INQUIRY INTO CERTAIN PROCEDURES OF THE INTERSTATE COMMERCE COMMISSION WEDNESDAY, JULY 29, 1970 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON INVESTIGATIONS, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee met at 2:30 p.m., pursuant to call, in room 2123, Rayburn House Office Building, Hon. Torbert H. Macdonald presiding (Hon. Harley O. Staggers, chairman). Mr. MACDONALD. The hearing will be in order. This phase of our inquiry into the operations of the Interstate Commerce Commission is devoted to the questions of unauthorized augmentation of the appropriations of the Commission which seems to be contrary to the rulings of the Comptroller General as reiterated in his letter to Chairman Staggers dated July 30, 1969, and which was inserted in the record of these hearings on June 26, 1970. As shown by the evidence already set forth in these hearings, there is a widespread practice among Commissioners and staff personnel who officially attend industry functions in either allowing the industry to pay the bill for accommodations at the function or in permitting the industry to pay the difference between their total bill and Government per diem to which they are entitled to cover any expenses incurred on such trips. At the June 26, 1970 hearings a staff study was entered into the record showing that during fiscal years 1966 through 1969, 43 hearing examiners had submitted one or more expense vouchers indicating transportation and/or hotel accommodations had been received at no expense to the Government. Testimony was also received on June 17, 1970, that three Commissioners in June of the year 1967 accepted the hospitality of a railroad company for 2 days and 3 nights for the stated purpose of inspecting the rail facilities between San Francisco, Calif., and Portland, Oreg. It is the intent of this subcommittee to determine how widespread this practice has been as it would appear that such a procedure is not conducive to good regulatory action. It is a practice prohibited by the Commission's own Canons of Conduct as well as an Executive order issued in May, 1965. It is a practice which has been condemned by reports of the Special Subcommittee on Legislative Oversight over a decade ago. It was our understanding that measures had been instituted to bring this to a halt. It is important to ascertain why the Commission has permitted these flagrant violations of its canons and the order of the President. (21) Green-covered publication, "Preliminary Revised Draft of Proposed Rules of Discovery." (22) Brown-covered publication, "Proposed ICC Discovery Rules." (23) Under a single clip, "Proposed Rules of Discovery, dated August 5, 1969, from Nuel D. Belnap to Chairman Virginia Mae Brown. (24) Bank statements, Suburban Trust Company, and cancelled checks, and check stubs from January 11, 1968, to June 8, 1970, consisting of 30 envelopes and 62 checkbooks stubs, of Mr. Garson's. H. NEIL GARSON. Staff Attorney, Special Subcommittee on Investigations, Special Assistant, Special Subcommittee on Investigations, (This material is being retained in the Subcommittee files.) Mr. MACDONALD. Does that complete the exhibits you have to offer? Mr. GARSON. That completes the exhibits, but I do want to make one comment about my checkbooks and check stubs. These are my only records and these are the originals, except for one check that was given to the committee at the last hearing. I would like to have an itemized receipt because should this matter come up at another time, if these are lost, I will have nothing. I am perfectly willing to leave them with the committee and Mr. Lishman can peruse these at his leisure. But this is all I have and if Internal Revenue or somebody else calls and says, we want to see your bank statements Mr. MACDONALD. In the first place, I think they will be secured, and in the second place, as already indicated, you will have a receipt for them. Mr. PICKLE. Are your bank checks in the paper bag? Mr. GARSON. Yes, they are all here, from 1968 to June 1 of 1970. Mr. HARVEY. Mr. Chairman, if I might make this observation again, I still think that the two ought to get together here and sit down immediately and make a complete detailed list of every bank book and every check and everything that is turned over so that when we come together in committee again, we do not face the argument, well, I turned this over and somebody else says, you did not turn it over. Mr. MACDONALD. Do you have anything further? Mr. GARSON. I only want to request the committee to give me an opportunity to come back and make a statement. Mr. MACDONALD. You have been assured that by every single member of the committee. Mr. GARSON. My reputation of over 20 years with the Interstate Commerce Commission and with the Government has been maligned and some statements were made here by counsel which simply shock me. Mr. MACDONALD. Well, let's not get into any matters of that sort. You can be assured that you will be heard from in public forum. Thank you very much for coming here. The hearing is adjourned subject to call of the Chair. (Whereupon, at 10:45 a.m., the subcommittee adjourned, subject to the call of the Chair.) INQUIRY INTO CERTAIN PROCEDURES OF THE WEDNESDAY, JULY 29, 1970 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON INVESTIGATIONS, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee met at 2:30 p.m., pursuant to call, in room 2123, Rayburn House Office Building, Hon. Torbert H. Macdonald presiding (Hon. Harley O. Staggers, chairman). Mr. MACDONALD. The hearing will be in order. This phase of our inquiry into the operations of the Interstate Commerce Commission is devoted to the questions of unauthorized augmentation of the appropriations of the Commission which seems to be contrary to the rulings of the Comptroller General as reiterated in his letter to Chairman Staggers dated July 30, 1969, and which was inserted in the record of these hearings on June 26, 1970. As shown by the evidence already set forth in these hearings, there is a widespread practice among Commissioners and staff personnel who officially attend industry functions in either allowing the industry to pay the bill for accommodations at the function or in permitting the industry to pay the difference between their total bill and Government per diem to which they are entitled to cover any expenses incurred on such trips. At the June 26, 1970 hearings a staff study was entered into the record showing that during fiscal years 1966 through 1969, 43 hearing examiners had submitted one or more expense vouchers indicating transportation and/or hotel accommodations had been received at no expense to the Government. Testimony was also received on June 17, 1970, that three Commissioners in June of the year 1967 accepted the hospitality of a railroad company for 2 days and 3 nights for the stated purpose of inspecting the rail facilities between San Francisco, Calif., and Portland, Oreg. It is the intent of this subcommittee to determine how widespread this practice has been as it would appear that such a procedure is not conducive to good regulatory action. It is a practice prohibited by the Commission's own Canons of Conduct as well as an Executive order issued in May, 1965. It is a practice which has been condemned by reports of the Special Subcommittee on Legislative Oversight over a decade ago. It was our understanding that measures had been instituted to bring this to a halt. It is important to ascertain why the Commission has permitted these flagrant violations of its canons and the order of the President. The acceptance of hospitality from the industry while at the same time being employed in an official capacity in making rules affecting the industry is obviously contrary to the public interest. Previous to the witness' appearance before the subcommittee today, certain testimony was received from him on June 18, of this year. The witness also appeared before the subcommittee on July 9, of this year in answer to a subpena served on June 30. This subpena called for Mr. Garson to produce all personal checking account records, documents relating to official ICC travel, and copies of Federal and State income tax returns for the period 1966 to date. Since the witness had certain commitments which would make it extremely difficult for him to fully comply in the time allotted by the subpena the subpena was modified by Chairman Staggers' letter dated July 6, 1970, temporarily suspending the request for income tax records and modifying the request for the other documents to apply only to the period January 1968, to date. On July 9, 1970, the witness appeared before the subcommittee and submitted material in response to the subpena and the letter of modification. We will now be happy to receive testimony from the witness to clarify certain aspects of the matter under inquiry. I would like to point out, Mr. Garson, the pamphlet on the desk in front of you, a copy of which you have, which sets forth the authority of this subcommittee to conduct this hearing. I also realize you may wish to make a statement, and I hope you do, or submit other data to the subcommittee which you have not previously furnished, and I want to assure you that you will have ample opportunity to do so. However, I will ask that your statement be held in abeyance until after the counsel has completed his questioning and the members have had an opportunity to address any inquiries to you that they may desire. I will also ask my colleagues on the subcommittee that they will withhold questions that they might have of the witness until the counsel has finished his questioning and at that time that the 5-minute rule will put in effect. Mr. Garson, will you be sworn? Mr. GARSON. I have been sworn previously unless you want Mr. MACDONALD. Well, I don't guess it will do any harm to be sworn again. Do you solemnly swear or affirm that the testimony you are about to give before this subcommittee is the truth, the whole truth, and nothing but the truth, so help you God? Mr. GARSON. I do. Mr. MACDONALD, Mr. Counsel? FURTHER TESTIMONY OF H. NEIL GARSON, SECRETARY, INTERSTATE COMMERCE COMMISSION Mr. MANELLI. Mr. Garson, in your previous appearance before the subcommittee, which took place on June 18, you were asked some questions pertaining to your attendance at the annual conference of the Motor Carrier Lawyers Association in Detroit, Mich., in May of 1968. You were asked a number of questions concerning the costs of the accommodations that you had at the hotel and the manner in which your hotel bill was settled. The hotel in question was the Hotel Ponchartrain in Detroit, Mich., and to save the subcommittee's time, I am going to paraphrase my understanding of the record up to this point and you correct me if I have anything wrong. Mr. GARSON. Can I interrupt one moment? I was told that I would be prepared that I could make a statement. I do have a statement, and I wonder whether I could give that statement before the questioning commences. I think what I have to say would clarify not only the Detroit situation but the San Juan, Puerto Rico situation, which was raised earlier. Mr. MACDONALD. I think in response to the counsel's questions, you can raise any matters that you would like to, and obviously you are going to be given a full rein to make any statement you want to at the conclusion of the questioning. Mr. GARSON. I appreciate that. Mr. MACDONALD. Mr. Counsel? Mr. MANELLI. In paraphrasing the record, at least as I understand it, you were asked in effect whether it was not true that you had occupied a suite of two rooms for which you paid only a portion, with the association picking up the difference over and above the portion that you paid. The record of June 18 shows you testifying as follows on that point, and I will quote these two paragraphs from your testimony: I don't know of any behind the scenes planning at the convention. I do know this, that when I approached the desk to check out, I paid the bill that was presented to me. I don't recall any sitting room. I will admit that much. But on the other hand the bill that was presented to me, I paid. A second statement on the same subject reads as follows: To the best of my recollection, I should like to state again for the record that when the bill was presented to me as I left the hotel, I paid the bill as presented to me. Now if there were any other arrangements between the hotel and the Motor Carrier Lawyers Association I would have no knowledge of those. Now in your appearance here on June 18, you were asked to supply for the record a copy of the bill that was presented to you when you checked out of the hotel. You subsequently sent a letter to the chairman, Chairman Staggers, with a copy of the canceled check in the |