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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
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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
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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
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(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
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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___________________________________________
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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
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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.
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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
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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
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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-
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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.
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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.
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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
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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.
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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
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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_
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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) .
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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
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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-
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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.
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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
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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-
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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
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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).
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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).
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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.
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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.
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(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
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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
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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).
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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.
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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.
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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).
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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
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Federal Reserve Bank of St. Louis
90 STAT. 1241
30
Pub. Law 94-409
5
use 552,
5
use 554,
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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
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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
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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
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90 STAT. 1244
33
September 13, 1976
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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
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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
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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
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Federal Reserve Bank of St. Louis
90 STAT, 1247
36
Pub. Law 94-409
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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,
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Federal Reserve Bank of St. Louis
90 STAT. 1248
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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-
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Federal Reserve Bank of St. Louis
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(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.
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Federal Reserve Bank of St. Louis
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(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
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(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--
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(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;
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Federal Reserve Bank of St. Louis
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(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
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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:]
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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
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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:]
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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
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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.
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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.
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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
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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 • • •
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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.
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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.
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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:
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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.
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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,
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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_.
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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
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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.
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[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,
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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~
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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 :]
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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.
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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.
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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
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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
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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
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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
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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:]
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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.
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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
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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.
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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).
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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.
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~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
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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.
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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
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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.
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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-
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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
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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.
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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
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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
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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-
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Federal Reserve Bank of St. Louis
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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--
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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:]
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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
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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.
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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.
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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.
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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.
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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
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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
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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
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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.
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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.
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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.
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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;
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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)
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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:
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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 )
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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
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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.
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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
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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
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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.
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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).
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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
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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.
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(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:
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§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.
* * * * *
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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:
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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.
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(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;
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(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;
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(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.
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(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
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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,
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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
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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.
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(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.
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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:
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* * * * *
(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;
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(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)
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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.
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* * * * *
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
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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
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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
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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
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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
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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
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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).
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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).
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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. •
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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
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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
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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
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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
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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.
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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.
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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
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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?
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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
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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:]
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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
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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.
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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:]
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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
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.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
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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
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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-
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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
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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
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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.
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---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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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."
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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
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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)
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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-
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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
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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
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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."
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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,
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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.
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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.
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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.
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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
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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.
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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.
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(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.
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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
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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.
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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
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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:]
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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.
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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-
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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
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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
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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
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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
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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.
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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.
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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.
~
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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
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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
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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.
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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
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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.
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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
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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.
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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
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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
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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
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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.
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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
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"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,
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~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
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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.
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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."
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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."
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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.
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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
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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.
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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.
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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.
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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
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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
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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
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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 •
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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.]
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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-
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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.
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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
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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.
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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.
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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
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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-
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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.
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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
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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-
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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
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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.
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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.
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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."
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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
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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
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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.]
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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
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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
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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.
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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-
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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;
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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.
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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.
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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.
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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
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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.
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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
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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-
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Exhibit A
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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
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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
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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
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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,
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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
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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
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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
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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:]
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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.
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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.
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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.
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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.
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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.
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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.
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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.•
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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.
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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.
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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.
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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
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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.
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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
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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.
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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.
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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)
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(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
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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
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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
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APPENDIX D
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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
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APPENDIX D
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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.
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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;
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APPENDIX D
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(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,
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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.
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APPENDIX D
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(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
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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.
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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.
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(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
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APPENDIX D
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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.
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APPENDIX D
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(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).
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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
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APPENDIX D
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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.
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{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).
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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.
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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.
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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
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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
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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.
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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
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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
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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-
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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.
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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"
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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
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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
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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.
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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.
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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:]
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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.
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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
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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
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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
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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.
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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
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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
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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
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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
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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.
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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-
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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.
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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
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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--
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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.
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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.
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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:]
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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).
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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.
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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.
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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."
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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.
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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).
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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.
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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.
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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.
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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
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(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).
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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
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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.
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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).
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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).
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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
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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).
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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.
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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.
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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
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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).
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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.
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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.
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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 judgments" about what is significantly related to the
company's business.
Commissioner John Evans said numerical rules wouldn't work because they
don't allow for "differences in what society ht>lieves (is significant) at different
times."
[From the New York Times, June 8, 1978]
SEC To PREPARE WIDER DISCLOSURE RULES
(By ,Judith Miller, Special to the New York Times)
WASHINGTON, June 7-The Securities and Exchange Commission decided
today to devise rules to require corporations to disclose to shareholders far more
information than they must now reveal about what corporate directors do and
how much they are paid.
This endorsement in principle ol wide-ranging disclosure requirements is expected to enhance significantly the role investors play in corporate decisionmaking. It is also expected to bolster the effectiveness and independence of corporate boards, a goal that has been a recurring theme in recent speeches by
Harold M. Williams, the commission chairman.
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SERIES OF PROPOSALS
At a public meeting, the commission directed its staff to draft a series of proposals to require publicly held corporations to disclose, among other things:
The existence, composition and function of director committees for auditing,
board nominations, executive compensation and conflict-of-interest questions.
Which directors are truly independent of management.
Director fees, and attendance at board meetings.
Directors who resign because of "policy" differences with the board.
Directors who have conflicts of interest.
The terms of settlement and cost of corporate proxy fights.
In addition, the commission asked its staff to draft a rule that would require
companies to submit responses to shareholder resolutions on proxy statements to
the resolutions' proponents before the company response is printed and mailed
to shareholders. The requirement would enable shareholders who present resolutions for proxy voting to review the accuracy of the company's response, and
challenge it if they desire, before proxies are mailed to shareholders.
The commission will also propose a rule requiring large institutions it regulates to disclose their voting practices with respect to shareholder resolutions
and other corporate electoral issues. The commission decided to require more information in view of the large equity holdings controlled by institutional investors, such as mutual funds, inst'.rance companies and bank holding companies.
DRAFT DUE JULY 1
All of the rule proposals are to he drafted by .July 1, to enable the commission
to consider them further and include them after public comment, in time for next
year's proxy season.
The commission, however, temporarily deferred action on the controYersial
issue of how the S.E.C. determines whether a shareholder resolution is significantly related to a company's business, and, hence, should he included on proxy
cards for shareholder consideration.
Last year, the commission ruled that some solial issues, such as investment in
South Africa, are so significant to investors that even if the issue affects less than
1 percent of a company's busine8s transactions-the informal standard previously used by the commission-snch resolutions should be considered lw company stockholders.
Today, the commission reiterated its discomfort with the lack of a quantitative
standard for evaluating which resolutions should be considered by companies.
but directed its staff to draft some standards that would be clear and objective,
but not rigid or purely quantitative.
"There must be room for qualitative judgments because such decisions should
reflect changes in what a society believes," Commissioner .Tohn Evans said today.
STAFF REPORT PENDING
In addition, the commission deferred action on a wide-ranging ~et of staff proposals concerning shareholder "communication·· with management and changes
in proxy cards that would afford investors opportunities to play a more active
role in corporate decision-making. These and other issues, such as whether new
Federal legislation is needed in this area. will he discussed at length in a report
now being prepared by the S.E.C. staff.
Today's actions are the result of the commission's long and controversial
hearings last year on the relationship between shareholders and corporate management and directors, generally known as "corporate governance. More than
300 witnesses testified.
The decision to draft increased disclosure rules is not final. The commission
will review the proposals and then publish them for public comment. Controversial proposals have often been altered in the wake of widespread public opposition.
In addition, the commission left open several significant questions. For instance, it did not decide whether descriptions of director committee functions
should be included in proxy statements or in annual reports.
KARMEL VOICES SKEPTICISM
Commissioner Roberta Karmel expressed repeated skepticism about many of
the disclosure proposals, arguing that the cost to corporations would be unduly
onerous, and that the disclosures would "clutter up" proxy statements.
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In general, the commission did not share Mrs. Karmel's concerns and voiced
strong support for the increased disclosure. However, the commissioners rejected
a plea by Theodore Levine, of the enforcement division, to require small companies to reveal more detailed information about how their boards function.
Mr. Williams argued that such explanations would lead to proforma responses
that would not enlighten investors.
Barbara L. Leventhal, a staff attorney who has played a primary role in
the corporate governorance debate, described the commission's actions today as
the "small first step in the very long process" of finding ways to enhance shareholder participation.
EXHIBIT C
SECURITIES AND EXCHANGE COMMISSION
OPEN MEETING AGENDA, WEDNESDAY, JUNE
28, 1978, 9
;00 A.M.
Item: Consideration of proposed report to Congress concerning the accounting
profession and the Commission's oversight role.
Otftce: Office of the Chief Accountant.
Staff: A. Clarence Sampson, Steven J. Golub.
Background: The incidence of significant unexpected failures by major corporations and the disclosure of widespread questionable payments and illegal
acts in the 197O's have raised concerns about the integrity and creditability of
financial controls and reporting of publicly-owned companies and, consequently,
the credibility of the accounting profession has come under careful scruting.
These events have led, among other things, to a broad examination of the
nature and structure of the accounting profession. That examination began in
1976 by the report of the Subcommittee on Oversight and Investigations of the
House Committee on Interstate and Foreign Commerce, chaired by Congressman
John Moss. It was continued by the Subcommittee on Reports, Accounting and
Management of the Committee on Government Affairs, chaired by the late Senate
Metcalf, which held public hearings concerning the accounting profession. Those
hearings were preceded by the staff report of the Subcommittee and were followed by the Subcommittee report issued in November, 1977.
The Subcommittee on Oversight and Investigations of the House Committee
on Interstate and Foreign Commerce held public hearings in February and
March, 1978 on the accounting profession's efforts to develop a self-regulatory
program. Congressman John Moss has introduced legislation proposing to
create a self-regulatory organization for accountants patterned after the National
Association of Securities Dealers ( "NASD").
The responsibilities of the Senate Subcommitte have been transferred to a
new subcommittee, chaired by Senator Thomas Eagleton, who has informed
Chairman Williams that he intends to continue the work begun under Senator
Metcalf's direction and to expand it to include various other related areas.
The Metcalf hearings conveyed a sense of expectancy for the profession and
the Commission to take action which will result in public confidence in the
independence of accountants, the profession's resolve and ability to develop and
maintain a viable system of self-regulation and self-discipline and the processes
by which accounting and auditing standards are promulgated.
EXHIBIT D
[From the Wall Street Journal, June 29, 1978]
ACCOUNTANTS' STRIDES IN SELF-REGULATION REFLECTED IN s:mc STUDY,
CHAIRMAN SAYS
(By a Wall Street Journal Staff Reporter)
WASHINGTON.-A Securities and Exchange Commission report to Congress on
the accounting profession shows that the profession has taken significant strides
in regulating itself, SEC Chairman Harold Wiliams said.
While he didn't given details of the report, slated to be released next Wednesday, Mr. Williams said at a public SEC meeting that the study reflects an
"enormous amount of activity on the part of the profession and the commission"
in the past year.
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The 1,300-page report indicates that there is a "basis for being encouraged"
and that there isn't any reason to believe "self-regulation won't work," Mr.
Williams said.
NASD TYPE BODY URGED
The accounting profession has come under heavy criticism from Congress in
the wake of unexpected failures by major corporations and the disclosure of
widespread questionable payments and illegal corporate acts that critics say
accountants should have spotted. In a background paper prepared for yesterday's
SEC meeting, the commission said the disclosures "raised concerns about the
integrity and credibility of financial controls and reporting of publicly owned
companies and, consequently, the credibility of the accounting profession has
come under careful scrutiny."
These concerns led Rep. John Moss (D., Calif.), chairman of a House Commerce subcommittee, to introduce legislation that would create a self-regulatory
organization for accountants patterned after the National Association of Securities Dealers, the self-regulatory organization for the over-the-counter securities
markets.
In response to the criticism, the American Institute of Certified Public Accountants took a number of steps, including the establishment of a division of accountants who practice before the SEC and the creation of a public board to monitor
those accountants' performance.
The SEO report discusses these moves, lumping them into three broad
categories.
THUEE CATEGORIES
Mr. Williams said these are the independence of outside auditors, including
the use of audit committees by boards of directors and the appropriate scope of
nonaudit services performed by the outside auditor, regulation and the role
of the public monitoring board, and the setting of accounting and auditing
standards.
Mr. Williams said that although the commission has a ''number of reservations,
doubts and concerns" about the moves the accounting profession has taken, the
agency believes the profession and the commission are "still basically on a constructive course."
The SEC,'s chief accountant. Clarence Sampson, said that "The next couple
of months will be critical," a reference to decisions the accounting institute still
must make on such issues as peer reYiew and the scope of services that auditors
can perform for companies they audit.
[From the New York Times, .June 29, 11178]
SEC's OPTIMit,;TIC ACCOUl.\"TING REPOR'l'
(By Philip H. Wiggins)
The Securities and Exchange Commission announced yesterday that its five
commissioners had given final approval to a report on the accounting profession
that says that substantial progress has been made in remedying some of problems
of the profession.
The S.E.C. will release the full text of the voluminous, 1,300-page "Report to
Congress on the Accounting Profession and the Commission's Oversight Role"
on July 5. The agency said that because of "difficulties in duplicating and the
intervening holiday weekend, the report will not be available until Wednesday."
The report was prepared for House and Senate subcommittees investigating
the accounting profession that had questioned the accounting profession's
credibility after the disclosure in the early 1970's of widespread corporate
payoffs and questionable payments.
"BASIS FOR BEING ENCOURAGED"
At a gathering announcing the report, Harold M. Williams, chairman of
the S.E.C., said the report indicated that sufficient progress had been made since
last September to make the S.E.C. "supportive of allowing the process additional
time to develop." He said that there was "a sufficient basis for being encouraged"
and that there was no reason to believe that self-regulation would not work in the
accounting industry.
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He said the commission had "a number of reservations, doubts and concerns"
a·bout the accounting profession's response to criticism, but that he believed "we're
still basically on a constructive course."
The report, which took five months to prepare deals with the independence
of outside auditors' regulations and oversight of the profession and with the
process of setting accounting standards.
The report was prepared for House Commerce Committee Subcommittee on
Oversight and Investigation and the Subcommittee on Reports, Accounting and
Management of the Senate Government Operations Committee. Both bodies
had questioned the accounting profession's credibility after the disclosure in the
early 1970's of widespread corporate payoffs and questionable payments.
[From the Washington Post, July 6, 1978]
ACCOUNTING FIRMS LAUDED,
W AB.NED
(By Nancy L. Ross)
The Securities and Exchange C'ommission yesterday patted the accounting
industry on the back with one hand while holding a regulatory gun to its head
with the other.
Chairman Harold M. Williams said the industry had made enough progress
toward self-regulation during the past 10 months that legislation was not necessary at this time. However, he warned that "if the profession's initiative is not
successful, a legislative alternative may well be required."
The SEC would leave control in the hands of the American Institute of Certified
Public Accountants, a trade organization. The AICPA recently formed an "SEC
Practice Section", or self policing entity, which Williams singled out as "the
primary basis for the commission's conclusion that there is promise for successful voluntary self-regulation."
An AIOPA spokesman said yesterday the organization was "very pleased" by
the SEC recommendations. At Senate hearings last year the industry appeared
divided on the issue of government regulation. Walter E,. Hanson, senior partner
of Peat, Marwick, Mitchell & Co., testified against it, while John C. Biegler, senior partner at Price Waterhouse & Co., third largest, proposed that all accountants with publicly owned clients should come under the supervision of the SEC.
The role and responsibility of accountants has come under public scrutiny and
criticism in recent years as the result of major business failures and scandals
involving bribes or questionable payments. Fortune magazine for example, reports
that Peat, Marwick, Mitchell & Co., the nation's largest accounting firm, has
lost a significant number of clients because of its role in auditing the books of
Penn Central, National Student Marketing, Republic National Life Insurance
and Stirling Homex. It also mentions a "barrage of suits" against accountants,
including a $30 million negligence judgment against Touche Ross, eighth largest
of the Big Jllight firms.
Moreover, as competition grows among these and other companies, many accountants have branched out into other services like tax preparation and management consulting, feasibility •studies and financial forecasting. This has led
not only to charges of conflict of interest, but in some cases to sloppy accounting
work due to time pressures, according to the Cohen Commission, a blue ribbon
panel that studied accountants 18 month ago.
Earlier this year Rep. John Moss (D-Cal.), chairman of the Rouse Subcommittee on Oversight and Investigations, declared that the American public was
"painfully aware" of illegal payments and slush funds that were "artfully concealed under the rubric of 'generally accepted accounting principles.' "
Last month he introduced a bill to l'reate an independent self-regulatory body
for the accounting industry on the model of the non-government National Association of Securities Dealers which oversees the over-the-counter market.
Ye~terday Moss called the SEC decision "wholly unsupported and even contradicted by the report's critical findings. It makes the SEC appear to be completely
confused and disoriented," he said. He cited a June 2 letter from Williams in
which the chairman wrote that the profession's self-regulatory program "now
stands perilously close to being reduced to a self-serving effort conducted behind closed doors.''
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In its 14-pound report to Congress, the SIDC stressed the needs for professional independence, active oversight and standard accounting procedures. The
single most important aspects of AICPA's self-regulatory program is peer review
possibly firm-on-firm review. Also under study are the questions of disciplinary
action against firms by the SEC, public acccess to the results of the peer review
program, and the extent to which it could perform outside the United States.
The SEO recommends the formation of audit committees by public companies.
Composed of independent directors, they are intended to provide a buffer between management and outside auditors.
Chairman Williams was aksed at a press conference if these and other measures would prevent or detect an Equity Funding situation at an early age.
(Equity Funding boosted the price of its stock by programming its computer to
show non-existent life insurance policies.) Williams replied that it wouldn't
necessarily act as an early warning system, but added, "We can't conclude from
an audit failure that self-regulation won't work."
Williams declined to set any deadlines for accomplishing the proposed reforms.
But he said the AIOPA is aiming at completing a full cycle of peer reviews within
thre{> years.
[From the Wall Street Journal, 7/6/78]
ACCOUNTANTS' SELF-REGULATORY EFFORTS GET SEC PRAISE, BUT FURTHER STEPS
ARE URGED
(By Charles N. Stabler, Staff Reporter of the Wall Street Journal)
WASHINGTON-The Securities and Exchange Commission gave the accounting
profession two cheers for its efforts toward tightening self-regulation but warned
that much more remains to be done.
The evaluation came in a 1,300-page report to Congress on the profession and
on SEC's oversight role in setting accounting and auditing standards. The study
was prompted by congressional hearings that highlighted widespread dissatisfaction with the auditors' track record on ferreting out corporate fraud, illegal
acts and questionable payments.
The SIDO said it wasn't "wholly rntisfied with the profession's efforts at selfregulation and it is too early to arness whether those efforts will prove effective
over the long run." On the basis of developments toward reform in the past year,
however, the agency said it "believes the profession's initiatives show sufficient
promise to be permitted to continue to evolve."
The commission said it hasn't concluded, "at the present time, that comprehensive direct government regulation would be a superior means of ensuring that accountants discharge their professional responsibilities."
The auditing profession has been under fire since the mid-1970s, following the
unexpected failure of some large corporations and the disclosure of questionable
accounting practices by others. Recently, Rep. John El. Moss, D. Calif., a persistent critic of the auditors, introduced legislation to bring the profession under
control of a quasi-governmental body patterned on the National Association of
Securities Dealers.
"GOOD BEGINNING
While the massive SEC report didn't support such legislation, it was made
clear in a news conference by Harold M. Williams, SEO chairman, and Clarence
Sampson, the agency's acting chief accountant, that the accountants' feet still
are being held .to the fire. The profession, said Mr. Williams, has "made a good
beginning but a lot remains to be achieved, achieved over a very short future.''
One specific key areas singled out by the report involves a quality control system called "peer review" that is being developed by the American institute of
Certified Public Accountants, the auditors professional association. Under peer
review, a firm that has SEC-registered corporations as clients would have to
undergo a periodic examination by outside auditors.
They would probe the firm's control systems and performance and report the
results to an outside watchdog body named the Public Oversight Board. This is a
new, five-member unit, headed by John McCloy, which is supposed to monitor the
effectiveness of the self-regulatory program of the SEC practice section of the
accountants' institute.
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The SEO said, "The single most important element in the institute's self-regulatory initiative is the proposed pear review program." But it indicated it
has serious doubts about how the program is being shaped and warned that a
failure in this area "would compel the commission to withdraw its support for
the profession's program."
In a letter to Mr. McCloy, d,ated June 2, which is one of many exhibits in the
report, Mr. Williams spelled oUJt the commission's concern in strong language.
The peer review program, he said, "now stands perilously close to being reduced
to a self-serving effort behind closed doors." And he warned that the status of
the program as of May 25 made the possibility of withdrawal of commission
support "a very real one."
•Su:bsequently, the exhibits show, Mr. McCloy wrote Mr. Will.iams attempting
to reassure him that the accountants "are itrying sincerely ... to
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