think would be• a useful role that the Department of Justice shQuld play, and we will work with them to develop and disseminate such guides. Senator CHILES. You have told me that maybe we will have some idea of what GSA's role will be in their commitment within a month. "What kind of accomplishments can we anticipate within the next 6 months? Mr. McINTYRE. Well, I think that one accomplishment will be to insure that some interpretative guidance has been developed and disseminated to the affected agencies. I think that is one thing you can depend upon. Another thing is that we will be able to provide the Congress with certain information with respect to the compliance with the law, and if we are able to do so, we will also try to proyide the Congress with some recommendations for any changes that might need to be made to improve the compliance with the law. You will certainly know by then the type of staff commitment that 0MB will devote to this effort. ,ve will have completed any types of jnformation-gatherjug forms that we will need to gather information to evaluate compliance with the law. I think you can expect within the next 6 months, considerable progress in implementing the steps that I ha Ye told the committee today we were going to take. Senator CHILES. That sounds good. Going hack to the Administrative Conference, I will haYe to tell you I am a little concemed about the Administrative Conference in tliis role. ,ve ham had some serious problems with the parts of their Interpretative Guide to the Government on the Sunshine Act. Can you tell me now who in the Conference will be inYolved and what specifically you see, what responsibilities they will have?, Mr. McINTYRE. Mr. Chairman, I personally can't tell., I haven:t met with the Conference and tried to work that out. I don t know if my staff has. Let me ask them. · Mr. NICHOLS. It will be the chairman of the Conference, or Mr. Berg, who is the executive director. Mr. McINTYRE. My staff tells me that people ultimately responsible :for the role of the Conference in this effort would be the chairman and the director o:f the Conference. As I indicated earlier, the Conference does have a responsibility to reYiew agency sunshine regufation~ prior to their publication, and that is the role which we would anticipate . . . them continuing to play. . . It is a statutory role, but it is also a role that does give the~ msights into the law. And we would feel that that type of expertise, legal expertise, could be put to good use in our own work with the Depart-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  233 ment of Justice, and in our own role in monitoring the compliance with the law. Senator CHILES. I think that you should give that issue your immediate attention and get back in touch with me. In your statement today, you say you are committed to holding down the size of the Executive Office of the President, and that therefore, you don't want any additional resources for sunshine implementation. I just want to go on the record to say that in a way I believe you are engaging in a false economy. There are many management issues beyond Sunshine which if 0MB were to add staff and give them proper direction, I think the Government could operate with greater efficiency and with less burden on the taxpayer, and I think that is what you and the President should be seeking. I would like to see the President give you some additional people and tell you that with those additional people he expects you to do certain things, find certain £acts, cut certain wastes and make those people productive in certain ways. You people are saying, "look here, we have a nice Office of 0MB and it hasn't grown any. It only has so many people, and the rest of the bureaucracy is out doing its thing on the people and where you all should be, the agency, that should be trying to trim that and pair that down." I won't ask you to comment on that. The efforts you described in your testimony will provide us with useful information on the agency compliance. T lhink thnt will he a great help to us. You state that you will also report to the President, and to the Congress, on agency experiences with the act. How often do you plan to make these reports, and do you know what form that they will be in? Mr. McINTYRE. l\fr. Chairman, we anticipate that we will be in continuous contact with you and your staff on our efforts to monitor the compliance with the law. I don't have a specific form developed, and I would like to develop the timeframe for reporting after some discussions with you and your staff to see what frequency would serve you best, and that we could meet. But I do intend to communicate with the various committees that have legislative jurisdiction on this law, and I expect that we would have to work out the frequency of reporting and also guidance on the form and content of the report. I anticipate working that out with you and your staff. METHOD OF GATHERING INF0RUATION Senator CHILES. Do you know what method will you use to learn about agency experiences? l\fr. l\fclNTYRE. About agency experiences? Senator CHILES. Yes: in vour statement vou also say that you were goin_g to report to the President and the CoJ\gress mi agency experiences with the act, what they experience with the act. . . Mr. l\fclxTYRE. I think we would be a!":king the agencies to describe their experiences under the act. It will be part of our informationgathering effort from all of the affected a.gencies. . . Senator CHILES. I am glad that you will be reviewmg and commenting on the regulations of the agencies. This, of course, is very important. W"ill this include a review and comment on how well the  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  234  agencies are following their regulations i In other words, do you intend to keep track of how well an agency follows its own regulations i Mr. McINTYRE. To the extent that we can do that along with all the other responsibilities we are undertaking, we will try to do it. It may be that the best approach would be to have the task force that Mr. Granquist referred to earlier initially review these regulations, and to follow the performance of the agencies, and give us some interpretation as to how well the agencies are complying with their own regulations, but to the extent that we have the ability and resources to do it, Mr. Chairman, we will try to do as good, as thorough a job in analyzing compliance with this law, as possible. 0MB OIRCULAR A-10  Senator CHILES. A previous director of 0MB, Mr. Jim Lynn, issued a letter encouraging agencies to freely use exemptions to the Sunshine Act, specifically exemption 9-B, to close meetings at which budgetary information might be discussed. Some agencies have taken this guidance as a not-so-suttle-hint from 0MB and have chosen to close meetings on the basis of exemption 9-B for budgetary reasons. This advice is contrary to the law. Perhaps 0MB might feel the law should be changed, but looking at this subject realistically, even if the worst happened and requests for appropriated funds were mentioned at open meetings, the public would really know very little about truly sensitive information. I am curious to learn what advice you have given with respect to this, what action you have taken with respect to this previous 0MB Sunshine advice, and whether you can tell me whether this is still a part of official OM13_policy. Mr. McINTYRE. Well, I haven't encouraged agencies to close meetings simply because they might mention they are going to buy some furniture or that they may discuss their appropriations. We do have a circular A-10. It does not direct that all budgetary meetings be closed. The circular does acknowledge that it is not possible to determine, in advance, that all budgetary meetings will meet the requirements of the Sunshine Act permitting a meetin~ to be closed. What the circular does say is that we believe that some meetings concerned with budgetary development would me,et the requirements for closing and because of the serious consequences that may result from such meetings that the agency should carefully consider their decisions. The President's position is that agency should open as many meetings as possible, and I think that he has forcefully stated that position in his memorandum. Senator CmLEs. What is going to take precedence, A-10 or the President's pronouncement; A-10 or the Attorney General's interpretation that the act should be construed broadly i Mr. McINTYRE. Mr. Chairman, like a lot of other things in life, good common sense and judgment needs to prevail sometimes. I would think that you would have to look on this on a case-bv-case basis, and an agency would have to determine the extent to which its discussion of budgetary issues would have some ad~rse impact on the ability of that agency to carry out its responsibilities.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  235 I would say that it is important that the budgetary issues be presented to the President in such a manner that he can make his decision and present his budget recommendations to the Congress. At that point, all budget recommendations to the public can certainly be :fully debated, and are :fully debated before the committees of Congress. There is almost an entire year in which budgetary priorities are debated before the Congress. Senator CHILES. Well, what troubles me is we have a letter from a director of 0MB which does not even have a semblance o:f a balance that you are talking about today which encourages closing specifically, and very emphatically, and encourages the use of exemption 9-B as a means of closing those meetings, and if that letter is still the official policy of 0MB and certainly A-10 didn't say that it is not, you could read A-10 and that letter, and shade A-10 very much toward where that letter goes. That, to me, would sort of negate what -appears to be the thrust of the President's letter, when he is talking about in the public interest, a meeting should be open. So, that gives us great concern. Mr. McINTYRE. The President's letter ,vould take precedence over the Director of 0MB, but I will be glad to address this question of circular A-10. IMPROVING AGENCY PRACTICES  Senator CmLEs. Thank you. From your testimony I see that we have agreed that there is a need :for citizens to be well informed al'.d you state that 0MB can play a useful role in seeing that the spirit o:f the act is met. I have long :felt that this was the case, and I believe that there is much that can be done to enhance the Sunshine Act. There are so many practices that are not specifically mandated by the act but which would go a long way in furthering open Government. For example, it would be helpful for public observers at a meeting to have access to staff papers. This often contributes significantly to understanding what is going on in meeting. In :fact, some agencies are already doing this. Not only does 1t contribute to public understanding, but in some cases it is absolutely necessary for a meaningful observation-as in the case where agency members talk in terms o:f page and paragraph numbers. What will 0MB do to encourage these practices 1 Mr. McINTYRE. I don't think we would encourage any practice cryptic discussions to evade or to avoid compliance with the law. I think the real question is what will we do to prevent such practices. 'Senator CHILES. You have phrased it much better than I did. Mr. McINTYRE. In that regard, I would say that I think this goes back to your question about monitoring the compliance with the regulations, making sure that agencies are in compliance with their own regulations, and trying to determine as we perform the monitoring, whether or not the agencies do use efforts to avoid full compliance. Senator CHILES. You also state in your testimony that you think it would be good practice for agencies to cite exemptions in the yederal Register notices, and to give explanations for closed meetmgs. I think that is a very good idea.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  236 Will you communicate to the agencies your thoughts on this matter? Mr. McINTYRE. Yes. Senator CHILES. In your statement you refer to the situation of a proper attitude, if Sunshine is to be truly effective. I have maintained for a long time that the attitude of the agency toward open Government is the critical point. I think one of the biggest impediments to sunshine's full implementation up to now has been in some agencies, a negative attitude. :Many agencies thus far have resisted opening their meetings to public scrutiny. I think, however, you have taken some important steps to create a positive attitude with the President's memorandum and your active involvements. The President's memo makes crystal clear to me that there is a strong and real commitment to Sunshine. I sincerely hope that you will continue to express this commitment to sunshine and that you will exercise a. visible leadership role. I think this executive leadership is the key ingredient to changing the attitude that has been displayed on the part of some of these agencies and breaking them of their old habits of secrecy. We thank you very much for your attendance here today. Mr. McINTYRE. Thank you, Mr. Chairman. I look forward to working with you and your staff as we proceed to implement these commit~ ments we made to you today. [The prepared statement of Mr. McIntyre follows:] PREPARED STATEMENT OF JAMES T. McINTYRE, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET Mr. McINTYRE. Mr. Chairman and members of the committee, I am pleased to be here today to talk about the Government in the Sunshine Act. As you know, the President and we at 0MB share your C()lllcern for open government. The Sunshine Act of which you, Mr. Chairman, are one of the principal authors, provides an important statutory basis for openness. ,ve believe that the act and its underlying principles will become even more important in the future, as it should. If one believes in the public's good judgment and the need for citizens to be well-informed, then barriers to access to the government must be removed. We believe secrecy is such a barrier. The SunRhine Act requires many meetings of commissions and boards of the Executive Branch to be open to the public. This is why the President strongly supports it. Because the act applies to about 50 different agencies, its terms attempt to accommodate differences among these agencies. The act provides, for example, that there are exceptions to the general rule that meetings be open to public observation. There are also exception procedures in the act to allow agencies to rea<>t in emergency situations and to take action quickly. But this flexibility, as well as some of the ambiguities that result from the legislative process, may lead to results not intended by the Congress. Therefore, I believe it is important that the Executive Branch respond in good faith to the efforts of C()lllgress to accommodate the special and sincere concerns of the agencieR. It is at thiR point. the point of implementation and of fair and reasonable interpretation of the Sunshine Act, that the President and 0MB play a useful role. ,ve believe that the attitude in which the act is implemented is most important. If the agencies are aware that the President and 0MB are squarely behind the act and are committed to its success, we will be well on the way toward successful implementation. As you know, last week the President issued a memorandum to the heads of agencies regarding the implementation of the Government in the Sunshine Act. The President stated in part that: "I urge the agencies covered by the Sunshine Act to respect it by opening to the public as many meetings as possible."   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  237 The memorandum also pointed out that the President has asked me to keep records of meetings held subject to the act. I will report to him -and to the Congress on agency progress in opening their meetings, as well as reasons for closing when agencies have determined that their meetings must be closed. We have alr€ady begun to monitor these meetings and I will discuss some of tlie -results later in this testimony. ,ve are working now with the Administrator of General Services to coordinate our monitoring efforts. The President also asked the Attorney General and others to help assure that meetings are closed only if it would be demonstrably harmful to open them. These are the only closed meetings that would be defended in litigation under the act. We remain sensitive to limitations on our ability to take action in this area. For example, 0MB was not given any authority by the act, and many of the agencies covered by the act have special status. There is still, however, a useful role that 0MB can play in seeing that the spirit as well as the letter of the act is met. I discussed with the President our limited authority in this area, and our limited resources. As you are aware, we are committed to holding down the size of the Executive Office of the President, and we believe that we can do what the President has asked without additional resources. Specifically we intend to : Keep track of the number of notices or meetings subject to the Sunshine Act and the number of these announcing meetings which are open to public observation, closed, or partially open and partially closed; Keep track of agency use of the exemptions and the special procedures in the act so that the facts will be at hand to evaluate whether any of these provisions are being used in a manner other than they are intended; Review notices of sunshine meetings that appear in the Federal Register to help evaluate whether they are timely and informative; Report to the President and to Congress on agency experiences with the act and such other things as its costs, public attendance, et cetera; Work with the agencies, the Department of Justice and the Administrative Conference of the United States to help assure that the agencies have sufficient legal and policy advice on the interpretation of the act; Express our views on matters without assuming specific responsibilities the act gives to other agencies where uniformity would be useful such as in the timing and content of agency reports under the act; and Review and comment on regulations of the agencies on a selected basis. We have reviewed the notices of meetings subject to the Sunshine Act which have appeared in the Federal Register during the period January through May of this year. The act does not contain a list of the agencies covered by it, but uses instead a generic definition to define the agencies covered. The committee reports accompanying the House and Senate bills listed 47 agencies the committees believed to be covered by the act. However, this list is not the same as the list we have compiled of agencies that issued notices during the first 5 months of this year. Of the 47 al!'encies listed in the committee reports, four did not issue regulations required by the act and did not give notice of any meetings. Those agencies are: The National Council on Quality in Education; the National Credit Union Board; the National Homeownership Foundation (Board of Directors); and the National Library of Medicine (Board of Regents). We have been informed that the National Credit Union Board, National Library of :\fedicine (Board of Regents), and the National Council on Quality in Education are advisory committees subject to the Federal Advisory Committee Act and, therefore, are not covered by the Sunshine Act. In fact, the National Council on Quality in Education has been terminated. In addition, 3 of the 47 agencies (listed in the committee reports) which issued regulations under the act did not give any notice in the Federal Register of meetings imbject to the act. These three ag~ncies are: The Board of International Broadcasting; the Export-Imiport Bank of the United States (Board of Direc• tors); and the Federal Farm Credit Board within the Farm Credit Administration. We have been informed by the Board of International Broadcasting that they have not held any meetings subject to the act during the past 5 months because of vacancies on the Board and other matters.   35-867 0 • 79 - 16 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  238 The Export-Import Bank and the Federal Farm Credit Board ha:ve pro:vided in their regulations that meetings will be held on specified days of the week or of the month, and that additional notice is posted elsewhere. Therefore, of the 47 agencies listed in the committee reports, 40 issued regulations and gave notice in the Federal Register during the first 5 months of this year of meetings subject to the Government in the Sunshine Act. Se:ven agencies which were not included in the committee's list issued regulations and ga:ve notice of meetings in the Federal Register in the first r; months of this year. Those seven agencies are the: Copyright Royalty Tribunal; :\'ational Museum Services Board; Federal Home Mortgage Corporation; Metric Board; National Railroad Passenger Corporation; Postal Rate Commission; and White House Conference on Libraries and Information Science. The office of the Chairman of the Administrative Conference of the United States (ACUS) issued a booklet entitled "An Interpretive Guide to the Government in the Sunshine Act" in June of this year that includes a list of agencies which issued final regulations under the act. That list includes two more agencies that were not included in the committees' lists and did not give notice in the Federal Register in the first 5 months of this year. These two agencies are: The Council on Environmental Quality and the National Center for Productivity and Quality of Working Life. The 47 agencies which did give notice in the Federal Register of meetings subject to the act placed a total of 733 original notices of meetings. There were also 380 notices of changes to previously announced meetings. Hence, 211 of the 733 notices (or 29 percent) were published 7 or more days before the scheduled date of the meeting; 627 of the 733 notices ( or 85 percent) were published on or before the date of the meeting; and 106 of the 733 notices (or 15 percent) were published after the announced date of the meeting. Although it is important that as much advance notice as possible be given, these statistics should not be interpreted as indicating notices that were not timely within the meaning of the act. The act requires only a public announcement of a meeting-and not necessarily a Federal Register announcement-at least 1 week before the meeting. An agency may also give less notice when a majority of the board members determines by a recorded vote that the agency business requires that the meeting be called at an earlier date. The act also permits an agency to change the time of a meeting if it publicly announces the change at the earliest practical time. Notice in the Federal Register is required by the act immediately after the public announcement. We believe that the judgtments which lead to the provisions permitting flexibility in the scheduling of meetings are sound, although this does not permit simple determinations as to whether an agency's notices are timely or not. We hope that the agencies will take note of these statistics, and copies of this testimony will be sent to them. They should attempt to provide as much advance notice of meetings as possible. So, 378 of the 733 notices ( or 51 percent) were for meetings open to public observation. This contrasts with a figure of 37 percent open meetings reported by Common Cause for the period of March through June of 1977. And 177 of the 733 notices (or 23 percent) were for closed meetings. This compares with 39 percent closed meetings in that earlier report. Also, 184 of the 733 notices (or 23 percent) were for meetings which were partially open and partially closed. This cOIIIlpares with 24 percent during the first calendar quarter of the act as reported by the Common Cause. During the first 5 months of this year, 76 percent of the 733 notices of meetings indicated that the meetings were either entirely or partially open to the public observation; stated another way, 49 percent of the meetings were entirely closed or partially closed. As with the statistics on notices of meetings, these numbers do not suggest that any particular meetings were improperly closed or improperly opened. Their value is in determining trends over longer periods and in identifying problem areas. Hence, 16 agencies held all of their meetings open to the public, and 6 agencies held all of their meetings closed. Although 261 of the 355 notices of closed or partially open and partially closed meetings ( or 74 percent) did not explain or cite a specific exemption of the act for closing the meeting or portion of the meeting. The act does not require that   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  239 the basis for closing be included in the Federal Register notice, we think that it would be good practice. Those who look at the Federal Register for notice of these meetings should find a short explanation of why the meeting was closed as well as more detailed explanations of the closing that the act requires. And 9 agencies cited particular exemptions as the basis for closing meetings. Because more than one exemption may be cited for a closing, a total of 258 exemptions were cited in 97 closings by these 9 agencies. Exemptions, 9, 9A, and 9B were cited the most-a total of 81 times-followed by exemption 8 (47 times), exemption 10 (44 times), and exemption 1 (38 times). One agency (EEOC) cited only a provision of its own regulations as the basis for closing its meetings. During this 5-month period, there were 380 notices by 32 agencies of changes to previously announced meetings. These changes were to the date, time, or agenda of meetings. Often there was more than one notice of change for a meeting. While not all of the changes affected the time or the date of meetings, only 128 of the 380 changes ( or 34 percent) were published in the Federal Register before the scheduled date of the meeting. Most of these changes (84 percent) were noticed to indicate changes in the agenda of meetings. Again, changes are permitted by the act and we believe that changes ·are necessary. However, we are concerned that too many changes can frustrate the purposes of the act by reducing the effective amount of notice given for meetings. As with the length of original notice, if you don't have notice of a meeting in time to attend, it doesn't do you much good learn that it was open. ,ve intend to work with you, Mr. Chairman, and with the agencies to continue to monitor the agency activities under the Sunshine Act. Longer range trends in these statistics will permit more meaningful evaluation of compliance with the act. We believe that the role for 0MB I have outlined today makes sense and will help to assure a successful implementation of this important legislation. These steps will not, by themselves, however, guarantee success. Success will also require your continued interest and vigilance and that of your committee, and the cooperation of the agencies covered. I want you to know that we intend to do our part. I have attached a copy of the President's Memorandum to the Heads of Departments and Agencies.  [Copy of the letter referred to follows:] THE WHITE HOUSE,  Washington, June 9, 1978. MEMORANDUM FOR THE HEADS OF DEPARTMENTS AND AGENCIES  Subject: "The Government in the Sunshine" Act: Implementation. The Government in the Sunshine Act requires certain Executive agencies to give notice of their business meetings and open them to public observation unless they must be closed for any of ten specific reasons. If the agency finds that the public interest requires, it must open its meeting to public observation eyen if there is a reason to close it. The same reasons which permit Executive agencies to close their meetings also permit advisory committees to close theirs. To eYaluate compliance with this Act, I have asked the Director of the Offlee of Management and Budget to record the number of meetings subject to the Act, to note whether those meetings are open or closed, and if closed, to state the reason for closing them. He will pass this information along to me and to the Congress, recommending whatever actions may be appropriate to meet the spirit as well as the letter of the law. In litigation under the Act, the Attorney General and the affected agencies must not defend the closing of any meeting unless they can demonstrate that harm would have resulted if an open meeting had been held. I urge the agencies covered by the Sunshine Act to respect it by opening to the public as many meetings ·as possible. JIMMY CARTER.  Senator CHILES. Thank you. The hearing is adjourned. [Whereupon, at 10 :32 a.m. the committee was adjourned.]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  OVERSIGHT OF THE GOVERNMENT IN THE SUNSHINE ACT-PUBLIC LAW 94-409 FRIDAY, AUGUST 4, 1978  U.S. SENATE, SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES AND OPEN GOVERNMENT, COMMITTEE ON GOVERNMENTAL AFFAIRS, Washing ton, D .0. The subcommittee met, pursuant to notice, at 9 :30 a.m., in room 3302, Dirksen Office Building, Senator Lawton Chiles ( chairman of the subcommittee) presiding. Present: Senator Chiles. Staff members present : Ronald A. Chiodo, chief counsel and staff director; Janet R. Studley, counsel; Robert F. Harris, deputy staff director; and Christine Sheridan Betts, chief clerk. Senator CHILES. Today, the Subcommittee on Federal Spending Practices and Open Government resumes its oversight hearings on the Government in the Sunshine Act. The first amendment guarantees freedom of speech and of the press. Its primary objective is to make Government responsible to the people it serves. The first amendment embodies the "profound national commitment of the principle that debate on public issues should be uninhibited, robust, and wide open." To accomplish this, the public has a right to know, indeed it must know, what Government is rloing-. and how it is handling the public's business. The Sunshine Act, which went into operation in March 1977, acknowledges the citizen's right to know and, for the first time, brings the Federal agency decisionmaking process into the light of day. It clearly expresses as our national policy that the public is entitled to observe and be fully informed on what the Federal agencies are doing, how they operate, and, equally important, why they make the decisions they do. There was an overwhelming popular support for the Sunshine Act when it was passed by the Congress. The idea of an open Govern-. ment was very appealing after we all saw what a closed Government could produce. The Federal Government had effectively lost the trust and confidence of those it governed. Earl Warren once noted that: "If anything is to be learned from our present difficuties, compendiously known as Watergate, it is that we must open our public affairs to public scrutiny on every level of government." Sunshine represented a major effort to do just that by prohibiting secrecy in agency decisionmaking. It is the most comprehensive antisecrecy measure since the Freedom of Information   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (241)  242  Act. It extends the open Government concept, and in many ways provides a more meaningful understanding of the governing process. To effective'ly evaluate governmental policies and actions, and to be able to choose representatives intelligently, our citizens must be able to understand the decisionmaking process. Actually witnessing deliberations yields a much better understanding of this process than reading subsequently prepared documents. Yet, despite our legislative efforts, the polls show that the public's confidence in Government is even lower today than it was at the height of the Watergate scandal. The public is still skeptical and suspicious about the Federal bureaucracy. Despite all the rhetoric about making Government more open, accountable, and responsible to the public, it is clear that Government has so far failed to convince the public that it, indeed. is responsive and accountable. I see this as a serious flaw in our Government. It is our responsibility to instill confidence in those we govern and we have failed. Either the Federal Government hasn't effectively opened up to the public or else it hasn't adequately communicated its openness. Secrecy, and the resulting exclusion of people from participating in their own Government, can too easily be used to subvert democracy. It no longer can be excused as an operational necessity. Lack of candor and straight-dealing in Government only leads to public frustration, alienation, and distrust. We in Congress have taken a strong stand against Government secrecy. And I understand now that the administration is also firmly committed to open Government. On June 9, 1978, President Carter issued a memorandum to the heads of departments and agencies urging the agencies to open up as many meetings as possible in full compliance with the spirit of the Sunshine Act. He has asked the Office of Management and Budget to monitor agency implementation and to report the results to the President and to Congress. He has also instructed the Attorney General and the ag-encies not to defend the closing- of any meeting unless they can clearly demonstrate that harm would have resulted from openini the meeting. It is this subcommittee's responsibility to oversee the implementation of the Sunshine Act. I want to know if it is working-and if it is not, why not. The one message I heard loud and clear at our first oversight hearing last November is that the agencies are havin!! difficulties in implementing both the spirit and the letter of the law. This message has been compounded by my dealings with some agencies since that hearing. Judging from the updated study of sunshine completed by the Library of Congress, I can see that there is still an inordinate number of meetings being closed. The majority of the meetings held in the past year were closed, with 30 percent of the aiiencies closing between 75 percent to 100 percent of their meetings. I should note, however. that there were 12 agencies which held all open meetings. One of these, the U.S. Foreign Claims Settlement Commission, held 41 meetings last year-all open. Overall, I find the Library of Congress statistics to be disturbing. They don't necessarily tell the whole storv, but thev do give a good indication of how open, or rather how closed, our Federal agencies are. I think they show that although a few agencies have experienced   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  243 little difficulty in operating in the sunshine, some obviously are still having serious problems. There's been a lot of institutional resistance to "open Government." This was evident at our first hearings on Sunshine before the act was passed and again at our first oversight hearing in November. Some initial resistance is understandable. The agencies were too comfortable with operating in secrecy. That's the way this Government has always run. I knew it wouldn't be a simple task to penetrate the aura of secrecy. Old habits are hard to change. But, this law has been in effect for well over a year. The change in attitude and procedures within the agencies should have been completed by now. The resistance should have dissipated. I hope to find that it has. I am looking forward to hearing from our witnesses on their experiences with sunshine implementation and how institutional attitudes toward public scrutiny have changed. I hope to discover that we are making progress and that this Government is finally beginning to operate in the Sunshine. FEDERAL RESERVE BOARD  Governor Miller, we are delighted to have you as our leadoff witness and to hear your statement as to what your experiences have been with the Federal Reserve. TESTIMONY OF G. WILLIAM MILLER, CHAIRMAN, BOARD OF GOV• ERNORS, FEDERAL RESERVE SYSTEM  Mr. MILLER, Thank you, Mr. Chairman. Chairman Chiles, I appreciate the opportunity to be here. Let me report from some history in my formal testimony since I am relatively new to the Board. The Board of Governors has not had any significant problem in complying with the letter and spirit of the Sunshine Act. There have been some additional costs and new procedural requirements, but Congress wisely addressed some of our special problems by formulating provisions designed to assure that sensitive and confidential financial mformation is not prematurely disclosed. We deal q_uite often either with confidential financial information, or information from bank examination reports, or other materials which could result in financial speculation in markets. Because we deal in these sensitive areas-or, perhaps, because of our unique roleexemptions from the open meeting requirement probably apply more to the Board's meetings than to those of other agencies. The Board's effective consideration of many of its issues has also been aided by the authority granted to use mmutes rather than verbatim recordings. This has encouraged the continuation of free and open discussion and, therefore, has allowed our deliberations to continue to be effective. The authority to close meetings under the so-called "expedited procedures" is also of great help to the Board in its operations. Typically, this procedure is used to close meetings dealing with monetary policy, or With proposals relating to specific banks or bankholding companies, or with foreign banking matters, or with bank enforcement matters.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  244 These we are able to handle without the more cumbersome procedures of advance notice. Because of the nature of the Board's activity and the nature of the exemptions that authorize the use of expedited procedures, it may be expected that a substantial percentage of the Board's agenda items will continue to be handled by this procedure. I thought a few statistics would be useful. The Sunshine Act has been in effect for about 16 months. In 1977, 27 percent of the Board's 114 meetings were either open or partially open. Referring to your comment, the Board was one of the agencies whose meetings were less than 50 percent open during 1977. Through June 1978, however, 43 percent of the Board's meetings had been open or partially open. Looking at agenda items in 1977, 17½ percent were open and 82½ percent were closed. During the first 6 months of this year, the picture has changed substantially; 26 percent of the agenda items have been open. The Board has developed a program to aid the public in understanding and obtaining the maximum possible benefit from its open meetings. We have published a pamphlet to help inform the public. And, we make most staff memorandums considered at open meetings available to the public in advance of the meeting. A brief statement about each item is usually made an open meeting so the public can understand the issue we are discussing. Incidentally, a summary of agenda items is also published in advance. I have included a sample of the summary made available to the public with my testimony. We do make photographs of Board members and seating charts available so that the public can follow the remarks of individual participants. We do make personnel available to the public for questions after the meetings. You may be interested in attendance at the Federal Reserve open meetings. The first open meeting was held on March 28, 1977, and was attended by 25 persons. It was interesting to me that when we recently held an open meeting on some rather significant subjects, we had to move from the board room to a special room to accommodate the attendance of 85 people-the largest attendance of the public we have had. Otherwise, public attendance has ranged from zero to 39; the average number has been 9. The Board maintains a mailing list for notices of meetings. In addition to printing notices in the Federal Register, we make advance notices of meetings available in two of our own offices and in the Treasury Department's press room. We also make notices of open meetings available to a news wire service for wider distribution. If there is ever an unexpected change in an agenda item, we call media representatives who regularly attend our sessions and individuals known fo have an interest in a particular item so that they will be aware of the addition or deletion of an item. If the change is significant, we call each of the persons interested in the Federaf R«:>serve on our so-called sunshine mailing list. The record of each c]oSPd Board me«:>ting is made available to the public in our Freedom of Information Office promptly after the meeting, unless the Board has voted to withhold part or all of the dis-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  245 cussion under the act's exemptions. For closed meetings, there a.re either minutes or recordings which may be listened to by the public, and transcripts are available on request. Material that is withheld temporarily is released as soon as it can be. The public may come into the Freedom of Information Office and get immediate access to all pertinent files and records. There are some associated costs with implementation of the act. The Board has reassigned two full-time employees to work solely on sunshine matters. "\Ve have had to install a public address system and a recording system. vVe have had to expand additional time of staff of the Secretary's and General Counsel's Offices in handling these matters. We estimate that compliance with the act costs about $100,000 per year. Also, there has been some delay in procesEing matters before the Board because of procedural requirements of the act, such as necessary notices. The Board continues to work on ways to minimize delays while meeting the spirit and purpose of the act. The Board has previously written to you about its concern that the Board's discussion of legislative matters be held in an open meeting. The Board believes that Congress intended, under exemption (9) (B), that an agency's deliberations about legislative matters could be closed since its position or action or policy could be frustrated by premature disclosure. Many times, the Board discusses positions of negotiation or fallback positions. The Board feels that it would frustrate the achievement of our primary legislative goals to disclose prematurely an alternate position on pending legislation. I also feel that Congress, in some cases, would prefer to hear from us directly first, rather than after our views have been made public at a sunshine meeting. CONGRESSIONAL TESTIMOXY  Senator CHILES. I hate to interrupt your statement, but it seems to me that if the Congress can open up its markup meetings, and does, and finds that that works with our problems, so can the Federal Reserve Board. Now, you are talking about negotiating fallback positions and compromising. Whether we are talking about the very legislation that's g-oing to affect the Federal Reserve, the public, defense, or anything else, we open up our meetings. Of course, if it is national security, we may close the markup session, but all of those other things we take, from the Clean Air Act to the energy legislation, we find that we now can deal with it in open session. The public can see what goes on and can educate themselYes as to what really happens when we come to makina some of these compromises. They have always read about the deals that were made before in smoke-filled rooms. Now we find that we can open up that process. I just find that the hardest thing in the world is, if the Congress can do that, why some agency feels like its fallback positions or its tradeoffs or what it's going to do in coming to the Congress should be done in closed session 1   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  246 Mr. MILLER. Senator, suppose the Federal Reserve were a Senatorof course, it could never be elevated to that position, but suppose it were a Senator-then it would come to a markup session after having worked with its staff on a proposals that might be introduced for the first time as an amendment or a change at that markup session. The press or the public would not have been in the office of the Senator when he worked with his staff to decide on the position he would take at markup. You are asking us to come to a markup session having previously publi~ly disclosed that we would accept this or that amendment. I think that a Senator does have the right-in the Halls of Con~ress and with his own colleagues-to decide privately what his position is going to be or what he will propose or how he will vote before he comes to markup. All we are asking is what an agency have that same right-Senator CHILES. And I would like to give you that right as a member of the Federal Reserve Board, to meet with your staff, to deal with them, to walk down the hall with them, to be able to take any position you want, but when you sit in that colle§:iate body, which 1s a public body, which is dealing with the publics business, which is setting procedures and is not really a tradeoff vis-a-vis the Federal Reserve and the Congress, we both belong to the public, both the Congress and the Federal Reserve, I think the people are entitled to see what happens in that process. I think it is an educational process. I think that's how they learn something about their Government and what takes place, and I really don't see anything to be gained from closing that. I saw the greatest reluctance in the Congress and on the part of the Members of the Congress when we were talking about opening the markup sessions. Oh, my goodness, you can't do that. You are not going to call each other by first names, take your coats off and get down to the nittygritty and do what you have to do, and, after all, the lobbyists can see what we are doing. We want to keep them outside. And the other argument was that you know so-and-so, he is going to be playing with the television cameras i:f you have an open session and we will never get the meeting done. All of those fears that people had, generally just have not come to pass. They operate just the way they operated in the past, and I think that's exactly what would happen in the Federal Reserve System when the system opens, and I think clearly the intent of the Sunshine Act is that that kind of meeting would be open. Mr. MILLER. Senator, I certainly agree with everything you say about the need for openness in Government. I certainly agree with the thrust of your statement, but I do believe there is a distinction to be made here. The Senator has an advantage by being able to develop, privately, a negotiating position. The Congress has already recognized in the act that if the Federal Reserve w_ere, say, going to buy some land, we wouldn't want the seller to know that the maximum we would pay is $1 million; the public would benefit if we could buy it for $750,000. We have some very important legislation pending before the Banking Committees on the question of membership in the Federal Reserve. We have made proposals, and we may make counterproposals. But for us to say in advance that we would sell for $1 million instead of $750,000  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  247 puts us at a disadvantage. We have discussed publicly the position we have taken and submitted to Congress. If we have a counterproposal to offer, could we go back and have another open meeting-not make any real decision, always adopt the minimum position and have to inch up meeting by meeting to solve the problem-or we could adopt, in private discussion, our strategy and then publicly debate the merits of the proposal's substance. I don't see much difference between the negotiating process among congressional committees and the negotiating process in buying properties. We are all trying to maximize our ability to do the best from the view of the public mterest. The difference is not in what we are trying to accomplish. But I do believe that there is a difference between an open markup session and an open agency meeting on legislative matters. A Senator can come to a markup with his mind made UJ? as to what concessions he would be willing to make but without his colleagues knowing that he would make concessions-he can maximize the use of his vote-while we might be asked to disclose our negotiating position in advance. Senator CHILES. Well, you know, we can carry this a long way, and I don't want to belabor it that much, but we have many times two committees with vested interests in a piece of legislation. There are very many times when I think the Budget Committees is in conflict with the Finance Committee in regard to budgetary matters, or the Budget Committee or the Finance Committee and the Appropriation Committee are battling, and so it would be very nice sometimes if the Appropriations Committee would not have to worry that the Budget Committee could know what they were doing in regard to trying to find out with respect to, for example, the refundable tax credit, how the Appropriations Committee can get jurisdiction, but we don't have that right. We deal with those open meetings and each committee reads the other committee's printing a11d has somebody there so they can monitor that and it works all right. There is some legislative history on this point. During the debate I stated on the floor of the Senate in a discussion of this exemption with Senator Percy that 9-B might cover a meeting involving a response to a congressional request for views or testimony if the request itself stated that the reply must be kept confidential. That floor comment was made off the cuff. It was made just during the debate on a newly presented question. Now that I have had more time to study it I am not even sure that that kind of request for confidentiality is sufficient to close one of your meetings. But other than that, certainly as far as the legislative history of it goes,. that was the only time during the legislative history that anyone said that they thought such a meeting could be closed. Excnse-me for interrupting you. Mr. MILLER. That's quite all right; I think it helps the discussion. The problem isn't that monumental; it's the natural consequence of human nature. If you can't Jay out three or four positions, you will lay out onlv your primary position and not make a decision on alternatives; that's what will happen. It's human nature not to disclose acceptable compromises in advance of bargaining.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  248 Quite apart from the question we are discussing, Senator, there is the question of the requirement that exists for verbatim recording of discussions of legislative matters. Members of our Board have felt constrained by this requirement from expressing themselves completely freely when they are talking about legislative proposals. While this may be a process of education, I think the verbatim recording requirement inhibits open discussion. If minutes were permitted, there would be a lot more freedom of discussion. This, of course, relates to the question of whether a meeting on legislative matters is open or closed. Even if discussions were closed, we would prefer nonrecorded meetings. Another area that I would mention is discussion of sensitive personnel matters. Senator CHILES. Did you have a meeting to discuss your testimony here today? Mr. MILLER. Yes; since this isn't a negotiating session, the meeting was completely open. Senator CHILES. It was open and that was a free discussion? Mr. MILLER. Ce.rtainlv. ,v-e are trying to report to you on our experience under the act. Not all legislative matters need to be closed. We have open meetings on many legislative matters when we are merely responding to a request by Congress to supply facts, information, or experience-for instance, if we were discussing whethC\r we thought the Federal Reserve Building in St. Louis worked 011t well after we built it. It would be different if we were negotiatir.g what we would pay the contractor. We wouldn't want him to know the maximum commitment we would extend. We would want to open bids and get the lowest bid we could, not to have everybody bid at our maximum. So there is a difference in the nature of the legislative discussions we are asking be closed. Discussing our sunshine experience is not sensitive in that regard. The issue of personnel matters is somewhat similar. The feeling of the Board is that when members are talking about individualstheir competence, their performance, or their candidacy for appointment or promotion-it is inhibiting to record such meetings and keep them for 2 years. The spirit of the act could be achieved just as well by maintaining minutes. Let me say, as a personal comment and from personal observation that I believe the Board of Governors is on a learning curve, making substantial improvements in meeting the spirit of the Sunshine Act. I want to say to you that whatever the issues of concern we mention today, we are anxious to learn and to fulfill that spirit, and that we will do our best to do so. We hope these comments-which are mainly positive, with a few little worries mentioned on the side-will be constructive. We would be happy to respond to your questions. Thank you very much. Mr. CHILES. Thank you very much. And in that last closing part of your remarks. as I mentioned earlier, one of the biggest obstacles I think to the full re.alization of open government has been this kind of a resistance. It is not something that's new to me. I saw it happen in Florida when we passed the Sunshine Act. I saw it happen in the Congress when we first startRd  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  249 opening meetings here. Institutional attitudes have been kind of negative when it comes to opening up the inner workings of agencies th~t have historically operated in secret. Those attitudes are sometimes firmly ingrained. Some agencies have overcome that resistance. In fact, I have heard some people say that it has caused the agency members to better prepare themselves because it is a public meeting and that there have been better discussions as a direct result of Sunshine. We feel that that's been the result in the Congress. Now that we have open markups, the Senators have to be prepared when they go to those markups and not just depend on that staff member who sits at their back and tells them everything that's gone on to that date, because the press and the public are there. We know, of course, historically that the Fed has been too enthusiastic about the prospect of openness. In fact, the Fed wanted to be excluded by name out of the Sunshine Act and sort of resisted the act all the way down, even to the final conference committee, there was still much resistance. When you submitted the Board's first annual Sunshine report last March, you mentioned at that time that your service on the Board had been so brief that you actually did not have a personal basis for assessing the act's impact on the Board's operation. You did send me, however, Dr. Burn's letter from last September because your colleagues generally concurred with Dr. Burn's views. If I recall correctly, Dr. Burns had a rather dim view of the Sunshine Act and I do recall that very vividly. By now you have had some time to evaluate the act and its impact on the Board so I was delighted to hear your last comments. I take it that's your personal view. Mr. MILLER. It is the view of the Board, Senator Chiles. Senator CHILES. That's what I wanted to know. Mr. MILLER. You notice the change going from 17½ percent to 26 percent of open agenda items. The trend is in the right direction. Senator CHILES. That's a very positive change and the trend is very definitely in the right direction. Mr. MILLER. I might say that the nature of our business is such that Congress felt many areas should properly be closed: Information that is financially sensitive, confidential information, enforcement of banking laws, and so forth. We still feel these areas should be closed. Our goal now is to try to have 50 percent of our meetings open and 50 percent of them closed, and our technique is to deal once a week with all open items and once a week with all closed items. This begins a trend toward more open items and more open meetings. PRESIDENT'S MEMO Senator CHILES. Are you familiar with the President's memo to the agencies with regard to the Sunshine Act? Mr. MILLER. Yes. Senator CHILES. Can you tell me, What is your reaction to his directive to the Attorney General regarding the defense to sunshine suits? Mr. MILLER. I had no particular reaction because I don't think we have seen that as a problem during my tenure.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  250 Senator CHILES. Your agency has a statutory authority of its own~ Mr. MILLER. The Board is an independent agency. We are trying to comply with the spirit of such directives, but as I said, we have a different status, as you know. Senator CHILES. What impact would you see the President's directives as having upon your agency and the Sunshinefolicies 1 Mr. MILLER. It is part of a cumulative process o encouraging the Board to take a more constructive look at how it can be more open. It reinforces the trend toward more openness. Senator CHILES. As a matter of Federal policy, do you have an opinion as to whether there should be a single litigation for a Government-wide statute like this to provide for a uniformly applied sunshine lawi Mr. MILLER. We normally use the Department of Justice in our litigation, so I would see no harm in your suggestion. However, the preference of the Board, generally, is to have the authority to do its own litigation at least, in selected cases, because we have areas of special competence. Senator CHILES. I see that, but I am talking about a generalized statute like this. I foresee a situation where there might be a halfdozen different interpretations, for example, as to what is the definition of a meeting. Mr. MILLER. I would have no personal objection to being held to one definition because I think efficiency would be served by common application. If there is some impediment to this then Congress can correct it; if there is not, I think we all should act the same way. DISTRIBUTIOX OF STAFF PAPERS AND BACKGROUND DOCUMENTS  Senator CHILES. In many instances the topic of discussion in an open meeting could be fairly technical. It is not easy for a member of the ~neral public to have a meaningful understanding of what'~ bein~ discussed. Generally only reporters and interested persons who regularly follow the. Federal Reserve Board's activities know the jargon well enough to understand what's going on. What measure has the Fed taken to assist the general public in understanding the Board's discussions, especially those involving specialized jargon 1 Mr. MILLER. Senator, we have done several things. First, we publish a summary which p11ts into fairly plain language-even I can understand it-the points that are going to be discussed and their implications. This is quite brief, and because we know that those who are really interested in a subiect could not understand it thoroughly with only the summary, we have also-generally, with very few exceptions-made staff papers available to those who request them. Normally, under Freedom of Information, I believe there is a 10-day period for reply to requests, but our compliance is better. We get material for the meetings to those who request it in advance without any delay. I believe this has resulted in our hearings being attended by people who are or can become thoroughly informed on the issues. Senator CHILES. I think that's a very positive thing. 'I know that's of great assistance. I wonder if you aren't placing sort of the initial burden on the individual to obtain these papers. Some agencies routinely distribute  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  251 staff papers to the public. I understand the Fed's requirement for request for background papers be submitted in writing at least 2 days before a meeting and I have heard that that can be a significant burden. Most of the people that we have spoken to have told us by the time they receive notice of one of your meetings they literally almost have to carry a handwritten request to your office because there is not sufficient time to mail it and to be able to get that back. Mr. MILLER. You may be right. We may want to examine that procedure. Our purpose is to make the papers available without a burdensome procedure. I think most of the people who follow the Federal Reserve drop by and pick up our materials, but if there is something better we can do I think we should look at it. Senator CHILES. I understand that you do receive some requests for virtually 100 percent of your open meetings and it would seem then that the Board can automatically assume that there will be requests for documents for every open meeting and because of that if they were more freely available it would be of some help. Mr. MILLER. I think that's worth looking at. Senator CHILES. I understand that you release some staff documents and then withhold others, not on the basis that the document involves a sensitive issue as described in one of the sunshine exceptions, but merely because they consist of intra-agency memorandums and recommendations. The documents that are released are also intraagency memos containing staff opinions and recommendations. I can't understand where you draw the line. It seems that the withheld memos don't contain truly sensitive information such as national defense matters or other matters that you are given a specific exemption on. You are going to discuss them at an open meeting, so I can't understand where the line is drawn in releasing them. So, can you tell me what criteria would be used to discriminate between those intra-agency memos containing staff opinions that you are going to disclose and those which you don't? Mr. MILLER. Mr. Chairman, as I understand it, the Board has taken the position that release of documents is governed by the Freedom of Information Act. The only memoranda that I know of that have been withheld are ones that were exempt from disclosure under the Freedom of Information Act as intra- or interagency memos. The background for that exemption, as I understand it was the fear that if such documents were available under the Freedom of Information-Senator CHILES. Well, undei' that theory you can withhold all of the intra-agency memoranda. You are not doing that. You are disclosing or providing some of them, so it seems like to me there has got to be some other judgment that's being made. You are not using that FOIA exception to exclude them all. Mr. MILLER. I am not aware of any other criterion. I will certainly look and see if there is one. REHEARSED MEETINGS  Senator CHILES. One problem that we had in the early stages of Sunshine in Florida was the occurrence of rehearsed meetings. This resulted when members of a committee or a cabinet attended premeeting discussions. Essentially the details of some issues subject to discussion at the meeting were discussed and worked out by several  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  252 members before the real meeting began. Now, this was one way to avoid having a controversial issue fully aired in the public. The Florida courts, however, didn't take kindly to that activity and they put an end to it. I have some correspondence between a member of your staff and the Federal Trade Commission. The Federal Trade Commission expressed disappointment and concern over the lack of information presented at a Federal meeting. The Federal Trade Commission believed this position was not given a fair treatment at your meeting. Your staff had failed to present the Board with many significant points that were critical to the Board's full consideration of issues before reaching a final decision. In response, the director of your Division of Consumer Affairs informed the Federal Trade Commission that under the Board's curr~nt proce~ures all matters to be placed on its agenda were thoroughly discussed m advance by several members so that at least those Governors would be familiar with the subject and be able to address it when the matter comes before the Board. In this case several Board members discussed the pros and cons of the issue prior to the Board's open meeting in order to be prepared to speak to them at the Board table. The letter further states that thus the discussion in the open meeting reflected a considered opinion arrived at after reviewing the arguments. That sounds a little like a premeeting session that would be contrary to the intent of the Sunshine law. The purpose of the act was to open up the whole decisionmaking process and not necessarily just to see a reflection of a considered opinion. Is this practice of thoroughly discussing in advance issues to be addressed at a meeting, is that a standard practice in effect? Mr. MILLER. Senator, I am not aware of such a practice. I don't believe it exists at the Federal Reserve. You are reading from material which was called to my attention and which I think goes back to last fall. Since that time, the FTC has indicated that their views have been adequately reflected in our meetings. There may also be a possible misinterpretation. The Governors do seek briefings from the staff on complicated issues, so that they can do their homework and be prepared. Senator CHILES. I am certainly not adverse to that. Mr. MILLER. I am certain you are not,-~ There is one other thing we do that might be misunderstood. There are some committees of the Board, each composed of less than a quorum of the Board. They oversee matters that may require direction to staff to develop a series of options and prepare material for presentation to the Board. They have no authority to make a decision for the Board. My experience is that when the committee materials come forward, the Governors do not have any view that there has been a premeeting or that a predecision has been made that they have to ratify. Quite often, they take exactly the opposite view and vote exactly the opposite view. So I am aware of no predecisionmaking. In the particular instance that you cite, there mav, to a degree, have been something like a briefing I wouldn't know. My own experience is that most individual Governors may, on complicated issues, seek a briefing. My own practice is to have the secretary and a few members   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  253 of the staff run through the agenda with me to make sure that I understand the issues and can preside effectively. I only go into depth on an issue when I feel that such understanding is part of my homework. PETITION TO OPEN  Senator CHILES. Some agencies have, by regulation or otherwise, established a procedure which allows for any person who petitions the agency to open a meeting that is proposed to be closed. This permits the reconsideration of the decision to close. I understand that you don't have an established procedure in this regard. I believe that at least one request to open the meeting was brought to the Boards attention and the meeting was opened. I am pleased to see the willingness of the Board to reconsider closing of the meeting. This practice, however, seems to hinge on your staffs determination as to whether the Board should even know of a request. Your staff has informed us that it uses its discretion in bringing these matters to the Board's attention. Also, the public generally is unaware that you might reconsider your decision to close in an appropriate case. · I would wonder if you would look at the possibility of establishing uniform procedures for permitting such requests with determinations to be made by the Board members themselves rather than being made by staff 1 Mr. MILLER. I certainly will, because I think that is properly a Board decision. Under our so-called "expedited procedures," the Board votes on whether to close any specific item. If we do not vote to close an itemif the public interest suggests it should be open-we would open the item and put it on a subsequent open agenda, with proper rotice given to the public. I was.not aware that requests to reconsider closing a meeting were not given to tihe Board, but I will certainly look at this issue because I think they should be. Senator CHILES. My concern there would be that although the act itself provides :for those sensitive matters that would need to be closed, we did enumerate items and, of course, we ga.ve the Fed additional reasons to close meetings; it still carries a presumption of openness. In addition to those specific items there is still the provision that in spite of the fact that an exemption would lie, the Board still needs to make a decision tihat the overall public interest would still not best be served by opening the meeting. I t:hink that's very, very important because I think if the staff can go down and sort of find any one of those checkoff items as being an exception then they can automatically close the meeting, especially if a prevailing attitude is one toward operatin,g in a closed manner. But I would think if the Board is changing its attitude and seeking to open meetings, certainly it should know of a request to open a meeting and that there may be some general overriding public purpose to be served by the meeting being open. That certainly should come to the attention of the Board. Mr. MILLER. It certainly should. Let me iust repeat that our current procedure is for the Board itself to decide on closing any item. It either makes the determination in advance, with adequate time for the 7-day notice, or it operates under the expedited procedure which allows it to vote at the particular meeting. Perhaps the gap is in not  35-867 0 - 79 - 17 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  254 knowing of a request to open a meeting; we will certainly look at that and make sure we get knowledge of such requests. Senator CHILES. I want to commend you on your Guide to Government in the Sunshine. I think that's a YHY useful way to assist the public, and also indicates your commitment to promote openness at the Fed. One of our staff members recently visited your Freedom of Information Office and noticed that none of those guides were on display. She asked for one and receiYed it, but apparently they are kept behind the counter. I wonder if you know how they are distributed? Mr. MILLER. Those pamphlets are on display on a rack in our main lobby. Senator CHILES. Well, I think when you have a piece of material as positive as that, you would not want someone to be hiding it under the counter. You would want it out. Mr. MILLER. You don't make many sales if you keep the merchandise hidden, I agree. MAILING LIST Senator CHILES. The subcommittee has received some complaints from individuals who say they have. called the Fed and asked about public notices of Boa.rd meetings. They were not told about your mailing list but were simply told that the notices were posted in the Treasury. One individual upon learning of the mailing list from someone else outside the Fed had to write a letter and specifically ask to be put on the mailing list and was told a phone call was not sufficient. It seems to me that's kind of an example of some institutional resistance. It is a problem for the public, but yet it is sort of subtle and hidden somewhere and I am not sure if that ever gets to your atention. I would appreciate it if you would check it. Mr. MILLER. That sounds a little bureaucratic, and we certainly need to do better than that. We don't need to but up barriers. Sena.tor CHILES. I notice that the mailing list issue, and again that's a very positive thing, I think, tha.t you have that mailing list. I notice that that did not get into the Governme:at in the Sunshine Guide. I just bring that to you your attention. If that's reprinted at any time that would be helpful if that was in that Guide, too. Mr. MILI,ER. Good noint. Senator CHILES. The definition of the word "meeting," it seems has been misconstrued by a lot of people. A meeting includes briefing or informa.tional discussion of, in effoot, the conduct of the agency that is attended by a quorum of the agency members. The .Justice Department is ~rging the agencies to define meetings broadly to include such sessions. I understand the Fed conducts weekly Friday briefings on the state of the economy but they are not treated as meetings. If it is during such informational briefin~ that members of an aP,'ency receive and reflect upon the basic informa.tion on which a later dis~ussion may be based it seems those meetings would impact agency pohcy. . Mr. MILLER. Chairn;ian Ch~l~s, thos~ briefin~ relate to the preparation :for monetary pohcy decisions which, of course, would be made in closed meetings. They do not relate to rulemaking decisions that would   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  255 be publicly discussed. A lot of the information we get at those briefings is not yet public. It is subject to-Sena.tor CHILES. Do you consider that to be sensitive information~ Mr. MILLER. There could be a marked impact if those meetings were open. Sensitive data could be misinterpreted as indicating that the Federal Reserve is about to do something in monetary policy. I never attended one of •those briefings in which anything that would touch on any aspects of the Board's business other than monetary policy was presented. The briefings a.re a regular means for staff to advise the Board on developments relating to the aggregates or other economic data. Senator CHILES. Chairman Miller, again I want to thank you for your testimony and what I see is a positive reaction of the Fed now in moving under sunshine. Thank you. Mr. MILLER. We like to respond positively, and I hope that we can show continued progress in meeting your objectives, Mr. Chairman. Thank you very much. [Mr. Miller's prepared statement, with attachments, follows:] STATEMENT OF G. ,vu.LIEM MII.LER, CHAIRMAN, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM  Thank you for the opportunity to appear before your Subcommittee to discuss the Government in the Sunshine Act as it applies to the Board of GoverI?ors of the Federal Reserve System, and to give you some of the Board's experiences and views to the implementation of the Act. In the period of approximately 16 months of operation under the Sunshine Act, the Board has found compliance with the latter and spirit of the Act not to be unreasonably burdensome. although there have been additional costs and some procedural difficulties. The ability to function under the Act has been due in large measure to action by Congress, strongly supported by the Board, in formulating provisions designed to address the specific problems of agencies that deal with sensitive financial information and the supervision and regulation of financial institutions. Important among these provisions are exemptions from the open meeting requirements for confidential financial information, information contained in bank examination- reports, and information the release of which could lead to financial speculation in currencies or securities or that could threaten the stability of financial institutions. Given the Board's unique responsibilities-particularly for the conduct of monetary policy, but also for supervision of State member banks and regulation of all bank holding companies-these exemptions probably apply to the Board's meetings more often than to those of any other covered agency. The Board's efl'ective consideration of many issues in the financial and supervisory area has also been enhanced by the authority to use minute entry summaries, rather than a verbatim recording, for agenda items closed under several of these exemptions. This has encouraged a continuation of the free and open discussion of sensitive matters that is so important to the deliberations of a collegial hody su<'h as the Board. Later. two additions will be suggested to those subjects for which minutes may be used where the Board believes free discussion has been somewhat impeded by the current recording requirement. Also, the authority to close meetings dealing with recurring items under certain exemptions by regulation rather than by requiring individual advance vote-the so-called "expedited procedures·• provision-has simplified the Board's operations under the Sunshine law, without any disadvantage to the public. EXPEDITED PROCEDURES  The Board's regulation provides for a meeting to be <'losed by a vote of at least four members at the beginning of the meeting if the subjects to be discussed fall within specified exemptions. Typically, such closed meetings deal with subjects involving monetary policy matters, such as the setting of discount rates. use of the discount window, changes in the limitation on payment of interest on time and savings accounts, and changes in reserve requirements or   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  256 margin regulations ; proposals involving a specific bank or bank holding company formation or further bank acquisition; other bank regulatory matters such as applications for membership, issuance of capital notes, and investments in bank premises ; foreign banking matters ; and bank supervisory and enforcement actions. such as cease and desist and officer removal proceedings. In adopting the Board's regulation providing for the use of expedited procedures, it was ascertained that of the 493 meetings of the Board held in the three calendar years prior to enactment of the Sunshine law, 94 percent could have been properly closed pursuant to exemptions that would sanction use of these procedures. Because of the nature of the Board's activities and the nature of the exemptions that authorize the use of expedited procedures, it may be expected that a substantial percentage of the Board's agena items will continue to be closed under this procedure. BOARD RECORD OF OPEN AND CLOSED MEETINGS  Oper_ating under the Government in the Sunshine Act during 1977, 27 percent of the Board's 114 meetings were either open or partially open. At these meetings the Board considered 638 individual agenda items, of which 17.5 percent were open and 82.5 percent closed. As to many of the closed items, tape recordings of the Board's discussions were placed in the Board's Freedom of Information Office soon following the meeting, thus making these discussions available to the public. Taking the release of these recordings into account another 5.3 percent of the items considered by the Board in 1977 are now open to the public. For 1978 through June 30, 43 percent of the Board's meetings were either open or partially open. The Board has considered a total of 377 agenda items during this period; 26 percent in open sessions, and 74 percent in closed meetings. OPEN MEETINGS PROCEDURES  The Board has put a good deal of effort into developing a program to aid the public in understanding and obtaining the maximum possible benefit from its open meetings. A pamphlet has been prepared to increase the public's understanding of the application of the Sunshine Act to the Board's meetings. A copy is attached to this statement. The Board makes most staff memoranda considered at open meetings available to the public upon request submitted prior to the meeting. Such requests are given priority treatment by the Board's Secretary. Before presentation of an item qn the agenda at an open meeting, a brief statement of the issues involved is usQally made for the benefit of the public. Members of the public attending the meeting are provided with an agenda summarizing the issues to be discussed. AIi example is attached to this statement. Photographs of Board Members and seating charts are available in the Board room. Following each meeting a representative of the Public Affairs Office is available for further questioning about the proceedings. In short, the Board endeavors to help the public understand the proceedings at open meetings. Twenty-five persons attended the first open meeting of the Board on March 28, 1977. Since then attendance has varied widely, depending on the public interest in the subjects to be considered. Attendance was large at one recent meeting in which the Board's proposed membership program, the l!roposed C~mmunity Reinvestment Act regulation, and aspects of the International Bankmg Act l~gislation were considered. That meeting was attended by about 85 m~mbers of the public. Otherwise, attendance has ranged from O to 39, averaging 9ameeting. The Board maintains a mailing list for notices of meetings. In addition to println_g notices in the Federal Register, the Board makes advance no_tices of meetings available to the public at the Board's Freedom of Information and Public Affairs Offices and at the Treasury Department's press room. Also, notices of open meetings are provided to a news wire service for use on its Washington "city ~ire." All notices invite the public to address _inquiries to the B~rd's Public Affairs Office, which is prepared to provide detalls about any meetmg. I~ the event of an unexpected change in an open agenda item. when advance_ written notice is unlikely to be received in time by the public, media representatives w~o regularly attend such sessions a·nd individuals known to have an interest m particular matters on the Board's agenda are advised of the change by telephone.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  257 When the change is significant, calls are also made to each of the persons on the Board's Sunshine mailing list-approximately 40 in number. RECORDS OF MEETINGS  As indicated earlier, the Board has also made a conscientious effort to comply with the spirit of the Sunshine Act with respect to the availability of minutes, transcripts, and recordings. The record of each closed Board meeting is made ·available to the public in the Board's Freedom of Information Office promptly after the meeting, unless the Board has voted to withhold part or all of the discussion uc.der the Act's exemptions. For closed meetings there are either minutes, or recordings which may be listened to by members of the public. Transcripts of recordings can be obtained upon request. Cover sheets attached to the released material indicate whether the entire record is available and list any subjects withheld. Material that is withheld temporarily is released as soon as it is determined that the exemptions under which it was withheld no longer apply. The public may come into the Freedom of Information Office and obtain immediate access to pertinent files, minutes and records. COSTS OF GOVERNMENT IN THE SUNSHINE  "'hile we have endea,·ored to maximize the benefits to be derived from implementation of the Act, it should be noted that such efforts are not without associated costs. We have had to reassign reso·urces within our staff so that two persons now work solely on Sunshine matters, one processing public announcements and the other processing the recordings and minutes of closed meetings. In order to meet our open meeting and recording obligations, it has been necessary to install a public address and multi-track recording system at a substantial cost to the Board. Compliance with the substantive and-technical requirements of the Act continues to place heavy additional demands on staffs of the Secretary, the General Counsel's office and others. We estimate that the cost to the Board of complying with the Sunshine Act is approximately $100,000 per year. Another cost, of a somewhat different nature, but of particular concern to me, relates to the delay in processing of matters before the Board as a result of compliance with procedural requirements of the Act. For instance, some items which prior to the Act were brought to the Board at a moment's notice are now delayed as much as two weeks to accommodate the Sunshine public notice and voting requirements. Items ready for Board action at an open meeting have been deferred in order that a grouping of such matters may be presented at one open meeting, rather than requiring the public to ·attend a series of meetings, each with only one or two open items on the agenda. The Board continues to consider appropriate steps that might be taken to minimize such delay. SUGGESTED AMENDMENTS TO THE ACT  The Board has previously written to you about its concern as to any requirement that the Board's discussion of legislative matters be held in open meetings prior to their presentation to the Congress. It is the Board's belief that Congress dealt with this question by adopting exemption (9) (B) under which an agency's deliberations may be closed if public discussion would make known information, the premature disclosure of which would be likely to frustrate significantly implementation of a proposed agency action. Two reasons support closing of legislative items on the basis of this exemption. First, the legislative process usually contains elements of negotiation and compromise, and premature disclosure of positions on legislative matters could significantly frustrate the ·attainment of legislative goals sought by an agency. Discussion of legislative matters often involves the consideration of strategy to be pursued in the accomplishment of legislative objectives favored by the Board. For example, the Board may decide to support a particular legislative proposal but determine at the same time to support various alternative proposals should the Board's preferred position prove unacceptable to the Congress. Premature disclosure of the fact that the Board is willing to support alternative   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  258 proposals could significantly frustrate the Board's ability to obtain support for its primary objective. Second, Congress often expects that views on legislative matters will first be given to Congress. The important working relationship between Congress and the agencies could be significantly frustrated if agency views on legislative matters were prematurely disclosed to the press and the public. Nevertheless, the Board's application of exemtpion (9) (B) to legislative discussions has been questioned by parties asserting that it was improper to use this section to close a meeting considering testimony to be given to the Congress. For this reason, the Board urges your Subcommittee to take action in the form of either an amendment or a clear statement in support of the Board's interpretation. · Even if the authority to close the discussion of legislative matters under exemption (9) (B) is clarified, another basic problem remains of the inhibiting effect that a requirement for verbatim recording has on the Board's consideration of legislative matters. According to my colleagues on the Board, the free and spontaneous exchanges that were formerly present in Board discussions of legislative matters have been somewhat constrained by the recording requirements for such a meeting. It would seem that the Board and other collegial agencies should be able to communicate to Congress positions that have been formulated during a meeting that has permitted uninhibited expression of each member's views. The public interest would not be harmed if agency deliberations were conducted in closed nonrecorded sessions where the results are later exposed to the public in the course of committee hearings. The Board recommends that the law be amended to permit legislative discussions to be subject only to the maintenance of minutes. Discussion of sensitive personnel matters has also been hampered by the Act's recording requirements. Board members, meeting in collegial fashion, <>annot be expected to express in complete candor their views regarding candidates for senior Federal Reserve positions, when each word spoken is recorded. The creation and retention for at least two years of substantial numbers of recordings reporting such sensitive deliberations seems unwise and, moreover. unnecessary. Accordingly, the Board also recommends that the Act be amended to enable an agency to discuss individual personnel matters in closed session subect to the maintenance of minutes rather than the verbatim transcript or recording now required. Mr. Chairman, I assure you that the Board intends to continue to carry out the letter and spirit of the Government in the Sunshine Act to the best of its ability. I hope these comments have been responsive to the Subcommittee's request, and I will be pleased to answer any questions you may have. Attachments. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, OPEN MEETING AGENDA, WEDNESDAY, MAY 10, 1978 1. SUMMARY AGENDA  Because of its routine nature, no substantive discussion of the following item is anticipated. Summary agenda items are generally resolved on the basis of the written documentation without detailed discussion by the Board members. Typically, staff recommendations are uniform and in accord with established policy. Questions may be asked by Board members, but if any Board member wishes to express a substantiYe view on the merits of a proposal, the Hem is moved to the regular discussion agenda. Summary item 1(a)  Proposed interpretation of Regulation A (Extensions of Credit by Federal Reserve Banks) to provide that a bankers' acceptance secured by a field warehouse receipt covering readily marketable staples is eligible for discount by a Federal Reserve Bank, despite the fact that the warehouseman is an employee of the owner of the goods. Reserve Bank loans to member commercial ,banks, known as discounts, must be secured by collateral deemed "eligible" for discount by specific Board action. Recently, the Board was asked to review its 1933 interpretation concerning the eligibility for discount of hankers' acceptances secured by field warehouse receipts. Under that interpretation. such acceptances were determined to be inelhdble for discount because the actual custodian of the goods was so closely identified with the owner of the goods that, in the Board's view, the lending  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  259 bank's security might be impaired. A review of the 1933 interpretation seemed desirable because of changes in commercial practice and law in the 44 years since its adoption. Furthermore, under the Board's Regulation D (Reserves of Member Banks) , the sale of ineligible acceptances by member banks results in additional reserve liability for the member bank, thereby making the question of ineligibility of significance to member banks. A proposed interpretation reversing the 1933 position of the Board was issued for comment in.December 1977. Of the 23 comments received, all but two favored adoption of the proposed interpretation. As a result of the commel!ts received, certain technical changes have been made to the proposed interpretation, but the final edition is essentially the same as the proposed. Staff is recommending approval of the proposed interpretation. 2, DISCUSSION ITEM  Proposal for a Uniform Interagency Bank Rating System ( UIBRS) to evaluate and rate commercial banks. After extensive discussions among staff of the Federal bank regulatory agencies, preliminary agreement on the key performance dimensions of commercial ba,nk operations has been reached. The proposed UIBRS describes a general framework for a uniform approach to rating banks. It was designed to measure the quality of a bank's operating performance and reflect in a comprehensive manner the institution's overall financial condition. UIBRS builds upon and improves the present Federal Reserve approach to rating banks by explicitly including earnings and liquidity as components in the evaluation of a bank's performance, in addition to capital, asset quality and management. UIBRS also sets forth the important judgmental considerations and essential factors that must be weighed in the process of assessing each of these performance dimensions as well as in assigning a composite rating. The proposed system expands the performance gradation scheme to allow the rating of each individual dimension of a bank's operating performance on a scale of one to five. Finally, qualitative criteria are described for five distinct composite categories which relate the degree of supervisory concern to the seriousness of an institution's problems. Common use of these five composite categories among the agencies will introduce an important element of uniformity into the rating of banks and enhance interagency communication with respect to individual institutions. Staff is recommending approval of the Uniform Interagency Bank Rating System. 3. DISCUSSION ITEM  Proposal to publish for comment an amendment to Regulation Y to permit hank holding companies to underwrite property and casualty insurance related to extensions of credit. The performance of this activity by bank holding companies is not included among those that have been designated by the Board in Section 225.4(a) of Regulation Y (Bank Holding Companies) as "closely related" to banking. The discussion at this meeting should focus on whether there is sufficient basis to consider property and casualty insurance underwriting as closely related to hanking and whether to publish a proposal for comment that would add this activity to the list included in Regulation Y. The Board's staff is divided in its recommendation. The Division of Banking SuperYision and Regulation and the Legal Division, although not making a final determination at this time, believe there is evidence that underwriting property and casualty insurance that protects collateral related to extensions of credit is an activity closely related to banking. The Division of Research and Statistics, however, recommends that the Board not propose property and casualty insurance underwriting as a permissible activity for bank holding companies under Section 4 ( c) ( 8). Staff believes the underwriting of property al!d casualty insurance is an activity which is only marginally related to banking, and that there are no functional or historical reasons to consider the activity to be bank related. 4, DISCUSSION ITEM  Proposed amendments to Regulations G ( Securities Credit by Persons Other Than Bank, Brokers, or Dealers), T (Credit by Brokers and Dealers), and U (Credit by Banks for the Purpose of Purchasing or Carrying Margin Stocks) to  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  260 provide that only those dealers submitting bid and offer quotations for a given stock to an automated quotation system will be counted as market-makers in-determining whether a stock should be shown on the Board's list of Over-the-Counter margin stocks. Since the early 1930's, the Federal Reserve has been directed by law to restrain the excessive use of credit for the purpose of buying securities. This is done by requiring that funds lent to acquire securities be a certain amount less than the market value of the securities. The difference between the credit value and market value of any security is the margin, which is normally expressed as a percentage. Margin requirements apply to certain securities traded on the over-the-counter market, as well as to securities listed on a national securities exchange. The Board publishes a list of covered over-the-counter stocks. One of the requirements for inclusion on the Board's list is that a certain number of dealers make bona fide bids and offers for such stock. When the OTC list was first published by the Board in 1969 the "pink sheets" of the National Quotation Bureau were the only consistent source of the required price information. Since that time an automated quotation system, NASDAQ, has been developed to a point where price information on all stocks on the Board's list can now be obtained from it. Information from the "pink sheets" is now duplicative of material from NASDAQ. Moreover, reviewing it requires an expenditure of staff and computer time no longer deemed necessary to complete the analysis required in surveying the stocks eligible for the Board's list. Accordingly, in March 1978, the Board issued for comment the proposed amendments to Regulations G, T, and U ( docket no. R--0147) to permit the Board to use survey data from NASDAQ only. Of the fifteen comments received, all but one supported the Board's proposal. Staff is now recommending fir,al adoption of the amendments as proposed. GOVERNMENT IN THE SUNSHINE-A GUIDE TO MEETINGS OF THE BOARD OF GOVERNORS OF THE FEDERAL SYSTEM  The Board of Governors meets several times a week to consider matters relating to the official supervisory, regulatory, and monetary policy responsibilities of the central bank. These meetings are conducted in compliance with the Government in the Sunshine Act. The public is welcome to attend and observe all meetings, except those that the Board determines should be closed under exemptions provided in the law, as listed at the end of this pamphlet.  Procedures for both OPEN and CLOSED meetings of the Board are described in the following pages. Additional information is available from the Board's Public Affairs or Freedom of Information Offices. OPEN MEETINGS-NOTICE AND ATTENDANCE  Notices of open meetings are published in the FederaZ Register, and copies are usually available seven days in advance of the meeting from the Board's Freedom of Information and Public Affairs Offices and in the Treasury Department Press Room. Information about agenda items may be obtained by phoning the Public Affairs Office between 8 :45 a.m. and 5 :15 p.m. In order to enhance the public's understanding of its discussions, the Board makes most staff memoranda considered at open meetings available to the public. Requests for documents should be made in writing to the Secretary of the Board as far in advance of the meeting as possible and received no later than the close of business two working days before the meeting. Open meetings generally begin at 10 a.m in the Board Building, at 20th Street and Constitution Avenue, NW. Ample seating is provided in a section of the Board Room reserved for the public. Visitors are asked to check in with the guard at the main entrance. In the Board Room, attendees are provided with a seating chart identifying the members of the Board and an agenda summarizing the issues to be discussed during the course of the meeting. We request that cameras and recording devices not be used unless approved in advance by the Public Affairs Office. The summary agenda  Items on the Summary Agend•a are usually the first if:o be' considered during an open meeting. Items placed on this agenda are those of a rouitine nature which often can be resolved without extensive discussion by Board members. Typically this agenda is used for recommendations which have the consensus of the staff and are in accord with established policy. Q!lestions may be asked by   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  261 Board members but if any Board member wishes to express a substanitive view on the merits of a proposal it is moved to the Discussion Agenda. The discussion agenda  Items on the Discussion ( or Regular) Agenda are presented orally 'by staff members from the division originating a proposal or by Board members with oversight responsibility for a particular mal:lter. Following presentation and discussion of each agenda item the members of the Board vote in order of seniority, with the Chairman or the presiding officer generally casting the last vote. CLOSED MEETINGS-NOTICE REQUIREMENTS  Items considered in closed session include primarily : bank and 'bank holding company supervisory matters, discussions of which generally disclose information from bank examination reports or commercial and financial informalf:ion obtained in confidence by the Board; monetary policy and other matters whose premature release could be used in financial speculation; and personnel matters. The two types of closed meetings, discussed more fully below, are : 1. "Recorded" meetings-or those meetings which require adv•ance public notice of one week. The -Sunshine Act requires a full transcript or electronic recording of these meetings. For them, the Board uses a multi-track recording system that enables identification of each speaker. 2. "Expedited" meetings-or those meetings which do not require advance public notice. Customarily, the Board prepares minutes of these meetings. Recorded meetings  Notices of meetings closed Ito the public under exemptions 1, 2, 3, 5, 6, 7, and 9B of the Sunshine Act are published in the Federal Register and copies are availa,ble from the Board's Freedom of Information and Public Affairs Offices, and in the Treasury Department's Press Room-generally a week before the meeting. Federal Register notices indicate ithe time, place, subject matter, and closed st•atus of the meeting; and the name and phone number of the official designated to respond to requests for information about 1:he meeting. As required by law, the following additional information is available in advance of a meeting in the Board's Freedom of Information Office: A notice citing the applicable exemptions and reasons for closing an item ; the anticipated attendance during discussion of that item; and the vote by Board members for closing ,the item. As necessary, a notice indicating any change in time of meeting, any deletion or addition of an item, ,and any change in the open/closed status of an item. After a meeting has been held, the following information is made available in the Board's Freedom of Information Office: The certificate of the General Counsel, stating that the meeting may ,be closed to the public and citing applicable exemptions. If applicable, a statement of the vote by Board members to withhold information from the copy of the recording or transcript released to the public, and the exemptions cited. A full cassette recording of the meeting, unless the Board has determined that the recording or a portion of ithe recording is exempted from release. Recordings or portions of recordings initially withheld are often released at a iater date when their exempted status no longer applies. The Presiding Officer's St·atement, giYing the time and place the meeting was held and the persons present. Special facilities are provided in the Freedom of Information Office for listening to recordings. Or, cassettes may be purchased at $5 per copy. Expedited meetings  Because a majority of its meetings can properly be closed pursuant to exemptions 4. 8, 9(A), or 10, the Board is qualified under the law to use expedited procedures for closing certain meetings. Expedited items include supervisory, regulatory, and enforcement matters relating to a specific financial institu~ion. and mon!'tary policy matters. Minut!'s of these meetings, rather than recordmgs, are usually maintained by the Board. . Copies of notices of meetings closed under expedited procedures are available from the Board's Freedom of Information and Public .Affairn Offic!'s and in the Treasury Department Press Room. Such notices indicate the time. place, and subject matter of the meeting; exemptions applicable to the closing of an item;   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  262 and the phone number of the official designated to respond to requests for information about the meeting. Additional information about expedited meetings available for inspection in the Freedom of Infonnation Office includes: The certificate of the General Counsel stating that the meeting may be closed to the public and citing applicable exemptions. l\Iinutes of the meeting, unless the Board has determined that the mintues or portions of the minutes are exempted from release. These minutes fully and clearly describe all matters discussed, and provide an accurate summary of any actions taken and the reasons for any action. The minutes also include a description of each of the views expressed on any item and a record of any roll call vote. l\Iinutes or portions of minutes initially withheld may be released when their exempted status no longer applies. The Presiding Officer's Statement giving the time and place a meeting was held and the persons present. l\Iinutes may be examined in the Freedom of Information Office. Or, copies of minutes may be purchased at 10 cents per page. OTHER PROCEDURES FOR HANDLING OFFICIAL BUSINESS  Not all matters coming before the Board are considered at Board meetings. The Board uses two other procedures to handle official business: notation ,·oting and delegation of authority. Under the first procedure. routine business is conducted by circulating material to each Board member for written vote and comment. Upon request by a Board member. however, any such item may be referred to the Board's regular agenda for discussion and is then subject to the provisions of the Sunshine Act. Under the second procedure, authority is granted to individual members of the Board or its staff. or to Resen·e Bank staff, to act on behalf of the Board. A copy of the Board's ··Rules Regarding Delegation of Authority," 1 may be obtained from the Freedom of Information Office. SUNSHINE EXEMPTIONS  Under the Sunshine Act meetings may be closed to the public when presentations to the Board are likely to1. Disclose matters authorized under Executh·e Order to be kept secret in the interests of national defense or foreign policy. 2. Relate solely to internal personnel rules and practices of an ageney. 3. Disclose matters specifically exempted from disclosure by statute. 4. Disclose trade secrets, commercial or financial information obtained from a person and privileged or confiidential. 5. Involve accusing any person of a crime or censuring any person. 6. Disclose information of a personal nature where disclosure would constitute invasion of personal privacy. 7. Disclose investigatory records compiled for law enforcement purposes. 8. Disclose information contained in or related to examination. operating or condition reports prepared for or used by an agency responsible for regulation or supervision of financial institutions. 9. Disclose information the premature disclosure of which would(A) (i) lead to significant financial speculation in currencies, securities or commodities ; or (ii) significantly endanger the stability of any financial institution; or (B) be likely to significantly frustrate implementation of a proposed agenc~· action. 10. Specifically concern the agency's issuance of a subpoena or participation in a civil action or proceeding. CONSUMERS UNION  Senator CHILES. Our next witness this morning is Mr. Mark Cymrot, senior litigator, and Ms. Ellen Broadman, attorney, of the Consumers Union, Washington, D.C., which is a nonprofit memberhsip organization chartered in 1936 under the laws of New York, for consumer goods 112 C.F.lt. Part 265.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  263 and services and the management of family income. The Consumers Union is probably best known for its publication, Consumer Reports. We are happy to have you with us this morning. I ·would like you to please, if you can, summarize your written testimony and your written statement will be inserted in the record. TESTIMONY OF MARK CYMROT, SENIOR LITIGATOR, CONSUMERS UNION, WASHINGTON OFFICE, ACCOMPANIED BY MS. ELLEN BROADMAN,ATTORNEY  Mr. CYMROT. Thank you, Mr. Chairman. We do intend to briefly summarize our written testimony. Ms. Broadman will discuss her actual experience attending board meetings, and I will discuss Sunshine Act litigation from earlier this year arising from Ms. Broadman's experience. Ms. BROADMAN. Before describing my experiences at the Federal Reserve Board, I would like to stress the importance of the Sunshine Act to groups like Consumers Union. Because the secrecy with which some agencies act, open meetings are often one of the few sources of information vrn have on how agencies act and make their decisions. ·with this information, we are better able to participate in agency procedures in a meaningful way and to comment on proposed regulations. While public participation and scrutiny may oftentimes add complexity to agency proceedings, it often results in more fully considered and better informed decisions. For this reason we are a strong supporter of the Sunshine Act. My most extensive experience with the Sunshine Act has involved the Federal Reserve Board. In the summer of 1977, I began attending Board meetings because I was particularly interested in the enforcement actions that they intended to take involving the Truth in Lending Act. A recent survey of the Comptroller of Currency and some hearings before a House committee had revealed that the agencies had not enforced the Truth in Lending Act adequately since 1969 when the act was first enacted. Because of this inadequate enforcement, there were widespread violations of the act which had resulted in enormous overcharges to consumers. I was also interested in learning of the Board's position on Truth in Lending Act amendments that were then pending before Congress. The meetings were often incomprehensive. Most of the meetings that I attended focused on staff memorandum and proposals that were not made available to public observers. At one meeting, the Governors discussed a proposed statement to be issued by the Federal Reserve Board on Truth in Lending Act reform. Each Governor took a turn stating revisions that he thought were necessary in this proposed document. The conversation consisted of such uninformative statements as, "I think this specific word should be deleted from line 5, on page 4." "I think this sentence should be inserted at page 9, line 3." and so on. At points during this discussion people in the audience just looked at one another and laughed because it was clear that nobody knew what was going on.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  264 Even at meetings where staff proposals were discussed generally, the Governors would often refer to pages and lines in these documents. Also, at one meeting, one of the Governors actually read from the document. Not knowing what the entire document said or the context within which the sentence was written, it was very difficult to follow the conversations and understand the decisionmaking process. On one occasion a Governor was having a debate with another Governor and referred to him a section in the staff document without saying what that section said. Needless to say, without the staff documents it was impossible to fully understand the decisionmaking process that we were entitled to view under the Sunshine Act. One of the industry lobbyists fairly routinely concerned one of the Federal Reserve employees after staff meetings in order to get a translation of what we had actually observed. Having attended those meetings I am convinced that all the documents which served as a basis for a decisionmaking process at a sunshine meeting must be disclosed to the public if the purposes of the Sunshine Act are to be fulfilled. I also attended several meetings after our lawsuit was settled with the documents in hand and that experience further convinced me of the importance of their disclosure to meaningful implementation of the Sunshine Act. At this point Mark is going to discuss the act and some of the positive changes that have occurred at the Federal Reserve Board since that time. Mr. CYMROT. Well, based on Ellen's experience in the summer of 1977 when she was attending meetings where truth in lending was being discussed and she did not understand what was happening, we made a formal request for staff documents for two of the meetings and that request was denied. We appealed that denial but prior to the decision on the appeal we were forced to file suit because of the 60-day statute of limitations in the Sunshine Act. Our right to action would have expired if we waited any longer, so we filed suit to obtain these documents in the U.S. district court here in Washington, D.C. After the suit was filed the Board did give us the two documents we requested. However, the suit proceeded because there was a question about what the future policy of the Board would be. We started discovery in that suit. We served subpenas on several members of the Board and on Commissioner Gardner. At that point entered into settlement discussions and the suit was settled. The basis of the settlement was that the Board would establish a procedure for making public the staff documents being discussed at the open meeting and this procedure was published in the Federal Register in January 1978. Under the new procedure, if a written request is made at least 48 hours in advance of the open meeting, it will be given priority treatment. Prioritv treatment means that a decision on the request for the document will be made prior to the meetings except if there is some extraordinary circumstance that prevents that from occurring. The second thing that the Bo3:rd a~reed to do was generally make available the staff rlocuments. Ag-am, the staff documents would be made public, but the Board reserved the' right in extraordinary circumstances to withhold certain documents.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  265 Now, in our view, the suit accomplished the release of staff documents and established a new procedure to obtain these documents. It also made the Board much more sensitive to the needs for open meetings and the problems of a group like ours and how we have to get information through these open meetings because the information is generaUy not available otherwise. The suit did not accomplish certain things, though, that we would have liked to see occur. First of all, it did not decide the question of whether documents can be obtained under the Sunshine Act or whether observers are limited to the Freedom of Information Act procedure. It was our view that where the Sunshine Act says that every portion of every meeting of the agency shall be open to public observation, the staff document is a portion of the meeting when it is discussed at a meeting. The legal significance of this issue whether the Sunshine Act or the Freedom of Information Act applies, gets back to the point that you were making to Chairman Miller. That's the question of whether exemption 5 of the Freedom of Information Act, which is the exemption of disclosure of intra-agency memorandums is applicable to open meeting documents. This exemption was not included in the Sunshine Act and we believe the reason for that was that the purpose of the exemption is to protect the deliberative processes of the staff. Yet, the Sunshine Act mandates that when it comes to the Board table, this deliberative process should be in the sunshine and the public should be permitted to see what process the Board goes through in making a final decision. Therefore, we don't believe that this exemption should be applicable in a situation where you have discussion of documents at open meetings. Now, in our experience, there has been significant improvement at the Federal Reserve Board. We receive staff documents. We have received all staff documents relating to the meetings that we have requested. As M:s. Broadman said, that makes the meetings much more understandable and we are able to do our job better as a result of beina able to understand the process that the Board is going through. While all of our requests have been granted we learned that in the period of January to May of 1978, 26 requests from other people have been denied. We find that disturbing. I think that the issue of whether intra-agency memoranda exemptions to the Freedom of Information Act, whether that should apply to sunshine documents is still a very significant question because of the Board's continued resistance to disclosure. Senator CHILES. Do you think there could be some difference, that your request has been complied with because yon brought suit and the other people have not shown that they would litigate so their requests might have been denied 1 Mr. CYMROT. Well, we certainly noticed that we caught the Board's and staff's attention with a lawsuit and we have been treated very weJl since that time. It is very possible that others who have not taken the trouble to file suit are not being treated as well. Yes, there is a possibility. I have no definite information on that. The one other matter that we are concerned with, the Board has put out a !)amphlet on the Sunshine Act. We think it is an excellent  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  266 pamphlet but they have not included the new procedure in the Code of Federal Regulations where the Board has its regulations concerning disclosure of documents. So, most lawyers in particular or people who know to look in the CFR to find out what procedures they would follow would not see those expedited procedures in the Code of Federal Regulations. We think that is a further indication that there is still resistance of the Board to widely distributing this open meeting procedure and resistance to the concept of openness. I think we are prepared for any questions that you would like to raise. BENEFITS OF SUNSHINE Senator CHILES. The primary purpose of the Sunshine Act is to give members of the public an opportunity to obtain more information about Government decisionmaking. You say it is one of the few opportunities that you have to get information and you also note in your testimony that all the secrecy in the decisionmaking process also allows for decisions to be made without vigorous public debate and criticism and comments that could cause something to be much more fully considered in reaching decisions. So I guess that it is your opinion that Sunshine benefits not only those members of the public that want to see what's going on but also the agencies and the general public at large that would be the recipient of those decisions? Mr. CYMROT. Absolutely. I think the open meetings permit us to find out what's happening at the agencies and present our vie,vs. At the same time it permits others to present their views and in that way the agencies receive a much broader set of views and more information to make their decisions. Senator CHILES. The heads of some agencies lrnse told us that Sunshine has forced them to be more efficient due to the notice requirements and also to be better prepared for open meetings because they are subject to public scrutiny. Could you give us any examples from your own experience as to how Sunshine has helped the decisionmaking process? Mr. CYl\IROT. "\Vell, yes, we have several examples. As testimony indicated, we are working on the truth-in-lending problem that all of the bank regulatory agencies have, and we found out that an open meeting was about to occur where certain guidelines for enforcement of the. act were going to he discussed and perhaps decided upon. We wrote a letter for the Federal Reserve Board, indicating that these proposals were disturbing to us in several respects and we thought that they shoulrl put t hes!.' proposals out for public comment. The need for public comment was then discussed at the open meeting and public comment was reecived. I think the guidelines have taken too long, but I think the final product will bea better product. Senator CHILES. Can you add anything to that? Ms. BnoADMAX. That's definitely the best example. Generally, we have learned of Board actions in several cases because we have gotten notices of open meetings at which they were going to be discussing these actions. "\Ve petitioned the Board recently to issue some regulations that would require lenders to retain records that would document noncompliance with the Trnth in Lending Act. That open meeting was ceitainly very infonnative and useful to us, and ultimately they did grant our request, which we were ve,ry pleased with.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  267 OBTAINING INFORMATION Senator CHILES. I think it is very clear that the problem you encountered wtih the Federal Reserve Board regarding the incomprehensible open meetings is a significant one. We have received numerous complaints that his same situation exists in other agencies, and the notion of holding a public meeting and proceeding to speak in such a way that no one can comprehend :i, discussion, certainly poses a real threat to sunshine. Certainly such a meeting doesn't fulfill the purpose of the act. There is no way that I think you can consider that to be an open meeting. Documents discussed at an open meeting are an integral part of the discussion and decisionmaking process, and l am troubled about this continuing problem. I think it really does harm the concept of open government. Do you think that there is a danger that these meetings could actually result in misinforming the public, therefore creating more confusion and misunderstanding of what an agency is doing than if they had closed a meeting to start with? Mr. CYMROT. Absolutely. If you are sitting in an open meeting and not understanding the discussion and basically just guessing what the various members of the Commission or Board are talking about, you are going to make wrong guesses. When we pass misinformation along or when others pass misinformation along, it can be very damaging. Senator CHILES. Now that you are obtaining those staff memorandums, do you think they are helpful to your understanding of the Board's discussions, the Fed's discussions? Mr. CYMROT. Very helpful. Miss Broadman i Ms. BROADMAN. Yes; it is like the difference between day and night. With the staff memorandum, I have had no trouble following the discussions at all the meetings that I have attended. Even in situations where the memorandums are not specifically dicussed, having those memorandums and having the factual information that the Governors are using to discuss the issues-Senator CHILES. There is an old story, you canit follow the players without a program. Ms. BROADMAN. Exactly. So they are extraordinarily use.fol. Senator CHILES. You mentioned in yonr testimony you finally got a complete copy of a staff memo that the Fed initially distributed, but there was certain information withheld. What was the difference between the edited copy and the complete oopy? Ms. BROADMAN. The difference wfls rather striking. Whoever edited t,hl1 memo certainly had a heavy hand. One of the more humorous deletions was the section which described a meeting that Mark and I had attended. They completely deleted what happened at the meeting, what the consumer representatives said and what the lenders said. Mr. CYMROT. We were at that meeting, -but they would not tell us what. we. said when we were there. · Senator CHILES. They were afraid to tell yon what yon said at the meeting? Ms. BROADMAN. That's right. Thev also <'leleted anything that gave you a sense of what the memo was about. They deleted the entire section of the action requested  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  268 which the memo was discussing. They also left out subject headings. For example, on page 4 they left out the section of the heading which said "time limit for reimbursement," but then they cut out ''how far back should a creditor be required to go on making reimbursement for violations." So they just left out information on what the memo was about. None of the information involved anything of any sensitive nature, a bank examination, or anything of that sort. Senator CHILES. It is just some staff member's feelings on what he ought to allow people to see or not? Ms. BROADMAN. Yes. Senator CHILES. That guy was probably a censor in World War II. Ms. BROADMAN. It certainly looked like it. There was one part of the memo that did give some of the staff members some problems. They were not happy, I guess, with letting out a paragraph which disclosed the extent of noncompliance with the law. The paragraph basically said that 35 percent of the member banks had actually overcharged consumers under the Truth in Lending Act and cited amounts that consumers have been overcharged. The average overcharged per bank was $2,500. There were significant overcharges in amounts exceeding $100,000 per bank. This information was very useful to us; it was information that the public really needs to know to comment on appropriate enforcement actions. Mr. CYMROT. I think the point is that we can't conceive of why those portions were deleted. We can't imagine any harm that possibly could occur. The staff wasn't identified. In many cases you are not talking about staff arguments. There just doesn't seem to be any reason for it. Senator CHILES. Now that the agencies keep records of their closed meetings as they are required by law, some like the Nuclear Regulatory Commission keep transcripts of open meetings. The Fed and most agencies have not begun this yet. Is it difficult to obtain information from an agency of what happened at an open meeting and if, for some reason, you couldn't attend it? Mr. CYMROT. Yes. If you are not there, by and large you miss it unless there is a staff member who is willing to tell you what happened. Sometimes there is a staff member and sometimes there is not. Senator CHILES. You think it would be beneficial if there were transcripts of the open meetings? Mr. CYMROT. Yes; you have transcripts of the closed meetings, but it seems to be completely backward that they don't have transcripts of the open meetings, since those are the ones that even they agree that the public is supposed to know what happened at those meetings. Ms. BROADMAN. That was a problem for us. We wanted fo have transcripts of an open meeting that we had attended, but there was no way that we could document what we had heard. Senator CHILES. Well, I guess as a lawyer you never want to be in a position, they call it champerty or something if you encourage people to file lawsuits, but I sometimes think there is a very beneficial effect of judicial interpretation, especially with a new law like sunshine. We are going to have to see what the court is going to say on some of these matters even though I feel, as I expressed in many instances, what the legislative intent was, and I know what my intent was. But when you get to interpreting what words mean or what the legal effect is, that always is left up to a gray area of how people are going to inter-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  269 pret that, and I think it will only be when the court really gets into the area and starts making some of these interpretations that it will be completely clear. This is necessary, especially if some agencies are going to try to nitpick and to c•:mtinually thwart ·what is the avowed purpose of the law. I am delighted to see what appears to be a changed attitude in the Fed, and also you say that you are seeing that change, too, but I think some lawsuits being filed, I think there is no doubt about it, the fact that you are filing suit has also brought about some changes. That's probably going to be very necessary to clear the law's parameters and have the act work properly. Mr. CYMROT. Yes; we always looked at litigation as a last .resort. Senator CHILES. Right; and it should be. Mr. CYMROT. I agree, it should be. It is simply that there is still considerable resistance in the Government to the idea of openness. We hear complaints about many other agencies, and unfortunately, it may be only litigation that will get these agencies to change. Senator CHILES. Of course, some of the express provisions in the act allow for litigation and provide the method for litigation. There is a limit to what this committee or any committee of the Congress can do in its oversight procedures. We can try to bring attention and put the -spotlight on them, or bring people up, but we can't ultimately order something to be done which the court can. Mr. CYMROT. That's right. It is up to the citizens who are concerned about their rights to information about our Government to enforce those rights. Senator CHILES. Thank you very much for your testimony. [The prepared statement follows:] STATEMENT OF MARK CYMROT, SENIOR LITIGATOR, AND ELLEN BROADMAN, ATTORNEY, CONSUMERS UNION, 'WASHINGTON OFFICE  Mr. Chairman, Consumers Union 1 appreciates the opportunity to testify at these hearings on Government in the Sunshine Act. We support the Act and recommend that it be strengthened in certail! respects. IMPORTANCE, OF THE ACT  Open meetings under the provisions of the Government in the Sunshine Act provide the public a unique opportunity to observe and understand the considerations underlying important governmental decisions. By opening agency decisions to public scrutiny, the Act enables the public to understand better the concerns and rationale of federal decisionmakers and to obtain important information related to the issues under consideration. This process improves the ability of interested members of the public to comment meaningfully on agency proposals, follow discussions at the agency agenda table, and otherwise participate more fully in agency proceedings. The Sunshine Act is important because, as our experience has proven, openness does not come easily to many Government agencies. In fact, some agencies appear to have an inborn inclination toward secrecy. For behind the shield of secrecy, agencies can take action without provoking vigorous public debate and 1 Consumers Union is a nonprofit membership organization chartered In 1936 under the laws of the State of New York to provide information, eclucation, and counsel about consumer goods and services and the management of the family income. Consumers Union's income is der!Yed solely from the sale of Consumer Reports. its other puhllca tions and films. Expenses of occasional public service efforts may be met, In part, by nonrestrictive noncommercial grants and fees. In addition to reports on Consumers Union's own product testing Consumer Reports, with more than 1.8 million circulation, regularly carries articles on health, product safety, marketplace economics, and leglslat!Ye, judicial and regulatory actions which affect consumer welfare. Consumers Union's publications carry no advertising and receive no commercial support.   35-867 0 • 79 - 18 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  270 without encountering open public criticism. They also more readily can avoid submission of public comments, which must be given reasoned consideration in proceedings subject to judicial review.2 While public discussion and scrutiny can create a more complicated decisionmaking process, it often results in more fully considered and better formulated decisions, consistent with the interests of all parties affected. FEDERAL RESERVE BOARD  Our most extensive experience with the Government in the Sunshine Act has involved the Board of Governors of the Federal Reserve System. The Board traditionally has been one of the most secretive agencies in the government, and one of those least open to outside comment and criticism. Board employees have been among the government employees least willing to discuss important consumer issues and to provide information concerning those issues, particularly since former Chairman Arthur Burns had the FBI investigate the disclosure of certain interest rate information to us.• Open meetings, therefore, are one of the very few sources of information that ,,·e have. Our experience illustrates the importance of the Sunshine Act and a number of problems which have arisen with it. THE BOARD'S IMPLEMENTATION OF THE SUNSHINE ACT  This same attitude towards secrecy was displayed iniltially by the Board in its implementation of the Sunshine Act. In May, 1977, Consumers Union attorneys attended a series of open Board meetings at which truth in lending simplification and enforcement were discussed. Both issues were importa1~t to consumers. Legislation was pending in Congress to amend the Truth in Lending Act, and a recent survey of the Comptroller of the Currency had disclosed "substantial noncompliance" by national banks with the Truth in Lending Act.' By attending the open meetings, we sought to educate ourseh·es better on the issues and to identify the concerns and positions of all interests involved in the debate. The meetings were often incomprehensible. The Governors discussed at length staff memoranda and proposals which were not available to the public observers. At times, various Go,·ernors suggested revisions to proposed legislative comments and testimony. Suggesltions took the form, for example, that certain words on a specified page and line be changed or deleted. At other times, Governors referred in discussion to specific statements or recommendations in staff lllE'moranda, without describing those statements or recommendations. For example, one Governor ended a debate wilth another Governor by stating his view that the analysis in the stafl' memorandum disposed of the other's concerns. It was not possible for those present at this "open" meeting to understand the exchange without copies of the sitaff memorandum. • See Portlamd Cement Ass'n. v. Ruckel8haus, 486 F.2d 385 (D.C. Cir. 1973). • In 1973, Consumers Union requested from the Board a compilation of Interest rates charged by Individual banks on a variety 0-:. consumer Installment loans. E,·en though this Information was widely advertised by lndh·ldual banks and made a,·allable to any consumer who asked a particular bank, the Board refused to disclose its compilation. The Information was sought for a "Consumers Gulde to Banking" to be prepared by the San Francisco Consumer Action In order to assist San Francisco area consumers to shop for credit. During the course of our suit to obtain the Board's compilation, a Board employee, without being solicited to do so, provided It to us. Angered, then Chairman Arthur Burns summoned the FBI to Identify the source of the "leak". When the employee admitted he had disclosed the data, he was fired. Congressional hearings were held to question the propriety of the Board's refusal to disclose the information and the Board's response to the disclosure. See letter from Representative Patman to Representative Henry S. Reuss, Chairman of the House 'Bankln,r, Currency & Housing Committee, 121 Congressional Record, at H. 1233 (F:ebruary 27, 1975). See also R. Kessler, FRB Probes "Fed" Stall' on Leak to Magazine, Washington Post, February 25, 1975, at 121 Conj?. Rec. Feb. 27. 1975, H. 1233; The Flap at the Fed, Washj,igton Post, Editorial Section, February 28, 1975. Consumers Union v. Federal Reserve Board, Civil No. 1766-73 (D.D.C. May 31, 1974), remanded (D.C. Cir. November 27, 1974 ). 'Consumers Union has testified on the legislation and flied extensive comments on the enforcement gnidelines. 42 Fed. Re~. 55786 (Oct. 18, 1977). See Statement of Mark Sllbergeld, Director, and Ellen Broadman. Attorney, Washington Office, Consnmers Union. Before the Subcommittee on Consumer Aft'airs, Committee on Banking, Housing and Urban Atrairs, U.S. Senate, July 12, 1977.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  271 Confusion was further engendered by the unavilaibility to the public of the technical backup information provided in the staff memoranda. We often missed entire portions of the discussion while we attempted to piece together the meaning of earlier statements. Needless to say, those who observed such "open" meetings could make little sense of the discussion.• SUNSHINE ACT LITIGATION  Faced with this frustrating situa!tion, Consumers Union filed with the Board a written request for the staff memoranda discussed at the June 27 and August 17 open meetings. The request was denied. We then filed suit because the Board's practice undermined the entire purpose of !the Sunshine Act.• After we filed suit, the Board released the two staff memoranda which we sought. On reading these documents we were amazed that the Board had denied our initial request. There was no information in either document• which reai,;onably could be characterized as confidential or disclosure of which would be contrary to the public interest. Release of the two documents did not dispose of the issues raised in the suit, however, since the Board's future policy was still at issue. The suit was settled by an agreement under which the Board agreed to release regularly the staff memoranda which are the subject of Sunshine Act open meetings. The Board retained the right to delete specific portions of the documents or to withhold specific documents at its discretion. The Board also agreed to an expedited procedure to enable persons who make a written request for a staff document at least 48 hours in advance of the open meeting to obtain the document by the time of the meeting. As part of the settlement, the Board issued the settlement agreement as a policy statement.• PRESENT BOARD PROCEDURE  Favorable changes have occurred subsequent to the settlement of the lawsuit. The Board has granted all of our requests to date for disclosure of staff memoranda to be discussed at open meetings. The Board recently published a pamphlet on the Sunshine Act which includes an explanation of how documents discussed at open meetings can be obtained prior to the meeting. This pamphlet has been made generally available, although not distributed at open meetings. At all the meetings which we have attended, agendas are available listing the items to be acted on during the open portions of meetings and summarizing the major issues involved in the decisionmaking. A seating diagram is distributed identifying the participants in the meeting. With the agenda, staff documents and seating chart we have been able to follow the discussions at Board meetings and better understand the process by which decisions are reached. Even so, some problems persist. Although we have been given all the documents that we have requested, some requests of others have been denied. The Board has denied some requests solely on the basis of Exemption 5 of the Freedom of Information Act which applies to inter-agency and intra-agency memorandums. (See Exhibit E.) It refuses to recognize that documents which are discussed at open meetings can be obtained under the Sunshine Act which does not include an exemption for inter-agency or intra-agency memorandums. The Board insists documents are available only under the FOIA and uses Exemption 5 to deny the public any documents it decides to withhold. Also, many persons with an interest in the Board's deliberations remain unfamiliar with procedures for obtaining these documents. ,ve have been surprised to learn that attorneys who work on issues directly affected by Board action do not know of the availability of these staff documents. We attribute this to the Board's refusal to include these procedures in its regulations published in the Code of Federal Regulations-a standard reference source for identifying agency procedures. 5 A similar situation reportedly arose at a recent meeting of the Securities and Exchange Commission. Washington Star, June 8, 1978 at B5, submitted to the Subcommittee u exhibjt A. • A copy of the Complaint is submitted to the Subcommittee as exhibit B. • Submitted to the Subcommittee as Exhibit C. 8 43 Fed. Reg. 2444, January 17, 1978. Submitted to the Subcommittee as Exhibit D.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  272 Settlement of the Consumers Union lawsuit, of course, means that there is no case law precedent for disclosure of documents discussed at open meetings which is applicable to other agencies.• REHEARSED "OPEN" MEETINGS  We recently learned that the discussions at the Board's meetings have not been the free al'ld open exchanges envisioned by the Sunshine Act. According to a letter dated October 27, 1977 from Janet Hart, Director, Division of Consumer Affairs at the Board, to Lewis H. Goldfarb, then the Acting Assistant Director for Special Statutes of the Federal Trade Commission, the Governors are briefed in advance of the meeting by the staff. The open discussion which is intended to occur at the public meeting actually occurs in private. After Mr. Goldfarb complained that the FTC's view a Board staff opinion had not been presented to the Board, Ms. Hart responded: " ... under the Board's current procedures all matters to be placed on its agenda are thoroughly discussed in advance by several members so that at least those Governors will be familiar with the subject and able to address it when the matter comes before the Board. Governors Jackson, Partee, and Lilly all received our staff memorandum which set out the arguments in favor of restricting EC-0007. They discussed the reasons pro and con in order to be prepared to speak to them at the Board table. Thus, the discussion in the open meeting on September 28 reflected a considered opinion, arrived at after reviewing the reasons you had put forward in your original letter and in the staff meeting." Thus, under the Board's present procedure, at least some discussions at the open meeting have been no more than a performance of a previously edited and rehearsed script. We believe that this practice undemines the Sunshine Act's purpose of encouraging public viewing of the actual _decisionmaking processes.1° This practice does not appear to violate the Act. Further, it is difficult to conceive of a statutory mechanism for preventing this abuse, since any prohibition could prevent necessary or desirable communications between members of collegial agencies except at scheduled meetings. Nonetheless, we wish to call it to this Committee's attention with hope that the Committee can encourage the Board to comply with the spirit as well as the letter of the law. THE SUNSHINE ACT SHOULD BE STRENGTHENED WITH RESPECT TO DISCLOSURE OF DOCUMENTS  Although we wholeheartedly support the general policies of the Sunshine Act, we believe that the Act needs to be strengthened in several respects. Presently, the treatment of documents under the Sunshine Act is unclear, in part because of the provision of the Act, 5 U.S.C. § 552b {k), which states: "Nothing herein expands or limits the present rights of any person under Section 552 [the Freedom of Information Act.] . . . " The Board is of the view that documents can be obtained only under the Freedom of Information Act, and not under the Sunshine Act, even if the documents are part of an open meeting. It has withheld staff documents under Exemption 5, which exempts from disclosure: "{5) inter-agency or intra-agency memorandum or letters which would not be available by law to a party other than an agency in litigation with the agency." 5 U.S.C. § 552{b) (5). While most of the exemptions to the Freedom of Information Act were included in the Sunshine Act, the inter-agency memorandum exemption was not. The purpose of Exemption 5 was to protect agency deliberative processes. EPA v. Mink, 410 U.S. 73 (1974). The Sunshine Act, however, mandates that the deliberations of collegial agencies be open to public view at the final decisionmaking stage. In ' The Civil Aeronautics Board just recently announced a policy of discretionary dis• closure of most portions of staff documents which are discussed at open meetings. How· ever, the CAB does not make clear whether such documents will be made available in advance, or only after, open meetings. 43 Fed. Reg, 22343, May 25, 1978. Some, but not all, other agencies subject to the Act have a similar policy of disclosure. The Consumer Product Safety Commission, Food and Drug Administration, and Interstate Commerce Commission routinely make these materials available to the public, while the Federal Communications Commission. Federal Maritime Commission, and Securities and Exchange Commtssion do so rarely, if ever. The Federal Trade Commission's policy lies somewhere between these two groups of agencies, permitting disclosure of some, but not all, staff documents. 10 Copies of the letters exchanger] between Ms. Hart and Mr. Goldfarb have been sub• mitted to the Subcommittee as exhibits F and G.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  273 our view, Exemption 5 is inappropriately applied to staff documents discussed at open meetings. However, the issue has never been resolved in court, and the Act is sufficiently ambiguous to make the outcome of litigation which challenges this practice uncertain. The Sur..shine Act, therefore, should be amended to require disclosure of such documents. We recommend that the Aet (1) should specify that all documents to be discussed at open meetings must be disclosed prior to such meetings and (2) should set forth the procedures by which this information may he obtained. These documents should 'be defined as a part of the "meeting," 5 U.S.C. § 552h (a) ( 2) 11 and, therefore, should explicitly he available for public obserrn tion pursuant to 5 U.S.C. § 552b(b)."' Certainly, such a reading of the Sunshine Act conforms with its overriding purpose of enabling the public to scrutinize and understand agency decisionmaking. THE SUNSHINE ACT STATUTE OF LIMITATION SHOULD BE EXTENDED  In addition, the 60-day statute of limitations in the Sunshine Act, 5 U.S.C. § 552b(h) (1), is too short and conflicts with the administrative procedure in the I!'·reedom of Information Act. In Consumers Union v. Board of Govcrno,rs, tl1e Sunshine Act statute of limitations would have expired if we had withheld suit until our administrative remedies were exhausted under the Fredom of Information Act. ,ve requested the staff documents for the August 18, 1977 open meeting by letter <lated August 25. The Board denied our request on September 19, 1977 and we appealed this denial on September 21, 1977. Under the Freedom of Information Act, the Board had until October 20, 1977 to respond to our appeal. Howe,·er, the Sunshine Act statute of limitations on our claim expired on October 17, 1977. Thus, we were placed in a serious dilemma. ,ve could file our suit before the 60-day statute of limitations ran and preserve our rights under the Sunshine Act, but risk dismissal of our }'OJA count for failure to exhaust our administrative remedies. Or, we could await Board action and preserve our claim under FOIA, but forgo our remedies under the Sunshine Act. Parties seeking documents related to open meetings should not be placed in this dilemma. The Sunshine Act statute of limit·ations should be extended to one year to avoid this conflict ·between the Sunshine Act and FOIA, and to allow time for parties to lawsuits arising under the Act to prepare their cases properly.13 CONCLUSION  In closing, we again thank the commiUee for this opportunity to comment on very important public interest legislation, the Government in the Sunshine Act. EXHIBIT A [From the Washington Star, June 8, 19781 "CLOUDS FILTER 'SUNSHINE' AT SEC MEETING"  There were a few clouds at the Securities and Exchange Commission's "sunshine" meeting yesterday as the five commissioners di-scussed moves to shed more light on corporate affairs. Although the session was open to the public-as required under the year-old Government in the Sunshine Act-the meeting was difficult for members of the public to follow. The staff had prepared a 60-page document containing all its recommendations. But the commission refused to release it despite the fact that without knowing 11 5 U.S.C. § 552h (a) (2) provides "the term 'meeting' means the deliberations of at least the number of individual agency members required to take action on behalf of the agency where such deliberations determine or result In the joint conduct or disposition of offkial agency business, lmt does not include deliberations required or permitted by subsection (d) or (e) ... " 13 r, U.S.C. § 552h(h) proYides: "Membersshall not jointly conduct or dispose of agency business other than In accordance wtlh this section. Except as provided In subsection (c), eYery portion of every meeting of an agency shall be open to public observation." 1• Thne is no magic to the one y~ar figure. Any period will suffice which permits exhaustion of the Freedom of Information Act process plus reasonable time for a potential plaintiff' to prepare a lawsuit for filing. However, in view of agency records retention practices, we see no reason why the one year provision would In any way prejudice or lnconyenlence agency Interests.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  274 what recommendations are being discussed it is difficult for members of the public attending an SEC meeting to know what the commissioners are talking about. At one point during the nearly three-hour meeting, Commissioner Irving Pollack, in discussing a matter other than corporate government, said he didn't understand footnote 5 on page 20. Aside from the commissioners and a few staff members who had the document, nobody in the audience knew what he was talking about. SEC Chairman Harold Willrams, in discussing the corporate governance recommendations, consistently referred to them by number-recommendations 1 through 7 were left for another time, for example--but because the commission declined to make the staff recommendations available, members of the audience could not know what they concerned. An attempt by The Washington Star to have the SIDC make the recommendations available--in much the same manner as the Federal Energy Regulatory Commission, Civil Aeronautics Board and Federal Reserve Board make staff papers available prior to ,a public meeting-was rejected. Commission general counsel Harvey Pitt pointed out that the Sunshine Act has not expanded the scope of material that would not be available under the Freedom of Information Act. The staff memo was a document prepared solely for the commissioners, he pointed out, -and is exempt from mandatory public disclosure. The reason, he indicated, was that if the public were given staff documents the staff would not feel free to express itself. After the meeting, a staff member agreed to brief reporters on the staff recommendations on which the commissioners had voted.  ExHIBIT  B  United States District Court for the District of Columbia Civil No. 77-1800 CONSUMERS UNION OF THE UNITED STATES, INC., PLAINTIFF, V. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, DEFENDANT  Oomplaint for Injunctive and Declaratory Relief  Plaintiff, Consumers Union of United States, Inc., by its undersigned counsel, comp~aining of the defendant, alleges : COUNT I  1. This is a civil action seeking injunctive and declaratory relief under the Government in the Sunshine Act, 5 U.S.C. § 552b, against defendant's failure to have a portion of its August 17, 1977 meeting open to public observation and its continued refusal to provide plaintiff with access to and an opportunity to copy a memorandum dated August 12, 1977 entitled "Proposed Remedies to Truth in Lending Violations" (hereafter, "the August 12 memorandum"). 2. Plaintiff is a nonprofit membership organization chartered in 1956 to provide information, education and counsel about consumer needs and services and the management of the family income. Plaintiff is the publisher of Consumer Reports, a monthly magazine with a circulation of -approximately 1.8 million, which regularly carries reports of its own product testing and articles on health, product safety, marketplace econorui,cs, and legislative, judicial and regulatory actions which affect consumer wefare. In addition, plaintiff represents the interests of its members through testimony before Congress, upon invitation to testify, and before the executive agencies and through litigation in the courts. ~Iany of plaintiff's members enter into consumer credit transactions which are subject to the requirements of the Truth In Lending Act and, therefore, have an interest in effective enforcement of that Act. 3. Defendants, a collegial body composed of seven members appointed to their positions by the President with the advice and consent of the Senate, heads the Federal Reserve System. Defendant is subject to the provisions of the Government in the Sunshine Act. 4. The court has jurisdiction of this action pursuant to 5 U.S.C. § 702, and 28 u.s.c. §§ 2201-2202.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  275 5. Defendant is responsible for enforcement of the Truth In Lending Act, 15 l:'.S.C. § 1601 et seq, with respect to consumer credit transactions of member banks of the Federal Reserve System. 6. Defendant and other federal financial institution regulatory agencies responsible for enforcement of the Truth In Lending Act have failed to enforce the .Act effectively during the eight years since it took effect. During the past year, these agencies, through the examiners employed by them, have begun to expand greater efforts in examining the financial institutions under their regulatory jurisdiction for Truth In Lending Act violations. These agencies have found widespread non-compliance with the Act, resulting in overcharges of interest to borrowers in consumer credit transactions. Due to these overcharges, many such financial institutions owe substantial amounts of money as restitution to such borrowers. 7. To cope with this alarming situation, defendant and the other federal bank regulatory agencies are attempting to develop joint guidelines for their bank examiners regarding the ordering of payment of restitution to aforesaid borrowers. 8. On August 17, 1977, defendant held an open meeting subject to the requirements of the Government in the Sunshine Act, during which the Governors discussed staff recommendations concerning the proposed joint guidelines. 9. Prior to this meeting, the staff recommendations had been transmitted to the Board in the August 12 memorandum. Also prior to the meeting, ·plaintiff requested from defendant copies of any documents to be discussed at the meeting. 10. During the course of the discussion of the truth in lending guidelines at the August 17 meeting, the August 12 memorandum was frequently referred to and discussed in detail. Due to defendant's refusal to make available the August 12 memorandum, much of the discussion during this portion of the meeting was incomprehensible to plaintiff and to the other members of the public present at the meeting even though plaintiff was familiar with truth in lending issues. 11. Therefore, the portion of the August 17 meeting relating to proposed guidelines and the August 12 memorandum was not, in fact, open to public observation. 12. On August 25, plaintiff requested from defendant access to and an opportunity to copy the August 12 memorandum in order to better understand what has occurred at the Board meeting. This request was denied, and defendant continues to deny plaintiff access to this document. 13. Plaintiff has exhausted all administrath·e remedies and has no adequate remedy at law. WHEREFORE, plaintiff respectfully requests the Court to grant plaintiff the following relief :  a. A permanent injunction against defendant's refusal to make promptly available to plaintiff and other members of the public the August 12 memorandum ; b. A declaratory judgment declaring that defendant has violated the Govemment in the Sunshine Aet by failing to have all portions of the August 17 meeting open to public obsen·ation and is continuing to violate that Act by refusing to pro,·ide plaintiff and other members of the public access to the August 12 memorandum ; c. The costs and disbursements of this action, including reasonable attorneys fees and other litigation costs reasonably incurred by plaintiff, and d. All other relief that the Court deems necessary and proper. COUNT II  14. This is a civil action seeking injunctive and declaratory relief under the Freedom of Information Act, 5 U.S.C. § 552, against defendant's refusal to provide plaintiff access to and an opportunity to copy a memorandum dated August 12, 1977 entitled "Proposed Remedies to Truth in Lending Violations" and a memorandum dated .June 23, 1977 entitled "Major Issue in Truth In Lending Simplification" (hereafter the June 23 and August 12, memoranda). 15. Plaintiff repeats and reiterates, with the same force and effect as if set forth at length here, the allegations of paragraphs 2 and 3 above. 16. The Court has jurisdiction of this action pursuant to 5 U.S.C. § 552 (a) (4) (B), 5U.S.C. § 702and28 U.S.C. §§ 2201-2202.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  276 17. The June 23 and August 12 memoranda were discussed in detail during the June 27 and Augut 17 open meetings of the Board, respectively. 18. On August 25, 1977, plaintiff requested that defendant provide access to and an opportunity to copy documents referred to during the June 27 and August 12 open meetings of the Board. The June 23 and August 12 memoranda were documents referred to during those open meetings. 19. Defendant partially denied plaintiff's request on September 9 and plaintiff's timely appeal thereafter was denied. 20. Plaintiff has exhausted all administrative remedies and has no adequate remedy at law. WHEREFORE, plaintiff respectfully requests the Court to grant the following relief: a. A permanent injunction against the defendant's refusal to promptly make available to plaintiff and other members of the public the memoranda of June 23 and August 12. b. A declaratory judgment declaring that defendant was and is in violation of the Freedom of Information by refusing to make available to plaintiff the June 23 and August 12 memoranda since the memoranda are not exempted from disclosure under any of the exemptions to the J!'reedom of Information Act; c. The costs and disbursements of this action, including reasonable attorneys fees and other litigation costs reasonably incurred by plaintiff; and d. All other relief that the Court deems necessary and proper. COUNT III  21. This is a civil action for injunctive and declaratory relief under the GovPrnment in the Sunshine Act and }'reedom of Information Act against defendant's policy or practice of refusing to grant plaintiff and other members of the public access to the recommendations and proposals to be discussed by the Governors at open meetings of the Board. 22. Plaintiff repeats and reiterates with the same force and effect as if set forth at length here the allegations in paragraphs 2 and 3 above. 23. The court has jurisdiction of this action pursuant to 5 U.S.C. § 552(a) (4) (B), 5 U.S.C. § 552b(h), 5 U.S.C. § 702, and 28 U.S.C. §§ 2201-2202. 24. The Board from time to time holds open meetings pursuant to the Government in the Sunshine Act, 5 U.S.C. § 552b, during which the Governors discuss staff recommendations and proposals for action by the Board. 25. These recommendations and proposals are often developed by the Board's staff and transmitted in writing in memoranda to the Governors prior to the open meetings. 26. The Board has a polic)· or practice of denying to plaintiff and other members of the public who attended these open meetings access to the recommendations and proposals under discussion and to the staff memoranda. As a rPsult, portions of these open meetings are not, in fact, open to public observation. 27. The foregoing policy or practice violates the Government in the Sunshine Act and the }'reeclom of Information Act, and plaintiff has no adequate administratiYe remedy or remedy at law. WHEREFORE, plaintiff respectfully requests the court to grant the following relief: a. A permanent injunction against the defendant's refusal to provide plaintiff and other members of the public access to staff recommendations and proposals which are to be the subject of and under discussion at open meeting of the Board; b. A declaratory judgment declaring the Board's policy or practice of denying plaintiff and other meml.Jers of the public access to staff recommendations and proposals which are the subject of and under discussion at open meetings of the Board in violation of the Government in the Sunshine Act and the Freedom of Information Act; c. The costs and clishursements of this action. including reasonable attorneys fees and other litigation costs reasonably incurred by plaintiff; and d. All other relief that the court deems necessary and proper. Respectfully submitted. MARK A. CYMROT, ELu;;N BROADMAN,  Attorneys for Plaintiff.  Dated: October 17, 1977.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  277 EXHIBIT  C  United States District Court for the District of Columbia Civil Action File No. 77-1800 CONSUMERS UNION OF THE UNITED STATES, INC., PLAINTIFF V. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, DEFENDANT  Summons  To the above named Defendant : You are hereby summoned and required to serve upon Mark A. Cymrot and Ellen Broadman, plaintiff's attorneys, whose address is 1714 Massachusetts Avenue, N.W., Washington, D.C. 20036, an answer to the complaint which is herewith served upon you, within 30 days after service of the summons upon you, exclusive of the day of service. If you fail to do so, judgment by default will he taken against you for the relief demanded in the complaint. [SEAL OF COURT]  OZerk of Court.  Date: October 17, 1977. NOTE.-This summons 1s issued pursuant to Rule 4 of the Federal Rules of Civil Procedure.  To : Board of Governors. From : Consumer Affairs Committee. Date: August 12, 1977. Subject: Proposed Remedies for Truth in Lending (TIL) Violations. Action Requested: Establishment of a Federal Reserve position on Truth in Lending enforcement procedures that will be taken to the Interagency Coordinating Committee as it strives toward adoption of uniform practices by the financial institutions enforcement agencies. Recommendat-ions: 'l'he Committee recommends that the Board support the adoption on a preliminary basis, by the agencies represented in the lnteragency Coordinating Committee, of the four positions discussed below. Background: Pursuant to an informal agreement between Messrs. Jackson, Heimann, Le Maistre and Marston, Board staff have been working with staffs of the Comptroller of the Currency and the FDIC 1 to develop uniform procedures for enforcing compliance with Regulation z.• This interagency task forre has reached substantial agreement on possible remedies in connection with violations of Truth in Lending. Representatives from the other agencies are reporting to their respective agency heads the positions agreed upon by the task force. The Committee believes that the remedies recommended herein are consistent with the Board's announced objectives of achieving compliance under TIL for its State member banks. The recommendations are based upon experience to date with the System's Consumer Affairs examination program and that of other agencies. The System has examined about 100 banks under the new procedures, and the Comptroller has examined about 2,000. Review of the examination reports is still under way, and it is not possible to make even preliminary estimates of the number of violations or amount of overcharges that may be found. Indications are, however, that violations will be found in a substantial number 1 Staffs of the Federal Home Loan Bank Board. the National Credit Union Administration and the Federal Trade Commission also participated In these meetings. What official action. if anJ·, will be taken by these agencies is not known prl'sently. 2 Procedures for enforcing compliance with Regulation B (Equal Credit Opportunity) have also been discussed, but no issues have arisen that seem to require special guidance at this time.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  278 of cases.• Because it does not seem practical to defer requiring remedial action until all examinations have been completed and reports reviewed, the Committee agrees with the other agencies that tentative standards should be adopted at this time, subject to being reconsidered in the light of experience. Each agency would closely monitor the effects of any reimbursement program, and the program would be subject to change in the light of experience. 1. Time limit for reimbursement: How far back should a creditor be required to go on making reimbursement for violations!' It has become evident through  consumer affairs examinations held to date that some creditors have been violating Truth in Lending for a number of years. (The Regulation became effective in 1969). The interagency task force recommends that creditors be required to make reimbursement as far back as their records extend.' This policy would have greater financial impact upon creditors who maintain records and favor creditors who did not. To adopt any other time limit for reimbursement, however, lacks support. Staff of the Legal Division concurs with this view. :t. Credit insurance not properly disclosed: How should violations of the requirement that the cost of credit insurance be separately disclosed and agreed to by the consumer be handled!' Regulation Z permits certain types of credit  insurance premiums to be eliminated from the total finance charge disclosure if certain disclosures are made. •.ro eliminate the premium from the finance charge, the creditor must (1) disclose the voluntary nature of the credit insurance and (2) obtain the customer's approval to acquire the insurance with a dated and signed statement. Staff believes that in situations in which the separate disclosure was not made and the premium was excluded from the disclosed finance charge, a significant violation has occurred. Accordingly, reimbursement of the amount of the overcharges would be necessary since the purchase of the insurance was required . In addition, a violating may occur when the separate disclosure is made, but the cost of the insurance is not filled in or the consumer fails to sign as required. The interagency task force believes that such violations are of a technical nature. The group recommends that in suc'h instances the creditor should ·be required to send the consumer a letter (1) asking whether or not the consumer had intended to acquire the insurance and (2) indicating that if the consumer did not intend to acquire the insurance a refund for the amount of the insurance premium would be given. However, if the only discrepancy on the separate credit insurance disclosure statement is a missing date, the group recommends that the creditor only be required to comply in the future. 3. De minimus rule: Should there be reimbursement when the m:erage amount reimbursable is less than some arbitrarily chosen, minimal amountf The interagency staff group agrees that when the actual cost of locating overcharged customers and making adjustments exceeds the amount of the reimbursement, a requirement ,to reimburse may not be appropriate. These costs may well exceed the basic utility that the reimbursement of overcharges would have for any one particular customer. Thus, the group has developed the following proposed guidelines on a de minimus rule. If an examiner's loan file sample reveals a pattern of overcharges that would represent an average reimbursement amount of less than $1 for overcharged customers, the bank would not be required to search through its records to locate and reimburse all overcharged consumers. However, any individual identified within the examiner's sample who was overcharged $1 or more would be reimbursed. Whenever the total dollar amount of any potential overcharge is large for a total universe of consumers in a bank (even though the average is less than $1), application of the de minimus rule may not be appropriate. In such cases, agency heads should have discretion to require the bank to conduct an affirmative ac• TIL overcharges were noted In approximate!~· R5 perrent of the Rtate member bank• examined. The averalfe overcharge noted in most bank• is under $2.500. However, there are significant overcharges in amounts exceeding $100,1100 per bank In seYen to ten banks examined. Under existing procedures, the Reserve Banks promptly notify DCA atafl' as such overcharge violations are uncovered. Governor Jackson Is notifll'd of rases Invoking large amounts as soon as the Reserve Banks are ahle to furnish sufficient data. Four specific cases In which ovncharges range between $100,000 and $200,000 have been reporter! to date. Stall' is following up on the remaining banks. In addition, stall' understands that the Comptroller examiners are finding similar overcharge patterns in national banks. No information is available on FDIC experience. • Stall' believes that neither the one-)·ear statute of limitations for civil penalties nor the two-year record retention requirement are relevant for this purpose.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  279 tion program, such as an educational effort, that would 'have the effect of the bank expending funds in amounts by which it would otherwise remain unjustly rewarded for the amount of the overcharges. If the average overcharge amount was $1 or more for those overc'harged consumers found within the examiner's loan file sample, the creditor would be required to search through it records to locate and reimburse all overcharged consumers. ( The de minimus rule would not apply.) 4. Method of reimbursement: What method should be used to make reimbursement when annual percentage rates (APRs) are understated? The thrust of any proposed remedy when an APR is understated ,to a consumer is to insure that the consumer's actual credit obligation does not exceed that disclosed. To adjust the credit obligation to the disclosed APR, the interagency group suggests that the following three methods of reimbursement be available: a. Lump-sum reimbursement for past overcharges and reduction of remaining payment amounts. b. Reduction in •the number of payments the customer has to make to adjust for both past and future overcharges (maturity reduction). c. Reduction in the future payment amounts to adjust for both past and future overcharges ( payment reduction). This overcharge reimbursement issue has presented substantial difference of opinion on theoretical grounds. Each method would return substantially the same dollar amount to ·the consumer. In the effort to reach agreement, the task force has endeavored to obtain as much input as possible from •those who will be affected, both creditors and consumers. Five Consumer Advisory Council members• were contacted by Board staff to solicit views as to the proposed methods of reimbursement. Generally, each member prefers method (a) that would allow for the consumer's credit obligation to be adjusted immediately for past overcharges.• In addition, the interagency task force met on August 10, 1977, with representatives from. both creditor and consumer groups• to seek their views on the proposed methods of reimbursement. The representatives were reluctant to commit the groups they represented, in view of the complexities of this issue and the lack of experience as to any impact the imposition of any of these methods will have. The creditor representatives tend to feel, however, that the creditors should be afforded the opportunity to select the best of the methods, while the consumer groups believe that consumers i,hould be given the option. This latter group seems to prefer method (a) (cash advance for past overcharges and reduction in future payments for overcharges that otherwise would occur in the future). The creditor representatives showed some preference for the maturity reduction (method (b)) especially in situations where significant overcharges exist. For the purpose of presenting the Board's posture to -t'he Interagency Coordinating Committee, this Committee recommends that the Board adopt the position •that •the preferred method of reimbursement when APR's are understated would be to make a lump-sum payment for past overcharges and reduce future payment amounts ,to reflect the correct payment terms ( method (a) ) . This method produces an immediate adjustment to ·the consumer's account for past overpayments and appears to be the most favorable. However, since this method could be unnecessarily burdensome in some situations, the Committee believes that other methods of reimbursement should be available, su'bject to approval by the regulating agency. Such situations may occur, for example, when (1) the total dollar amount of any lump-sum payment would jeopardize the financial sta·bility of the bank, or (2) the number of ·the remaining payments would not justify the administrative costs of reducing the amounts of these payments. Exhibits A and B may be useful in undertanding the application of these reimbursement methods. Exhibit A shows a typical Truth in Lending disclosure violation resulting in customer overcharges. The bank's failure to include prepaid finance charges in the APR calculation results in an understated APR. Exhibit B shows the effects of the different methods of reimbursement. 5 Bankers Carl Felsenfelcl and Richard Wheatley, Consumers Anne Draper and Robert Klein and Stat<> Regulator Robert Bullock. • Mr. Felsenfeld believes that method (b) might be preferable in short-term loan situations. • Creditor Groups: American Bank<>rs Association. Consumer Bankers Association, U.S. League of Savings Associations. and Credit Union National Association. Consumer Groups: Consumers Union, Consumer Federation of America, and Public Interest Research Group.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  280 Exhibit A  "'"')TICE TO ct1sro•.1~R nEOU\Jlt"•• RY t _LlEP fll)f J>AL RfS[H\'l HU, 't r,r10~~ Z !Toi• (.0,,,.,-4  ,,.O.,  LAW  •••I  LOAN NO,  , ... FltMr:cE Cll,\RG[ .,,.. , .... , ......,,,.,....,uo., .. ,o .......  0..  . . . . . . ,_31,l♦00 _ _  r ... Al.'J\.•,.r ('I 1,,, LOA" .............. ,'",, '-"' ,.,. r, ff'MO r1•1v,c.1 ,,.,.,., ~ ..... ,. ,, ,,.,..., ,,,...... ,., ,,...,,••.,.  1 l'11'intr:  S ''IJll,lJO  :fSt:.1  \.'icL.  !._ __  -----  l  0  s  !  --  -  .  .  '  -----·' --TOlAlS 1,400 .  ........ .. s:.J_J...MlQ_ (30,0001  ,o ..  ----·----  "  ·-·  .:~~--------= ~------·---;---~----,____  •• , . . . . . . . .  y,,,. ...... ~, .........  '  (!)l).•.1 1.1  ··'-  ( ....... ,, ......,l~•-T •1~A".1Clro ... , 0  ------· '----I)------------- . ----- --· -----' ~  111.IJ~i  1  L.L-  !!:GH: 111:.,\Tl"Jll<: ..~.  _4_3_6_3_ _ __  A,1~ust 1, 1977  s:  ____  ·--------- ,---s _ _ _ __  NETPAOCf.EOS  ~ i ~Ji'~~~~ iHARGE ·s sU~: zso; ,,o_ . Til,1 '"""'" tnct...-" ,,,. r,i1-;,.. ,--_ -----.. ---- ---- -,- -· - - - !.:------.---Oft '"'' ,,.........,:  :! 4  ---  Ttw A•1t~UAL r£11CC'l':'l>Cf Fl!\TE  •-·"1 , n/a  S  7  '------  .-  (56,900.40)  I ------  •  o"", ,.,, . ..,..,.:.,. •• __ 8._~ --"  (9.~)  C..,At:t~'l.5 [11:CLUC.-JLL l•um 1•, l':••"•,.:E CHAPO:E ,,. ,.,,.o•nw1lofl  ' ,  4 __  s  ,  - - ---. ----- -----::::::::::::::::::-'.,=---,--  ---·--·--·--  -----  '-·------.----  7  ·--------------~---  '•Y-.... lo,"'"'"''·•-:"'''=~' 0.. 11............. c,., Vtll l.. _36~- ....,..u,1.,,.... ,1;,,,.,,.. ors-Z1.L.'3.2__~-•"'f-- (230.67 _Js.t•. .,,. 11•~':.:l11.~'.l!'h':!".11JZ, ..,d..•o,.r•_l!,~_ _ .,,vo1•.,. .. - .....,_...,1,, ,,... T!HAL0' ,.-vYt-.rson , , . , . . _ . _ , a• SL•) S___86.,.9U0.!10 ., .., -;,;. , ....,... "".°"'....,""''"''""'''"'"''"·"""'"'""' .nd lic·n 0 ,...,_,"' 1°"""'111 21 Chestnut Dr__.l.oL5 ... ::clti:!n=-,- H.._icl1ts _____ __-:_--:-...; ~~.~ ;::::~ ,n ,~cd,..._......... " ....~.;.;;.0,--;;;.;..,-c-,N--,-_••-..•  ..,n boo  -•I,.. « ..- .......... ,., lh•I 1n••~- o.. c,.. , .... ,,.,, .. l~ ... , ~~"""" .... ,1w 11.ln,j N ...... ,v le,'""''' ....... __ """""' lo• ...... Cl'I  -  . . . . , , . , '" -  ...,,.... ,ti.  e... ,,i• 11 ·•""~-,,,_,.,,  ,, .... ..,,,rnod.o_ ... ,,n!..._,,,... ::is 9·b11•1  Any  fl:l)'l11tmt  recr.ived' more tha-:t 1S days  o~_  .na.q( ~l_4C'_c 1 1t~ wil 1. _.l\S!:IC'S~l,a _10·,_ 9LJfi.1Ltn~n1,h_ly_J_lj]Y.!''~~t=·- - - - - - - o.-....~ :o••r_,,.,...,, ,.., .....,•• ,, .,., ,,. ••c.fll•"~' ..,,., ~........ 2:..1;u11G1 _i:.a_ prcp:i)'!llult __ pcn.11,.,t_y______- __ -.-.:._-.:._-.:._-.:._-.:._-_-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-.:._-:_-:_-:_-:_-:_-:_-:_-:_-:_-:_-:_-:_-:_-:_-: o... ..r,,,,.w•,t=•""' ,,,.,,,,.,,.:,i...,.,... ,,.~,0112:o;a:D1t1l  _ _ _ __.R~ul.e..oUS,_'.,___ _ _ _ _ _ _ _ _ _ __  M,._.,,............. ,,,,,noot•P'l"••,o"S,,flflf lhSIJIU .. CE  '"C"[ATV U•S•JJIAIICE •• ,..,111•11 "'co.,...,,., 0" "'''"' ,.,,. ;:.~· ;:..;, -; or-11,_, bt t,o,o.- 1~"""0°' t"V _ , . ol h 1cno,oa. I I ~ , . . . . , _ IW"lll•,...,1,.., .,,r.• •o'.,;.•,u.,,-•11•, •~ ,.,-,,..1•-:• 1•,,ci-.• ... 1...., I · - - - - · • r , , 1 . , . 1e,..-all"'•cr.M er.tc,, 1,.tfll .-~oc,,s.1.~,~rl't 1•1:iU"A".';"f .,, ,,, .. ;.,•oJIOOhta .. 1..., ...... t-1.,u ••,,. ....... ,a,n-ld•l•--•-~nocndlf_.._ _ .,..  e"'~ IL•··,~.. ,,""" t  C.I  , ~ . - le,,  1211  T,...ce,a:10,e•..-,1L••1-.:lCu~  · - • llt-,  s _ _ _ _ _, 1.....,.,, ,:lt.... Cl"IC!ll.  •,•-...--c•••lt.1----'°'-"...,olrwn--,,,t,  l""so••C""'11IL•lt  ....,o...i:,,,.,,...,,,.,..  l._,..,..C,td,I  Lif•• ..••-•O"'v  s..,..,...... -------c,cs.,,;j;~f,o"'•,--------  --------,,,-----   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  281 EXHIBIT  B  EFFECT OF DIFFERENT METHODS OF REIMBURSEMENT  Loan amount: $31,400. Amount financed: $30,000. Term: 30 yrs/$360 monthly. Prepaid charges: $1,400.  Violation discovered after 84 payments made. Annual per• centaae rate  Amount financed  Monthly payments  Finance charae  8. 5 9.0 8. 5  $31,400 30,000 30,000  $241. 39 241.39 230. 67  $56,500.40 56,900.40 53,041.20  Bank disclosure ••••••••••••••••••••• ······-------- __ Rate actually char1ed ________ --·------- ---------- ---· Adjustment at disclosed rate _______ • ________________ _  1. Lump Sum Payment for Past 0-vcrchargcs-Reduction in Amount of Remain• ing Payments:  (a) Payments 1-84 of $241.39. (b) $1,233.38 lump sum p11yment for past overcharges. (c) Payments 85-360 reduced to $230.67 to adjust for future overpayments. 2. Reduction in Number of Payments (iJiaturity Reduction):  (a) (b) (c) (d)  Payments 1-84 at $241.39. Payments 85-300 at $241.39 (216 additional payments). Payment 301 at $185.14. Payments 30'>--360 eliminated.  3. Reduction in Future Payment Amounts to Reff,ect Past and Future Over• charges:  (a) Payments 1-84 of $241.39. ( b) Payments 85-360 reduced to $220.56.  EXHIBIT  D  [From Federal Register, Vol. 43, No 11-Jan.17, 1978] NOTICES [6210--01] FEDERAL RESEBVB SYSTEM  Material Scheduled to be Discussed at Open Board Meetings PROCEDURE FOR PROCESSING REQUESTS  For the information of the public, the Secretary of the Board of Governors of the Federal Reserve System has outlined the following procedures that are in effect at the Board for the processing of requests for copies of memoranda and other material scheduled to be discussed at meetings of the Board that are open to public observation. As required by law, the Secretary of the Board regularly makes public an• nouncement of the agenda for each open meeting at least one week in advance of the meeting. Members of the public who wish to request copies of materials scheduled to be discussed at such a meeting should make their requests to the Secretary as. far in advance of the meeting as possible in accordance with the Board's rules regarding availability of information, 12 CFR Part 261. In any case, the request should be received by the close of business two working days prior to the meeting. Because such materials may be helpful to the requesting party if they are available for use at the open meeting to which they relate, the Secretary gives such requests priority treatment. Requested materials are made available by the time of the meeting unless there is insufficient opportunity to process the request or a determination is made to invoke an applicable exemption from disclosure. Requests for materials to be discuss€d in open meetings should be in writing and addressed to the Secretary. They may be presented during business hours   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  282 at the Board's Freedom of Information Office, Room 1228, Federal Reserve Building, 20th Street and Constitution Avenue NW., Washington, D.C. 20551. Board of Governors of the Federal ReserYe System, January 12, 1978. THEODORE E. ALLISON, Secretary of the Board. [FR Doc. 78-1269 Filed 1-16-78; 8 :45 am]  EXHIBIT E BOARD OF GOVERNORS OF THE Ji'EDERAL RESERVE SYSTEM, DIVISION OF CONSUMER AFFAms, Washington, D.C., October 27, 1977.  l\lr. LEWIS H. GoLDFARB, A.cting Assistant Director for Spec-ial Statutes, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C.  DEAR LEW : This responds to your letter of October 13, expressing concen1 that the Commission's reasons for asking that the Board modify or withdraw staff opinions EC-0007 and EC-0008 were not adequately presented to the Board before it reached its decision at its open meeting on September 28. Since the Board decided to publish for comment a proposal to amend Regulation B in regard to the subject coyered by EC--0008, I will only try to answer your concerns about consideration of EC-0007, the 'religious book-seller' question. First, I am very sorry if you formed the impression at the meeting between the two staffs that the interpretation would definitely be modified. We had no reason to suppose it would not but we should have emphasized once again that staff members can neYer safely predict what decision seven Governors will make on any given question. I do not believe, however, that you were disadvantaged by failing to repeat in your subsequent letter arguments as to why it might be desirable to narrow the interpretation. "·hatever may have been the case when you were with us, under the Board's current procedures all matters to be placed on its agenda are thoroughly discussed in adYance by several members so that at least those Governors will 1Je familiar with the subject and able to address it when the matter comes before the Board. Governors Jackson, Partee, and Lilly all received our staff memorandum which set out the arguments in favor of restricting EC---0007. They discussed the reasons pro and con in order to be prepared to speak to them at the Board table. Thus, the discussion in the open meeting on September 28 reflected a considered opinion, arrived at after reviewing the reasons you had put forward in your original letter and in the staff meeting. It is not correct that Board staff made no effort at the open meeting to explain the implications of EC---007 as to "all other creditors who may request race, religion, or national origin infonnation." I am sorry that you were not yourself at the meeting. Had you been, you would ha Ye heard me make precisely that point to the Board. The Board acknowledged that the point had been made but nonetheless arrived at the conclusion that the arguments supporting the letter in its existing form carried more weight. Thank you again for your letter-I harn been Yery happy about the good understanding and cooperation between our staffs and would not want anything to prevent a continuation of a most helpful relationship. Sincerely, JANET HART, Director. EXHIBIT F FEDERAL TRADE COMMISSION BUREAU OF CONSUMER PROTECTION, Washingtnon, D.C., October 13, 1977. JANET HART, Director, Dirision of Cons1tmer A.flairs, Board of Governors of the Federal Rcsert'C System, Washington, D.C.  DEAR JANET: I have received the Board's response to our request for reconsideration of Staff opinions EC-0007 and EC-0008 and have discussed with my staff the Board's treatment of our request at its open meeting on September 28, 1977. In light of what I consider to be a good working relationship  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  283 between our staffs I feel constrained to express my disappointment and concern over staff's presentation of our position before the Board. I recognize that your staff is placed m the delicate position of having to defend the merits of its official staff opinions while at the same time presenting, in an objective way, the views of other agencies which assert that those opinions are improper and inconsistent with the purposes of the law. Notwithstanding this factor I do feel that our proposals were not given fair treatment before the Board and, as to opinion IDC-0007, we were assured that staff would take a position favorable to ours before the Board. At our meeting of July 22, involving several members of the :rrc, the Justice Department and your staff you stated unequivocally that opinion EC-0007, responding to a request from a religious book seller as to whether it could request information on an applicant's religion, was unnecessarily broad and that a second opinion would be published narrowing the coverage of EC-0007 to the facts presented. In light of your statement we did not discuss this issue further and did not address it in our subsequest letter to the Board. We assumed from your statement that EC--0007 would be modified to the satisfaction of all the parties involved. What happened at the open meeting was quite a different story however. Not only was the question of narrowing the scope of EC--0007 not even discussed before the Board but much to the embarrassment of the several FTC staff members present at the meeting several Board members ridiculed Commission staff for even expressing concern about a religious book seller requesting information on the religion of its customers. Board staff apparently made no effort to explain what was really at issue here, to wit, the implications of this opinion on all other creditors who may request race, religion, or national origin information and the extent to which it contradicts the Board's earlier position on data collection for monitoring purposes. Nor was there any mention of Board staff's earlier view that the staff opinion was overly broad and should be narrowed to the facts of the situation. Had we known that Board staff was going to reverse its position on this issue we would have attempted to enlighten the Board as to our legitimate concerns and thereby hopefully inspire some meaningful debate on this issue. I will not go into the details of the Board's treatment of opinion EC-0008 except to say that, in our view, staff did not present many of the significant points at issue. It appeared that one of the major reasons the Board ultimately agreed to publish the proposed amendments for comment was out of deference to its sister agencies. Janet, I am sure you are aware that we are not fearful of a religious book seller denying credit on the basis of religion nor do we believe that bank card issuers will intentionlly manipulate their security parameters to deny credit at point of sale on a prohibited basis. Our motivation for pursuing these matters so vigorously is based on more fundamental concerns which we expressed in our letters to the Board and at our meetings with you but which apparently were not aired at the open meeting of the Board. ,ve are concerned that Board's staff has construed its authority under the Equal Credit Opportunity Act as empowering it to make sweeping changes in the law on the basis of a fact situation presented by a single creditor. We believe the interpretation writing authority should be exercised as discreetly and narrowly as possible, strictly limited to the facts presented. This is consistent with the basic rules of statutory interpretation and is particularly appropriate where the process is undertaken outside public scrutiny. We are concerned that the staff members responsible for drafting official interpretations, who are not involved in the bank examination process, have a limited appreciation of the complex problems confronted in enforcing this law, particularly those faced .by enforcement agencies such as the FTC and the Department of Justice which do not have examinors to review the policies of every institution within their jurisdiction. We believe that the concurrence of the Department of Justice as the chief enforcer of this country's civil rights laws and the FTC the principal enforcement agency, should be sought before the issuance of any opinion which would change compliance responsibilities under this civil rights law. We are concerned with a recurring theme in the Board's and its staff's approach to implementing Equal Credit Opportunity that if there are no significant complaints about a problem in this area then it does not exist. While the "mailbag" approach may be useful in enforcing Truth in Lending it would be folly for ours or any other enforcement agency to implement an enforcement program solely on the basis of letters received from aggrieved individuals. Dis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  284 crimination, especially discrimination in any aspect of a credit transaction, is often too complex and subtle for consumers to detect and pursue. Detection is now made even more difficult by staff opinion EC-008 which denies credit card customers the right to be told the reasons for denial at point of sale. We are concerned that Board staff is in a position of irreconcilable conflict in having to defend its own official, non-Board approved interpretations while at the same time presenting the views of the opponents of those interpretations in an objective way. We know that, of necessity, the activities of the Division of Consumer Affairs are not accorded a high priority among the Board's overall responsibilities for this nation's monetary affairs. (When I was employed by the Board I was told that no memorandum longer than three pages would ever receive the scrutiny of the Governors.) The staff's presentation at the table is therefore of critical importance to the Board's full and fair consideration of the issues involved. Without questioning the Board's staff good faith in making its presentation at the table, I must note that some of the major points in support of our position on both interpretations were not covered by the staff. ,ve are concerned that the Board's staff, in issuing interpretations EC-0007 and EC-0008, have acted in a manner inconsistent with the Board's own regulations which provide that official staff interpretations will only be issued upon those requests that "have no significant policy implications" (12 CFR 202.l(d) ( 4) (ii). Clearly, a rever~al of the Board's official interpretation of "adverse action') and a new exce11tion to the Regulation B prohibition against the collection of race, religion and national origin data are interpretations which have significant policy implications. I am expressing these concerns to you out of a sincere belief that many of the important protections which have !Jeen incorporated into the law and its Regulation through an open process of pu!Jlic de!Jate and participation are being Swiftly eroded through the Board's official staff interpretation"' process. I would welcome any suggestions you may have for improving this process. Sincerely, LEWIS H. GOLDFARB, Acting Assistant Director for Special Statutes.  EXHIBIT G  DECE:MBEB 9, 1977. To: Bonnie Naradzay. Access Officer for ]'OIA, BCP; Lewis Goldfarb, Special Statutes ( 506 IND) ; .Justin Dingfelder, Special Statutes (502 IND). From: Karen Kawaguchi Abrams, FOIA Branch. Subject: FOIA Request No. 77--0570---Federal Reserve Board Staff Opinions IDC-0007 & EC--0008. Attached is a copy of an ]'OIA request from Ellen Boardman of Consumers Union. I spoke with her today. She is specifically interested in correspondence from .Janice Hart of FRB to Mr. Goldfar!J. Please submit your Bureau's determinations to me (through Bonnie Naradzay) with any responsive documents by December 22, 1977. Thank you. CONSUMERS UNION, Washington, D.O., December 7, 1977.  BARBARA KEEHN, FOI A Officer, Federal Trade Oomm-issio11, Washington, D.O.  DEAR Ms. KEEHN: Consumers Union requests to inspect and copy records containing correspondence betwPen the Federal Trade Commission staff and Federal Re!<erve Board staff concerning the FTC petition for reconsideration of FRB Staff' Opinions EC-0007 and EC--0008. This request is submitted pursuant to the Freedom of Information Act, 5 U.S.C. § 522 et seq, as amended, and FTC regulations 16 C.F.R. Part 4. Please inform me of any copying costs prior to making copies. Thank you for your attention to this matter. Sincerely, ELLEN BROAD:MAN,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Attorney, Washington Office.  285 EXHIBIT G(l) DIANE B. COHN, ATTORNEY AT LAW, Washington, D.O., June 2, 1977.  Re: Meeting of June 3, 1977-Government in the Sunshine Act request. Mr. GRIFFITH L. GARWOOD, Deputy Secretary of the Board of G01,ernors, Federal Reserve System, Washington, D.O.  DEAR. MB. GARWOOD : 'rhis letter is written on behalf of Marty Rogol, Director of the Public Interest Research Group ("PIRG"). As you know, PIRG represents the views of consumer groups before various federal regulatory agencies. As part of its activities, PIRG monitors those agencies with regulatory responsibilities over financial institutions, including the Ji'ederal Reserve Board. As a result, it has studies the Board's implementations of the requirements of the Government in the Sunshine Act and, in particular, its continuing policy of closing meetings, such as that which is to be held on June 3, 1977, when the Board discusses legislative proposals or draft testimony, to be presented to Congress. It is our view that the Federal Reserve Board's reliance on exception 9(B), 5 U.S.C. § 552b(c) (9) (p) as a basis for closing all such legislative policy discussions is based on an overly broad interpretation of that exemptive provision and that this policy is neither supported by the language of the Sunshine Act nor consistent with its legislative history. Exemption 9(b) was intended to apply only to those few instances where the premature disclosure of information would "be likely to significantly frustrate implementation of a proposed agency action ..." ( emphasis added). It is difficult to imagine how the Board's ability to submit public testimony on pending legislation or to propose legislation of its own could be rendered inefl'ective in each instance by providing public access to the decision-making process by which such positions are formulated. In fact, the Board's practice of closing these meetings conflicts with those statements in the legislative history of the Sunshine Act which address this very issue. When Senator Percy raised the Board's concerns during debate on the floor of the Senate, Senator Chiles stated that only where there is a specific Congressional request and a need for secrecy regarding proposed legislative testimony may an agency hold its meetings "in confidence" pm-suant to exemption 9(B). 121 Cong. Rec. S19442 (Nov. 6, 1975). Absent some particularized showing that confidentiality is necessary to prevent the frustration of agency action, exemption 9(B) cannot be properly invoked. If the Sunshine Act is to have its intended effect-that is, to meaningfully advise the public and the Congress of the considerations, alternatives and dissenting opinions which are relevant to the testimony or proposal finally formulatedthese meetings must be open to the public. Certaiuly the practice of closing such meetings cannot be defended on the ground that the Board may choose to make transcripts of these meetings availa·ble sometime after the testimony is presented or the legislation enacted. By that time, the opportunity for a complete evaluation of the Board's positions and timely input into the legislative process often has passed. Consequently, strict compliance with the open meeting requirements of the Sun!<hine Act is crucial. We therefore urge the Board to reconsider both its specific decision to close the June 1 meeting to the public and its general practice of denying public access to its legislative policy discussions. DIANE B. COHN. EXHIBIT O (2) AUGUST 5, 1977. Ms. DIANE B. COHN, Attorney at Law, Washington, D.O.  DEAR Ms. COHN: I am writing in reply to your letter of June 2, 1977 in which, on behalf of Mr. Martin Rogol, Director of the Public Interest Research Group ( "PIRG"), you urged the Board to reconsider both its specific decision to close its meeting of June 3rd to the public and its "general practice of denying public access to its legislative policy discussions" under the Government in the Sunshine Act. With respect to your specific request concerning the June 3rd meeting, I understand that Mr. Griffith Garwood, Deputy Secretary of the Board, spoke with you  https://fraser.stlouisfed.org 35-867 0 • 79 • 19 Federal Reserve Bank of St. Louis  286 concerning this request on the day of the meeting and informed you that due to its late receipt your request unfortunately could not be properly considered by the Board at that time. We further understand that PIRG is principally concerned with what it feels is the Board's general practice of closing its discussion of legislative items in reliance upon exemption 9(B) of the Sunshine Act (5 U.S.C. 552b(o) (9) (B) ). Exemption 9(B) provides that an agency may close a meeting, or portion thereof, when it properly determines that such portion or portions of its meeting is likely to "disclose information the premature disclosure of which would(B) in the case of any agency, be likely to significantly frustrate implementation of a proposed agency action, except that subparagraph (B) shall not apply in any instance where the agency has already disclosed to the public the content or nature of its proposed action, or where the agency is required by law to make such disclosure on its own initiative prior to taking final agency action on such proposal•••". The legislative history of the provision demonstrates clearly that it was intended to allow agencies to close their deliberations when premature disclosure of agency intentions would significantly frustrate or even destroy the effectiveness of proposed agency actions. Examples giYen in the Senate Report include formulation of agency negotiating strategy, as in collective bargaining with employees, and consideration of agency actions which by their very nature need to be implemented without advance public knowledge, as in the imposition of an embargo on the export of goods. The House Report summarizes the exemption's purpose by stating that it "employs a balancing test between the presumption in favor of openness and the need the delay the disclosure of certain information in the interest of proper administration." As referenced in your letter, since the Act became effective, the Board has had occasion at several of its meetings to consider legislative items requiring formal Board action. In a number of these cases, the Board has closed discussion of those items after determining that exemptions other than 9(B) were applicable and that the public interest did not otherwise require that tihe items be open. In the majority of cases, however, the Board has closed its discussion of legislative items on the basis of exemption 9 ( B). Two reasons clearly support closing of such items on the hasis of this exemption. First. when the Board ts asked by Congress to transmit its views and recommendations on legislative matters, whether in the form of testimony, comments, or the actual formulation of a legislative proposal, it is of-ten necessary to preserve the eft'ectiYeness of its actions by delaying disclosure of its deliberations. Di8cussion of legislath-e matters generally involves the consideration of strategy to be pursued in the acC'omplishment of legislative objectives favored by the Board. For example, the Board may decide to support a particular legislative proposal, hut decide at the same time to support alternative "fallback" proposals if such primary proposal should prO\·e unacceptable to the Congress. Premature disclosure of the fact that the Board was willing to support alternative proposals could significantly frustrate the Board's ability to foster support of the primary µroposal being consid!'red. In this regard, we think PIRG would agree that the legislath•e process contains elements of negotiation and compromise, and premature disclosure of positions on legislative matters would significantly frustrate the attainment of primary legislative goals sought by the agency. Second, the legislative history supports the view that the Congress generally expects that, as a matter of proper agency administration, agency views on legislatiYe matters will first be given to Congre.<is. The important working relationship between Congress ancl the independent federal agencies would be significantly frustratecl if agency views on legislation were prematurely disclosed to the press nnd interest groups---hoth public ancl priYate. Such premature disclosure could lead to nctions being taken by others fhat could significantly frustrate effective agency compliance with the requeRt or that could significantly reduce the effectiveness of age-ncy viewR when giYen. The point to be made is that the closing of agency discm;;sion of legislatiYe matters under exemption 9(B) does not shield foreYer from public S<'rutiny the formulation of agmcy views on legislation; it only delays the release to the public of such agency deliberations. While the Board's and PIRG's general views on the applicability of exemption 9(B) to legiRlath-e mattE>rs may be somewhat different. very serious consideration has been gh-en to PIRG's views on the scheduling of such matters. While the   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  287 Board feels that its general views of the applicability of exemption 9(B) to legislative matters is supported in the Act and its legislative history, each agenda item is being judged separately. The ~oard recognizes that reasons for invoking exemption 9(B) may be less compelling in certain situations and outweighed by the public interest in open discussion. In fact, since receiving your letter, the Board has opened to public observation its discussion of Truth-in-Lending simplification legislation and foreign bank legislation because there was a significant public interest and because it felt an open discussion would not significantly frustrate the attainment of its objectives. The Sunshine Act is, of course, recent legislation as yet uninterpreted by the courts, and the Board and other agencies subject to the Act are, on a daily basis, having to make sometimes difficult judgments on the scope and meaning of its requirements. We appreciate your having provided us with your views. Very truly yours, THEODORE E . .ALLISON, Secretary of the Board.  EXHIBIT H (1) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Washington, D.O., March 6, 1978.  Ms. NANCEE SIMONSON, The Bureau of National Affairs, Inc., Washington, D.O.  DEAR Ms. SIMONSON : This is in response to your request under the Freedom of Information Act, 5 U.S.C. § 552 ("Act"), for docwnents to be discussed at the open meeting of the Board of Governors scheduled for March 6, 1978. In accordance with the Board's expedited procedure pertaining to such requests, the memoranda to be discussed at this meeting will be made available to you immediately before the start of the meeting with the exception noted below. The draft testimony of Governor Coldwell before the Senate Committee on Banking, Housing and "Urban Affairs regarding S. 72, the "Competition in Banking Act of 1977", consists of staff recommendations and opinions and as such is exempt from disclosure pursuant to section (b) (5) of the Act (5 U.S.C. § 552(b) (5) ), pertaining to internal memoranda not available by law to a party other than an agency in litigation wHh the agency. However, this document will be made aYailable to you as soon as it is presented to the Congress. If you believe, contrary to the opinion expressed herein, that you have a legal right to the information that has been withheld, you may appeal -this determination in accordance with section 261.4 ( e) of the Board's Rules Regarding the Availability of Information, a copy of which is enclosed for your convenience. Yery truly yours, GRIFFITH L. GARWOOD, Deputy Se<Jretary of the Board.  EXHIBIT H(2) • BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Washington, D.O., February 6, 1978.  l\,ls, NANCEE SIMONSON, The Bureau of National Affairs, Inc., Washington, D.O.  DEAR J\Is. SIMONSON: This is in response to your request dated February 1, 1978 c•opies of 8taff documents which are to be discussed at the Board's open meeting scheduled for February 6, 1978. Your request is being processed under the }'reedom of Information Act, 5 U.S.C. § 552 ("Act"). In accordance with the Board's expedited procedures pertaining to such requests, the requested memorandum for item 1 of the Summary Agenda and portions of the memorandum for item 2 of the Discussion Agenda wil !be made available to you prior to the start of the Board meeting. The draft statement to be discussed as item 1 of the Discussion Agenda and portions of the document to be discussed as item 2 of that agenda have been withheld because they consist of intra-agency memoranda containing staff opinions and recommendations and are exempt from disclosure pursuant to exemption 5 of the Act. The statement in   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  288 item 1 of the Discussion Agenda will be made available to you immediately upon its delivery to the Senate Committee on Banking, Housing and Urban Affairs. Accordingly, your request is substantially granted but denied in part for the reason stated above. If you believe that, contrary to the opinion expressed herein, you have a legal right to the documents determined to be exempt, you may appeal this determination in accordance wHh the procedures in§ 261.4(e) of the Board's Rules Regarding Availability of Information, a copy of which is enclosed. Very truly yours, THEODORE E . .ALLISON, Secretary of the Board.  NUCLEAR REGULATORY COMMISSION Senator CHILES. Our next witness is Dr. Joseph M. Hendrie, Chairman of the Nuclear Regulatory Commission. He has been with the Commission since 1977. If you could summarize your presentation, to some degree, it would give us more time for questions.  TESTIMONY OF lOSEPH M. HENDRIE, CHAIRMAN, NUCLEAR REGULATORY COMMISSION, ACCOMPANIED BY STEVE OSTRACH AND SAMUEL CHILK Mr. HENDRIE. Thank you very much, Mr. Chairman, and I will try to cut down a little bit on the prepared statement. I would like to begin by thanking you for the opportunity to discuss the Commission's views and experience on the administration of the Government in the Sunshine Act. In some measure my discussion will draw on the annual report on the administration of the act that the Commission recently issued, and we would like to submit a copy for the record as part of my remarks. Senator CHILES. We will receive that copy for the record. [The material referred to follows:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  289 FIRST ANNUAL REPORT ON COMPLIANCE I/ITH GOVERNMENT IN THE SLlNSHINE ACT OF 1976 Introduction The Nuclear Regulatory Corrmission (NRC) herewith submits the First Ann~al Report as required by Subsection (j) of the Government in the Sunshine .~ct (5 U.S.C.  §  552b, P.L. 94-409).  This annual report sum-  marizes ~RC's compliance with the requirements of the ~ct.  It contains  a tabulation of the total number of open and closed meetings of the Ccmmission, the reason for closing meetings, litigation infor.nation, and other information relating to this agency's procedures for public notification and understanding of the Coomission's meeting activities. NRC's Statutory Meeting Reauirement ' The Nuclear Regulatory Commission is a five-member, independent regulatory commission established by the Energy Reorg-anization .~ct of 1974 (P.L. 93-408).  It is responsible for assuring the protection of  the ~Lblic health a,1 safety through the licensing and regulation of the uses of nuclear materials.  The Comission is required by the Energy  ~eor9anization Act to conduct its business in meetinss. Section 201.(a)(l) of the .~ct states that "the Chairman (or the Acting Chair:nan in the  absence of the Chairman) shall preside at all meetings of the Commission and a quorum for the transaction of business shall ccnsist of at lEast ~hre:e :;-:e::it:ers present."  In compliance \'iith this reaui:--2."7:ent, princ~~a1  cct~Qns of the Cor.rniss~on are accompli~hed :hrougn ~he vo:es of a quorum  of ~=~:ers present.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  290 In keeping with its significant and substantial public health and safety responsibilities, this Corranission has emphasized the participation of each Commissioner in its decision-making activities.  Commission  meetings are therefore generally scheduled at times when all Commissioners can be present so that each may participate in and contribute to the deliberations. Use of Notation Voting The Commission has interpreted the "presence" pro vision of the Energy Reorganization Act to mean that actions requiring formal votes of the Commissioners must be handled in the meeting context.  Therefore,  the Commission only utilizes a very restricted form of notation voting as a mechanism to indicate that certain noncontroversial matters may be sch~duled for approval at a voting session without the need. for further These matters involve relatively minor  deliberation at the meeting.  regulatory or adjudicatory activities which represent only a minor extension, m1Jdification,  m)  elaboration of existing policy and do not  set new precedent or constitute a majJr departure from existing policy. Under this procedure, individual Commissioners inform the Secretary of their readiness to approve these matters without staff briefings or other deliberations at a meeting.  When the Secretary has received  written notification of the Commissioners' wishes, and after due public notice, he schedules a Corranission meeting at which the Commissioners may formally register their votes.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  At these meetings, the staff paper  291 or subject is briefly described, the staff recommendations are recited, the comments of individual Commissioners are discussed, and a formal vote is taken and recorded by the Secretary. The Secretary's record of these votes is placed in the NRC's Public Document Room. This procedure has proven awkward and difficult to administer for reasons not associated with the Sunshine Act and the Commission is now considering whether to propose an amendment to Section 20l(a)(l) of the Energy Reorganization Act to modify the absolute physical presence requirement for matters now requiring formal meeting affirmation.  The  difficulties arise in the scheduling process, i.e., sufficient time to affirm the action previously agreed upon, the availability of a quorum of Commissioners and the time required to give ample public notice. As~ result, there are occasions on which items that have received the "approval" of all individual Commissioners, may exper:ience unavoidable delays of several days to several weeks prior to formal Commission affirmation and staff implementation.  Such delays have severe impact,  of course, on matters upon which timing is critical. For matters which do not involve formal rulemaking, adjudication or licensing activity, the Commission also employs procedures under which individual Commissioners comment on and approve staff actions in writing to the Secretary.  These procedures are utilized primarily for the  approval of outgoing correspondence by the Chairman, and for noting actions being taken or about to be taken under delegations of authority to the staff.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  292 Meetings Defined by Sunshine Act With enactment of the Government in the Sunshine Act and in compliance with its provisions, NRC has adopted regulations clearly defining meetings of the Corrrnission which are subject to the announcement and record keeping requirements of the Sunshine Act.  In summary, a meeting  is defined as the deliberation of at least a quorum of Commissioners where such deliberation determines or results in the joint conduct or disposition of official Commission business.  Gatherings of a social or  ceremonial nature and certain informational discussions which are conducted without specific reference to any particular matter pending before the Commission are considered exempt from the provisions of the Sunshine Act.  A complete definition of the term "meeting" is contained in section  9.1101 of NRC' s Sunshine regulations which are appended to this report (Apprndix D). For purposes of tabulating meetings in this report, each separate item scheduled for discussion or briefing is counted as  J meeting.  Add..itionall_y.  each seruon aLwhich one or more matters were scheduled for affirmation under the limited notation voting procedure described above is counted as a  rno~•; na.  Analysis of Meetings Held During Reporting Period The Nuclear Regulatory Corrrnission held 326 meetings announced under provisions of the Sunshine Act, during the period March 12, 1977 through March 11, 1978.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  These meetings are tabulated in Appendix A by month.  293 Of the 326 meetings, 182 (56%) were conducted open to the public; 143 (44%) were conducted in closed session; one meeting was conducted as a partially open - partially closed meeting. The tabulation also indicates that the percentage of open meetiings has increased from less than 50% during the first three months to over 70% for the final three months. All closed or partially closed meetings were approved by vote of the Commission to be closed under one or more of the exemptions authorized by subsection (c) of the Sunshine Act.  In addition, the General Counsel  certified that each meeting was closeable under the specified exemptions. Appendix B contains a tabulation showing the number of instances in whiph each of the exemptions were used for closing meetings.  The tabulation  indicates that 70 percent of the meetings (99) were closed.because they contained discussions involving personal privacy ('Exemption 6), classified information (Exemption 1) or matters under agency adjudication (Exemption ·)  10).  An additional 26 meetings which contained discussions regarding  proposed legislation and formulation of budget proposals to be submitted to the Office of Management and Budget and eventually to Congress were closed.  It is the belief of the Commission that the premature release  of these matters might preempt their actions as well as those of the Executive Branch and the Congress.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  294 Consideration of Public Interest in Determining Open/Closed Status The Colllllission, in adopting its Sunshine Regulations, explained how it would employ the public interest criterion in exercising agency discretion to open meetings when an exemption is available: Section 9.104(a) of the rules, like the proposals of several other agencies, gives presumptive but not conclusive force to the determination than an exemption is available in deciding the public interest question. The fact that a meeting does come within a specific provision of§ 9.104(a) indicates that the Congress recognized a public interest in closing, not opening, meetings of this character. The Corrrnission staff has been instructed to consider the public interest in recoT1171ending to the Commission whether or not to close particular meetings. The Colllllission believes that this internal procedure and the awareness of the Colllllissioners themselves and their advisors of public interest concerns will ensure adequate consideration bf the public interest before any decision to close a meeting is made, without need for a formal procedure of the type proposed. 42 Fed. Reg. 12876 .(March 7, 1977) In the implementation of its rules, the Collllli°ssion calls upon the staff to consider the public interest factors in any recolllllendations to the Commission for closed meeting discussions.  The Commissioners  review staff's recommendations for closed meetings, consider the advice of the General Counsel as to whether the item is properly closeable, and discuss among themselves the necessity for precluding public attendance, including the 1nterest of the public in the subject matter. Implicit in this procedure is that a vote to close represents the Colllllission's determination that the public interest does not require an open meeting.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  295 Process for Public Notification of Meetings Conmission regulations provide that each meeting is publicly announced by the following methods: a.  Forwarding to the Federal Register for publication an announcement of the time. date and location of the meeting, the topic(s) to be discussed. whether it is open or closed, and the name and phone number of a contact.  b.  Publicly posting in the NRC Public Document Room, 1717 H St., N.W •• Washington, O.C. 20555, a copy of the announcement at the time it is sent to the Federal Register.  c.  Mailing a copy of the announcement to those persons on a mailing list (currently 48 names and addres_ses) at the time it is sent to the Federal Register.  d.  Submittal of a copy of the Federal Register Notice to the news media (AP. UPI, Energy Daily. Nucleonics Week. the l~ashington Post. Washington Star. and Nuclear Industry Magazine) at the time it is sent to the Federal Register.  Appendix C contains a tabulation of the number of days notice for NRC meetings.  In summary, more than two-thirds of all meetings (three-  fourths of the open meetings) were announced with seven or more days notice. The remaining meetings (43 open and 61 closed) were held with less than seven days notice.•   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  296 Meetings held with less than seven days notice are generally scheduled for the following reasons: a.  for consideration of subjects which by nature require illlTiediate discussion and prompt action by the Commission, such as emergency consideration of problems concerning operating reactors, short-notice scheduling of Congressional hearings at which Commission testimony is requested, and items which have expiration dates not under control by the Col!ITiission (about 70%);  b.  for administrative reasons, such as the scheduling of a continuation meeting because of the need for extended discussion of the items, or the rescheduling of meetings previously announced with due public notice to accol!ITiodate dtscussions of more urgent matters or late shifts in CoIT1Tiissioners' schedules (about 30%).  The ColllTiission takes quite seriously the need to assure that shortnotice meetings are held to a minimum.  In all cases the urgent nature  of the need for the meeting is considered by all ColllTiissioners, and in the instances sul!ITiarized above, all were scheduled with the unanimous agreement of the Commissioners.  In instances where the Col!ITiission  approves the short-notice scheduling of a public meeting, staff makes special efforts to release as rapidly as possible the mailed announcements, to notify press representatives of the meeting, and to telephone any parties who have a specific interest in the matter to be discussed.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  297 Procedure for Public Request to Change Status of Closed Meetings The Commission's rules describe the procedure to be followed by a person who wishes to request a change in the status of a closed meeting. 10 CFR 9. l06(b) and (c) provide that "any person" may ask the Commission to reconsider its decision to close a meeting by filing a petitio~ for reconsideration within seven days after the date of the decision to close and before the meeting in question is held.  Any such petition  must specifically state the grounds on which the petitioner believes the Commission decision is erroneous, and the public interest in opening the meeting.  Filing such a petition does not automatically act to stay the  effectiveness of the Commission decision or to postpone the meeting in question. The Commission has received no requests for a change in the status of a closed meeting. Steps Taken to Assist Public Understanding of Open Meeting geliberations The Commission has taken a number of significant steps to facilitate public understanding of open meeting deliberations. a.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Specifically:  The Commission has constructed an entirely new meeting room expanding the seating capacity for the viewing audience from a maximum of 60 to 154.  A second, smaller  conference room, with a maximum seating capacity of 30,  298 also was constructed to be used in the event the number of meeting attendees exceeded the available seating capacity in the main meeting room.  Both rooms are provided  with multiple overhead speakers and with a closed circuit television system to ensure that every person desiring to attend a meeting can see and hear as well as any other attendee. b.  Copies of any vu-graphs to be used in the course of meetings are made available to meeting attendees at the entrance to the Conference Room prior to the co11111encement of the meeting.  c.  The Commission has recently initiated a procedure for providing copies of the principal unclassified staff paper scheduled to be considered at the meeting to public at_tendees in the Conference Room.  These papers will also be placed in the Public Document  Room at the conclusion of the meeting. d.  The Commission has amended its regulations implementing the Sunshine Act to permit public attendees to tape record Commission discussions of open meeting items.  e.  On December 2, 1977, the Commission initiated a policy of transcribing all open Commission meetings.  These are unofficial  transcripts which are not edited by the Commissioners or by the staff and are placed in the Commission's Public Document Room within 48 hours of the conclusion of the meeting.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  299 f.  The Conmission currently is developing a pamphlet entitled "Guide to NRC Open Meetings".  The guide will describe  for public attendees the normal seating arrangement for participants at the conference table, the general functional responsibilities of these participants, Commission procedures for voting on agenda items, general rules for public conduct at Commission meetings, and sources of additional information on the Commission and its meetings.  Copies  of the guide, when published, will be available in the Commissioners' Conference Room and in the Public Document Room. g.  The Office of the Secretary is preparing for placement in the NRC Public Document Room a list of abbreviations and acronyms in an effort to further help _the public in understanding the many technical terms discussed in Commisfion papers.  Use of Cameras and Recording Devices In conjunction with its decision to provide transcripts of its open meetings to the Public Document Room, the Commission altered its existing rule requiring advance approval by the Secretary of the use of electronic recording devices. At that time, the Commission determined that the use of small electronic sound recorders by persons in attendance at its open meetings would not hinder the conduct of business and might be an additional   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  300 step to increasing public understanding of the Commission's actions, but that the use of larger electronic recording equipment and cameras would continue to require the advance written approval of the Secretary of the Co11J11ission. In a separate· but related action, the Commission has approved on a trial basis the use of cameras, including television coverage, at open licensing proceedings conducted by NRC's Licensing and Appeal Boards.  Experience gained during this trial period may be applicable  in evaluating and determining future policy regarding open Co11J11ission meetings. Procedure for Releasing Records of Closed Meetings The Co11J11ission's policy on release of transcri.pts, recordings, and minutes of closed meetings varies according to the type of.meeting held' and the method used to record them, as noted below~ a.  Closed Meetings Recorded' 1 by Transcript For most of the Co11J11ission's closed meetings (except certain meetings closed pursuant to Exemptions 1, 6, and 10 of the Act), a transcript and a backup tape recording are made.  The  transcript, or portions thereof, are made available to the public unless a determination has been made to withhold the entire text.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  301 The procedure for determining.which transcripts, or portions of transcripts, should be publicly disclosed includes three levels of review:  1) by the office presenting the briefing or  discussion for a detennination of classification and sensitivity of subject matter; 2) by the Office of the General Counsel for review of classification, sensitivity, compliance with Sunshine Act requirements and advising the Commission on ultimate disposition of the transcript; 3) by the Commission for a final determination regarding public disclosure.  For the  information of the public, a statement is filed in the Public Document Room identifying the portions being withheld and the reason for withholding.  To date the Commission has released  16 transcripts in whole or in part; has-withheld six in their entirety; has 27 currently in review; and has agreed to release 27 additional transcripts and after app~opriate Legislative/Executive Branch actions have been completed. b.  Closed Meetings Recorded by Tape Only The Commission on occasion conducts meetings on subjects so sensitive that the presence of the staff and a court reporter has been deemed to be inappropriate.  These meetings generally  involve the exchange of highly classified infonnation with representatives of other agencies not subject to the Government in the Sunshine Act, or highly sensitive discussions of the   35-867 0 • 79 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  20  302 Commissioners on personnel organizational matters.  The latter  discussions involve such matters as the filling of key organizational positions, the performance of key employees, and significant organizational and management alignments.  Meetings of this  type are recorded for Sunshine Act purposes by magnetic tape only.  The Commissioners determine immediately at the conclusion  of the meeting whether any portion of the tape should be released.  To date, the tapes of the 17 meetings in this  category have been withheld.  Withheld tapes involving highly  classified information are stored in a secure vault maintained by the Division of Security; those involving personnel/organizational matters are retained in the personal possession of the Chairman. c.  Closed Meetings Recorded by Long Form Minutes Meetings closed to public attendance pursu~nt to Exemption 10 have been recorded in minutes, as authorized by the Act. date, 58 minutes have been written.  To  The minutes are prepared  by the Office of the Secretary and reviewed by the Office of the General Counsel and by the Commissioners as a matter of policy; they are not released to the public in view of the adjudicative character of these meetings. Litigation Brought Against the Commission Under 5 U.S.C.  §  552b  No litigation has been brought against· the Commission under this section during the reporting period.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  303 TABULATION OF OPEN AND CLOSED MEETINGS BY MONTH MEETINGS  OPEN  CLOSED  17  2  15  0  April  34  22  12  0  May  16  9  7  0  June  49  July  3  3  0  0  August  23  11  12  0  September  34  11 (42%)  22 (57%)  October  30  21  9  0  November  28  19  9  0  December  34  19 (64%)  March 1977  24 ( 49%)  25 (51%)  15 (36%)  OPEN/CLOSED*  0  0  --~---------------------------------------------------------------------------January 1978  28  19  9  0  February  26  20  6  0  2 (30%)  0  March  4  326  2 (70%)  182  143  (56%)  ( 44%)  * Indicates meeting(s) held partially open and partially closed.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  APPENDIX A  304 TABULATION OF CLOSED MEETINGS BY EXEMPTION CITED  TOTALS  EXEMPTION(S) Classified Information  15  2  Personnel Rules  0  3  Other Statutory Exemptions  0  4  Trade Secrets  2  5  Accusation of a Crime  0  6  Personal Information  14  7  Investigatory Reports  0  8  Financial Regulation  0  9  Significant frustration of proposed action  41  10  Civil Action  39  = 1!  4,. 10  2, 6,  3  l • 6, 9 6, 10  4  4, 9  2  9, 10  8  1, 4  3  1, 3, 4, 6 l• 9  4  l • 10  4  1. 4, 6  l • 9, 10 (IIOTE: 99 of the 144 meetings (70%) were closed under Exemptions 1, 6 or 10, or ~ombinations thereof)   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  144  (Includes· T open/closed) APPENDIX B  305 TABULATION OF MEETINGS BY DAYS NOTICE DAYS NOTICE  OPEN AND CLOSED  CLOSED  TOTAL  3  4  4  4  8  9  10  5  15  8  30  18  48  7  93  51  145  13B  82  221  OPEN  13 12 11 10  SUBTOTAL 6  0  5  9  14  5  0  5  5  10  4  0  6  3  9  3  0  2  3  2  0  9  9  18  0  9  9  18  8  24  32  43  61  104  181  143  325  .Less than one  SUBTOTAL TOTAL   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  0  APPENDIX C  306 NUCLEAR REGULATORY COMMISSION REGULATIONS AS AMENDED IMPLEMENTING THE SUNSHINE ACT (42 FR 12875, MARCH 7, 1977)  In accordance with section 161 of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. 552b(g) and 553, 10 CFR Parts 2 and 9 are amended as follows: 1.  A new Subpart C is added to 10 CFR Part 9 to read as follows:  Sec. 9. l 00  Scope of subpart_  9. l 01  Definitions  9. l 02  General requirement  9. l 03  General provisions  9. 104  Closed meetings  9 .,105  Commission procedures  9. 106  Persons affected and motions for reconsideration  9.107  Public announcement of commissi~n meetings  9. 108  Certificat~bn, transcripts, recordings and minutes  9. 109  Report to Congress Subpart C - Government in the Sunshine Act Regulations  Sec. 9.100  Scope of Subpart This subpart prescribes procedures pursuant  to which NRC meetings shall be open to public observation pursuant to the provisions of 5 U.S.C. Sec. 552b.  This  subpart doe~ not affect the procedures pursuant to which   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  _,_  (Updated 3/28/78) APPENDIX D  307 NRC records are made available to the public for inspection and copying which remain governed by subpart A, except that the exemptions set forth in section 9.104(a) shall govern in the case of any request made pursuant to section 9.8 to copy or inspect the transcripts, recordings or minutes described in section 9.108.  Acc~ss·to documents considered  at NRC meetings shall continue to be governed by subpart A.  Sec. 9.101  Definitions  .  As used in this subpart: (a)  "Commission"means -the collegial body of  '-fi~e=commissior.ers or a quorum thereof as proyided by section 201 of the Energy Reorganization Act of 1974, or any subdivision of that collegial body authorized ~o act on its behalf, and shall not mean any body·not composed of me~bers of that collegial bc~y. (b)  "Commissioner" means an individual who  is a member of the Commission. (c)  "Meeting" means the deliberations of at  least a quorum of Commissioners where such deliberations determine or result in the joint conduct or disposition of official Commission business, but does not include deliberations required or permitted by sections 9.105, 9.106, or 9.108(c), gatherings of a social or cere~onial nature, or   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -2-  APPENDIX D  308 briefings of the Commission by rcprcscnt..1tiv1:s c,f other agencies or dcpurtments of tile Unitccl Stillci; go'.'crn,r.•!nt, or representutivcs o[ foreign governments or inL0rnJtional bodies where such briefings or discussions are infor~utional in nature and are not conducted with specific reference to any particular matter then pending before the Commisson. (d)  "Closed meeting" means a meeting of the  Corr~ission closed to public observation as provided by subsection 9.104. (e)  "Open meeting" means a meeting of the  Commission open to public observation pursuunt to this subpart. (f)  "Secretary" means the Secretary to the  (g)  "General Counsel" means the General Counsel  Con1..-nission.  of the Commission as provided by section 25(b) of the Atomic  Energy Act of 1954 and section 20l(f) of the Energy Reorganization Act of 1974, and, until such time as the offices of that officer are in the same location as those of the Commission, any member of his office specially d~signated in writing by him pursuant to this subsection to carry out his responsibilities under this subpart.  Sec. 9.102  General requirement Commissioners shall not jointly conduct or  dispose of Commission business in Commission meetings other   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -3-  APPENDIX D  309 than in accordance with this subpart.  Except as provided  in section 9.104, every portion of every meeting of the Commission shall be open to public observation. Sec. 9.103  General provisions The Secretary shall ensure that all open  Commission meetings are held in a location such that there is reasonable space, and adequa~e visibility and acoustics, for public observation.  No additional right to participate  in Commission meetings is granted to any person by this subpart.  An open meeting is not part of the formal or informal  record of decision of the matters discussed therein except as otherwise required by law.  Statements of views or expressions  of opinion made by Commissioners or NRC employees at open meetings are not intended to represent final determinations or beliefs. No pleading or other paper may be filed wit~ the Commission in any proceeding as the result of or addressed to any oral argument or discussion of any mat~er during an open meeting except as the Commission shall direct.  Members of the public attending open  Commission meetings may use small electronic sound recorders to record the meeting, but the use of other electronic recording equipment and cameras requires the advance written approval of the Secretary.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -4-  APPENDIX D  310 Sec. 9.104 (a)  Closed meetings Except where the Commission finds that the public  interest requires otherwise, Commission meetings shall be closed, and the requirements of sections 9.105 and 9.107 shall not apply to any inforrr.ation pertaining to such meeting otherwise required by this subpart·to be disclosed to the public, where the Commission determines in accordance with the procedures of section 9.105 that open~ng such meetings or portions thereof or disclosing such information, is likely to: (1)  disclose matters ~h~t are (i) specifically  authorized under criteria established by an Executive order to be kept secret in the interests of nati9nal defense or foreign policy, and (ii) in fact properly ciassified pursuant to such Executive order; (2)  relate solely to the internal personnel  rules and practices of the Commission; (3)  disclose matters specifically exempted  from disclosure by statute (other than 5  u.s.c.  Sec. 552)  provided that such statute Ci l requires tbat the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (ii) estab:,ishcs particular criteria for withholding or refers to particular types of  matters to be withheld;   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -5-  APPENDIX D  311 (4)  disclose trade secrets and commercial or  .nancial information obtained from a person and privileged : confidential, including such information as defined in ?ction 2.790(d) of the Commission's regulations; (5)  involve accusing any person of a crime,  nposing a civil penalty on any person pursuant to 42 U.S.C. ~c. 2282 or 42  u.s.c.  icense pursuant to 42  Sec. 5846, or any revocation of any  u.s.c.  Sec. 2236, or formally censuring  ny person; (6)  disclose information of a personal nature  here such disclosure would constitute a clearly unwarranted nvasion of personal privacy; (7)  disclose investigatory reports compiled for  .aw ~nforcement purposes, including specifitally enforcement if the Atomic Energy Act of 1954, as amended, 42 U.S.C. ,ec. 2011 e t . ~ - , and the Energy Reorganization Act of 1974, 3S  amended, 42 U.S.C. Sec. 5801 e t . ~ - , or information which  if written would be contained in such records, but only to the extent that the production of such records or information would (i) interfere with enforcement proceedings, (ii) deprive a person of a right to a fair trial or an impartial adjudication, (iii) constitute an unwarranted invasion of personal privacy, (iv) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation,   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -6-  APPENDIX D  312 or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (v) disclose investigative techniques and procedures, or (vi) endanger the life or physical safety of law enforcement personnel; (8)  [reserved)  (9)  disclose information the premature disclosure  of which would be likely to significantly frustrate implementation of a proposed Commission action, except that this subparagraph shall not apply in any instance where the Commission has already disclosed to the public the content or nature of its proposed action, or where the Commission is required to make such disclosure on its own initiative-prior to taking final action on such proposal; or (10)  Epecifically concern the Commission's  issua~ce of a subpoena, or the Commission's participation in a civil action or proceeding or an action or proceeding before a state or federal administrative agency, an action in a foreign court or international tribunal, or an arbitration, or the initiation, conduct or dispositi_on by the Commission of a particular case of formal agency adjudication pursuant to 5 U.S.C. Sec. 554 or otherwise involving a determination on the record after an opportunity for a hearing pursuant to part 2 or similar provisions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -7-  APPENDIX D  313 (b)  Examples of situations in which Commission  action may be deemed to be significantly frustrated are (1) if opening any Commission meeting or negotiations would be likely to disclose information provided or requests made to the Commission in confidence by persons outside the Commission and which would not have been provided or made otherwise; (2) if opening a meeting or disclosing any information would reveal legal or other policy advice, public knowledge of which could substantially affect the outcome or conduct of pending or reasonably anticipated litigation or negotiations; or i3) if opening any meeting or disclosing any information would reveal information requested by or testimony or proposals to be given to other agencies of ~overnment, 1nclu::ling the Congress and the Executive Branch before the requesting agency would receive the informatton, testimony or proposals.  The examples in the above sentence are  for illustrative purposes only and are not intended to be exhaustive.  Sec. 9.105 (a)  Commission procedures Action under section 9.104 shall be taken only  when a majority of the entire membership of the Commission votes to take such action,  A separate vote of the  CowRissioners shall be taken with respect to each Commission ~eeting a portion or portions of which are proposed to be   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -8-  APPENDIX D  314 cloced to the public pursuant to section 9.104, or with respect to any information which is proposed to be withheld under section 9.lOS(c).  A single vote may be taken with  respect to a series of meetings, a portion or portions of which are proposed to be closed to the public, or with respect to any information concerning such series of meetings, so long as each meeting in such series involves the same particular matters and is scheduled to be held no more than thirty days after the initial meeting in such series.  The vote of each Commissioner participating in  such vote shall be recorded and no proxies shall be allowed. (bl  Within one day of any vote ta~en pursuant to  paragraph (a) of this section, subsection 9.lq6(a) or subsection 9.108(c) the Secretary shall make publicly available in the Public Document Room a written copy of such vote reflecting the vote cf each member on the question.  If a portion of a meeting is to be closed  to the public, the Secretary shall, within one day of the vote taken pursuant to paragraph (a) of this section or subsection 9.106(a), make publicly available in the Public Document Room a full written explanation of its action closing the portion together with a list of all persons expected to attend the meeting and their af(iliation.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  APPENDIX D  315 (c)  The notices and lists required by subsection (~)  of this section to be made public may be withheld from the public to the extent that the Commission determines that such information itself would be protected against disclosure by section 9.104(a).  Any such determinations shall be made  independently of the Commission's determination pursuant to paragraph (a) of this section to close a meeting, but in accordance with the procedure of that subsection.  Any such  determination, including a written explanation for the action and the specific provision or provisions of sectio~ 9.104(a) relied upon, must be made publicly available to the extent permitted by the circumstances.  Sec., 9 .106 (a)  Persons affected and motions for reconsideration Whenever any person whose inter~sts may be  dLrectly affected by a portion of a meeting requests that the Commission close such portion to the public for any of the reasons referred to in paragraph (5), (6), or (7) of section 9.104, the Commission, upon request of any one Commissioner, shall vet~ by recorded vote whether to close such meeting. (b)  Any person may petition the Commission to  reconsider its action under subsection 9.lOS(a) or subsection (a) of this section by filing a petition for reconsideration with the Commission within seven days after the date of such 1ction and before the meeting in question is held.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -10-  APPENDIX D  316 (cl  A petition for reconsideration filed pursuant  to subsection (b) of this section shall state specifically the grounds on which the Commission action is claimed to be erroneous, and shall set forth, if appropriate, the public interest in the closing or opening of the meeting.  The  filing of such a petiti?n shall not act to stay the effectiveness of the Commission action or to postpone or delay the meeting in question unless the Commission orders otherwise.  Sec. 9.107  · Public announcement of Commission meetings  (a)  In the case of each meeting, the Secretary shall  make public announcement, at least one week before the cme~nng, of the time, place, and subject matter of the meeting, whether it is to be open or closed to the public, and the name and phone number of the official designated by the Commission to respond to requests for infotmation about the meeting.  Such announcement shall be made unless a majority  cf the members of the Commission determines by a recorded vote that Commission business requires that such meeting be called at an earlier date, in which case the Secretary shall make public announcement of the time, place, and subject matter of such meeting, and whether open or closed to the public, at the earliest practicable time. (bl  The time or place of a meeting may be changed  following the public announcement required by subsection (a) cf this se~tion only if the Secretary publicly announces   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -11-  APPENDIX D  317 such changes at the earliest practicable time.  The subject  matter of a meeting, or the determination of the Commission to open or close a meeting, or portion of a meeting, to the public, may be changed following the public announcement required by this subsection only if (1) a majority of the entire membership of the Commission determines by a recorded vote that Commission business so requires and that no earlier announcement of the change was possible, and (2) the Secretary publicly announces such change and the  vote of each member upon such change at the earliest practicable time. (c)  Immediately following each public announcement  required by this section, notice of the ti-me; place, and subject matter of a meeting, whether the meeting is open o;: closed, any change in one of the preced_i.ncj, and the name and phfne number of the official designated by the Commission to respond to requests for information about ~he meeting, shall also be submitted for publication in the FEDERAL REGISTER. (d)  The public announcement required by subsection (a)  of this section shall consist of the Secretary (1)  publicly posting a copy of the document  in the Public Document Room at 1717 H Street, N.W., Washington, D.C.; and, to the extent appropriate under the circumst2nces.   35-867 0 - 79 - 21 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -12-  APPENDIX D  318 (2)  mailing a copy to all persons whose names  are on a mailing list maintained for this purpose; (3)  submitting a copy for possible publication  to at least two newspapers of general circulation in the Washington, D.C. metropolitan area; (4)  any other means which the Secretary believas  will serve to further inform any persons who might be interested. (~}  Action under the second sentence of subsection (a}  or (b} of this section shall be taken only when the Commission finds that the public interest in prompt Commission action or the need to protect the common defense or security or to protect the public health  or safety overrides the public  interest in having full prior notice of Commission meetings.  Sec. 9.108  Certification, transcripts, recordings and minutes  (a) (11 through  For every meeting closed pursuant to paragraphs (10) of subsection 9.104(a) and for every deter-  mination pursuant to subsection 9.105(c), the General Counsel shall publicly certify at the time of the public announcement of the meeting, or if there is no public announcement at the earliest practical time, that, in his or her opinion, the meeting may be closed to the public and shall state each relevant exemptive provision unless the Commission votes pursuant to section 9.105(c) that such certification is protecte~ against disclosure by section 9.104(a).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -13-  A copy  APPENDIX D  319 of such certification, together with a statement from the presiding officer of the meeting setting forth the time and place of the meeting, and the persons present, shall be retained by the Commission.  The Commission sh?ll maintain a complete  transcript or electronic recording adequate to record fully the proceedings of each meeting, or portion 0-f a meeting closed to the public, except that in the case of a meeting, or portion of a meeting, closed to the public pursuant to paragraph (10) of subsection 9.104(c), the Commission shall maintain such a transcript or recording or a set of minutes. Such minutes shall fully and clearly describe all matters discussed and shall provide a full and accµrate summary of any actions taken, and the reasons therefor, including a description of each of the views expressed on· any item and the record of any rollcall vote (reflecting the vote of  .,  each Commissioner or. the  question).  All documents con-  sidered in connection with any action shall be identified in such minutes. (b)  The Commission shall make promptly available  to the public, in the Public Document Room, the transcript, electronic recording, or minutes (as required by subsection (0)  of this section) of the discussion of any item on the  ager.da, or of any item of the testimony of any witness ~eceived at the meeting, except for such item or items of such discussion or testimony as the Commission determines   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -14-  APPENDIX D  320 pursuant to subsection (c) of this section to contain information which may be withheld under section 9.104 or subsection 9. lOS(c). Copies of such transcript, or minutes, or a transcription of such recording disclosing the identity of each speaker, shall be furnished to any person upon payment of the actual cost of duplication or transcription as provided in section 9.104.  The  Secretary shall maintain a complete verbatim copy of the transcript, a complete copy of the minutes, or a complete electronic recording of each meeting, or portion of a meeting, closed to the public, for a period of at least two years after such meeting, or until one year after the conclusion of any Commission proceeding with respect to which the meeting or portion was held, whichever occurs later. (c)  In the case of any meeting closed pursuant to section  9.~04, as the last item of business, the Cbmmission shall determine which, if any, portions of the electronic recording, transcript or minutes and which, if any, items of information withheld pursuant to section 9.lOS(c) contain information which should be withheld pursuant to section 9.104; provided however, that should the Commission not make such determinations immediately following any such closed meeting, the Secretary of the Commission, upon the advice of the Office of the General Counsel and after consulting with the Commission, shall make such determinations.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -15-  APPENDIX D  321 {d)  If at some later time the Commission determines  that there is no further justification for withholding any tran~cript, recording or other item of information from the public which has previously been withheld, then such information shall be made available. Sec. 9.109  Report to Congress The Secretary shall annually report to the Congress  regarding the Commission's compliance with the Government in the Sunshine Act, including a tabulation of the total number of open meetings, the total number of closed meetings, the reasons for closing such meetings and a description of any litigation brought against the Commission pursuant to the Government in the Sunshine Act, including any costs assessed against the Commission in such litigation (whether or not paid by the Commission).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  -16-  APPENDIX D  322 Mr. HENDRIE. As you know, Senator, the Nuclear Regulatory Commission is a five-member, independent regulatory commission established by the Energy Reorganization Act of 1974. It is responsible for assuring the protection of the public health and safety through the licensing and regulation of the civilian use of nuclear materials. In keeping with our significant public health responsibilities, this Commission has emphasized the participation of each Commissioner in all of its decisionmaking activities. We are possibly unique among agencies in that at the present time our organic statute permits us to take substantive actions only through formal meetings of the Commission and not by notation voting, although legislation to permit limited use of notation voting by unanimous consent is now pending in at times when all Commissioners can be present so that each may particpate in and contribute to the deliberations. My fellow Commissioners and I fully support the purposes of the Sunshine Act. The subject matter of the issues that we deal with is of considerable and legitimate interest to many segments of the public, and each of us feels a continuing responsibility to inform the public about the questions before us and about the reasons for our decisions. Open sunshine meetings help us meet that responsibility. An ever-increasing portion of our meetings have been open-for example, over 70 percent of our meetings in our last 3-month recording period were open to the public. Furthermore, in a variety of ways the Commission has voluntarily chosen to go beyond the literal requirements of the act and to adopt policies that advance the purposes of the act by providing maximum information to the public consistent with the administration of the Commission's business. In December of last year we began to keep and make publicly available transcripts of our open meetings so that members of the public who could not attend the meeting would be able to keep informed. Several months ago we began routinely providing public attendees with copies of the staff paper which is the principal subject of discussion at each of our open meetings. We are doing this so that our meetings will be understandable by the general public and not by just a specialized group of insiders. Furthermore, we have amended our regulations to permit attendees to tape-record open meetings, and we are permitting on a trial basis, and under certain conditions, radio and television coverage of hearings held by our Atomic Safety Licensing Appeal Boards. Finally, in several recent cases of general interest we have let the public attend adjudicatory sessions that clearly could have been closed under exemption 10. The essential measure of the Commission's administration of the act lies in our conduct of the act's open meeting provision. The key element in our administration has been our regulations, attached as appendix D of the annual report. The regulations were designed to do more than simply repeat the statutory language. We picked up the suggestion in the legislative history of the act that the regulations be used to adapt the general language of the Sunshine Act to the specific categories of business that come before each agency. In prac~ice, we have found the language of the Sunshine Act to be reasonably workable.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  323 Of course, as with any statute, experience continually gives rise to a number of questions of interpretations. I discussed two such minor problems that have surfaced in the Commission's experience under the act in my April 12 letter to you, and I shall only mention them here. One problem which arises in some meetings closed under exemption 1 is caused by the creation of a transcript containing extremely sensitive classified information-information so sensitive that it would not be written down in any form were it not for the transcript requirement. Adding exemption 1 meetings to the class of meetings for which subsection (f) (1) of the act permits minutes to be used in lieu of transcripts would solve the problem. The other area of potential concern involves Commission meetings with Member of Congress. These meetings might have to be held outside the Commission's control and, therefore, ,ve might be unable to insure we are in compliance with the act. Another minor problem which I have not previously mentioned, deals with exemption 2 of the act. It provides £or closure of meetings dealing only with "internal personnel rules and practices." Occasionally matters come before us dealing with reorganization of Commission offices or redistribution of £unctions among Commission branches. These are normally matter of little, if any, interest to the public. However, it is possible that some employees might be inhibited about discussing agency structural problems at a meeting open to public attendance and open to other employees. This problem would be solved if the exemption were not limited to meetings concerning "personnel" rules and practices, but applied to any agency meeting limited to discussion of internal personnel or organizational rules and practices. I would think for the most part we hesitate to hold open meetings on them because when we are talking about reorganizing branches of the agency, it is often just as well not to lead that discussion too far with regard to disclosure to agency staff. I£ exemption 2 was broadened a bit, it could be applied to agency meetings limited to discussion of the internal personnel or organization rules and practices, so we think that would solve that problem. The Sunshine Act has caused some problems in our handling of dayto-day administrative matters. Few if any of these administrative issues are of an "emergency" nature, so routine use of the short-notice provision is section ( e) (1) of the act is inappropriate. However, the questions I have in mind are of a scale such that interposition of a week's delay between the time an issue arises and the time the Commission can deal with it has the practical effect of preventing the Commission from having any significant control over the matter. Fortunately, we believe there is a simple solution to this problPm ,vhich is folly consistent with the spirit of the act and which would aid us in carrying out our administrative duties. That solution would be to permit use of meeting announcements stating that a meeting will consider general administrative questions before the Commission. The announcement would be issued at least 1 week before the meeting and would name the specific administrative items that would definitely be on the agenda. However, it would also provide that otlwr administrative issues that arose during the week might also be discussed. The open/ closed status of the meeting would depend upon the specific items discussed, although normally such meetings would be open.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  324  Day-to-day administrative matters, only a few of these have the aspect of urgent emergency matters, so that I don't feel that using a short-notice provision is generally justified. On the other hand, the sort of things that I have in mind are often such that imposition of a week or more delay, to allow the regular noticing for the meeting to really-Senator CHILES. Those meetings that you are talking about closing involve administrative matters, is that right? Mr. HENDRIE. No, no. What I have got in mind, and we believe that this is acceptable, and I cited it to see your reaction to it, in fact, is if we could use meeting announcements for meetings that would in almost all cases be open, which would list a number of general administrative questions that I have got working for the Commission to focus upon, we would issue the notice on a regular 1 week previous notice schedule. The notice would also provide that perhaps other administrative matters that arose during the week might be discussed, and then we would ·be able to have sort of a weekly administrative nutsand-bolts meeting at that time. I say it would typically be open, and would be closed only if one of the nuts and bolts would fall clearly under an exemption, probably the classified one. Such meeting it seems to me would be helpful and give us a chance to a roundtable discussion of this kind of administrative thing. I think it would be useful for the public to see us carrying that kind of thing out. Senator CHILES. i don't see any problem with that if you are thinking about that being an open meeting. You are citing that as one of the provisions opposing-Mr HENDRIE. It would not be a basis at all for closing. Any basis for closing would have to fall under the exemptions already in the act. The way I handle it now is that I circulate the 11th floor at 1717 H Street, gomg to Commissioner after Commissioner with a list of these nut-and-bolt items. By the time I have gone around the circle-I generally have to make two complete revolutions of the floor before I get them cleaned up-it is a nuisance in terms just of the time it takes. Well, I did want to comment in closing that one of the aspects that we found in our implementation of the Sunshine Act is that as we gained experience in working under the act, we became more comfortable in doing our work in the open. We are turning increasingly to open meetings where we might have been able to close meetings due to the subject matter. I also would comment that while we had great concern about the effect of making transcripts of all our meetings, open as well as closed ones, what effect that might have on the discussion, I think we have pretty well solved that problem. Senator CHILES. You don't think that's now really hindering free and full discussion? Mr. HENDRIE. No. I don't think it hampers or has impeded people. I think the essential element that we have adopted, Senator, and it might be useful to have it noted here, is that we make these transcripts as unedited reporters' best efforts to transcribe what goes on; and I, for one, make a very specific choice not to review those trans<'ripts, so they go in the public document room in 24 hours, as soon as they are transcribed, with a notice oh the front saying, this is just a reporter's best. effort to put down what was said. It is not a Commission authorized or reviewed document. And please don't take things out of this unre https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  325 viewed transcript and use them as a basis for litigation or, in fact, we said specifically, the things that are said in that way and recorded in that form are not the basis to come into the Commission's own adjudicatory proceedings and attempt to raise contentions because Commissioner So-and-So made a remark in the meeting. Now, I think that protection or that aspect _of treating t~e ~ranscript is very important, and I say that because if each Comm1ss10ner had to review each of those open meeting transcripts and iterate back and forth between us until we were all perfectly satisfied that the language was just right for a formal Commission pronouncement, we would not do anything but review transcripts. MEETING DEFINITIONS FAULTED Senator CHILES. I note that you define the term "meeting" in your Sunshine regulations by basically tracking the statute. Then you embellish it when you exclude briefings of the Commission by representatives of other agencies or the Departments of the U.S. Government or representatives of foreign governments or international bodies where such briefings or discussions are informal in nature, not conducted with specific reference to any particular matter then pending before the Commission. The Justice Department has interpreted "meeting" broadly to include such briefings. Informal briefings or discussions are important to the whole decisionmaking process. The information received or discussed at such sessions affect agency decisions in some part. Even if the information doesn't directly relate to a pending matter, if it relates in any way to matters within your jurisdiction it would certainly lay the informational groundwork for later actions. Those briefings interest me. It seems that even if you just sit there and let the outside parties do most of the talking, I would like to know what kind of information the Commissioners are being given, at least to be informed that a meeting is taking place and is on the record. It seems that by excluding those sessions from your definition of "meeting" you manage to take them outside the operation of the act and the public has no notice. And that appears to me to be contrary to the act itself. How have you justified that kind of definition~ Mr. HENDRIE. Well, Mr. Chairman. I point out that the provision comes from the Commission's regulations implementing the Sunshine Act at a time before my arrival here. It was adopted because, perhaps it is not entirely true, but it may be that we are unique among the regulatory agencies because we have need through our nuclear export responsibilities to have access to some of the most sensitive classified information which is available in the Government. Senator CHILES. I understand that, and we want to protect you, or allow you to protect that. Mr. HENDRIE. And I think in part this provision was drafted with an eye toward allowing the most sensitive sorts of intelligence briefings to be classed as nonmeetings, and thus avoid the record requirements of the Sunshine Act where a closed meeting is held. Now, I have concluded-the General Counsel, when I came aboard, and I had some discussions about it-and I have concluded that it is   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  326 very hard for a quorum of Commissioners, that is three or more Commissioners to sit in a room and hear someone tell you things that are of interest to you and important to the business of the Commission, and be sure the Commissioners won't ask questions and discuss things a little bit. That is, I just find_ it hard to envision those briefings as being clearly nonmeetings and I have decided earlier, after I came down, that under my chairmanship we would not be having briefings of that kind that were labeled nonmeetings. Now, that, in turn, I think is consistent with the way we would bot:Jh like to see the Sunshine Act interpreted. Senator CHILES. I think it is. Mr. HENDRIE. But it also makes for me a certain problem in dealing with some of the classified information. Some of this stuff is in the intelligence area where people simply don't like to have it written down at all, and the requirement to make, a record of a closed meeting, even though we classify it and so on, was potentally a very severe impediment, but then Admiral Turner was very kind ,and helped us work out a more forthcoming attitude on t:he part of our principal information supplier in that area, and they are now willing to come and talk at closed and carefully protected meetings, classified at the highest level and he.Id in appropriate and secure places. I must say there is the residual question, for which the intelligence agencies assure us that it is not a problem, but there is a problem. Are we, in fact, getting, then, in that form where we make those briefings, everything that the intelligence agencies would tell us if there were not a tape being made? I have to go on the assurance that they are telling us everything but I have no way of knowing that tihat in fact is the case. And there have been a couple of occassions when information has been of a nature that they simply cannot stand, even under the arrangements we have for very carefuJly classifying and taking these briefs, they simply will not come and talk. In those cases we arrange for the information to be given to Commissioners in groups of one or two, that is, less than the formal quorum of the Commission, an~ thus not a meeting by virtue of the quorum definition of the meetmg. But I recognize, and I make no bones about it here, that that's a way of dealing with a difficult area in order to get the Commission the information it needs to do its business. Senator CHILES. Well, I note that you were also having a problem concerning Commission meetings with Membe.rs of the Congress? Mr. HENDRIE. Well, there was just one occasion when the Commission was getting ready last year to lose a quorum and one of our oversight chairmen said, would you fellows, before you stop being a Commission, would you please come down here and let us discuss how we are going to keep the business of 1:Jhe Government working in your agency, and so the three sitting Commissioners went and it was decided that since there were three of them there and they were going to talk about the business of the agency there was a meeting under the definition of a meeting, and so a suitable record was made. Senator CHILES. Well, I would think that should be. If we in Congress didn't see fit to except that when we were having you down I think it should be an open mesting.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  327 Mr. HENDRIE. Well, there might be occasions when Members of Congress might want to meet with more than two Commissioners, that is three or more, and where it may be unhandy to be able to make a record, get the reporter in and make a tape record. But I must say, if the Congress chooses not to make a specific exemption here why we will continue to regard three Commissioners and a Congressman as a meeting unless it is in a forum like this. Now, if my colleagues came with me today, we wouldn't hesitate to sit here in a row and we feel this is a public meeting, a record is being made. Senator CHILES. ,ve have a reporter to cover you today. Are you familiar with the President's memo to the agencies witih regard to the sunshine law? Mr. HENDRIE. Yes; in general terms. PRESIDENT'S  MEMO  Senator CHILES. ·what is your reaction in regard to his directive to the Attorney General regarding the defense of the sunshine lawsuits? Mr. HENDRIE. ,vell, I think it is a clear admonition to us that in our practices, that if we attempt to polish the fine print, if there is any in the Sunshine Act, too closely and find those things where there is question and so on, that we may just get ourselves into court. The Justice Department isn't going to come and help out. So the admonition is to interpret these thing-s and treat them in a forthcoming way and stay away from boundary lines, and I think that's fair. Senator CHILES. Your agency does not have the statutory authority to litigate its own Sunshine suits? Mr. HENDRIE. No, sir, we don't. We go to the Justice Department. Senator CHILES. What impact would you say that the President's directive has upon your agency and its sunshine policies? Mr. HENDRIE. I think there our inclination was to try and stay away from borderline sorts of cases anyway. I didn't feel that it indicatedcertainly after I came aboard I didn't feel it indicated any changes in the s01t of directions I was taking. Senator CHILES. Do you think the directirn does put the President squarely behind the public purpose of Sunshine for openness wherever possible? Mr. HENDRIE. Absolutely. CHANGING TREND Senator CHILES. Although the Nuclear Regulatory Commission has closed a lot of meetings over the past year, I am pleased to see that the trend has been changing recently. I am happy to see that you are now opening about 70 percent of your meetings as opposed to under 50 percent in your first few months under sunshine. Your report went up through March of this year. ,vhat percentage of meetings have you opened in the 4 months since then, for April, May, June, and July? Do you have those meetings? · Mr. HENDRIE. Yes; I have it here as soon as I get to the right spot. The last one which would be reported there, I beliere, would be January to March in our annual report. The report actually closed as of March 12. If one goes through to the end of March, there would ham   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  328 been 63 meetings, 73 percmt of them would have been open and 27 percent closed. For the next quarter, which would be the 1st of April through the end of June 1978, there were 84 meetings, 73 percent open, 27 percent closed. In July, for just a month, there have been 34 meetings and the percentage of open has dropped to 53 percent and 47 percent closed, and the reason for that is that my colleagues-I have disqualified myself from the case-haw been adjudicating the nuclear powerplant in New Hampshire and meeting for a couple of weeks there, very, very frequently, so we have a large block of Seabrook adjudicatory sessions of the Commission that were closed. There were also four budget meetings, I believe, that were closed. AFFIR::\L\TIOX VOTES-.\ FORl\I OF NOTATION VOTING  Senator CHILES. Well, that's a very good trend that we see there, and we are delighted to see it. I notice that each affirmation item is counted as a separate meeting. Affirmation items, as I understand it, involve a pro forma meeting, as these items were really disposed of by circulating memos. On one day I note that you had three open meetings, two or which were alloted only 10 minutes. My concern-I just hope it is not an accounting method causing these affirmation meetings, to cause these figures to turn around. Mr. HENDRIE. Let me check and make sure of each affirmation item. Mr. CHILK. Each affirmation session is counted as one meeting even though we may affirm five or six papers. Senator CHILES. Thank you. That relieves me a little bit. Mr. HENDRIE. And this fs one of the results of the fact that we do not have statutory authority to do notational voting, Mr. Chairman. These are, for the most part, matters that the Commission has been briefed upon in an open meeting or they are minor matters that just don't deserve a briefing. The Commissioners have indicated their decision and we then have to meet at a session once a week where we take formal collegial note of the fact that we are all in agreement on that. Senator CHILES. I would like to just ask you a little bit about these affirmation votes. I realize that you engage in them because of the pro·vision of the Energy Reorgamzation Act, and although this act requires formal votes of the Commissioners in a meeting session, some matters are really decided before the actual meeting where a pro forma recording takes place. That means it is really in the form of a notation proceeding with the final vote being in public. Mr. HENDRIE. Yes; that's quite right. There is no discussion at the affirmation discussion. Senator CHILES. The purpose of Sunshine is to require that the entire decisionmaking process takes place in public. This increases public understanding of the policy. Your affirmation procedure allows the public to witness just the final vote and not the decisionmaking process. Those individual decisions are basically arrived at on the basis of written material and not through collegial discussions. I understand as a practical matter this may be necessary for routine, noncontroversial matters. The act does not expressly prohibit it: I am concerned, however, with the frequency of its use and the types of issues disposed of in  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  329 this way. You could dispose of some very controversial matters and never have a public discussion. How much of your agency's business is decided by affirmation voting? Mr. HENDRIE. I wouldn't know what sort of fraction to guess about that. I would comment, Senator, that if we talk about items where the final Commission action is by an affirmation vote after circulating to each Commission, and we exclude from that category matters where there has been at least one open Commission meeting where somebody briefed or discussed the matter, and what's happening here is that rntes are coming later in the notational form to be affirmed at this session, it's small. I really think that's a situation where you have a chance to get the matter out on the table, and perhaps the particular language of the Commission's final order is being worked out and iterated between the offices, and that's the thing that comes through, but if you exclude from this category the matters where there has been a previous open Commission meeting for discussion of the item, briefing, or what have you, then I think it comes down to a fairly routine matter, and I don't think all that great a volume. The Secretary of the Commission is here, Mr. Samuel Chilk. I would be glad to have him comment. Mr. CHILK. I would certainly support the chairman's views that all or a very large majority of the affirmations which previously have been brought before the Commission either in the form of a briefing or in the form of previous policy discussions are aired and generally resolved in these public sessions. The Commissioners' later vote on those papers and their vote is affirmed at a public session as an administrativP matter. Senator CHILES. Well, rather than quelling my fears, you have raised tlwm a little bit morP. If it is an item of magnitude in order, it is not the kind of routine, little checkofL simple matter. If it is a matter that von actually discussed at a meeting or at a briefing, then it seems like when you use affirmation voting or notation voting, isn't there certainly all kinds of room for discussion that's going to takP plncP off the rPcord, not in the public meeting, about how people are going to vote? And normally you just wouldn't have somebody walking around getting voles. It would seem to me that it would be back-and-forth discussion: "Well. how are you going to vote on this thing wP discussed the other day?" "W"ell, I have got my list here and I am thinking about checking it off 'yes'; what do you think'?" That would appear to mP to be right where the critical decisionmaking is going on, and if it is already done and you just affirm that in a meeting, I don't see how you are going to ham that happen without a real discussion or some discussion taking place. ~Ir. HEXDRIE. ·well. whatenr discussions the Commissioners have, or horse trading that gets done in the offices is not done on a collegial basis. in the same sense that you can't get three of them together. otherwise that's a meeting that has to be public and noticed and everything else. Senator CHILES. But it appears to me this is a way of seeing that it isn't done on a collegial basis so that yon have_ a rmblic meeting. Mr. HENDRIE. Well, if you go in the direction that you seem to be heading, what you are saying is it- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  330  Senator CHILES. I am trying to find out where you all have been heading. Mr. HENDRIE. You seem to be saying that two Commissioners aren't allowed to talk to ea.ch other unless they are on the public record someplace. Senator CHILES. What we are saying and what I think the act says, is that we are trying to allow the public to see what takes place in the decisionmaking process and those items leading up to a vote. But if you sit down and have all the discussion and have an open meeting for that and say, all right, we are going to hear from everybody and listen to what everybody has to say, and then we are going to adjourn the meeting and we are going to go back, and then through interoffice circulation-and whether that be up and down the hall or whether that be through passing memos-and then we are going to go through the process of how we are going to come to a vote. And then we are going to come back to an open meeting and we are going to say, all right, we are going to check off on this notation voting that has already taken place. What you have done is you have effectively removed from the public the ability to see what really took place in regard to how that decision was reached. They got to see the briefing. They got to see the final product. But they don't get to see how that decision was made. And I think that's the express intent of Sunshine, to try to open that up. Mr. HENDRIE. I just don't think it is practical, Senator Chiles, to have five Commiss10ners sit in a room at a session and deal in only that forum and that forum only with the volume of administrative an;l team paperwork. It is quite hard for the policy matters to come through the agency. Senator CHILES. That's why I was trying to ask you the nature of the business that you were doing in this category. Now, if you told me that what we are dealing with, or if your regulations said on those kind of routine matters, noncontroversial matters, that we are dealing with we are going to have to lleal with them on this kind of basis, fine. But on those kinds of matters where it appears to take collegial decisions, I don't see the difference. In having all that briefing there, a man is going to have to spend some time in saying at the end of all that briefing, all right, let's go through and go to item 1, item 2, item 3, if they were matters that really are there, and that there is going to need to be some discussion, but I think that ought to be done in public. Now, if we are talking about housekeeping and routine matters, that's why we didn't expressly prohibit this, because we didn't want to be so nitpicky to handicap people where they couldn't have some checkoff voting. But certainly we were trying to get to those matters where there was going to be discussion leading up to that vote, that those matters would be covered. Mr. HENORIE. Sam, do you care to comment on the sort of thing that comes through and we process? I must say I deal with probably three or four consent papers an evening. I think the Commission is just incapable of processing that volume of business in collegial sessions. We are hardly able to process it otherwise. Mr. CHILK. I would say that most of the affirmation items are of such a routine nature that our procedure of simply affirming these matters in open session is not in conflict, I don't believe, ,Yith the requirements of the Sunshine Act.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  331 We do from time to time, as the chairman has indicated, have matters which may be scheduled for public briefings or policy discussion on more than one occasion. Once issues have been aired, the remaining action is the process of recording a Yote. This final outcome is handled by an affirmation session in which I will, in the presence of the public, summarize the paper and remind the Commissioners how many times they have previously met on this subject. I then indicate what the Commission votes were during the consent process and ask them to affirm their votes in the public session. However, the large majority of affirmations, in my judgment, are not matters of this type-they are routine administrative matters. Senator CHILES. That's where I think you are really in the grny area in the coverage of the act, because th03e matters in which collegial discussions are taking place, interoffice or otherwise, I think you are going around the purpose of the act. Mr. CmLK. I don't think it is a matter necessarilv of interoffice discussions, but we would certainly be pleased to look ;t it again. AY.\ILABILITY OF STAFF MEMOS  Senator CHILES. I would like to have our staff go over those kinds of items with you. And I want to say that I want to compliment the Commission on making some of the staff memos available to the public. I think that's very possible and certainly helps understanding, and I think you are to be complimented on that. It would seem to me that, again if there are additional staff memos that are circulating on these notation lists that the public doesn't see, maybe those could be made available, too, at the time you are talking about your affirmation process. But I need to understand this a little bit better, so I would like to go into it further with the staff. Public observation of a meeting implies a meaningful observation, and it is useless if no one in the audience can understand what's going on. We have encountered several problems in this area. I understand that you have supplied unclassified papers at meetings scheduled, and I think that's a great process and a good practice and shows your commitment to Sunshine. Are these staff papers available at every open meeting? NOTICE PROBLEMS Mr. CmLK. Yes; together with a briefing outline. Senator CHILES. Providing the public with accurate advance notice of agency meetings is also an utmost requirement. Careless treatment of notice requirements can reduce the effectiveness of the Sunshine Act. The meetings are not of any use to anyone if people don't know about them. I am glad to note that "the Commission takes quite seriously," and I am quoting from your report, "the need to assure that shortnotice meetings are held to a minimum." However, when I see that 30 percent of your meetings are held with less than 7 days' notice and 32 meetings with less than 1 day's notice, I am very concerned. Is there any way that you can reduce those numbers of short-notice meetings? Mr. HENDRIE. Well, let me give you an example, Mr. Chairman. At 10 :30 or so this morning, the Administrator of the EPA announced th"  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  332  Seabrook decision. The Commission will want to move on that and move rapidly. There are some hundreds of millions of dollars sitting idle. There are 4,000 construction workers sitting around wondering where a paycheck will come from. The Commission will certainly have a short-notice meeting on Seabrook, I hope, although, as I say, I don't sit on it and I am simply encouraging my colleagues to act expeditiously. There simply are urgent things that come along that require us to put our heads together. We get a letter from Congress, £or instance, and i£ we would put our heads together, we could see what direction we would work on the answer, what direction we will go, and so on, petitions occasionally from people that require urgent action. I try to keep these things to a minimum and deliberately try not to schedule short-notice meetings, but I think there is always gomg to be an irreducible number of these things coming through. USE  OF  CAMERAS AND RECORDIXG DEVICES  Senator CHILES. Well, I hope you will continue your efforts in that regard. The Justice Department has urged all the agencies to permit the use of cameras and tape recordings in open meetings. You permit the use of tape recordings but not cameras absent the advance written approval. Do you really think requiring advance written approval serves any significant purpose~ It seems like other agencies have permitted cameras with no disruption of agency proceedings, and I note that you have allowed the use of cameras in your Licensing and Appeal Boards. Have you had any bad experiences with that? Mr. HENDRIE. So far the experience is good. ,v-e have put in some provisions in connection with that trial policy that I think are helpful. One of them is, what we have in mind, primarily, are television cameras and movie cameras that would film proceedings, and we have said that they have to operate on existing light to avoid the floodlit hearing room problem and its high temperature and this sort of atmosphere, and also the camera has to occup a fixed location so you don't have cameramen wandering around the room. I think a chief concern in initiating that policy was for our Boardsand wouldn't apply to the Commission-for our Boards was that we might lose the use of Federal courtrooms as our Boards go out of town and have to find places to meet. A number of Federal chief judges in the district take a dim view of cameras in their courtrooms and won't let the cameramen in if we are using a courtroom, and we didn't want to be shut out of using those Federal facilitil's because they are very useful for our hearings, but we haven't had any negative results that I have heard, and I think in due time we will probably adopt that policy. At the moment we are simply observing how it comes out with the Licensing Board. PUBLIC INTEREST Senator CmLES. Well, I hope you would look at that. I really don't see anything to be gained if it is an open ml'eting by requiring written notice or a written request. In your annual reports you describe how the Nuclear Regulatory Commission employes the public interest criteria. You draw the con https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  333 clusion that providing exemptions Congress-and I am quoting now"recognized the public interest in closing and not opening the meetings falling under an exemption." I don't think this conclusion is correctly drawn. We acknowledge that there may be instances where a discussion of some specific sensitive matter should be conducted in a closed meeting, but I don't think Congress ever intended that as a rule meetings with an exemption. should be closed. 1Ve merely wanted to allow for the closure if it were absolutely necessary. In what form does the staff submit to you its recommendations concerning the public interest? Is there always a discussion among the Commissioners themselves of the public interest consideration? In other words, where an exemption will lie, how do you determine if the public interest. consideration outweighs that exempt.ion? What kind of discussion is that? Does the staff make that decision? Mr. HEXDRIE. The Commission votes to close all of the meetings, and the Secretary, when we have a Commission agenda session to look ahead and take whatever votes to close that may be necessary, the Secretary will point out the nature of a given item for which closing might be considered, on classified matters or personnel privacy. As Chairman, I am generally pretty well informed on what the Commission is going to hear in the next week or so, at least if we can schedule ahead of time, and the recommendations are then made to the Commission. If it is judged as appropriate, it may be closed and there may be some discussion, depending on the item-at times the Commissioner will be familiar with the item and the background-it generally isn't an extended discussion. Senator CHILES. Another thing that troubles me about your regulations is that they state that "Except where the Commission finds that the public interest requires otherwise, the Commission meeting shall be closed, where the Commission finds that the meeting falls within one of the exemptions." The Sunshine Act itself does not require that you close any meetings. It allows for closure under certain restricted cases. This regulation appears to me to detract from the presumption of openness contained in the act. I hoped your regulation would be more positive than this. It seems to me you could revise this to merely allow for the closure and not mandate it. The way that the regulation now reads the Commission's meetings shall be closed unless you make a positive finding that the public interest demands otherwise. I think the act itself says you may close the meeting for one of these exemptions, but even with one of these exemptions you must determine that there is not an overwhelming public interest. Your regulations appear to reverse that and say they shall be closed where one of the exemptions lirs. unless yon find an overriding public interest to the contrary. It is all in the rmnlrnsis, maybe, but what we are dealing with is the emphasis, and I think Congress is trying to say that the Government policy of this country now is that we want meetings to be open unless tlwre is an overriding reason to close them. Mr. HExnRTE. I have been joinrd by Steve Ostrach who will as,-ist me in answering that. I am glad he is here so he can have this point called to his attention. Do you want to make a comment on the point, Steve?  35-867 0 - 79 - 22 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  334 Mr. OsTRACH. Briefly, I believe the language that the Commission has in section 104 of the regulations is basically a repeat of the language that is contained in section C of the Sunshine Act, 552 b ( C). In the Commission meetings at which these regulations were discussed, there was no intent to vary the language whatsoever when that material was presented to the Commission. It was intended to be virtually a rehashing of the statutory language. Mr. HENDRIE. Let me comment. Since I don't regard myself as much of an expert scanner of legal language, we will take your comment well in mind, Senator, and have the counsel examine it. Senator CHILES. We thank you very much for your appearance here and for your actions under sunshine. Mr. HENDRIE. Thank you, Senator. [The prepared statement of Mr. Hendrie follows:] TESTIMONY OF CHAIRMAN JOSEPH  M. HENDRIE  Mr. Chairman and members of the Subcommittee, I am Joseph M. Hendrie, Chairman of the Nuclear Regulatory Commission and with me are several members of the Commission staff. I would like to begin by thanking you for the opportunity to discuss my views and experiences on the administration of the Government in the Sunshine Act. In some measure my discussion will draw upon the Annual Re,port on the Administration of the Sunshine Act that the Commission recently issued and I would like to submit a copy of that report to be included in the record as part of my remarks. The Nuclear Regulatory Commission is a five-member, independent regulatory commission established by the Energy Reorganization Act of 1974 (P.L. 93-408). It is responsible for assuring the protection of the public health and safety through the licensing and regulation of the civilian use of nuclear materials. In keeping with our significant public health responsibilities, this Commission has emphasized the participation of each Commissioner in all of its decisionmaking activities. We are possibly unique among agencies in that at the present time our organic statute permits us to take substantive actions only through formal meetings of the Commission and not by notation voting, although legislation to permit limited use of notation voting by unanimous consent is now pending in Congress. H.R. 12928. Therefore, our meetings are generally scheduled at times when all Commissioners can be present so that each may participate in the contribute to the deliberations. My fellow Commissioners and I fully support the purposes of the Sunshine Act. The subject matter of the issues that we deal with is of considerable and legitimate interest to many segments of the public and each of us feels a continuing responsibility to inform the public about the questions before us and about the reasons for our decisions. Open Sunshine meetings help us meet that responsibility. An ever increasing portion of our meetings have been open-for example, over 70 percent of our meetings in our last three-month recording period were open to the public. Furthermore, in a variety of ways the Commission has voluntarily chosen to go beyond the literal requirements of the Act and to adopt policies that advance the purposes of the Act by providing maximum information to the public consistent with the administration of the Commission's business. In December of last year we began to keep and make publicly available transcripts of our open meetings so that members of the public who could not attend the meeting would be able to keep informed. Several months ago we began routinely providing public attendees with copies of the staff paper which is the principal subject of discussion at each of our open meetings. We are doing this so that our meetings will be understandable by the general public and not by just a specialized group of insiders. Furthermore, we have amended our regulations to permit attendees to tape record open meetings, and we are permitting on a trial basis, and under certain conditions, radio and television coverage of hearings held by our Atomic Safety Licensing and Licensing Appeal Boards. Finally, in several recent cases of general interest we have let the public attend adjudicatory sessions that clearly could have been closed under exemption 10.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  335 Of course the essential measure of the Commission's administration of the Act lies in our conduct of the Act's open meeting provision. The key element in our administration has been our regulations, attached as Appendix D of the Annual Report. The regulations were designed to do more than simply repeat the statutory language. \Ve picked up the suggestion in the legislative history of the Act that the regulations be used to adapt the general language of the Sunshine Act to the specific categories of business that come before each agency. Jfor example our regulation based on exemption 5 of the Act not only lists the statutory provisions involving accusations of crimes or formal censures, but also mentions two specific Commission functions that we feel come within the legislative intent-imposition of civil monetary penalties and license revocation proceedings. We believe that each agency covered by the Sunshine Act is obligated to examine the general categories of business it conducts and, to the extent practical, make clear in its Sunshine regulations how meetings involving those categories will be treated for Sunshine purposes. In practice we have found the language of the Sunshine Act to be reasonably workable. The Act sets out sufficiently clear guidelines so that the path of proper compliance is well marked, but the drafters of the Act also built in 1-ufficient flexibility so that 50 agencies with a wide variety of missions and procedures would not be forced into a Procrustean bed of conformity. The best example of this flexibility is the definition of "meeting" in section (a) (2) of the Act. The inclusive intent of the provision is clear and not so narrowly defined as to gh·e a loop-hole hunter much chance of success. But that language is not so overbroad as to force every agency to publish a Federal Register notice aboul its annual Christmas party. Of course, as with any statute, experience continually gives rise to a number of questions of interpretations. I discussed two such minor problems that have surfaced in the Commission's experience under the Act in my April 12 letter to you and I shall only mention them here. One problem which arises in some mt~tings closed under exemption 1 is caused by the creation of a transcript containing extremely sensitive classified information-information so sensitive that it would not be written down in any form were it not for the transcript requirement. Adding exemption 1 meetings to the class of meetings for which subsection (f) (1) of the Act permits minutes to be used in lieu of transcripts would solve the problem. '.rhe other area of potential concern involves Commission meetings with members of Congress. These meetings might ha,·e to be held outside the Commission's control and therefore we might be unable to ensure we are in compliance with the Act. Another minor problem which I have not previously mentioned deals with C>xemption 2 of the Act. It provides for closure of meetings dealing only with ••internal personnel rules and practices." Occasionally matters come before us dealing with reorganization of Commission officers or redistribution of functions among Commission branches. These are normally matters of little, if any, interest to the public. However, it is possible that some employees might be inhibited about discussing agency structural problems at a meeting open to public attendance and open to other employees. This problem would he solved if the exemption were not limited to meetings concerning "personnel" rules and practices, but applied to any agency meeting limited to discussion of internal personnel or organizational rules and practices. I would also like to mention three minor ambiguities in the Act as examples of the kinds of issues that arise in the course of implementation of the Act. Sunshine transcripts contain minor errors introduced by the transcriber's unfamiliarity with agency jargon or names. We haYe adopted a policy of permitting any speaker to correct such errors in the transcripts of his statements, but only by marking the transcript so that the raw ,·ersion can still be read and by initialing each change. We believe this proper under the Act, but we are im·estigating how other agencies have handled the issue. Another area that is stiH not entirely resolved is the treatment of postponed or continued meetings. For example, we normally ha,·e a separate vote to hold a "short notice" meeting when a meeting which had been scheduled for Tuesday, and which had been properly noticed more than a week in advance, was rescheduled for Thursday. \Ve believe that in such circumstances short notice votes are not required by the Act, but out of caution, we ha,·e continued to take them. We believe that, at least in this area, the best way to implement the Act is to accept the procedural burden of probably unnecessary yotes.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  336 Another example of a troubling open question is a minor, but substantive issue that we may someday have to face. Exemption 10 permits an agency to close meetings dealing with its participation in a number of forums including for example, court and international tribunals. One forum not mentioned however is a case of formal adjudication before another agency. Recently the Commission has been involved in a formal proceeding before an administrative law judge of the ICC. Although the issues presented by that case never have been discussed in a Commis~ion meeting, in other cases such participation might be of concern to the Commission. Virtually all of the reasons that underlie exemption 10 also would support closing such a meeting, yet the Act does not specifically provide for such closure. In this case we believe that the proper course is to follow the evident purpose of the Act and not to adopt an overly narrow reading of the exemption. The Sunshine Act has caused some problems in our handling of day-to-day administrative matters. Few if any of these administrative issues are of an "emergency" nature, so routine use of the short notice provision is section ( e) ( 1) of the Act is inappropriate. However, the questions I have in mind are of a scale such that interposition of a week's delay between the time an issue arises and the time the Commission can deal with it has the practical effect of preventing the Commission from having any significant control over the matter. Fortunate'ly, we believe there is a simple solution to this problem which is fully consistent with the spirit of the Act and which would aid us in carrying out our administrative duties. That solution would be to permit use of meeting announcements stating that a meeting will consider general administrative questions before the Commission. The announcement would be issued at least one week before the meeting and would name the specific administrative items that would definitely be on the agenda. However, it would a'lso provide that other administrative issues that arose during the week might also be discussed. The open/closed status of the meeting would depend upon the specific items discussed, although normally such meetings would be open. As I said above, the Commission does not now hold the sort of general roundtable discussions about administrative matters that would be the subject of a general announcement. If the Sunshine Act permitted us to, I believe we would. That would assist us in carrying out our administrative and supervisory duties. Furthermore, by giving the public a window on an important aspect of the Commission's work which it does not now have, we would be furthering the principal purposes of the Act. One not unexpected aspect of Sunshine Act implementation is that we have found that, as we gain experience working under the literal requirements of the Act, we have become more comfortable in doing our work in the open. This in turn has led us increasingly to employ our discretion to open meetings that could have been closed. The statistics given above demonstrate the extent to which we have been doing this. Thank you for your time this morning. I would be glad to try to answer any questions you might have.  [Subsequent to the hearing the following letter was received:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  337 UNITED STATES  NUCLEAR REGULATORY COMMISSION WASHINGTON. 0. C. 20555  August 31, 1978 OFFICE OF THE CHAIRMAN  The Honorable Lawton Chiles, Chairman Subcommittee on Federal Spending Practices and Open Government Committee on Governmental Affairs United States Senate Washington, D.C. 20510 Dear Mr. Chairman: In testimony before the Subcommittee on Federal Spending Practices and Open Government of ·the Committee on Governmental Affairs on August 4, 1978, I inadvertently erred in providing you with information regarding the Nuclear Regulatory Commission's affirmation votes. In my testimony I indicated that I thought the majority of affirmation votes occurred on items on which the Commission had been previously briefed publicly. However, in reviewing our records, I found that in fact, a significant majority of affirmation votes occurred on items on which the Commission had not been briefed publicly. In order to correct my testimony, I hereby request that this letter be made a part of the record. I regret any misunderstanding this error may have caused.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Siocecely,L  Hendrie  SEP O6 1978  338 SECURITIES AND EXCHANGE COMMISSION Senator CHILES. Our next witness is the Honorable Harold M. Williams, Chairman of the Securities and Exchange Commission. The SEC protects the interest of the public and investors against malpractices in the securities and financial market. Mr. Williams has been Chairman of the SEC since April of 1977. "'\Ve are happy to have you with us today, Mr. Williams. We will have you share with us your views on sunshine, and your statement in full will be inserted in the record, and any summary remarks that you can make on that will be appreciated. TESTIMONY OF HAROLD M. WILLIAMS, CHAIRMAN, U.S. SECURITIES AND EXCHANGE COMMISSION, ACCOMPANIED BY HARVEY L. PITT, GENERAL COUNSEL  Mr. WILLIAMS. Thank you very much, Mr. Chairman. I am pleased to have the opportunity to be here with you this morning and review certain aspects of the Commission's recent experiences under the Government in the Sunshine Act. I have with me Haney L. Pitt, the Commission's General Counsel, who has been interested and involved in the Sunshine Act since it was under consideration in the Congress, and he has had a key role in assuring our compliance with the act. Congress intended the Sunshine Act to insure to the fullest practicable extent, public access to "information regarding the decisionmaking process of the Federal Government." Thus, the act provides as a general rule, that, "every portion of every meeting of an agency shall be open to public observation." As the Federal agency charged with responsibility for administering the laws designed by the Congress to provide full and fair disclosure to investors, the Securities and Exchange Commission is sensitive to the statutory objectives of the Sunshine Act and the importance of accurate public understanding of governmental processes and decisions. During the legislative process, we expressed our support for the act's objectives, but also our concern that certain of the burdens of compliance might outweigh the benefits to the public. We knew, and the Congress recognized, that most of our meetings could not be open to the public, in view of the Commission's broad-ranging law enforcement and quasi-judicial responsibilities and of the fact that even our consideration of rulemaking proposals must often include discussions of active enforcement cases. Nevertheless, our experience has been that the Commission has been able to consider a substantial number of its agenda items in meetings that are open to the public. Since the Commission, before the Sunshine Act, had conducted almost all of its meetings in private session, the act has truly worked significant changes in the manner in which the Commission conducts its business. As noted by Commissioner Evans during this subcommittee's earlier oversight hearings on the administration of the act, we have certain concerns about the operation of the Sunshine Act in practice. "'\Ve are concerned that the ability of the Commission to perform its statutory mission should not be impeded for the sale of inflexible procedural   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  339 requirements which, while theoretically designed to assure the public access to information about its Government, do not in fact perform this function. We are concerned that pressure is being applied to require the Commission to go far beyond the requirements of the act, and to expose the internal deliberative processes of the Commission to public view, something we feel would be very counterproductive. I :feel that the Commission would be remiss if it did not report to you these concerns. As Commissioner Evans also pointed out in his testimony, many of the comments we have received about our public meetings indicate that observers are impressed by the depth of discussion and the consideration afforded to opposing viewpoints of major issues, as well as by the overall competence and fairness of the Commission's deliberations. Our exl?erience since Commissioner Evans' remarks has generally been consistent with his report. But, as the public's experience with our meetings broadens, an increased demand is evolving, particularly on the part of the press, for supplementary measures, beyond those required by the act itself, in order to make our meetings more informative and understandable. I think this can be healthy process, and we are always ready to consider suggestions for improving our procedures. ,ve have been making some changes in the way we conduct our meetings and, in general, improving the level of understanding the Commission's meetings. As you are a ware, the Congress intended that the public's access to the decisionmaking processes of the Federal Government, as implemented by the Sunshine Act, be balanced against the need to protect the ability of Government to carry ont its responsibilities. In the case of the Commission, of course, our principal responsibility is to administer and enforce the Federal securities laws. I think this can be r, healthy process. Senator CHILES. Not to interrupt you very much, but let me just say I think it is very healthy, too, if the press is showing some appreciation for the fact that open meetings are taking place and that they want to find some information. The greatest problem that I have noted in trying to do something about sunshine is in the lack of interest on the part of the press. Both lack of support where we were trying to get the act passed, and lack of interest, really, in trying to see that the agencies are going along ::md enforcing the act or opening under the act the way they should. To me, coming from Florida where we are sort of the Sunshine State, the press took the leadership and carefully followed the implementation. In first passing the act, every time as a member of the State legislature I went into a closed meeting they would take my picture or they would note my name. Every time the legislature had a closed meeting the response of the press was "they would be hauled bodily out of that meeting." Through that constant sort of operation they made me a convert. I guess they made a lot of other people converts of Sunshine and ultimately opened up the process. Up here I will have to say on a national press leYel there has been almost a complete absence and lack of interest. I think they are too nsed to dea1in2: with their sources or operating the ,my it has in the past. So. I am Yery · heartened by your saying that you are finding   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  340  the press is wanting more information, and wanting further openness. I think that's very helpful. Mr. WILLIAMS. Bv and large we react the same way to it, and we are and have been, in part, using the response of the people who observe our sessions, and the kinds of questions raised by the public as a result of our meetings as a kind of barometer of whether our meetings are understandable. We then try other ways of increasing, at a reasonable cost and effort to the Commission, public understanding of our open meetings. For the past 16 months, as we have worked with the Sunshine Act, which, incidentally, is about the same period of time as I have been Chairman and during which I have also been involved in learning how to be Chairman, we have become increasingly aware of the difficulties involved in following the discussions at our meetings. For example, as you might expect, the more complex the matter under discussion, the more detailed the Commission discussion of that matter becomes. It is in these situations that we recognized, even before certain recent criticism of our open meeting procedures, a need for improvements in our procedures. In his testimony before you last November, Commissioner Evans informed you that, in order to facilitate a better understanding of the discussions at our open meetings, the Commission had begun to distribute to attendees at these meetings summaries of relevant background information pertaining to agenda items. Nevertheless, the Commission has recently received some resPonsible criticism with regard to the conduct of its open meetings and, in your letter dated June 10, 1978, you requested our views "in light of recent complaints about the cryptic nature of some of your open meetings." These complaints, which originated with some members of the press who regularly cover the Commission's meetings, indicated to us that the discussions between the Commission and staff that occur during our open meetings are not always fully understood by those who attend our open meetings. In my prepared testimony, I set forth in some detail relevant information concerning the two particular meetings in which this type of problem arose : in order to preserve time, I will not now detail that for you, Mr. Chairman, but I do want to point out that these were both very difficult meetings for the Commission as well as the public, and involved very complex issues which did not lend themselves readily to simplification. In essence, what I am saying is that we did make a sincere and honest effort to aid those who wanted to understand what was going on, and I would say, judging from the fullness and accuracy of the published reports of those meetings, that I think we were rather successful. Complaints about open meetings are serious to us, not only ·because these complaints indicate that the bene.fits of the Sunshine Act are not being fully realized, but beyond that, because they implv that the quality of public understanding of what the Commission is doing and the press attendant coverage is less than it could be. On the other hand, there is a limit to the amount of educating we can do. The Commission's meetings are primarily business meetings, not classrooms, and, as Commissioner Karmel pointed out recently, "The public has a right to know what we are doing, but also has a right   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  341 to have us get our work done." This is the balance with which we have, in good faith, been struggling. Despite these reservations, Mr. Chairman, I believe that there are several steps that we can take, and are taking, to try to make more useful information available to the public. As I indicated, the Commission does prepare summaries of items discussed at open meetings to help the public follow the Commission's open meetings. Many of the items we, discuss are relatively simple and understandable. Our problems arise, however, principally in connection with those agenda items in which there is great public interest involving complicated questions of fact and law, where some knowledge is required for a full understanding of the commission discussion. It is primarily in these situations, where it is reasonable to expect that the discussion will be complicated, that the Commission must direct its efforts to assure that members of the public and the press are able to follow our deliberations. I think it is through continued experimentation that we will learn how to deal most effectively with this problem. There are, however, some specific things we are already doing. First, where complex items are to be discussed, or where a matter has an involved procedural history, or where the Commission discussion of an agenda item embraces staff memorandums ,vhich are, in turn, predicated on a voluminous record, we are providing a more detailed summary of the matter to those attending the open meeting. These summaries furnish both relevant background information and identify the issues to be discussed by the commission. The format of the summary may, of course, vary, depending upon the nature of the matter. We will continue these efforts in this area. In additon, as I have indicated, at times I have found it useful to make a statement at the beginning of the meeting summarizing the issues expected to be discussed, and we will be doing this more frequently in the future, as appropriate. Moreover, we will continue to make staff members available to answer press interviews regarding the issues, and we may well consider, although we haven't done so yet, holding press briefings in advance of meetings were considerable public interest is anticipated. I believe that the feedback we receive from these efforts will let us know whether we are being more successful than we have been in the past in communicating to the public the information necessary to allow them to follow our meetings. On the other hand, if it becomes apparent that we need to do more in this regard, we should be able to determine what additional corrective measures are in order. Finally, I should say that both the Commission and the staff are very sensitive to the difficulties inherent in following a complex discussion. I know that right from the Chairman on down, we often get deeply immersed in the intricasies of the matter under consideration and sometimes lose sight of the fact that, to some of our observers, aspects of our discussion are sometimes difficult to follow. We do know that we are speaking to a new audience which is relatively unsophisticated about the areas of Commission regulations, but we are conscious of our responsibilities under the Sunshine Act ; and I believe that, with the steps we are now taking, we will enhance the ability of our audience to follow the Commission's deliberations.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  342 I hope that these comments are responsible to the concerns of the subcommittee. The act has been in effect only since March 1977, and the agency p~ac~ice und~r it is s~ill developing. As I indicate~ earlier, the Commission's chairmanship changed at about the same time. The dynamics of open Commission meetings are rather unique, and the ability to conduct our meetings in a manner most beneficial to the public is u skill we are still developing. We will try to insure that the public better understands the Commission's open meetings and these efforts are a reflection of our understanding of the purpose our open meetings fulfill. I can assure you that the Commission intends to make every reasonable effort to live up to the spirit as well as the letter of the Sunshine Act. Thank you, Mr. Chairman. Senator CHILES. Thank you, Mr. Chairman. THE PUBLIC DISCLOSURE AGENOY?  I find that it is very interesting to think about SEC and its overall purpose to protect the public, and I think back to the earliest concept of how SEC was going to do that, the Securities and Exchange Commission, and the underlying rationale and principle was blue sky. We are going to allow the businessman to basically go into any kind of scheme that he wants to as long as he, in that prospectus, tells exactly what it is going to be and what the proposition is going to be, and what the limits are going to be, so that the public can read that prospectus and try to understand what's going on. That has been part of the purpose of the SEC, as I understand it, since the earliest time that it originated. I represented some clients before that were in the tangles of the SEC as to whether they had performed properly that blue sky purpose. I have seen the diligence with which the whole agency works in that regard. I then look in your statement today and I see where you are talking about this new provision, that this Commission see whether to develop a number of rulemaking procedures to remove existing impediments to shareholder communications and participation in the corporate electoral process, and to improve the quality of information available to investors regarding corporate management, as well as to stimulate voluntary changes in the structures and procedures of corporate boards of directors. In order to facilitate Commission discussion of these issues, the Division forwarded to the Commission a staff report setting forth 36 preliminary recommendations. Well, you are trying to allow those stockholders to determine what the directors have been up to and so you are going to say that there has got to 'be adequate information made to those stockholders. Our stockholders are the public. That's my stockholder and I think it is yours. Mr. WILLIAMS. Yes. 'Senator CmLES. It is the Commission's ultimate stockholder. And here we are talking about a corporate stockholder who is going to buy a piece of stock and we are going to prot~ct him, or your age~cy is, and you are going to make the board of directors get all this m https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  343 formation. I am trying to get you to give some information to your stockholders and to my stockholders as to what yon are doino- to pro0 tect them ultimately and how yon are completino- that. blue some give to sunshin~ to addition I am trying to get you, in sky, and I think that's what the act is all about. "\Vhen I see that you ope~ate or have been operating thr~ugh memor~nda, where yon are talkmg about paragraph 1 and sect10n 2, there 1s no way that your stockholders can understand what's going on in that discussion. I believe if that were a corporate annual meeting you all would be down on them as quick as you could be and say, yon can't do that. A stockholder can't understand that. You have got to do it so that he can understand. But we have got to somehow enable your stockholders and my stockholders to understand. Mr. WILLIAMS. Mr. Chairman, if our meetings were closed we would not have this problem, but we strive to comply with the spirit of the Sunshine Act. The incident that you are referring to was one where the Commission was attempting to order its agenda. vVe were not trying to be cryptic. Senator CHILES. vVell, I don't mean to take any one instance, and I don't mean to take any one particular meeting. I mean to try to look at them, really, in regard to what is going on in your meetings every day. Mr. WILLIAMS. Your criticism is well taken. I wasn't rejecting your criticism. It is valid. Senator CHILES. And to try to see that the general public can understand. If not, we really haven't done anything by passing the Sunshine Act. You might have the proposition that what they didn't know before didn't hurt them, other than the fact that people had a general mistrust ,vhen you closed meetings maybe in the SEC. They might have been less concerned in the past than they might be now. It seems that from what I can understand, the summaries of the staff memoranda are very, very cryptic. You give very little information with regard to what really might be in the memo itsel:f. Now, I can see Commissioner Karmel's admonition, or her problem, that you have got to conduct your meetings. I think the government has got ,to work. If it doesn't work then we are not doing anything for anyone. But I think you have got to provide the other people with the tools if they want to avail themselves of the tools so that they can follow your meetings. Based on what we have been seeing, what you are releasing so far, even if I want to try to follow your meeting and try to understand it and am willing to spend some time, based on what you are giving me, I couldn't follow it. So I think that takes away from what he is saying. It is not our job to spoonfeed them. You have got to take it one way or the other. You have either got to spoonfeed them or yon have got to give them that material that you are using so that they can get all the information themselves. If you don't want to give them all the material then yon are going to have to provide some kind of spoon feeding so that they can understand your meetings. Mr. WILLIAMS. I believe, Mr. Chairman, at least in terms of our selfassessment, it speaks both to the ability of the press to cover our meet https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  344 ings and our efforts to provide to the public, in the aggregate, a reasonable understanding of Commission deliberations. If we look at the actual press coverage, of the two meetings for which we have been particularly criticized that coverage was accurate and dealt with the substance of what took place at these meetings. Senator CHILES. You think they finally got the information in spite of what happened i Mr. WILLIAMS. I wouldn't say that the press obtained information "in spite of" what took place. I think the combination of listening to the discussion at these meetings, my commentary during the course of the meetings, and the press briefing that followed the meetings, all resulted in good reporting of the substance of these meetings. Senator CHILES. Well, I am glad that you approve of what came out of the reporting. Mr. WILLIAMS. One of the press accounts of one of these meetings was particularly interesting. In that newspaper, there were two articles side by side. One criticized the cryptic nature of the Commission's meeting in question and, literally, right next to that criticism was a very fine article covering the substance of what took place at the meeting. Senator CHILES. Well, I will have to say that some of the complaints we have received have not been on the basis of just two meetings, but have been on the basis of general procedures. I want to say I think your statement is positive in that you reflect in that statement that you are sensitive to this criticism and that you are working to try to do something about it. Mr. WILLIAMS. Yes; we are. Senator CHILES. But I think there certainly is room for something to be done about the criticism. Again, as I say, particularly in an agency that requires full disclosure. Mr. WILLIAMS. I am hard put to argue with you. Senator CHILES. I am enjoying this, you understand. I told you I have been before your agency regarding full disclosure. This is my day in court, perhaps. Well, I look forward to the opportunity of our staff to have some chance to work with your staff in trying to see how you come up with procedures, and I assure you again, we don't want to see you not able to complete your job. We understand the sensitive area in which the SEC works, and we tried to cover that as best we possibly could and take those problems that your staff and the agency raise as being of particular concern in regard to allowing you provisions to close those meetings. We think that it is very necessary, and I think overall the SEC does an outstanding job in trying to police the securities field. I think again that it is all the more reason that we need to see that the agency works in an exemplary fashion in regard to the provisions of sunshine as well. I rn?te t~at your public :iffairs officer was quoted by one journalist as saymg, 'We vote m public, and that's all the law reQuires." Mr. WILLIAMS. That is not the Commission's position, or its interpretation of the Sunshine Act, Mr. Chairman. Senator CHILES. I am delighted to hear that. On~ person rece~tly visited your agency in search of some sunshine material and described the SEC as being the most intimidating of the  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  345 agencies. The reception that he received from your personnel at the public information room led him to believe that there was no Sunshine Act for SEC. No one seemed to know anything about sunshine materials. No one could offer him any advice as to where to obtain information. Basically, he was given the runaround and sent from one floor to another, and finally reached your secretary, Mr. Fitzsimmons, who told him that there were no files, transcripts, or minutes to be examined. He didn't even get an example of a set of minutes. Mr. Fitzsimmons finally told him that as far as he was concerned, the benefit of sunshine to the public was far outweighed by the burden to the agency. Mr. Chairman, for these reasons and the other complaints that we have received, it appears to us that there is some way the Commission's views, as expressed by yourself and in earlier letters, don't seem to have been conveyed down to your staff at all. It seems that there is a need for your staff to try to help the public understand the sunshine procedure that you all have adopted. It seem to me that the public shouldn't have to go through a frustrating experience like that in trying to exercise its rights under the act. Mr. WILLIAMS. I am not familiar with the instance, but I will look into it. Senator CHILES. Excuse me for a moment. I am going to have to run. [Brief recess.] AVAILABILITY OF BACKGROUND MEMORANDUMS Senator CHILES. Back on the record. In your full statement you expressed concern that the availability of background memorandums could present to the public a misleading or inaccurate view of Commission policy. It would seem to me that not releasing these materials may be a greater cause for confusion or misinformation, especially on the basis of the press that's trying to cover those meetings. We have heard this morning that the Federal Reserve Board and the Nuclear Regulatory Commission were releasing staff memorandums to the public to help the coverage of their meetings. Is that something that the SEC is considering doing in the future i Mr. WILLIAMS. No, Senator, we are not considering releasing our internal staff memoranda. I haven't looked at the nature of the staff memorandums released by these other agencies, or the extent to which subsequent formal action of these agencies operates as a confirmation of the recommendations of the staff contained in these memorandums. But, from our perspective, at least, there are a number of problems implicit in engaging in a release of such memorandums by our staff. I can discuss some of the reasons briefly. First, there are portions of those memorandums that often relate to ongoing enforcement activities. In addition, portions of these memorandums often provide the staffs assessment of the pros and cons, legal strengths and weaknesses, or detail the implications of the financial effect on various aspects of the industry, which might result should the Commission follow various courses of action, whether suggested by the staff, or not. This is, obviously the kind of information that the Commission should have before it in -arriving at its determination, but   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  346  clearly is not the kind of information that should be publicly disseminated. At the same time, very often the determination of the Commission is significantly different from the recommendations of the staff. Thus, what is communicated to the public often is worded substantially differently from the original staff recommendation, with some subtle, and some not so subtle, differences and emphases than those that are put forth to the Commission in the staff memorandum. The publication of staff memorandums under these circumstances would not help clarify the matter for the public and, indeed, I think would both confuse the public ·and, in some cases, undermine public understanding of the final Commission determination. Senator CHILES. ell, it would seem if those memorandums come within any of the exemptions, certainly that gives you the right to strike that portion of that memorandum or not make that available. I think the quest.ion is rPally as to whether these memos lose their protective status when they ·nre discussed or referred to at an open meeting. Now, in passing the Sunshine. Act, Congress has cast a whole new light on the sanctity of the decisionmaking process. The courts have made their decisions regarding such memos without the guidance of the Sunshine Act. The new situation of open meetings I think has changed the agency operations. I think sunshine clearly represents the later expression of congressional policy and intent. I note in your testimony you also state that you are concerned about the effect of public exposure on the staff. Congress really rejected that so-called chilling effect argument. That was one of the major arguments that the Boards themselves had to make against having their processes opened up, Fed and the SEC and others. Members of Congress even discussed it one time when talking about opening up our markup sessions. We rejected that chilling effeet argument. Even if that is the effect, the right of the public to be informed is more important. I think this whole issue of a staff memorandum, as they are used at an open meeting, is one that you really need to look at, because I think that they are well within the provisions of sunshine. I can envision, where through the use of memorandums, you can get around entirely the whole purpose of the meeting being open by passing all of the information back and forth, or having it contained in the memorandum. Especially, again, where we found in some of the meetings earlier that people were checking off paragraph 3, or saying I agree with that, or I don't agree with paragraph 4, and talking in those kind of cryptic terms. ,Vhen you put together the cryptic terms and the information that you can put in memorandums, you see how easy it is to really evade completely the purpose of the Sunshine Act. That appears to be the basis of the suit that was brought against the Fed. That suit was settled, so we don't have any idea what the courts would say in that regard. Mr. PITT. If I may respond, Senator, the concern you express is one that the Commission shares. The Sunshine Act itself, of course. indicates in subsection (k) that it was not intended to amend or change the Freedom of Information Act, and its governance of the opportunity of the public to obtain agency documents and access to agency memorandums would continue to be governed by the Freedom of Information Act.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  ,v  347 The difficulty stems, I think, from the :fact that the Commission's meetings are, to a large extent, very free wheeling. The issues that are raised are not preplanned or prediscussed. The staff covers a wide range of options and alternatives and includes within the integrated text of its memorandums not only enforcement matters but often provides the Commission with specific recommendations to show the Commis.<;ion the limits o:f its authority with respect to matters under consideration. These are not the kinds of matters that would come up normally in discussion, but rather are provided to offset the discussion in terms of the Commission's ~wn ability to consider whatever recommendations ham been made, and to enable the Commission to provide the staff with specific instructions as to the action that it wants taken. In most cases, therefore, the staff's memorandums constitute integrated documents which include heavy reliance on materials that normally would not be made publicly available, even though the meeting itself may be open and the matter under discussion is one which is appropriate for public observation. Senator CHILES. "\Vell, I am not sure I understand what you said exactly, hut I think when you get in court on this <luestion and if you don't make memorandums available, I am just gomg to bet you are going to get in court on it, I think it is going to be mteresting as to whether that judge is going to say you can't have an open meeting unless those tools and those materials that you are using in the discussion of that open meeting are available to the public. And i:f the court doesn't come down that way I aim going to be very surprised. And it may be that you are going to have to change your memorandum some and you are going to have to delete those parts that contain truly sensitive points that are covered by the exemptions. You may have to change some of your procedures a little bit, but I don't think you can go in there and use all kinds of written memorandums, circulate those all freely back and forth, and not have that be available to the public and call that an open in the sunshine meeting. Mr. Prrr. One situation that you alluded to-where an agency deliberately uses memorandums numbered in a way to obfuscate conversation-might create for an agency precisely these kinds o:f problems with courts. But, I think Chairman Williams' statement pointed out that, in the meetings that have attracted some criticism, the Commission was not trying to deliberately objuscate its discussion. Rather, the Commission was attempting to order its discussion. There may well be differences in what agencies are required to do, depending upon the situation presented, but the act itself requires that a balancing be made. "\Vhen an agency holds its meeting with :full public observation, and where the public receives a :full understanding o:f the meeting by the briefings and the kinds of things the Commission is now undertaking, the Commission should not be deprived o:f the candor reflected in the staff memorandums that it now receives. Senator Cun.Es. "\Vell, I would just say again if that balance is going to be obtained, that's going to he obtained before the lawsuit comes to its fruition. That's going to be obtained by the general public and press being satisfied with what they are receiving. I don't think you have that situation at all now. · And I think that after you go to the confrontation o:f a lawsuit, you may find that it is too late to have that kind of balancing proce-   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  348 dure because the ju.dicial order may do what I think it should and will do, and what I would advise my client of what I think that judicial order would do regarding whether these documents would be made available if they did not come within one of the express sunshine exemptions and they are used in that open meeting. Mr. Chairman, are you familiar with the President's memorandum to the agencies with regard to the Sunshine Act 1 Mr. WILLIAMS. Yes; I am. Senator CHILES. I know that you have the statutory authority to litigate your own suits, and that will cover the Sunshine suits, too. ·what impact has the President's directive had upon your agency and its Sunshine policy j, Mr. WILLBMS. Well, the underscoring by the memorandum of the importance of our substantive compliance with the Sunshine A.ct is an admonition we take seriously. What may be exempted from public observation relates to the securities laws we enforce and administer. Senator CHILES. As a matter of Federal policy do you have an opinion as to whether there should be a single litigator for a Government-wide statute like Sunshine to provide for a uniformly applied law and interpretation 1 Again, the situation I foresee is where there might be a half dozen different interpretations of the act, or of a definition of a meeting under the act. That would certainly damage the effectiveness of the statute. Mr. WILLIAMS. From our standpoint our perception is that, since the appropriate interpretation or, if you will, defense, of the agency under the Sunshine Act does relate so directly and so integrally with the substance of the laws we enforce and administer, for example, our judgment as to whether the public disclosure of information would endanger the stability of financial ma.rkets, that this concern should override the possibility that courts might give multiple interpretations to the provisions of the Sunshine Act. Accordingly, we believe that the Commission should be responsible for its own defense. Senator CHILES. Chairman ~filler, of the Federal Reserve, did not seem to have any problem with the Federal Reserve being represented by the Attorney General in regard to Sunshine suits, but you do have a problem with the Security and Exchange Commission being represented by the Attorney General. Mr. WILLIAMS. Yes; on two grounds. One, we are an independent agency and not part of the executive branch. Senator CHILES. Neither was the Federal Reserve the last time I looked. Mr. WILLIAMS. You are ri~ht, of course, but we are nevertheless different in terms of our precise responsibilities and our relationships with the executive branch. The Commission, unlike the Federal Reserve Board, has extensive enforcement responsibilities. The other point to be made here is that we may not both deal with the same kind of factual concerns or not. We have not focused on what similarities or differences might exist between the two agencies. Mr. PITT. In addition, the responsibility for Government litigation has been the subject of a recent study by the Office of Management and Budget. A number of the independent agencies do not have the kind of litigating capacity that the Securities and Exchange Commission has developed over the last 40 some years.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  349 Senator CHILES. You are not including the Fed as one of those agencies that doesn't have a litigating capacity? Mr. Prrr. ·we have a greater litigating capacity than most agencies, even with respect to statutory provisions administered by the Federal Reserve Board. The Federal Reserve Board establishes rules under section 7 of the Securities and Exchange Act relating to margin requirements, but it is the Securities and Exchange Commission that enforces those requirements and not the Federal Reserve Board. In part, an agency's litigating capacity is simply a function of how effectively the agency has utilized in the past its litigating potential and where it has placed its regulatory focus, of course, there are a number of agencies that have the same approach that the Securities and Exchange Commission does with respect to its litigating authority. Senator CmLEs. Well, one of the problems and confusions that seem to have developed in regard to the interpretation of the Freedom of Information Act has been the fact that agencies have tried to make their own interpretations as to what the act means and what particular statements say and that, I think, in itself has caused concern. I see the same possibility of that happening to the Sunshine Act if you don't have some standard that's going to set the uniform policy. Mr. Prrr. The agencies with independent litigating authority have not been insensitive to the possibility of conflicting positions. There have been two approaches to this issue that have made it a nonproblem. First, the general counsels in each of the independent agencies have attempted to coordinate and apprise each other of their litigating posture. And second, with respect to the Freedom of Information Act and Sunshine Act, there has been very effective coordination with the Department of Justice and the Administrative Conference. We consider the position of both the Justice Department as well as the NLRB before we advise the Commission as to the disposition of Freedom of Information Act matters; and, the Commission, in making its own determination as to whether to pursue a particular litigation theory. We do this to be certain as to what potential effects may be of our posture on the Freedom of Information Act with respect to Government agencies other than ourselves. USE OF CAMERAS AND RECORDING DEVICES AT THE SEC  Senator CmLEs. I note that your regulations require any person desiring to record or photograph any meeting to apply to the Commission secretary for permission to do so, setting forth the requestor's interest in the matter and the reasons why the requestor desires to record or photograph the SEC proceedings. I find those requirements to be rather intimidating. I think having to explain one's interest and reasons for desiring to record or photograph to deter someone from even applying. Those burdens appear to me to act only to restrict and limit public observation. Why do you require reasons and explanations of interest before you permit an activity that the Attorney General has clearly said is permissible? What benefits do you derive from that kind of restrictive regulation? Mr. WILLIAMS. Well, in partial response, we do not tape or record our open meetings. We are simply interested in knowing if the meeting is being taped, so that we can make our own judgment as to whether   35-867 0 - 79 - 23 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  350 there is any reason for the Commission, under those circumstances, either to maintain its own record of the proceeding or if there appears to be great enough interest, to transcribe the meeting ourselves and simply make the transcription publicly available. Insofar as photographmg our meetings is concerned, we are primarily concerned with simply knowing what is going on in our Commission room that might interfere with our proceedings. Senator CHILES. Well, again, it just looks to me that if the meeting is open, I should not be required to tell you why I want to come to your open meeting or whether I am going to be there at all. The Attorney General has expressly said that where these activities do not cause a commotion or do not disrupt things. they should be allowed. It would seem like any kind of reasonable rules or regulations to see that there is not a disruption would be proper, but when you ask somebody to give the reason why he or she wants to tape or photograph this meeting it acts to intimidate and inhibit the person. Indeed, this has a true chilling effect on a person's right to observe. I think clearly it would cause people to feel that they could not use that procedure. Mr. Wn.LIAMS. We will take a look at that. I am not aware of our having intimated anyone, but if we have intimidated them to the point where they don't request permission, I wouldn't know about that. We will take a look at it. AVAILABILITY  OF  MEETING  RECORDS  Senator CmLES. I agree, you wouldn't know it. The legislative history makes clear that agencies ar.e expected to make meeting records promptly available to the public. It places the burden on the agency to determine what can be released. That burden is consistent with the burden placed on the agency to justify closed meetings and withholding any information. Your regulations require the transcript, recording, or minutes be released within 20 days, excluding weekends and legal holidays, of receipt' by the SEC's freedom of information officer of a written request. Now, the act permits an individual to bring an action against an agency prior to or within 60 days after the meeting out of which the violation Pxists. Twenty days excluding weekends and holidays isn't exactly the prompt availability that the act contemplated and it would seem that it would certainly make it difficult for someone to act within the statue of limitations. Most of your meetings seem to fall within the expedited closing provision which permit you to keep minutes rather than worry about transcripts. It seems to me that the 20-day requirement could be reduced by routinely evaluating minutes or transcripts right after the meeting to determine what could be released. How and when is the review presently handled? Mr. PITT. First, with respect to when the statute of limitations begins to run, I think that you have raised a matter of legitimate concern. But, the event triggering the statute of limitations would, in my view, be the failure by the agency to turn over the transcript and, prior to that time, the statute probably would not run. Senator CHILES. Not necessarily. That might be one of the reasons but that certainly would not be the--   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  351 Mr. PITT. Conceivably, you may be correct. A court might hold otherwise, but, insofar as this Commission is concerned, we certainly did not contemplate that the statute would run until someone requests the transcript and ·we finally deny the request. The 20-day period you referred to is patterned after the comparable Freedom of Information Act provisions. The way the review procedures are now patterned is a reflection of both the number and the kinds of matters the Commission considers. In a 4- or 5-month period, we estimate that the Commission considers between 600 and 700 matters. The tapes of the Commission's consideration of those matters can run anywhere from 20 minutes to 2 or 3 hours, which is extensive. Most of the closed meetings involve matters of a law enforcement nature and, therefore, based on our understanding of the act, the materials would not be available for public inspection because they are subject to an appropriate exemption in their entirety. But where somebody makes a request for a transcript we do have the capacity to prepare a transcript promptly and to have it edited, if editing is appropriate, or to prepare a statement of reasons that would indicate why we are withholding the requested material, similar to that we prepare now under the Freedom of Information Act. This statement of reasons would be necessary, of course, so that a firm basis for seeking judicial review would be available for someone who felt we were improperly withholding the transcript. The effort is really an attempt both to comply with the spirit of the act and to manage the inordinate number of tapes that the Commission has in its possession virtually all of which would be completely exempt from disclosure, even on a word-by-word basis. Mr. WILLIAMS. Also, if I am not mistaken, we have not received any requests for transcripts. Senator CHILES. You have not. Mr. WILLIAMS. And under these circumstances, I would be reluctant to expend much in the way of Commission resources to anticipate a request. But on the question of if there is a statute o:f limitations-Senator CHILES. If you say 20 days, excluding weekends, you, in effect, are talking about 4 weeks, so you are talking about 28 days there. You are talking about then making the written request to the Freedom of Information officer and then waiting to get the material back. It looks to me like a person who wants to look at a transcript and then determine whether the meeting was properly closed or not will not have much time left to do this. I might well have that record 5 or 10 days before the statute of limitations is going to run. It might prompt me to go on and feel that I have got to file a suit to protect myself, just to stop the statute from running. We are talking about a very short statute of limitations o:f 60 days. We set the time limit so as not to leave these matters open for months or years. That was Congress decision to try to do that. So I am glad to hear that you haven't received those requests, and tha~ there aren't a lot of requests, but it still appears to me that the procedure is bad. I:f it is going to take me 45 or 50 days to actually obtain that transcript, it would leave me very little time to try to protect my rights under the statute.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  352 Mr. PITT. I think the only response is that fairness would dictate that the statute should not run until we have finally denied a request; and second, I think if the request asserted that there was an immediate need for the transcript, such as immediate litigation, it has not been our practice in litigation to try and stretch our time periods to deprive people of their rights. As long as requests for our transcripts aren't received on a regular basis, which is the concern of the Chairman, we have the capacity to prepare the transcript in less than the 20 days specified by our rule, but the 20-day period was predicated on the same kinds of considerations that went into the time limitation now contained in the Freedom ,>f Information Act for agency review. When drafting our regulations ,m this point, we did not pick the .20 day number at random. We based the time period available for agency reviews on something that the Congress seemed to have suggested for a fair time period in an analysis situation. EXPANDING THE ACT'S EXEMPTIONS BY RULE?  Senator CHILES. In your regulations you seem to go into considerable detail expanding upon the statutory exemptions. For example, with regard to exemption 9-B, you permit a meeting to be closed if opening it would disclose information, 1he premature disclosure of which would be likely to significantly frustrate the implementation, or the proposed implementation, of action by the Commission, any other Federal or State governmental authority or agency, or any securities industry self-regulatory agency. ,Vhen I read 9-B, I see reference only to the frustration of the proposed agency action. The legislative history clearly indicates that this exemption applies only to the agency's own actions. It seems to me that your regulations have created a new exemption to Sunshine that ~oe.s beyond the clear meaning and intent of the act. How do you justify regulations which go to that extent in broadening the act? Mr. PITT. Our intent in drafting that regulation was not to extend, but rather to explain, of the exemptions as it applies to our agency. In fact, our agency takes a vt>ry narrow construction of section 9-B, and the Commission has made a concednl effort not to read the exemption broadly. But it basically covers a number of situations which do involve other agencies, and, although we are not the initiating agency, the situations do involve our agency as well. For example, the Department of Justice may request that we refer files to them for possible criminal prosecution. That is a Justice Department-initiated action, and yet the more public knowledge that the Justice Department asked us to refer our files, and that we have done so, would frustrate agency action. A similar situation exists with respect to the request by securities industry self-regulatory organizations for a referral of files. These organizations may make requests of us for information which may be of assistance to them in connection with their disciplinary proceedings or other statutory responsibilities. We have also utilized the 9-B exemption where settlement discussions of pending litigation exist, as well in situations where the mere knowledge that an issue was set on the commission's agenda would very clearly frustrate the agency's actions.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  3i3 Our rule was drafted to be appropriately reflective of the kinds of practices in which our agency, in fact, is engaged. Senator CHILES. Well, is that, in fact, going to cover those other agencies, or are you saying it is just going to cover your actions~ Mr. PITT. The Commission, for example, may be asked by a State securities commissioner to furnish files to it for possible State prosecution or State investigation. At the time the request comes in, of course, we do not know whether the Commission will honor the ·request or if the Commission may determine that there are some circumstances that might warrant the Commission's withholding the information at that time. The mere publication of another agency's request for files is not yet our agency's action. The Commission takes action when it decides whether to refer the requested material, and under what circumstances it will do so. Exemption 9-B as implemented by Commission regulation was drafted to cover this situation. We do not intend in any way to go beyond either the spirit or the letter of section 9-B as contained in the act. Senator CHILES. Well, we are concerned about 9-B to start with because it is becoming the catchall exemption. When you start broadening the catchall exemption and expanding it, then that really gives us problems. I would think that it should be construed very narrowly, and that's what we intended. Mr. Prrr. That has been, virtually in literal terms, what the instructions to our staff have been. Senator CHILES. Chairman Williams, again we want to tJhank you for your appearance here today, and we look forward to continuing progress on the part of the Securities and Exchange Commission. Thank you. Mr. WILLIAMS. We certainly will. Thank you. [The prepared statement. with exhibits of Mr. "Williams, follows:]   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  354  srATEMENT OF 'IHE OC'NORABLE HAOOLD M. WILLIAMS, OlAIRMAN, UNITED STATES SECURITIES AND EXCHANGE C'OMMISSICN, BEFORE THE SUBOJMMITI'EE CN FEDERAL SP~'DING PRACTICES AND OPEN ~ OF 'IHE SENATE C'OMMI'ITEE CN GGVE.'lNMENTAL AFFAIRS, ROOARDING 'IHE G:NER!<r!ENT IN 'IRE SUNSHINE ACT.  August 4, 1978 Mr.  Chairman, Me.'!lbers of the Subcorrmittee: I am pleased to have the opportunity to review with you today  certain aspects of the Co11111ission's recent experience under the Government in the Sunshine Act.  With me is Harvey L. Pitt, the Ccmn.ission's  General Counsel, who has been interested in the Sunshine Act since it was under consideration in the Congress, and who has had a key role in assuring our canpliance with the Act. Congress intended the Sunshine Act to ensure, to the fullest practicable extent, public access to "information regarding the decision making process of the federal government." as  !/ Thus, the Act prnvides,  a general rule, that, "every portion of every meeting of an agency  shall be open to public observation."  y  As  the federal agency charged  with responsibility for administering the laws designed by the Congress to provide full and fair disclosure to investors, the Securities and Exchange Commission is sensitive to the statutory objectives of the  Sunshine Act and the importance of accurate public understanding of governmental processes and decisions.  y y  5  u.s.c.  552b, note.  5 U.S.C. 552b(b).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  355 During the legislative process, we expressed our SUl'.lport for the Act's objectives, but also our concern that certain of the burdens of compliance might outweigh the benefits to the public.  We  knew, and  the Congress recognized, that most of our meetings could not be open to  the public, in view of the Carmission's broad-ranging law enforce-  ment arrl quasi-judicial responsibilities arrl of the fact that even our consideration of rule-making proposals must often include discussions of active enforcement cases. Nevertheless, our experience has been that the Canrnission has been able to consider a substantial number of its agenda items in meetings that are open to the public.  Since the Cormnission had, before the s.unshine  Act, conducted almost all of its meetings in private session, the Act has truly worked significant changes in the manner in which the Canrnission conducts its business. As noted by Camtissioner Evans during this Subcormni ttee 's earlier  oversight hearings on the administration of the Act, we have certain concerns about the operation of the Sunshine Act in practice. We are concerned that the ability of the Comnission to perform its statutory mission should not be :impeded for the sake of inflexible procedural requirements which, while theoretically designed to assure the public access to information about i~s government, do not in fact perform this function.  y  We are concerned that pressure is being applied to require  the Ccmnission to go far beyond the requirements of· the Act, and to  Testimony of John R. Evans, Carmissioner, Securities and Exchange Comnission, before the Senate Subconmittee on Federal Spending Practices and O!:len Government of the Senate Committee on Governmental Affairs:November 29, 1976, p. 6.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  356 expose t.,e internal deliberative processes of the Conmission to public view, something we feel would be very counterproductive.  I feel that  the Commission would be remiss if it did not report to you these concerns.  As Conmissioner Evans also pointed out in his testimony, many of the comments we have received about cue public meetings indicate that observers ace impressed by the depth of discussion and the ccnsideration afforded to opposing viewpoints on major issues, as well as by the overall competence and fairness of the Conmission's deliberations.  ii  Our experience  since Col!lllissioner Evans' remarks has generally been consistent with his report.  But, as the public's experience with our meetings broadens,  an increased demand is evolving, particularly on the part of the press, for supplementary measures, beyond those required by the  Act  itself, in  order to make our meetings more informative an:l understandable.  I think  this can be healthy process, and we are always ready to ccnsider suggestions for improving our procedures.  We have been making some changes  in the way we conduct our meetings and, in general, improving the level of understanding of the Comnission's meetings.  As you ace aware, t.,e Congress intended t.,at t.,e public's access to the decision-making processes of the federal government, as implemented by  the Sunshine  Act, be  balanced against the need to protect the ability  of government to carry out it§l responsibilities.  In the case of the Can--  mission, of course, our principal responsibility is to administer and enforce the federal securities laws.  In my tenure ·as Chairman over  the past 15 months, however, I have beccme increasingly aware of the  ii  Id. at 3.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  357 difficulties involved in following the discussions at our meetings.  For  example, as you might expect, the more complex the matter under discussion, the more detailed the Comnission discussion of that matter becomes.  It is  in these situations that we recognized, even before certain recent criticism of our open meeting procedures, a need for improvements in our procedures. In his testimony before you last November, Carmissioner Evans informed you that, in order to facilitate a better understanding of the discussions at our open meetings, the C011mission had begun  to  distribute  summaries of relevant background information pertaining to agenda items to  attendees at these meetings.  y  Nevertheless, the Ccmnission has recently  received some responsible criticism with regard to the conduct of its open meetings,,and in your letter dated June 10, 1978, you requested our  views "in light of recent canplaints about the cryptic nature of some of [our] open meetings."§/ These complaints, which originated with some members of the press who regularly cover the Comnission's meetings, indicated to us that the discussions between the Camiission and staff that occur during our open meetings are not always fully understood by those who attend our open meetings.  Today, I would like to discuss with you  those recent criticisms that have been made concerning the Comnission's open meetings, and indicate the weys in which we are responding to the suggestions we have received,  Id., p. 7. We sul:xnitted at that time a number of these sunmaries to'"your staff for the Sulx:Olllllittee's information. Leeter to Chairman Williams, dated June 30, 1978. By letter of the same date, I noted that the COIIUlission's testimony would be directed "to the subject of the Comnission's policy regarding dissemination of staff memoranda and other documents in connection with open meetings."   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  358 I am aware of two Conmission meetings that have been particularly criticized.  First, on June 7, 1978, the Coltillission considered certain  staff recerindations regarding the re-examination of the C011111ission's rules relating to shareholder co1tI11unications, shareholder participation in the corporate electoral process and matters generally concerning corporate governance.  The second meeting concerned the Comnission' s consideration  of a staff report to Congress entitled "The Accounting Profession and the Comnission's Oversight Role." _This meeting was held on June 28, 1978. These complaints are serious ones because we know that if observers do not understand what is being discussed at a Comnission meeting, the intent of the Sunshine Act may not be fully realized.  On  the other hand,  I must candidly acknowledge my own belief that there is a limit to the airount of educating we can do at our public meetings. are primarily business meetings, not classrooms.  As  11.gency meetings recently pointed out  by Camtissioner Karmel, "The public has a right to know what we are doing but it also has a right to have us get our work done.•  y  Those who want  to follow our meetings have available to them the resources that will permit them to do this; but they must do their own homework. Despite these reservations, Mr. Chairman, I believe that there are several steps that we can take, and are taking, to try to make useful information available.  Before discussing these steps, I would first like  to describe the two particular meetings which have primarily engendered criticisms by the press.  y  Legal Times of Washington, Monday, July 17, 1978, p. ll.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  359 The Co111Dission's Meeting on Corporate Governance On  April 28, 1977, the Comnission announced its intention to  conduct a broa:I re-examination of its rules relatin, to comnunications to shareholders, shareholder participation in the corporate electoral  process, and corporate governance generally.  y  The COllmission indicated  that the decision to undertake the study was based, in part, on the fact that recent events, such as numerous corporate disclosures concerning questionab~e and illegal payments, had served to focus public attention on the subject of corporate accountability, and had raised questions about the adequacy of existing checks and balances. To prepare for public hearings, the Comnission solicited written  COllllli!nts on a number of issues relating to(1) the adequacy of existin, avenues of comnunications between shareholders and corporations, and particularly, whether shareholders should be provided with more information-than they receive today with respect to socially significant matters affecting their corporations; (2) whether the Comnission's rules regarding shareholder proposals should be amended to facilitate the presentation of shareholder views and concerns in the corporate proxy materials;  (3) the role of shareholders in the corporate electoral process, and whether the Comnission should amend its proxy rules to  provide shareholders greater access to the corporate proxy  Securities Exchange Act Release No. 13482 (Apr. 28, 1977), 12 SEC Docket 239 (May 10, 1977).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  360 mechanism for the purpose of nominating persons of their choice to serve on boards of directors; and (4) whether additional disclosure relevant to an assessrrent of the quality ard integrity of management should be required. The  Conmission also raised general questions concerning the need for legis-  lation relating to federal minimum standards for corporations or the federal chartering of corporations, the role of the stock exchanges and self-regulatory organizations in improving corporate governance, and the costs and benefits associated with various regulatory approaches. On  August 29, 1977, the Comnission published a secon::l release  V  announcing the schedule for public hearings, and, reflecting the extraordinarily canplicated nature of this undertaking, restated the issues to be considered based on those comrents which had already be.en received. The public hearings began in Washington on September 29, 1977, and continued for five and a half weeks, with additional hearings held in Los Angeles, New York and Chicago.  More than three hundred persons an::l organi-  zations, including corporations, business associations, government officials, public interest and religious groups, law firms, bar associations, financial analysts, professors, accountants, and other individuals, submitted written comments or testified during the proceedings, producing a file of over 10,000 pages.  All of these C?mrents are, of course, available for public  inspection, and the Commission recently released, in the exercise of its discretion, a summary of the comrents. 10/  As  t.loat· summary reflects, this  V  Securities Exchange Act Release No. 13901 (Aug. 29, 1977), 12 SEC Docket 1630 (Sept. 12, 1977).  lQ./  SEC News Digest, July 26, 1978.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  361 proceeding generated a multitude of views on a large number of issues, ranging from narrow technical matters arising under existing proxy rules to broad philosophical approaches  to  the problen of how corporations can  be made mre responsive to shareholders and the public at large. Based on this voluminous record, the Colllltission's Division of Corporation Finance recorrmended that the CO!!lllission authorize the Division to develop a number of rulernaking proposals for further COlllllission consideration. These rules 1-ere to be designed  to  remove existing impediments  to  shareholder  comnunications and participation in the corporate electoral process, and to improve the quality of information available to investors regarding corporate management, as well as  to  stimulate voluntary changes in the struc-  tures and procedures of corporate boards of directors. 11/ In order to facilitate Commission discussion of those issues, the Division forwarded to the Conmission a staff report setting forth 36 preliminary recorrmendations.  These preliminary recommendations were the subject of discussion  at the open Conmission meeting held on June 7, 1978. The basic purpose of this meeting was to fo[111ulate, with greater specificity, broad policy with respect matters. to  to  various corporate governance  Because the staff was only at the stage of requestin, authority  develop rule proposals, the Corrmission did not have before it specific,  fully developed proposals. We were primarily concerned with the kinds  With respect to a number of other issues, in particular, the role of self-regulatory organizations in improving corporate governance and the need for new federal legislation, the Division was not prepared to make specific recorrmendations and suggested that the COlllllission defer its consideration of these questions to permit the staff additional time to formulate specific recorrmendations.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  362 of effects various types of rules might have,  and  the substantive dis-  cussion was, therefore, necessarily general in tone. Looking at this meeting in retrospect, I can understand how our discussions might have engendered some misunderstanding.  There was, indeed,  some confusion, even on t.~e part of those participating in the discussion.  While we did try to minimize the confusion, the expansive subject  matter  and the  wide-ranging nature of the staff's recomnendations, together  with the fact t.~at this was a preliminary discussion, not designed to lead to a decision as to any discrete question, all tended to make our discussion  rather difficult to follow. A sumnary of relevant background information had been prepared for distribution to those attending this meeting, 12/ and, at the beginning of the meeting, I made an opening statement, in which I sl.lllmarized the principal issues we expected to discuss.  Initially, the best wey to proceed  appeared to be to discuss the staff recommendations in the order in which they were presented. After a while, however, because there was so much material presented to the Commission and so little time in which to conduct a full review of the Division's recommendations, I suggested that it might be better to turn to a discussion of those recommendations which could be The  implemented by the errl of 1978, in time for the next proxy season. staff then indicated that·those recommendations pertaining to the  Division's request for authority to issue proposed disclosure rules relating to the composition  and  structure of corporate boards of directors  would be a useful point at which to begin the more limited discussion.  12/ This summary is attached to my written statement as Exhibit A.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  363 The Commission agreed that t.~is was a reasonable approach, ard determined to defer consideration of certain other staff proposals. Admittedly, this procedure was awkward am, as we attempted to revise the agenda by sorting out those recolllllendations which we had determined to consider i.rmnediately ard those which we had agreed to defer, there were some confusing references to certain reco111!1endations by number. Our references to recommendations by rumber were not meant to conceal substantive information from the public, however, but si~ply to enable us to determine, as quickly as possible, which recommendations could be considered for prompt implementation before next year's proxy season. As to those recommendations which the COl!mission did discuss, the staff extensively described the proposal and the reasons favoring its adoption. There were numerous questions ard comments by the Commission, am a full discussion followed with respect to each recommer.dation which the Canmission considered.  I firmly believe that this discussion was canprehensible to  those attending the meeting with some general knowledge of the subject matter. On  the whole, the meeting was a success from the Commission's stand-  point, since we were able to develop our policy ard to set some standards and guidelines for further staff development. 13/  13/  Following the meeting,  Subsequent to the June 7 Ccmnission meeting, on July 19, 1978, the Commission issued, 15 SEC Docket 291 (Aug. l, 1978), Securities Exchange Act Release No. 34-14970 in which the Commission indicated its intention to address, in stages, certain issues related to corporate governance in more detail. Stage one includes rulemakin;i proposals to provide investors with expanded information on certain matters, including the structure, composition ard functionin;i of the boards of directors of canpanies   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  (continued)  364 knowledgeable members of the Commission's staff answered reporters' questions about what the Commission ha:l considered an:l decided at its meeting.  I  think it is interesting that, in spite of the complaints we recei'led about the difficulties those in attendance experienced, we foun::I the press accounts of the meeting to be quite full and accurate. 14/ The Meeting at which the Commission's Report on the Accounting Profession was Considered On  June 28, 1978, the Commission considered and ap9roved the publi-  cation of a report, entitled "The Accounting Profession an:! the Corrmission' s Oversight Role." This report was the result of a corrmi tment I made to the late Senator Lee Metcalf before a Senate Subcommittee during  my testimony in June 1977 on the accounting profession.  At that time,  I stated that the Commission would undertake to report periodically to Congress on the response of the accounting profession to the challenges which Congress an:l others had placed before it an:l on the Commission's own initiatives in this area.  As  you may know, the central question in  the debate over the future of the accounting profession is whether the  13/ (continuation) registered with the Cormti.ssion.  Stage two will involve the publica-  tion of a canprehensive staff report relating to corporate governance, and the means by which..corporations can best account to shareholders an:l the public. After publication of this report, the Commission will consider, in the third stage, what further action, if any, is appropriate with respect to shareholder conmunications and shareholder participation in the corporate electoral process, and will determine whether to publish additional rulemaking proposals, or whether to recorrmend new legislation that would affect corporate governance. A number of these newspaper accounts are attached to my written statement (Exhibit B).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  365 profession should continue to be primarily self-disciplined and self-regulated, or whether the federal government should become more directly involved in its regulation and in the development of the accounting principles  and auditing standards under which the profession operates. In order to give a comprehensive, and comprehensible, picture of developments in this canplex field, the report was divided into three parts:  first, the COlllllission's conclusions concerning the profession's  progress during the past year and its expectations concerning the objectives toward which the profession must work in the coming months; second, a staff's description and analysis of the profession's progress in three broad areas-independence, regulation and oversight, and the  development of ac~ounting and auditing standards; and, finally, a volume of exhibits containing documentary materials relevant to the analysis. This report, which was over 1300 pages lon;, was delivered to Congress on July 5, 1978, and, at the same time, it was also made public in full. The Conmission prepared and distributed to those who attended this meeting a smmary setting forth relevant background information; 15/ and, as  I had done at the Camnission meeting on corporate governance, I opened  the meeting t:,y'smmarizing the backgrouoo  and  purpose of the report and  the scope of the investigation into the matters selected for inquiry.  Discussions then ensued on the draft report.  Like the corporate governance  meeting, this meeting concerned an expansive subject, and one that was of a rather complex and technical nature.  W This smmary is attached to   35-867 0 - 79 - 24 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  my  written remarks as Exhibit C.  366 Mr. Chairman, in your letter to me dated June 30, 1978, you make reference to the "cryptic nature of some of [our] open meetings.•  I can  understand how this criticism might have been made with respect to our June 28 meeti!JJ on the accountill3 professicn.  In fact, at one point in  the discussion of this matter, I recall having apologized to those in attendance for the C01T111ission' s use of "cryptic" phrases.  This was intended  as a reference to technical accounting terms which we necessarily had to use in the course of the Conmissicn' s discussicn.  Because the subject  matter of this meeting was so complex, certain portions of the Commission and staff discussion might not have been very clear to observers who either had  not previously had an extensive exposure to or knowledge of accounting  matters, or who had not followed this issue closely in recent months. I believe, however, that members of the public with some background knowledge of accounti!JJ matters who were generally familiar with the nature and purpose of the Camtission's inquiry into the accounting profession  should have been able to follow the C011tnissicn's discussion with little trouble.  In any event, Mr. Chairman, we did what we could to present  the meeting in a canprehensible fashion, and it is certainly not the  case that the Camtission's discussion was couched in technical jargon in an attempt to obfuscate or to withhold information fran the public. Following the Camtission's meeting, I announced that the full report would be available on July 5, 1978, 1§/ and that members of the staff  The C01111lission's report was canpleted by July 1, 1978; over the July 4th weekend it was reproduced and bound for distribution to the public.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  367 of the Office of the Chief Accountant arrl I would hold a press conference  r.o answer questions and further discuss matters raised in the Ccmnission's report.  In addition, I swmnarize:'I the major conclusions of the report,  and this sunmary was widely and accurately cited in the press accounts of the Commission's meetin;i.  Again, judgin;i fran the accuracy arrl canpleteness  of the press reports of the meeting that were published,  ll/  I believe  that the Commission was quite successful in presentin;i the matter to the public in an understandable fashion. Recent Developments In taking steps to enhance the public's understanding of Ccmnission meetings, those responsible for these matters at the Commission have spoken and met with representatives of the press, and this has produced a rn.nnber of helpful and constructive suggestions. We have already taken some steps to implement certain of these, and other measures will be considere:'I in the future.  I believe that, through continuous efforts, we  will be able to assist the public, and particularly the press, better to understand the discussions at open Commission meetings.  Although some have requested it, the Ccmnission is, however, generally reluctant to disclose to the public internal, pre-decisional memoranda.  We believe that the systematic disclosure of internal working  papers would be counterproductive, arrl would terrl to interfere with the Comnission's internal processes.  These considerations have long been  recognized by the Congress; the legislative history of Exemption 5 of 17/ These are attached to my written statement (Exhibit D).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  368 the Freedan of Information Act, as well as the many court decisions that have considered that provision, including several Supreme Court decisions, 18/ all recognize·that the disclosure of internal memoranda often runs the unacceptable risk that the free exchange of ideas between the Camti.ssioners  am the staff would be inhibited. I share this view.  I believe that the routine public exposure  of working documents written by the staff would tend to make these documents more formalistic, am less comnunicative, than they now are.  In my  opinion, this would result in further slowing down an administrative process that often is already too slow.  Because of the pcssibility of public exposure,  the staff would be more reluctant to send tentative pcsitions or preliminary  views to the Comnission, am, at least in some instances, reluctant  to express disagreement with positions taken by fellow staff members or members of the Comnission.  Further, if Camtission attorneys knew that  their opinions would be disclosed to potential adversaries in litigation, they would be much less willing to flag potential weaknesses in proposals under consideration by the Commission, or to pcint out alternative methods of accomplishing desired objectives.  Under the present system, premature  or apparently ill-advised proposals can simply be sent back to the originating division or office by the Comnission for further consideration.  By  considering such matters, however, the Comnission often receives valuable guidance as to the staff's thinking, and is better able to shape the  See National Labor Relations Board v. Sears, Roebuck & Co., 421 u.s: 132 (1975); Renegotiation Board v. Grumman Aircraft & Engineering Corp., 421 U.S. 168 (1975); Environmental Protection Agency v. Mink, 410 U.S. 73 (1973).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  369 develcpment of policy.  Finally, I am concerned that the availability  of our internal, pre-oecisional memoranda could present to the public a misleading or'inaccurate view of the COlllllission policy with respect to a matter, where the Ccmmission's final decisions differs from the staff reCOlmlendation. In addition, where the matter under consideration by the Ccmmission is the publication of a release, or some other public statement, I am very reluctant to distribute draft copies in advance of Ccmmission consideration an:! approval.  As  a group, we are a Colll!lission which tends  to go over our public comnunications rather carefully and thoroughly;  with very few exceptions, each is reviewed by the COlllllissioners an:! their legal aides, and it is very often the case that significant changes in the draft are made before it is issue:l.  Moreover, when the COlllllission  is considering the approval of a document to be sent to Congress, as was the case in our consideration of the accounting report, I believe it would be inappropriate to release the document to the press before it is transmitted to Congress. There is, however, more that we can do to promote public understanding of Commission meetings.  As I indicate:l, the Comnission does prepare  sumnaries of the items discussed at cpen meetings, and I believe in most instances these summaries provide the background information which interested observers need in order to follow the ensuing Commission discussion. Of course, many of the items we discuss at open meetings are relatively simple mat~ers requiring little discussion.  Our problems have principally  arisen, in connection with those matters in which there is great public   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  370 interest, whic.'l involve canplicate:l questions of fact arxl law, arxl where some knowledge of a large record is required for full understanding.  It is  primarily in these situations, where it is reasonable to expect that t.'le discussion will be complicated, that the Commission must direct its efforts to assure that members of the public arxl press are able to follow the COl!lllission's discussions.  I believe it is only through continuous  experimentation that we will learn how to deal most effectively with this problem, arxl I want to outline, briefly, some of the steps we are taking. First, where unusually canplex matters are to be discusse:l, where the matter has an involved procedural history, or where the matter requires the consideration of lengthy staff memoranda which, as in the corporate governance area, are predicated on a voluminous r:cord, we will provide a more detaile:l summary to those attending the open meeting.  These surranaries  can both provide relevant background information and identify the issues that the Commission will be discussing, without disclosin;i specific internal recoomendations or opinions.  The format of the surranary rray, of course,  vary, dependin;i on the nature of the matter.  We have alrea:ly attempted  to expand the information contained in these surranaries, and I thin'-. we  can continue our efforts to improve in t.1-iis area. 19/ In addition, I have, as I indicated, at times found it useful to make an oral statement at the begiming of a meeting, 51:.1mmarizing the issues to be discussed by the Conmission.  I plan to do this more frequently, when it appears  appropriate to do so. 19/ An example of a summary of agenda ite'11S distribute:l at one of our more recent meetings is attached to my written statement (Exhi~it E).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  371 Second, because no interest is served by inaccurate press accounts, the Commission will endeavor to make publicly available, wit.~in one business day, copies of the Cormtission's minutes of open rneetings, formally reflecting the action that the Commission took. Third, as we did after the rneetings at which corporate governance and the accounting report were considered, we will continue to make Commission  staff rnembers available to answer press inquiries regarding open rneetings. In addition, a press briefing may be sc.~eduled in advance of a meeting where considerable public interest is reasonably anticipated.  The feedback  we obtain fran our participation in these press conferences will, I believe,  let us know when we are not successful in communicating with the public, and will enable us to take pranpt corrective measures.  Finally, both the rnembers of the Commission and the staff must develcp a greater sensitivity to the difficulties involved in following a complex and technical discussion.  For example, in the corporate governance  meeting, a great deal of confusion an:l misunderstanding probably could have been averted if I had made it clearer that references to recommendations by number were only for the purpose of orderin:i our agenda, an:l not for  the purpose of substantive discussion.  If we all will recognize that we  are speaking to a new audience, and take into consideration the need to CO!llnunicate with rnembers of t!:_e public who attend our rneetings, I believe our ability to put our ideas across to this audience can only improve.  *  *  *  *  I hope that these comments have been responsive to the concerns of the Subcommittee.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  The Sunshine Act has, of course, been in effect  372 only since March 1977, an:l agency practice under it is still developing. In addition, the Ccmnission's chairmanship changed very shortly after the effective -date of the Sunshine Act, when I assumed the post in April 1977. The dynamics of open Ccmnission rreetings, I think it is fair to state, is rather unique, an:l conducting our meetings in a manner most useful for public observation is a skill which requires sorre practice. But, as I said, we have been experimenting, an:l our efforts are intended to assure that the public better understands Ccmnission and staff discussions at the Commission's open meetings.  These efforts are a reflection of  our concern that the purposes of the Act be fulfilled.  What combination  of approaches will work best for us I do not yet know.  But, Mr. Chairman,  I can assure you that the Ccmnission intends to make every reasonable effort to live up to the spirit, as well as the letter, of the Sunshine Act.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  373 ExHmIT  A  SECURITIES AND EXCHANGE COMMISSION OPEN MEETING AGENDA, WEDNESDAY, JUNE 7, 1978, 10 A.M.  1. Item : Proposed rule 15c3-4 and the amendment of rule 15c3-3 concerning the borrowing and lending of customer securities by brokers and dealers. Office: Division of Market Regulation. Staff: Katherine H. Hayes. 2. Item : Proposed rule change filed by the Chicago Board Options Exchange, Inc. concerning restrictions on writing of uncovered discount call options during registered underwritten offerings of underlying securities. Office: Division of Market Regulation. Staff: Jeffrey D. Saper. 3. Item: Proposed adoption of rule 13f-1 and related form 13F concerning the implementation of the Commission's institutional disclosure program. Office: Division of Investment Management. Staff: Lee B. Spencer, Richard W. Grant, Dennis M. Gurtz, Michael S. Lichtenthal. 4. Item: Discussion concerning the re-examination of rules related to shareholder communications, shareholder participation in the corporate electoral process and corporate governance generally. Office: Division of Corporation Finance. Staff: Richard Rowe, Barbara Leventhal, Richard Nesson, Jennifer Sullivan. 5. Item : Proposed exemption from certain rules of the Commissioner's conduct regulations for temporary employee. Office : Office of General Counsel. Staff: Paul Gonson, Myrna Siegel. 1. Proposed rule 15c3-4 and the amendment of rule 15c3-3 concerning the borrowing and lending of customer securities by brokers and dealers. Background: The Commission will consider requesting public comment on proposals to amend rules to permit a broker-dealer, under restricted conditions, to borrow, lend, and arrange for the lending of fully-paid and excess margin securities carried for the account of a customer, where the lending customer consents in writing to the transaction and holds full collateral for the securities lent. 2. Item : Proposed rule change filed by the Chicago Board Options Exchange, Inc. concerning restrictions on writing of uncovered discount call options during registered underwritten offerings of underlying securities. Background: On October 26, 1977, the Chicago Board Options Exchange, Inc. ( "CBOE") filed with the Commission copies of a proposed rule change, which was supplemented by additional material on February 9, 1978 and on March 27, 1978. The substance of the proposals filed provides for the imposition of trading restrictions on certain member transactions involving the writing of opening uncovered discount call options during the pendency of underwritten distributions of securities underlying call options traded on the CBOE. 3. Item: Proposed adoption of rule 13f-1 and related form 13F concerning the implementation of the Commission's institutional disclosure program. Background: The Commission will consider the adoption of Rule 13f-1 and related Form l3Jj' under the Securities Exchange Act of 1934, which would govern the reporting requirements of institutional investment managers exercising investment discretion over accounts having in the aggregate more that $100,000,000 in exchange-traded or NASDAQ-quoted equity securities. Under the proposed rule, such managers would be required to file a report within a specified time after the end of each calendar year, identifying those securities, the aggregate amounts held, the nature of such investment discretion and any voting authority. The Commission will also consider soliciting comments on the usefulness and burdens associated with quarterly reporting. 4. Item: Re-examination of rules related to shareholder communications, shareholder participation in the corporate electoral process and corporate governance generally. Background: On April 28, 1977, the Commission announced its intention to conduct a broad re-examination of rules relating to shareholder communications, shareholder participation in the corporate electoral process and corporate governance generally. The release indicated the decision to undertake the study was based, in part, on the fact that recent events, such as the numerous corporate disclosures concerning questionable and illegal payments, had served to focus 1   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  374 public attention on the subject of corporate accountability, and raised questions about the adequacy of existing checks and balances on corporate management. Preparatory to hearings, the Commission solicited written comments on a number of questions concerning these and related issues. Hearings commenced on September 29, 1977 in Washington, D.C. and continued for five and a half weeks, with sessions held in Los Angeles, New York and Chicago. In total more than three hundred persons and organizations including corporations, business associations, government officials, public interest and religious groups, law firms, bar associations, financial analysts, academics, accountants, and other individuals submitted written comments or testified during the proceedings. Since the close of public hearing and comment process, the Division of Corporation Finance has engaged in summarizing and analyzing the various views that were submitted and has developed a series of preliminary recommendations responding to some of the specific questions raised in the Commission's releases concerning the hearings.' These preliminary recommendations address specific questions, primarily in the context of the Commission's existing rules and do not attempt to address certain broader issues raised in the hearings such as, for example, whether additional legislation is necessary or appropriate with respect to corporate accountability or what the proper balance should be between government and the private sector in implementing initiatives to stimulate corporate accountability. The preliminary recommendations of the Division of Corporation ll'inance cover four major areas: (1) rules designed to remove existing impediments to shareholder communications, including an evaluation of the procedural requirements and criteria for excludability of shareholder proposals in Rule 14a-8; (2) increased opportunities for shareholder participation in the corporate electoral process; (3) changes relating to matters to be discussed in proxy statements, including disclosure of committees and management compensation; and (4) changes in the format of proxies. 5. Item: Proposed exemption from certain rules of the Commission's conduct regulations for temporary employee. Baokground: The Commission will considel· the exemption of Bruce Alan Mann, Esq. from certain requirements of the Commission's Conduct Regulations, so as to permit him to continue ai,; a partner of his law firm; retain a margin account ; and exempt the filing of certain detailed statements of financial interests. Mr. Mann, while on leave from his private law practice, will act as a consultant to the Commission during the fall of 1978, on methods of improving the process of raising capital for small business firms and other matters.  ExHIBl'.l'  B  NEW DISCLOSURE RULES BEING MAPPED BY  SEC  [From the Washington Star, .June 8, 1978]  (By Stephen M. Aug, Washington Star Staff Writer) The Securities and Exchange Commission has ordered its staff to develop new rules that would force corporations to disclose a wide variety of information designed to help shareholders east their votes on corporate matters more intelligently. At the same time, the commissioners decided to require financial institutionsprincipally mutual funds and bank holding companies-under SEC jurisdiction to disclose to their shareholders how they exercise voting power through their huge holdings of shares in other corporations. The proposed rule to disclose institutional voting practices would be accompanied by a recommendation to institutions beyond the SEC's aurhority-principally banks--to make the same disclosures voluntarily. The Commission took the actions during a public meeting yesterday at which its staff began presenting recommendations resulting from a year-long examination of shareholder participation in the way corporations are governed. 1 Securities Exchange Act Release Nos. 13482 (April 28. 1977) and 13901 (August 29. 1977).   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  375 SEC Chairman Harold M. Williams, who has called for improvements in the way corporations are governed almost since he joined the agency more than a year ago, said in opening the discussions that he wanted to concentrate on changes that could be put into effect before next spring, when most companies will be holding annual elections. Williams said he was most interested in recommendations that improve the functioning of boards of directors, those that enhance the ability of shareholders to participate in the corporate election process, those relating to disclosures in annual proxy statements and those involving shareholders in the process of nominating directors. The commissioners appeared agreed that the agency needed a rule to replace what had been known as the 1 percent rule which it dropped about a year ago. That regulation provided that a corporation could leave out of its proxy material shareholder proposals that dealt with matters that affected less than 1 percent of a corporation's business. The Regulation was adopted in an apparent attempt to discourage the growth of purely social issues that some shareholders were trying to have placed on corporate ballots, In many cases these social issues-such as demands to have corporations stop doing business in South Africa, or encouragement of birth control-had litNe to do with the activities of the corporation. In some cases, corporate managements have been asked to make public pay schedules and benefits for workers they employ in other countries. Barbara Leventhal, a lawyer in the division of corporation finance, who directed the staff study, said testimony during hearings on corporate governance indicated that corporations often voluntarily provide information sought by shareholder groups when the request is backed by a vote of 5 to 10 percent of shareholders. The disclosure of institutional share voting provoked some discussion by the eommissioners. Williams suggested. it should be included in proxy material that mutual funds, for example, send to shareholders. Commissioner Irving Pollack said an increasingly large nu'!lllber of directors of institutions believe the way in which shares they hold are voted is becoming a more important part of their job. Earlier in the meeting the commissioners decided to require institutional investnwnt managers who have control of more than $100 million in stocks to file quarterly reports with the SEC identifying those securities and the voting authority they may exercise over them. This regulation is viewed is important information not only by brokerage firms that deal in large bolcks of stocks--trying to match up buyers and sellers of large blocks-but also by corporations that want to know who are the large holders of their securities. The identity of institutional owners is sometimes shielded because the stocks are held in "street names." Williams pointed out that the trend of institutional trading activity is important information for the marketplace because "there are such massive" amounts of securities held by institutions. The commissioners also asked the staff to draft a rule that would make certain that shareholders proposing a matter on which stockholders will vote are given an opportunity to review corporate management's statement in opposition to the proposal. The staff recommendations were not made available to the public before or during the meeting, but Ievenson summarized for reporters after the meeting the recommendations the commissioners accepted. Among the principal regulations the SIDC ordered its staff to develop in time for issuance next month are: Financial institutions will have to disclose their voting practices for shares they hold. Corporations will have to disclose the composition and functions of any of four committees that they may have on their boards of directors: Nominations committee, extcutive compensation committee, audit committee and conflict-of-intere~t <'Ommittee. Proxy statements would have to disclose the existence of business or personal relations between directors or nominees for board seats. The proposed rule would define directors in probably three groups : Those also in corporate management, those not in management but affiliated through personal or business relationships with management, and those who have no affiliation whatever. This is designed. to indicate to shareholders the extent to which so-called "independent" directorsthose from outside corporate management-are truly independent.  https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  376 Shareholders would have to be told the number of board and board committee meetings are held each year and the percentage of a·bsences by members who miss meetings. Disclosure would be required in the event a director resigns over a disagreement on business policy matters. Proxy statements would have to have some form of disclosure indicating the amount of time directors may devote to the affairs of the company. This might require disclosure of the number of boards and other business activities in which each director is involved. Further, it would require disclosure of potential conflicts of interest in connection with board memberships or other affiliations. Fees paid for directors' meetings and committee meetings directors attend would have to be disclosed. Corporations would have to disclose the terms of settlement of corporate proxy battles. [From the Associated Press]  The Securities and Exchange Commission authorized its staff yesterday to draft new disclosure rules that would give shareholders a wide variety of information that is currently unavailable. The staff will draw up rules concPrning the existence, composition and functions of nomina,ting, compensation and auditing committees. The SEC also has asked for rules disclosink the existence of business and personal relationships between Board members and company management : the number of company board meetings; the reasons for resignations by company directors; the fees paid to directors and the number of other directorships that they hold. New rules would identify possible conflicts of interest among persons holding directorships in several businesses and woul!l require management to show shareholders favoring a proxy proposal a copy of management's opposition statement before it is printed. Consideration of issues concerning changes in shareholder authority to nominate directors, the format of proxy materials and the need for federal legis'.lation in the corporate area were deferred. The staff intends to complete drafting the rules in time to publish them by .July 1, making them effective for next year's annual meeting season.  SEC ACTS To REQUIRE DISCLOSURES BY FIRMS ON DIRECTORS, BUT DELAYS OTHER DECISIONS [From the Wall Street Journal, June 8, 1978]  (By a Wall StrPet Journal Rtaff Reporter) WASHINGTON-The Securities and Exchange Commission took the first steps toward requiring companies to disclose a wide Yariety of information about what their directors do for them. But the commission put on the back burner most of the fundamental issues raised last year in hearings that d<>lved into the question of how corporations are governed. Among the issues temporarily deferred are the questions of whether further federal legislation regulating companies is needed. whether shareholders should have a greater role in nominating directors, and whether the format of proxy statements should be changed. The agency put off decisions on those more complicated issues and told its staff to write disclosure rules that could be published by July 1 and put in place for next year's proxy season. "This was just the smallest first step," said Barbara Leventhal, special counsel to the REC's Division of Corporation Finance. A staff' report containing the recommendations on the broader issues is expected to he sent to the commission in the fall. The rules to be drafted will require the disclosure of: -The existence, composition and function of committees of directors that nominate other directors and executives, set pay, oversee the company's financial records or perform similar functions. -The existence of personal or business relationships between directors and management. Directors would have to he classified a;: management directors.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  377 affiliated nonmanagement directors, such as the company's outside lawyer, and unaffiliated nonmanagement directors, that is, someone who doesn't have anything to do with the company. -The reason a director resigns if it is a result of a policy dispute. Such a rule would give "an important tool to outside directors," Mrs. Leventhal told the commission. The rule is intended to encourage directors to air such matters as illegal corporate activities. -Information about attendance at board meetings, possibly by identifying directors who don't attend a certain percentage of meetings. -The total number of directorships held by directors, as well as identification of directorships that may pose a conflict of interest. -Fees to directors. -The terms of settlement of proxy contests. The cost of one recent proxy fight and settlement exceeded a company's gross profit for the year. Mrs. Leventhal said. The report due in the fall will address the use of a company's treasury by management for proxy fights, she said. Some of the disclosures will have to be in the proxy statements sent to shareholders, while other may have to be included in a report to the commission such as the annual report. The SEC's move to revise its disclosure rules comes in response to scandals involving questionable payments and other irregularities that raised questions about how corporations can be called to account. The commission's response was expected to be limited because a majority of the commissioners believes that additional federal government regulation of business, such as federal chartt>ring of companies. is unwise. The commissioners would prefer that companies take on the "reform" task themselves by such actions as appointing more independent directors and establishing independent audit committees. Some SEC officials believe that if companies are required to disclose the existence of such committees, it will induce companies that don't have them to establish them. The commission also told the staff to draft a rule that would allow proponents of a shareholder resolution to review management's statement in opposition to the resolution before it is published. Currently management can review shareholder proposals and the accompanying statements, but shareholders don't have access to the opposing statement to check it for accuracy. In a related matter, the SEC asked the staff to come up with some guidelines for determining what shareholder prGposals are "significantly related" to the company's business and have to be included in the proxy materials. The commission recently eliminated its "1 % rule," under which a shareholder proposal dealing with less than 1 % of a company's business wasn't considered significantly related and could be excluded by management. The commission clearly wanted some sort of guidelines as a substitute. Chairman Harold Williams suggested that the 1 % rule be reinstituted with allowance for exemptions. He said he questioned the commission's "ability on an ongoing basis to make value