THE MICHIGAN DAILY'
u av-- Y a a _ aTUSDAY, JUNE 29
THE TCHTAN IAIT.
1965
r
legulatory Agencies 'Big Seven'
By JULES LOH
sociated Press Newsfeatures Writer
WASHINGTON - Even - old
James Madison, man of vision that
he was, might wince today if he
saw what has become of that tidy
three-branch government for
which he labored so passionately.
Nowhere does the Constitution
mpention a "fourth branch" of
government, but one exists.
It not only exists, but within its
ontrol are all the powersand
-functions of the other three
.ranches - legislative, executive
and judicial - a circumstance
Madison himself once character-
ized forbodingly as "the very def-
inition of tyranny."
Not Insignificant
Nor is this fourth branch some
Insignificant appendange to the
federal structure.
The federal regulatory agencies
are the powerful fourth branch of
American government.
By generally accepted count
there are 33 agencies involved in
"the determination of rights, priv-
ileges and obligations of private
individuals through adjudication
and rulemaking," the definition
made by a commission set up to
study them.
But most of their broad in-
fluence over Americans' daily lives
centers in seven agencies.
Known as the Big Seven, they
* The Federal Trade Commis-
.sion (FTC), set up to prevent
price fixing, deceptive advertising,
monopoly and other practices that
urt business competition. It is
the FTC which now is demanding
a health warning on cigarette
p ckages.
* The Federal Communications
Commission (FCC), which licenses
radio and television stations, since
the airwaves belong to everybody,
and regulates all interstate and
foreign communications.
J The Interstate Commerce
Commission (ICC), grandaddy of
all the alphabet agencies, which
,Was set up in 1887 to regulate the
railroads. It still does, as well as
bus and truck lines and commer-
cial operations on inland water-
ways. Right now the ICC is wrest-
,ling over proposals for huge rail-
road mergers.
4 The Civil Aeronautics Board
(CAB), which approves airline
routes, fares and freight charges,
authorizes subsidies and inves-
tigates accidents
* The Federal Aviation Agency
(FAA), which takes over after the
takeoff. It writes flying rules, cer-
tifies pilots, inspects airplanes for
safety and operates control towers.
Two years ago, when the FAA
celebrated its fifth anniversary,
its 45,000 employes outnumbered
those of the state department.
* The Securities and Exchange
Commission (SEC), which patrols
the stock exchanges, registers niew
issues of stocks and bonds and
generally enforces the "truth in
securities" laws of the early New
D)eal.
*Federal Power Commission
(FPC), which licenses hydroelec-
tric projects 'and interstate pipe-
lines and controls their rates and
operation.
Those are the Big Seven.
In a 1937 report to Congress,
resident Franklin D. Roosevelt
styled them "miniature indepen-
dent governments." He also called
them "a haphazard deposit of ir-
responsible agencies and unco-
Ordinated powers," though more
were hatched during his years in
#he White House than any ad-
ministration before or since.
It's easy to see how the agencies
came to be. Population has in-
creased nearly 50-fold since Madi-
eon's day, and technical and eco-
nomic change has engulfed these
multiplying legions at an even
swifter rate. Each new field of
technology or economics has
spawned a corresponding federal
agency with its army of experts
to guard the public interest.
The commissions aren't respon-
sible to the President, yet he ap-
points allhcommissioners, with the
approval of the Senate, to five,
six or seven-year terms, which
thus extend beyond his own. Only
a one-man majority from either
political party may serve on the
same commission.
A commissioner can't be remov-
ed except for incompetence or
misconduct, which are hard to
prove and have nothing to do
with the popularity of his de-
cisions. The president names the
chairman of each agency except
the ICC, which gets together once
a year and elects its own
Haphazard and uncoordinated
they may also be, but the trouble
tonal that "the discretionary
scope of federal officials is now so
wide and so flexible that they
can arbitrarily grant or withhold
prosperity from most of the larger
businesses now operating in the
U.S "'
V F.JTN ot P recise
The fact is Congress has given
most of the agencies no more
precise a standard to follow than
to act "in the public interest."
Supreme Court Justice William 0.
Douglas, a former head of the
SEC and no foe of government by
administration, wrote in a 1951
dissenting opinion:
"Unless we make the require-
ments for administrative action
strict and demanding, expertise,
the strength of modern govern-
ment, can become a monster
which rules with no practical
limits on its discretion." "Abso-
lute discretion," he continued,
"like corruption, marks the be-
an agency as "absolutely amor-
phous ., . a metaphysical, omnis-
cient, brooding thing which sort of
floats around the air and is not
a human being."
A Bother
A case of litigation, says Ache-
son, "goes into this great building
and mills around and comes out
with a commissioner's name on it,
but what happens in between is a
mystery. That's what bothers
people."
Commissioners must have an
intimate knowledge of the indus-
tries they regulate. They must
hobnob with industry officials, at-
tend their conventions, listen to
their problems. Chumminess is the
rule, not the exception, between
those in the industries and the
agencies. Agency personnel often
come from the industries they are
hired to regulate, and vice versa.
Agency officials see nothing
wrong with swapping personnel,
nor do industrialists. Both feel
they benefit from the other's ex-
perience. Most agencies exercise
their functions through negotia-
tion with the industries rather
than adjudication. Last year, the
NLRB settled 24 per cent of its
cases without litigation. Staff
members feel prior experience on
the other side of the fence does
more to help the cause than hurt.
But the problem of contamina-
tion isn't limited to the honest
difficulty a commissioner might
face in trying to be impartial.
Pressure from industry, in the
phrase of FPC head Howard Mor-
gan, "can be cruel."
Pressures
Dixon says pressures can come
not only from industry but from
Capitol Hill and the White House
as well. The agencies' budget re-
quests, for example, go through
the President's budget bureau.
The pressures from so many di-
rections, he feels, are themselves
checks and balances against the
concentration of government func-
tions in the agencies
There have been repeated ef-
forts over the years to figure out
some way td' regulate the regula-
tors. l The latest is approval by
Congress of a permanent "ad-
ministrative conference" to act as
overseer of the agencies, a plan
devised by President John F. Ken-
nedy.
James Madison, back at the
birth. of the nation, may never
have dreamed there could be a
fourth branch of government. But
historian Samuel Eliot Morison
has observed that Madison at least
"predicted that only a federal
government over a large area could
reconcile conflicting economic in-
terests and subordinate private to
public welfare."
However clumsily, or arbitrarily,
the federal regulatory agencies
may seem to some to be doing the
job. It appears Madison was right.
RIVALS SUCH AS UNION LEADER David McDonald (left) and
Max Zivian, president of the Detroit Steel Co., have one over-
riding thing in common-both are often subject to control by
federal regulatory agencies.
is nobody has figured out a better
way. What Churchill said about
democracy seems also, to apply to
the federal regulatory process:
The poorest system yet devised
except for all the others.
control by Whim?
Back in 1908, University Pro-
fessor Woodrow Wilson said "reg-
ulation by commission is not reg-
ulation by law but control ac-
cording to the discretion of gov-
ernment officials."
But six years later, as President,
he urged Congress to create the
Federal Trade Commission, which
supervises a broader area of the
economy than any other agency.
But Prof. Wilson plainly had a
point. Two years ago a leading
business magazine said in an edi-
ginning of the end of liberty."
Appeal to the federal courts is
open to anyone affected by an
agency decision. But given the
courts' tendency to go along with
the agencydand the fact that ap-
peal often is a costly and laborious
ordeal, many smaller companies
complain they rarely have any
alternative except to bow.
The enormous caseload makes
it impossible for each commission-
er to hear every case-another
fault many find with the whole
system. Most agency decisions ac-
tually are made by one or more
anonymous staff men.
Former Secretary of State Dean
Acheson, now a Washington law-
yer with much experience before
the regulatory tribunals, regards
presents the
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