(The documents referred to follow :)

OFFICE OF CHAIRMAN TIERNEY, DECEMBER 19, 1968

(G. C. No. 251-68)

MEMORANDUM TO THE COMMISSION RE CONDUCT OF HEARING BY HEARING EXAMINER W. WALLACE WILHITE IN F.D. No. 25230, CHICAGO, B. & Q. R.R. Co., DISCONTINUANCE OF TRAINS Nos. 42 AND 43 BETWEEN OMAHA, NEBR., AND BILLINGS, MONT.

The investigation into the Wilhite matter has been completed. Circulated herewith is a memorandum of Associate General Counsel Cerra.

I vote (1) to send the draft response to Senator McGee and (2) to place a copy of the letter of censure (Appendix A) in Examiner Wilhite's Official Personnel Folder.

Since no need has been shown for a further hearing nor has such a request been received, F. D. 25230 can proceed to a decision by Division 3.

I am also attaching a copy of a memorandum which was prepared as a result of this incident and was sent to all of the hearing examiners on November 5, 1968. It does not appear that any good purpose would be served by sending an additional memorandum at this time.

Since I would like to send the letter to Senator McGee as soon as possible, may I have your votes and comments by December 23.

OFFICE OF THE GENERAL COUNSEL, DECEMBER 13, 1968

(No. 251-68)

MEMORANDUM TO CHAIRMAN TIERNEY RE CONDUCT OF HEARING BY HEARING EXAMINER W. WALLACE WILHITE IN F.D. 25230, CHICAGO, B. & Q. R.R. Co., DISCONTINUANCE OF TRAINS Nos. 42 AND 43 BETWEEN OMAHA, NEBR., AND BILLINGS, MONT.

Pursuant to your oral instructions, Personnel Director Adams has asked this office to review the file in the above matter and (1) summarize the findings reached in the various investigation reports; (2) express an opinion as to whether the Canons of Conduct have been violated and, if so, recommend appropriate action to be taken as concerns Hearing Examiner Wilhite; (3) suggest appropriate changes, if needed, in the Canons of Conduct; and (4) prepare a response to Senator McGee's letter of October 17, 1968. Consultations have been held with the Personnel Director and the Managing Director, who concur in the findings and recommendations.

I. SUMMARY OF REPORTS

The investigation of Hearing Examiner Wilhite's conduct during the hearings on Burlington's application to discontinue trains (Nos. 42 and 43) operating between Omaha, Nebr., and Billings, Mont., was initiated after receipt of Senator McGee's letter indicating that he had received several reports that Mr. Wilhite had travelled between hearing locations with representatives of the railroad and had been repeatedly entertained by them. The file consists of a detailed investigation report by Chief Rail Investigator Burns, an account by Mr. Wilhite of his itinerary from October 6 to 19, 1968, and an appraisal of the 917-page transcript of oral hearings by Chief Hearing Examiner Cheseldine.

A review of the investigation reports and the underlying interviews with all parties to the proceeding establishes that, during the course of the hearings, Examiner Wilhite rode on four occasions with railroad officials in an automobile furnished by the railroad between the various points of hearing at Omaha, Lincoln, Broken Bow, and Alliance, Nebr., and Newcastel, Wyo.1 and on two occasions between Newcastle, Sheridan and Billings, Mont., with Assistant Attorney General Donald Empfield of the State of Wyoming.2 Automobile travel was the only feasible means of transportation beween several points along the route.

The investigation reports also reveal that on a number of occasions Mr. Wilhite had meals and drinks with railroad personnel at the railroad's expense. On 1 The trips occurred on October 9, 10, 12, and 15, 1968.

The trips occurred on October 16 and 17, 1968.

most of these occasions, someone, representing the protestant's interest was present and, on other occasions, only railroad employees were present. At one of the dinner engagements, Examiner Wilhite paid all expenses. The examiner borrowed a light topcoat from a railroad employee which he used and returned after completion of the hearings.

There is no evidence to indicate any discussion of the case during the auto trips or the group meals. Nor is there any traceable evidence that any part of Mr. Wilhite's hotel expenses were paid for by anyone other than himself-the bills having been settled in cash or traveler's check.

Concerning the examiner's conduct at the hearings, railroad officials and representatives of State governments, opposing the application, stated that they felt Mr. Wilhite conducted a fair and impartial hearing, and that there was no basis for criticism of him in this respect. On the other hand, attorneys representing the people of the City of Alliance, Nebr., and Newcastle, Wyo., as well as attorneys and others representing the interested labor unions, for the most part, felt that Mr. Wilhite, by his conduct at the hearings, showed partiality to the railroad. They expressed concern about the examiner's association with railroad representatives during off-hearing hours. However, Chief Hearing Examiner Cheseldine and Assistant Chief Hearing Examiner Schutrumpf read the entire 917-page transcript of record and found no basis therein to support the allegations of preferential and prejudicial conduct of the hearing examiner during the course of the oral hearings. In their opinion, the record and his rulings show that the parties and the evidence were handled in the manner customarily treated in cases such as this one. Of course, voice inflections and attitude do not show in the printed word. The Chief and Assistant Chief Hearing Examiners conclude that: *** There may have been an occasional ruling with which we differ, but there was no reversible error. Acceptance of evidence as to an alternative plan of operation, on the last day at Billings, was proper. Further, the railroad submitted such evidence under direction of the Commission and under protest. The only point at which it appears that the examiner may have been unduly interested in closing the hearing early was Newcastle and this is not clearly shown on the record. *** [I]t appears that certain witnesses who would have testified could not because the hearing was closed while they were at lunch. It is clear, however, that this was not entirely the examiner's fault and resulted in part from a misunderstanding on the part of the examiner and involved parties. Nevertheless, admittedly this additional evidence would have been cumulative.

It will be noted that no one specifically asks for a further hearing and that the principal complainant, Mr. Burgess, indicates that a further hearing would serve no useful purpose."

At the hearing in Alliance, Nebr., the examiner refused to include in the record a prepared statement by Mr. Rowbotham, who died unexpectedly, shortly after writing to Chairman Tierney on October 19, 1968, complaining of this ruling. The Chief Hearing Examiner believes that, in the absence of further hearing, the Commission may consider this letter as a petition for inclusion of the statement in the record. Accordingly, he has notified the railroad thereof, and furnished it with

3 The dates of these meals purchased by the railroad and the persons present, other than railroad personnel, were as follows:

(a) October 11, 1968-Examiner purchased a round of drinks;

(b) October 12, 1968-Homer Hamilton, Assistant Attorney General, Nebraska. (Examiner's meal consisted of a bowl of soup);

(c) October 15, 1968-Mr. Sween, a union representative and Court Reporter Hines: (d) October 16, 1968-Donald Empfield, Assistant Attorney General, Wyoming: Dean Borthwick, Administrative Assistant to Senator Hansen; and Court Reporter It appears that the examiner indicated an intention to decline meal invitations by the railroad unless protestants were also present.

Hines.

The examiner also had breakfast and lunch with participants in the case on the following occasions: (a) October 12, 1968, lunch with railroad officials and Court Reporter Hines, who paid the bill; (b) October 13, 1968, breakfast with Assistant Attorney General (Nebraska) Hamilton;

(c) October 14, 1968, breakfast with union representative McCoy:

(d) October 16, 1968, lunch with railroad men, Assistant Attorney General (Wyəming) Empfield, and R. S. Dumbrill, attorney for City of Newcastle, Paid for by

railroad;

(e) October 17, 1968. lunch with Assistant Attorney General (Wyoming) Empfield and Court Reporter Hines, Mr. Empfield paid the bill.

4 October 13, 1968, present in addition to railroad men were Assistant Attorney General (Nebraska) Hamilton and Mr. and Mrs. Nell, a union representative.

copies of the letter and statement, granting it 10 days to reply. As a result, a determination of the request will be made in the report. This procedure has been followed before.

Under the circumstances, the procedure suggested above by the Chief Hearing Examiner is appropriate. However, the investigation reports made it clear that the Examiner permitted Mr. Rowbotham's attorney (Assistant Attorney General Hamilton of Nebraska), to consult with the witness and attempt to offer his testimony through direct questions. The witness was never recalled. Since there was an objection to the testimony and it admittedly was not admissible as written (see Hamilton's statement), the examiner's ruling thereon does not constitute reversible error.

Finally, those interviewed almost unanimously confirmed the fact that the examiner, before closing a hearing, stated that if anyone present wished to testify, they should come forward and testify.

In conclusion, I am of the opinion that the transcript of record and evidence obtained in the investigation will not support a finding of preferential or prejudicial conduct by Hearing Examiner Wilhite during the oral hearings.

II. HAVE THE CANONS OF CONDUCT BEEN VIOLATED?

The question presented is whether the examiner's acceptance, during off-hearing hours, of rail-paid-for entertainment and automobile travel between hearing sites constitutes a violation of the Commission's Canons of Conduct.

In pertinent part, the provisions of Section 14 (a) of the Canons prohibit the acceptance of "entertainment, favor, loan, or any other thing of monetary value, which might reasonably be interpreted as being of such a nature that it could affect (an employee's) impartiality." (Emphasis added). Excepted from this prohibition are "obvious family or personal relationships" and the "acceptance of food or other refreshments of nominal value on infrequent occasions in the course of a luncheon, dinner, or other meeting ***”

This exception to the general prohibition of accepting entertainment, etc., covers a wide variety of circumstances, and calls for the exercise of sound judgment to be governed by the criteria of whether an employee's conduct "might reasonably be interpreted as being of such a nature that it could affect [his] impartiality." (See Section 14(a)). Additionally, the Canons provide that an employee "shall avoid any action, whether or not specifically prohibited herein, which might result in, or create the appearance of *** giving preferential treatment to any person *** or losing complete independence or impartiality * or affecting adversely the confidence of the public in the integrity of the Commission." (See Section 14 (b)).

Unfortunately some hearing examiners do not exercise sound judgment in light of the above criteria. They interpret the exception in Section 14(a)(ii) as not prohibiting those entertainment situations which arise during off-hearing hours if both sides in the case are present. They defend the acceptance of food or other refreshments on the ground that it simply involves a group of people being friendly with each other while travelling together in a matter in which they are participating. No one doubts the sincerity of this position, especially where both sides to a case are present and there is, to some degree, reciprocity by all concerned in paying the bills for the meals. Nevertheless, the honest nature of the situation is not controlling since the examiner's mere presence on such occasions might create the appearance of improper influence and loss of impartiality. Hearing examiners are continuously under public scrunity while on itineraries, and their association with parties to the proceeding during off-hearing hours is bound to reflect upon the public image of the Commission. This is particularly true in train-off cases where the interests of the general public in the outcome of the proceeding is intense. No matter what might be said in explanation of such behavior, the fact that the behavior has occurred adversely affects the confidence of the public in the integrity of the Commission's impartiality in deciding quasijudicial or legislative matters. The simple solution-indeed, the one that is demanded by Section 14(b) of the Canons of Conduct-is to tactfully avoid any situation which might create the appearance of favoritism or place the Commission in a bad light.

In conclusion, the record establishes without contradiction that, during offhearing hours, Hearing Examiner Wilhite accepted from the railroads and others the loan of a topcoat, food, refreshments, and automobile travel between places

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of hearing. While his behavior might have been purely innocent and friendly in nature, Mr. Wilhite, in my opinion, used bad judgment in not avoiding actionas required by Section 14(a) and (b) of the Canons-which might create the appearance of losing complete impartiality. Accordingly, it is recommended that he be censured and that a copy of said censure be placed in his personnel file. A draft of a letter of reprimand is attached as Appendix A.

III. ARE CHANGES REQUIRED IN THE CANONS OF CONDUCT?

In my opinion, the present language of Section 14 of the Canons of Conduct is adequate and does not require amendment unless an absolute prohibition against accepting any entertainment is to be imposed. I recommend, however, that the Commission call the pertinent provisions of the Canons to the attention of the staff of hearing examiners with an admonition that they scrupulously adhere to the Canons and avoid any action which would create the appearance of a loss of impartiality.

IV. DRAFT RESPONSE TO SENATOR MC GEE'S LETTER OF OCTOBER 17, 1968

Re Finance Docket No. 25230-Chicago, Burlington & Quincy Railroad Company, Discontinuance of Trains Nos. 42 and 43 Between Omaha, Nebr., and Billings, Mont.

Hon. GALE MCGEE,

U.S. Senate,

Washington, D.C.

DEAR SENATOR MCGEE: This is in further response to your leter of October 17, 1968, which referred to reports that, during the course of the hearings in the above proceeding, Hearing Examiner W. Wallace Wilhite travelled by automobile between hearing locations with railroad employees and was repeatedly entertained by them. You have inquired as to whether the Commission has rules or regulations covering such conduct and, if so, whether the governing regulations have been adhered to in all respects in the instant case.

This Commission has issued standards of ethical conduct for its members and employees which have not been adhered to in the instant case. Section 14(a) of the Commission's Canons of Conduct (49 C.F.R. 1000.735-14(a)) prohibits the solicitation or acceptance, directly or indirectly, of "any gift, gratuity, entertainment, favor, loan, or any other thing of monetary value, which might reasonably be interpreted as being of such a nature that it could affect their impartiality, from any person ***" that has business relationships with,. or conducts operations regulated by, the Commission. Excepted from this general prohibition are "obvious family or personal relationships when the circumstances make it clear that it is those relationships rather than the business of the persons concerned which are the motivating factors" and the "acceptance of food or refreshments of normal value on infrequent occassions in the course of a luncheon, dinner, or other meeting ***." Section 14 (b) further provides (49 C.F.R. 1000.735–14(b)) that:

"Members and employees shall avoid any action, whether or not specifically prohibited herein, which might result in or create the appearance of: ** (2) giving preferential treatment to any person; *** (4) losing complete independence or impartiality; *** or (6) affecting adversely the confidence of the public in the integrity of the Commission."

Our investigation of Hearing Examiner Wilhite's conduct during on and off-hearing hours establishes without contradiction that, during off-hearing hours, the examiner rode, on four occasions, with railroad officials in an automobile furnished by the railroad between various points of hearing and, on two occasions, with Assistant Attorney General Donald Empfield of the State of Wyoming. The investigation also establishes that the examiner had meals and drinks paid for by railroad personnel. In most of these instances, someone representing the interest of the protestants was present and, on other occasions, only railroad employees were present. The examiner occasionally bought rounds of drinks at these engagements and, at one group dinner, paid all expenses. The examiner also had some morning or afternoon meals alone with and paid for by protestants in the case.

Acceptance of transportation on Commission-scheduled official business constitutes an unauthorized augmentation of the Commission's appropriations. If automobile travel is the only means of transportation, a car should have been rented by the examiner for his sole use of himself and the reporter.

Concerning the examiner's conduct at the hearings, the interviews and signed statements submitted by railroad officials and representatives of State governments show that they felt the examiner had conducted a fair and impartial hearing and that there was no basis of criticism of him in this respect. One the other hand, attorneys representing the people of the City of Alliance, Nebr., and Newcastle, Wyo., as well as attorneys and others representing the interested labor unions, for the most part, felt that the examiner was partial to the railroad during the oral hearings. The entire 917-page transcript of record was examined independently by the Chief Hearing Examiner and an Assistant Chief Hearing Examiner in order to determine whether there is any basis to support the allegations of preferential and prejudicial conduct on the part of the hearing examiner during the course of the oral hearings. Preliminarily, it appears that there is no basis to support the allegations and that the parties, the evidence, and the examiner's rulings were handled in the same manner as is customary in train-off cases. Where testimony of some witnesses tends to be cumulative of evidence presented by others, it is appropriate to accept stipulations that those not testifying would have similarly so testified. In this case, no one has specifically requested further hearing. Please be assured, however, that in reaching its decision the Commission will review the record in order to determine the various issues presented.

In conclusion, because the conduct of a hearing examiner during on or offhearing hours is a matter of serious concern to this Commission, the following steps have been taken. Upon receipt of your letter, Hearing Examiner Wilhite was relieved of all further duty in connection with this proceeding. He will not participate further in any of the Commission's internal work necessary to reach a decision in this proceeding before expiration of the statutory four-month period. As is customary in this type of case, the Commission, by Division 3, will review the record in its entirety and decide the case on the basis of the facts and the applicable law. Additionally, while Mr. Wilhite's conduct during off-hearing hours may have been purely innocent and friendly in nature, he employed poor judgment in not avoiding situations which might create the appearance of losing complete impartiality. His behavior is considered to be in violation of Section 14 (a) and (b) of the Canons of Conduct. Accordingly, he is being reprimanded and warned that any similar conduct in the future may lead to more serious disciplinary action.

I trust that the above information will permit you to respond more adequately to the complaints you have received.

Sincerely yours,

PAUL J. TIERNEY, Chairman.

At your convenience, I will be available to discuss the matter.

ARTHUR J. CERRA, Associate General Counsel.

APPENDIX "A"
DRAFT

DECEMBER 1968.

Mr. W. WALLACE WILHITE,
Hearing Examiner, Office of Proceedings,
Washington, D.C.

DEAR MR. WILHITE: In October 1968, complaints were received by this Commission concerning your conduct while holding hearings in Finance Docket No. 25230 on the application of the C. B. & Q. Railroad to discontinue Trains Nos. 42 and 43 which operate between Omaha, Nebraska, and Billings, Montana.

A thorough investigation of your conduct during the above hearings was made. This investigation confirms the fact that you rode with Burlington Railroad personnel in an automobile furnished by the Railroad between Omaha, Nebraska, and various places of hearing to Newcastle, Wyoming, and from that point on to Sheridan and Billings, Montana, with Special Assistant Attorney General Donald Empfield of the State of Wyoming. The investigation also confirms the fact that on a number of occasions you had meals and drinks with the railroad personnel and other parties to the case, either alone or in mixed groups, and that the bills were paid for by the Burlington Railroad, although on one occasion you paid and, on other occasions, the protesting parties paid the bills.

The conduct of hearing examiners during hearings has long been a matter of concern to the Commission. Your actions during off-hearing hours in fraternizing with and accepting favors and gratuities from the parties showed poor judgment

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