OVERSIGHT OF THE GOVERNMENT IN THE FRIDAY, AUGUST 4, 1978 U.S. SENATE, SUBCOMMITTEE ON FEDERAL SPENDING Washington, D.C. 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 doing, 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 Government 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 Act. It extends the open Government concept, and in many ways provides a more meaningful understanding of the governing process. To effectively 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 agencies not to defend the closing of any meeting unless they can clearly demonstrate that harm. would have resulted from opening 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 having 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 agencies 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 they 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 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 information is not prematurely disclosed. We deal quite 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 minutes 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. 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, 1712 percent were open and 822 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 to 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 Federal Reserve on our so-called sunshine mailing list. The record of each closed Board meeting 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 cussion under the act's exemptions. For closed meetings, there are 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. We have had to install a public address system and a recording system. We 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 processing 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 TESTIMONY 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 going 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 themselves as to what really happens when we come to making 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? |