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 given 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 the 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 basis of this exemption.

First. when the Board is 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 often necessary to preserve the effectiveness of its actions by delaying disclosure of its deliberations. Discussion of legislative matters generally 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 decide at the same time to support alternative "fallback" proposals if such primary proposal should prove 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 proposal being considered. In this regard, we think PIRG would agree that the legislative 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 legislative matters will first be given to Congress. The important working relationship between Congress and the independent federal agencies would be significantly frustrated if agency views on legislation were prematurely disclosed to the press and interest groups—both public and private. Such premature disclosure could lead to actions being taken by others that could significantly frustrate effective agency compliance with the request or that could significantly reduce the effectiveness of agency views when given. The point to be made is that the closing of agency discussion of legislative matters under exemption 9(B) does not shield forever from public scrutiny the formulation of agency 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 legislative matters may be somewhat different, very serious consideration has been given to PIRG's views on the scheduling of such matters. While the

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 Board 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.

DEAR MS. SIMONSON: This is in response to your request under the Freedom of Information Act, 5 U.S.C. § 552 (“Act”), for documents 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 with the agency. However, this document will be made available 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. Very truly yours,

GRIFFITH L. GARWOOD, Deputy Secretary of the Board.

EXHIBIT H(2)

BOARD OF GOVERNORS

MS. NANCEE SIMONSON,

The Bureau of National Affairs, Inc.,
Washington, D.C.

OF THE FEDERAL RESERVE SYSTEM,
Washington, D.C., February 6, 1978.

DEAR MS. SIMONSON: This is in response to your request dated February 1, 1978 copies of staff documents which are to be discussed at the Board's open meeting scheduled for February 6, 1978. Your request is being processed under the Freedom 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 lbe 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

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 with 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 JOSEPH 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:]

FIRST ANNUAL REPORT

ON COMPLIANCE WITH
GOVERNMENT IN THE SUNSHINE

ACT OF 1976

Introduction

The Nuclear Regulatory Commission (NRC) herewith submits the First Annual Report as required by Subsection (j) of the Government in the Sunshine Act (5 U.S.C. § 552b, P.L. 94-409). This annual report summarizes NRC's compliance with the requirements of the Act. It contains a tabulation of the total number of open and closed meetings of the Commission, the reason for closing meetings, litigation information, and other information relating to this agency's procedures for public notification and understanding of the Commission's meeting activities.

NRC's Statutory Meeting Requirement

1

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 uses of nuclear materials. The Commission is required by the Energy Reorganization Act to conduct its business in meetings. Section 201.(a)(1) of the Act states that "the Chairman (or the Acting Chairman in the absence of the Chairman) shall preside at all meetings of the Commission and a quorum for the transaction of business shall consist of at least three members present." In compliance with this requirement, principal actions of the Commission are accomplished through the votes of a quorum of members present.

In keeping with its significant and substantial public health and safety responsibilities, this Commission 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" provision 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 scheduled for approval at a voting session without the need for further deliberation at the meeting. These matters involve relatively minor regulatory or adjudicatory activities which represent only a minor extension, modification, or elaboration of existing policy and do not set new precedent or constitute a major 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 Commission meeting at which the Commissioners may formally register their votes. At these meetings, the staff paper