There is a stock we have found that is on a list and has been added to the list, and the stock is held by a member of the Commission. There has never been anyone here trying to make a case against the Commissioner. This situation is only illustrative of a problem. I assume the Commissioner will act promptly to divest himself of that holding. It is proscribed. He has no option but to get rid of it. Mr. COLLINS. This position, then, is the staff's position when they said Mr. Moss. The staff makes no position; they make a statement of fact. Mr. COLLINS. If the chairman is saying that it is a statement of fact Mr. Moss. It is a statement of fact. Mr. COLLINS. Well, then I would ask unanimous consent that we have the full explanation of the background that led into what you consider a statement of fact. Mr. Moss. I consider it a statement of fact because it is a fact. A fact means something that is incontrovertible. Mr. COLLINS. Mr. Chairman, it makes it very difficult if we cannot call a witness, then we cannot file a statement for anyone to be heard by the committee. Mr. Moss. I am not going to bring any witness before this committee until I am prepared to have that witness before us and until I feel it will add something of significance to the record. He has not requested to be heard. If he should, that matter would be very carefully considered, as will the request by the gentleman from Texas. Are there other questions? If not, the committee excuses the witnesses. [After the hearing, the following exchange of letters regarding the FCC's testimony took place between the subcommittee and the Commission:] HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Hon. RICHARD E. WILEY, Chairman, Federal Communications Commission, DEAR MR. CHAIRMAN: Thank you for your testimony before the Subcommittee on Oversight and Investigations at our recent hearings on conflict of interest regulations. In order to complete the record on this issue, we request that you provide answers to the following questions: (1) When was the Commission first made aware of the proposed "10/25 formula"? [This formula would allow a spouse or minor child to hold a single communications stock with a dollar value of up to 10% of the employee's salary and would allow ownership of a group of communications-related stocks as long as the total value does not exceed 25% of the employee's salary.] (2) Why wasn't that proposed formula mentioned in the February 16, 1977 letter to Chairman Brooks of the House Government Operations Committee concerning the GAO report? (3) Will the "10/25 formula" be made a part of the FCC regulations? If not, why not? (4) Has the "10/25 formula" been transmitted to the Civil Service Commission for their review? If so, when was this done? If not, why was this not done? (5) Before the "10/25 formula" was adopted by the Commission on March 9, 1977, were comments requested from anyone inside or outside the Commission? If so, who commented and what did they say? If no comments were requested, why weren't they requested? (6) During the period January 1, 1975 to the present, how many employees have been told to divest of a financial interest under Section 4(b) of the Communications Act? Of that number, how many have elected to transfer the interest to a spouse or minor child and request a waiver under 18 U.S.C. 208? Of those who requested such a waiver, how many received it and how many were denied? (7) How many certificates of non-participation are currently in effect under 18 U.S.C. 208? (8) How many waivers under 18 U.S.C. 208(b) are currently in effect? There is one further point to be clarified for the record. Due to a misunderstanding between your Executive Director's Office and our staff, the position held by the employee in Case Study C was listed incorrectly. Case Study C actually referred to a Supervisory Electronics Engineer in the Domestic Facilities Transmission Branch of the Common Carrier Bureau. We would appreciate receiving answers to the above questions by June 10, 1977. Thank you. Sincerely, JOHN E. Moss, Chairman, Subcommittee on Hon. JOHN E. Moss, FEDERAL COMMUNICATIONS COMMISSION, Chairman, Subcommittee on Oversight and Investigations, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: This letter is in response to your letter dated May 31, 1977, in which you presented eight (8) questions for reply. The answers to these questions are as follows: Question 1. When was the Commission first made aware of the proposed "10/25 formula"? Answer. The proposed 10/25 formula was first presented to the Commission for consideration on February 9, 1977 and was approved by the Commission on March 9, 1977. Question 2. Why wasn't that proposed formula mentioned in the February 16, 1977 letter to Chairman Brooks of the House Government Operations Committee concerning the GAO report? Answer. The proposed formula was not approved by the Commission until March 9, 1977, after the February 16, 1977 letter to Chairman Brooks. Moreover, that letter responded to specific recommendations made by GAO in its December 21, 1976 Report, none of which were germane to the proposed 10/25 formula. Question 3. Will the "10/25 formula" be made a part of the FCC regulations? If not, why not? Answer. It appears reasonable to await the result of reviews conducted under the new formula, and application of additional criteria where financial interests exceed the formula, and to gain some experience in its use before considering the need to formalize the present adininistration procedures through incorporation into FCC regulations. Question 4. Has the "10/25 formula" been transmitted to the Civil Service Commission for their review? If so, when was this done? If not, why was this not done? Answer. The 10/25 formula has not been transmitted to the Civil Service Commission for review because the application of Title 18 U.S.C. § 208 waiver standards rests with the agency, not the Civil Service Commission. Question 5. Before the "10/25 formula" was adopted by the Commission on March 9, 1977, were comments requested from anyone inside or outside the Commission? If so, who commented and what did they say? If no comments were requested, why weren't they requested? Answer. As mentioned above, the adoption of the formula by the Commission followed a review of our current and past policy of granting waivers of the applicability of Title 18 U.S.C. § 208. The agenda item, covering this matter in some detail, was issued to the Commissioners and their staffs, as well as the Heads of our Offices and Bureaus. The item itself, prepared by the Executive Director, took a view different from that staffed by the General Counsel, and it was only after a thorough discussion of the matter during several staff meetings and a Commission Meeting, attended by representatives from various Bureaus and Offices, that the Commission concluded that adoption of the formula was in the best interests of the Government. The agenda item, which was the staff's written presentation to the Commission, was previously supplied to the Subcommittee. No transcript was kept of oral presentations at the Commission meetings. Since this was purely an internal administrative action, and not a formal rulemaking, other comments were not required. Question 6. During the period January 1, 1975 to the present, how many employees have been told to divest of a financial interest under § 4(b) of the Communications Act? Of that number, how many have elected to transfer the interest to a spouse or minor child and request a waiver under 18 U.S.C. 208? Of those who requested such a waiver, how many received it and how many were denied Answer. From January 1, 1975 to the present, (12) employees were advised to divest financial interests under § 4(b) of the Communications Act. With two exceptions, each employee's initial report indicated the financial interest as a joint ownership with a spouse, minor child, or member of the immediate household. Ten (10) employees divested themselves of their share of the interest, leaving full control of the financial interest with a spouse, minor child, or member of the immediate household. Two (2) employees owned the financial interest outright, and divested and transferred full control of the interest to a spouse, minor child, or other member of the immediate household. All 12 employees applied for a waiver pursuant to Title 18 U.S.C. 208. Eleven (11) of the 12 waiver requests were approved, with the remaining employee being advised that the position occupied made it unlikely that the employee would participate in matters affecting the companies in which the spouse holds a financial interest. No waivers were denied. Two of the approved waivers are under review because the financial interest exceeds the 10/25 formula approved by the Commission on March 9, 1977. Question 7. How many certificates of non-participation are currently in effect under 18 U.S.C. 208? Answer. There are five certificates of non-participation currently in effect. Question 8. How many waivers under 18 U.S.C. 208(b) are currently in effect? Answer. As of June 7, 1977, 29 waivers under 18 U.S.C. 208(b) are in effect. This figure includes the 11 employees reported above. Of the 29 waivers, 9 (including the 2 previously mentioned) are under review because the financial interest exceeds the 10/25 formula approved by the Commission on March 9, 1977. I am enclosing for your information copies of the following: (a) a letter, dated June 10, 1977. to the Chairman of the Civil Service Commission attaching a list of stocks which FCC Commissioners and employees may not own under § 4(b) of the Communications Act and offering the assistance of our General Counsel with respect to § 4 (b) interpretations; and (b) a memorandum from me to the other FCC Commissioners, dated June 10, 1977, reminding them of our individual responsibility for determining that all of our financial interests are consistent with the requirements of 84(b) of the Communications Act. Sincerely, Enclosures. RICHARD E. WILEY, Chairman. Hon. ALAN K. CAMPBELL, FEDERAL COMMUNICATIONS COMMISSION, Chairman, Civil Service Commission, DEAR MR. CHAIRMAN: As you may be aware, I was a witness at the May 23 hearings before the Subcommittee on Oversight and Investigations of the House Committee on Interstate and Foreign Commerce which is making a study of conflicts of interest. That subcommittee's staff study had determined that one member of our Commission owned three stocks which, while apparently not having been questioned by the Civil Service Commission, had been construed by our General Counsel, in response to employee inquiries, to be prohibited holdings under § 4(b) of the Communications Act of 1934. Section 4(b) of that Act is written in very broad terms and, unfortunately, sometimes has the effect of prohibiting interests in companies having only a rather remote relationship to the FCC's functions. For your convenience, I have attached the full text of § 4(b). To aid you in your review of financial interests of FCC Commissioners, I am enclosing a current list of stocks found to be prohibited holdings for our employees under § 4(b) of the Act. Section 4(b) applies also to Commissioners. As the list indicates, it is merely a compilation of past rulings and is not intended to be exhaustive. I would like, however, to make our General Counsel available to you or your staff to advise as to any financial interests of FCC Commissioners which you believe may raise any question. I suggest this could be done by simply seeking his advice as to any questionable holding without identifying the Commissioner or the amount of stock involved, thereby maintaining the confidentiality of Commissioners' reports to you. Any required divestiture of financial holdings would continue to be a matter as to which your Commission would deal directly with the Commissioner involved. Even though the Subcommittee's study found only this one instance out of 53 reports of Commissioners filed with you, I hope that this procedure will aid in preventing even that rare occurrence with respect to FCC Commissioners. If you have any different or additional suggestions as to how we may be of service to you in this area, while avoiding interference with your proper functions or compromising the confidentiality of information supplied you, I would be pleased to hear from you. Sincerely, RICHARD E. WILEY, Chairman. Hon. RICHARD E. WILEY, HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Chairman, Federal Communications Commission, DEAR MR. CHAIRMAN: As you know, this Subcommittee recently held hearings on conflict-of-interest regulations during which several "case studies" of employees at your agency were mentioned as potential conflict situations. In our continuing oversight of this issue, we would appreciate it if you would inform us at this point of any changes in the status or financial holdings of these employees. In addition, you should notify us in the future of any similar changes as a result of your review of their cases. This will allow us to report those changes which may occur prior to our issuance of our report on these hearings, which we anticipate in several months. Because of our desire to avoid the mention of specific names, you should simply notify us by using the letter designations of our Staff Report. We would appreciate your prompt response to this request. Sincerely, JOHN E. Moss, Chairman, Subcommittee on Oversight and Investigations. Hon. JOHN E. Moss, FEDERAL COMMUNICATIONS COMMISSION, Chairman, Subcommittee on Oversight and Investigations, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: Reference is made to your letter of July 22, 1977, requesting updating information concerning those Commission employees whose "case studies" were reviewed during the Subcommittee's recent hearings on conflict-of-interest regulations. Of the five cases referred to, those identified as B and C have been disposed of as follows: B-The employee reported on June 3, 1977, that the holdings of his wife in the General Electric Company had been sold by her on April 13, 1977; C— The employee reported on June 28, 1977, that the holdings of his wife in AT&T had been sold on June 20, 1977. With cases A, D, and E presently under active review, I have taken the necessary steps to keep the Subcommittee advised of any changes in the status or financial holdings of the employees' family members as a result of this review. Sincerely yours, RICHARD E. WILEY, Chairman. Mr. Moss. We will call now the witnesses from EPA. Mr. WILEY. Thank you, Mr. Chairman. Mr. Moss. Please stand and be sworn. Please raise your right hand. Do you solemnly swear the testimony you are about to give this subcommittee shall be the truth, the whole truth, and nothing but the truth, so help you God? MS. BLUM. Yes. Mr. FRICK. Yes. Mr. JAMES. Yes. Mr. Moss. We want to welcome you here. I believe this is the first. time you have appeared here since assuming office. Ms. BLUM. Thank you TESTIMONY OF BARBARA BLUM, DEPUTY ADMINISTRATOR, ENVIRONMENTAL PROTECTION AGENCY, ACCOMPANIED BY G. WILLIAM FRICK, GENERAL COUNSEL; AND MICHAEL A. JAMES, DEPUTY GENERAL COUNSEL Ms. BLUM. Mr. Chairman, I am very pleased to be here. I have no formal statement, but there are a couple of things I would like to say if I may. Mr. Moss. You are recognized. MS. BLUM. Thank you. I feel and our Agency feels that standards are essential to the success of our EPA programs. We feel that if we lose the confidence of the public then we are going to fail because so much of what we do depends on public support. With me here today is Bill Frick, who is the General Counsel for EPA. He served as Deputy General Counsel, who is Agency Counselor for Conflict of Interest, from February 1975 to June 1976. Michael James, on my right, is now Deputy General Counsel. He has served as Agency Counselor from June 1976 to date. The agency Counselor who served from the beginning date of your study, which I believe was January 1974, is no longer employed at EPA; or I would have him here, too. |