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"'Headless Fourth Branch' Denounced
by FCC Prober"
Harvard
Law Record - April 3, 1958 - Pages 1, 3
By Binder
reprinted by permission
Bernard Schwartz, ousted investigator for the House Committee on Legislative Oversight, delivered a bold, blunt, scathing denunciation of the federal administrative agencies before a capacity audience in the James Barr Ames Courtroom last Friday evening. Mr. Schwarz's speech, delivered in what seemed often bitter tones, was a stinging, sweeping indictment of what he termed "the headless fourth branch of the government," and, in particular, the FCC.
These agencies have become a "political dumping ground for lame-duck congressmen," for people the President or his friends owe a political obligation to, he charged. The manner in which they function is "a terrible thing, a shocking thing." Their decisions "are not based on the law or the facts, but on how heavy a pressure is brought to bear" upon them.
In an address sponsored by the Law School Forum the New York University Professor of Law attacked the idea that the powers granted to these agencies are not really legislative, executive and judicial, but are only quasi powers. When a trucker it is convicted of violating a quasi-law, he asked, is he put in a quasi-cell? The laws made and enforced by the administrative agencies are as real and as effective, he emphasized, as are the laws made and enforced by Congress and courts. It is a delusion to think otherwise.
Mr. Schwarz assaulted four fictions which, he declared, dominate the field of public administrative law.
(1) Congress can give broad, wholesale powers to the agencies it authorizes and these agencies will develop proper standards to limit their own powers.
(2) Administrative agencies regulate in the public interest.
(3) Fair procedure, full adversary hearings, impartial examiners, and lengthy, learned opinions protect the public from administrative decisions based on political pressure and the dominating influence of the large industries which the agencies are supposed to regulate.
(4) Agency heads are "experts" in the field in which their agency operates, and "you can trust the experts."
The former chief investigator spoke primarily of what he called the "big six" federal administrative agencies: the CAB, ICC, SEC, FTC, FPC, and, particularly, the FCC.
Congress, he stated, has unwisely granted these agencies wholesale powers "not canalized to keep them from overflowing their banks." This "skeleton legislation" gives the agencies "a carte blanche" enabling them "to write their own law." The statute setting up the FCC, for example, lays down the standard of "public interest, convenience, and necessity." This, Mr. Schwarz declared, tells the Commission, in effect, "to do as it darn pleases." Lacking Congressional guidance it makes wholly arbitrary decisions, influenced by pressures from many sources, especially the big, financially affluent networks.
Although the FCC has announced various criteria which supposedly guide its decisions, Mr. Schwartz continued, the Commission "does not follow any objective criteria... it does as it wishes."
He decried the fact that the FCC commissioners are "treated like clients, not like judges," by the important communications interests. They are "wined and dined, given color TV sets, paid vacations," and treated to nothing but the best. And the decisions rendered by the Commission, he charged, show a "constant orientation toward the large networks... Can you name one case [of the disputed allocation of a television channel] in which a network station lost," he asked?
The public interest and the interests of the large networks cannot be equated, he asserted. "The Commission has often acted upon the opposite assumption."
That the Commission members and should favor, consciously or unconsciously, the moneyed network interests is only natural, Mr. Schwartz continued, for the only real future the average commissioner has is with the big networks, "either directly or by way of some law or engineering firm which counsels them."
All a Fiction
Apparently adequate procedural safeguards have been set up to insulate agency functioning from political pressures. But "the whole procedure is a fiction," he charged. Hearings are held, briefs are submitted, reports are written and thousands of pages of material are accumulated for the ostensible purpose of aiding in the just allocation of a TV channel license. But all this, the ousted investigator declared, is window dressing. "The Commission doesn't mean it. The parties don't mean it." The decisions "are not based on the law or the facts." They are "governed by political pressure." And everyone acquainted with the workings of the FCC knows it.
The commissioners don't even have to read the record, the briefs, or the reports of the examiner, don't have to listen to the oral arguments, or give any explanation or reason that all for their decisions. In the FCC the only responsibility a commissioner has is to vote. If you are a commissioner and "if your friend White comes to you and says, 'vote for X,' you can do it and you don't have to explain to yourself, much less to the public," he stated.
Most of the man who make the decisions in the federal agencies don't write their own opinions, and many don't even read them. In the FCC, for example, agency decisions are explained in an official opinion written by and "Office of Opinion and Review."
After his formal address Mr. Schwartz was questioned by a panel consisting of John M. Gaus, Professor of Government, and Clark Byse and Phil C. Neal, Visiting Professors of Law.
Professors Byse and Neal disagreed sharply with Mr. Schwarz on the validity of his general condemnation of the agencies, declaring that he had greatly "overstated his case." Professor Neal charged that Mr. Schwarz was "building a very large pyramid of sin upon the head of a single pin." He suggested that Mr. Schwarz' damning remarks may well be limited to one agency, indeed, to one commissioner. Professor Neal stated that he teaches "skepticism of experts" to his classes, and among these experts he includes Schwartz.
But when Professor Neal asked if the FCC had not done a creditable job in disposing of the color TV controversy between CBS and NBC the ousted investigator had a ready reply.
When a CBS-oriented chairman headed the FCC, the CBS color system was approved by the Commission, he said. As soon, however, as a new NBC-oriented chairman was appointed, the Commission reversed its stand and approved the NBC system. Soon after this decision, he explained, the chairman resigned his job with the Commission and accepted a position as vice president with NBC at a great increase in salary. "This may be a coincidence," he added.
CBS Superior
Mr. Schwartz told the audience that many engineering authorities favored the CBS color system because they believed it gave a superior picture. The system would require a converter to adapt it to black and white receivers, he continued, but these converters could be produced at an average cost of about $20 per set by the manufacturers, a rather mild sum when compared to the high cost of producing the NBC process.
But RCA (which owns NBC) has an almost complete patent monopoly in the TV receiver manufacturing industry, he declared. Every receiver produced uses at least one patent owned by RCA, which stubbornly opposed the production of these converters.
This is "one of the most blatant examples... where the experts were overruled by the industry," he asserted.
When asked why the FCC recently approved a trial for pay TV, in the face of a militant network opposition, if it were dominated by the industry as he had charged, Mr. Schwartz answered that pay TV, in the present climate of opinion in Washington, has no chance of adoption. The Commission knows it; the networks know it. So it doesn't matter what the Commission does on this particular matter.
When Professor Byse suggested that he had gone overboard in his condemnation of the federal agencies, that they could not all be guilty of the wrongs he listed, Mr. Schwartz stated that the difference in the amount of corruption present in the various agencies was largely a question of degree, not of kind. Taking direct issue with Professor Byse, he expressed "grave doubt" about the proper functioning of the SEC.
Mr. Schwartz declared that the best way to attack the problem that the administrative agencies present is to raise the calibre of the men appointed to the commissions. "Can you name even one outstanding appointment to any of the important agencies in recent years," he asked? Nobody named one.
Penal Sanctions Needed
We should not regard procedural safeguards as a myth, he cautioned. The enactment of a legislative code setting up standards for the heads of agencies as high as those set up for judges is needed. And penal sanctions must be provided. Rules adopted by the agencies themselves are "nothing, because there is no sanction, nobody to enforce them."
In answer to a question from Moderator David F. Cavers, Mr. Schwarz stated that he didn't feel that it was necessary or practical to divorce the legislative from the judicial functions performed by the agencies.
Mr. Schwartz was strongly criticized by Professor Byse for leaking a confidential report which he submitted to the Committee on Legislative Oversight to The New York Times, three weeks after the Committee had voted to bury it. He defended himself by explaining that excerpts from this report had already appeared in the column of a national newspaper columnist, which gave a distorted picture of the report. The only feasible way to correct this, he said, was to get the report in its entirety before the people through a widely distributed newspaper.
Professor Byse took Mr. Schwartz to task for going over the head of the Committee he was hired by and was supposed to serve. He had no right to do this, Professor Byse asserted. While his ends may have been laudable, they certainly did not justify his means. The methods he used, Professor Byse declared, did his cause more harm than good.
Mr. Schwartz replied that the relationship between a Committee Counsel and a Committee is not like the familiar lawyer-client relationship. For in the former a public interest is involved, and not only the Committee but also the public must be considered by the Counsel and, when possible, served. It was in order to fulfill his duty to the public that he brought the FCC scandal out into the daylight, he stated.
Refused to Whitewash
Members of Congress have been among the worst offenders in attempting to exert influence upon the administrative agencies, he charged, and they have been all too willing to blind themselves to what has been going on under their very noses. He was hired by the Committee to investigate the agencies and he did not feel compelled to participate in a whitewash of them.
When investigating, "if you stumble over some garbage, what are you supposed to do," he asked? "Walk around it?" Richard Mack, Schwartz asserted, would still be sitting on the FCC if he hadn't gone over the head of the committee and named names. He could have done no greater disservice, he continued, than to let the FCC "remain as it was, or as it may still be."
In answer to a question from the audience Mr. Schwarz stated his opinion that Congress has a legitimate purpose to further public education, to expose improper activities, to ventilate public grievances. It should not merely "grind out laws as a sausage maker drives out sausages."
Action by Congress is needed, he emphasized, and you will not get corrective Congressional action unless you crystallize public opinion. This can best be done by exposing "horrible examples." The public and the press are not interested, he added, unless there is a scandal involved.