AGENCY SEPARATION OF FUNCTIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP77M00144R000800160003-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 12, 2016
• Document Release Date: May 13, 2002
• Sequence Number: 3
• Publication Date: September 17, 1976
• Content Type: REPORT

Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
94TH CONGREss
2d Session
Calendar No.
SENATE
REPORT
No. 94-1259
AGENCY SEPARATION OF FUNCtIIONS"
SEPTEMBER 17, 19743.-Ordered to be printed
Mr. KENNEDY, from the committee. on the Judiciary,
submitted the following
REPORT
The Committee on the Judiciary, to which was referred the bill
S. 798, as amended, to amend chapter 5, subchapter II, of title 5,
United States Code, to provide for improved administrative pro-
cedures, having considered the same, reports favorably thereon with
amendments, and recommends that the bill as amended do pass.
S. 798 would amend the Administrative Procedure Act, '5 U.S.C.
sections 551-559, to make generally applicable to all formal proceed-
ings those safeguards relating to separation of litigating and ad-
judicative functions now contained in 5 U.S.C. section 651(d)-and applicable only to certain categories of formal adjudication.
S. 798 is endorsed by the Administrative Conference of the United
States and, with a qualification explained below, by the American
Bar Association. The bill is also supported by the Department of
Health, Education, and Welfare; the Department of the Interior; the
Department of the Treasury; the .Department of Agriculture; the
Federal Communications Commission; the Federal Maritime Com-
mission; and the Consumer Product Safety Commission. (See, Hear-
ings before the Subcommittee on Administrative Practice and Proce-
dure, Committee on the Judiciary, U.S. Senate, on "Administrative
Procedure Act Amendments of 1976," April 28 and May 3, 1976, 94th
Congress, 2d session (hereafter referred to as "1976 Hearings").)
AMENDMENTS
1. On. page 1, line 9, change "shall" to "may" and on line 11 after
"title" change the period to a comma and add the following : "or the
entire record may be.certified to the agency for decision." '
Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
 Approved For Release 2002/06/05 2CIA-RDP77M00144R000800160003-7
Explanation.-The amendment is intended to give the agency the
option, where the presiding officer becomes unavailable before render-
ing a decision, either to assign the case for decision (including such
additional hearings as may be necessary) to another officer qualified
to preside-i.e., an administrative law judge or an agency member-or
to have the record certified to the agency itself for decision. It should
be noted that the purpose in adding language to the first sentence of
section 554(d) is simply to specify who may decide the case in the event
of unavailability of the presiding officer. (See, Davis, Administrative
Law Treatise, section 11.19, p. 119.) The addition to section 554(d)
is not intended to overturn the results in those cases which hold that
where the presiding officer becomes unavailable in a case which turns
on a determination of witness credibility, a new hearing must be held.
(See, Gamble-Skogmo, Inc. v. F.T.C., 211 F.2d 106 (8th Cir. 1954) ;
Van Teslaar v. Bender, 365 F. Supp. 1007 (D. Md. 1973).)
2. On page 2, lines 8 and 10, change the "(g)" to "(f)".
Explanation. This is a technical conforming amendment.
3. On page 2, lines 18 and 21, and on page 3, line 5, strike the word
"prosecuting" and insert in lieu thereof the word "litigating".
Explanation.-The references to "prosecuting" functions have been
changed to "litigating" functions. The term "prosecuting" functions
suggests a criminal or quasi-criminal proceeding. Since the bill would
extend separation-of-functions principles to rulemaking and initial
licensing proceedings, the broader term is believed by the committee
to be more appropriate. It should be interpreted pari passe with that
extension, and not so broadly as to include all participation in court
litigation arising out of agency proceedings. For example, a general
counsel whose role in a case is limited to defending the agency's action
in a judicial review proceeding would not thereby be disqualified from
advising the agency after remand of the case or in a related case. (See,
Attorney General's Manual on the Administrative Procedure Act,
58, n. 8 (1947) (hereafter referred to as "AG Manual".)
4. On page 2, line 26 and on page 3, lines 1 and 2, strike the words "in
ratemaking and cognate proceedings and".
Explanation.-The term "cognate proceeding" does not presently
appear in the Administrative Procedure Act. It would have been added
in a revision of definitions proposed by the Administrative Conference
of the United States and the American Bar Association, incorporated
in S. 796. Since the committee has not acted on this proposal, the refer-
ence in this bill would be premature and confusing.
5. On page 3, after line 6, add the following: "(3) This subsection
does not apply to the agency or any member of the body comprising
the agency.". Strike the quotation marks and final period at the end
of line 6.
Explanation..-The exception from separation-of-functions require-
ments for the agency itself and members of the body comprising the
agency is brought forward from present section 554(d). (See, 77T.
v. Cinderella Career and Finishing Schools, Inc., 404 F.2d 1308, 1315
(D.C. Cir. 1968) ; Withrow v. Larkin, 421 U.S. 35, 51-52 (95 S. Ct.
1456,1467 (1975).)
Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
 Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
3
HISTORY OF THE BI I,
Revision of the Administrative Procedure Act safeguards relating
to separation of functions has been considered by the Congress for
over a decade. Legislation introduced in the 88th Congress proposed
amending the provisions on separation. Of functions (see, proposed
amendments to section 1005(c) of title 5, United States Code in
S. 1663 and S. 2335, 88th Congress), and subsequent bills to amend the
Administrative Procedure Act have followed suit (e.g., S. 518, 90th
Cong., 1st sess.).
The American Bar Association, following a study lasting over 14
years, adopted a specific resolution in August 1970 that legislation
be adopted "providing that agency employees engaged in investigative
or prosecuting functions in an adjudicatory proceeding or formal
rulemaking proceeding cannot ex parte participate in or advise in the
decision of that proceeding by agency heads, review boards or hear-
ing examiners." In June 1973 the Administrative Conference of the
United States adopted a formal statement on the ABA resolution
approving it in part but indicating that the Conference did not believe
"that agency officials having general or(ranizational or supervisory
responsibility for such functions should, solely by virtue of that respon-
sibility, be barred from performing their customary function of
advising agency members in proceedings not presently covered by
5 U.S.C. 554(d)."
On February 22, 1975, Senators Edward M. Kennedy and Charles
McC. Mathias introduced S. 797 and S. 798, which reflected alterna-
tively the ABA and Administrative Conference positions on this issue.
The bills were referred to the Committee on the Judiciary and hear-
ings were held on these and other proposals to amend the APA on
April 28 and May 3,1976. The subcommittee favorably reported S. 798,
with amendments, to the full committee in July 1976.
On September 16, 1976, the Committee on the Judiciary met and
ordered reported S. 798, as amended, without objection.
The second and third sentences of section 554(d) of the Administra-
tive Procedure Act contain, three distinct provisions for protecting
the independence of the decisional process in formal, on-the-record
agency adjudication :
First, the presiding officer, ordinarily an administrative law judge,
may not consult a person or party on a fact in issue except on notice
to all parties.
. Second, the presiding officer must not be responsible to;or subject
to the supervision of agency officials engaged in the performance of
investigative or prosecuting functions. Thus, as a practical matter,
an agency's administrative law judges must be.placed in an organiza-
tional unit separate from those to which investigative and prosecuting
personnel are assigned under the supervision of the agency itself or
of agency officers who exercise no investigative or prosecutive func-
tions. (See, AG Manual 55-56.)
Third, no employee who has performed investigative or prosecuting
functions in a case may participate or advise off-the-record in the
agency decision in the same or a factually related case. He cannot, in
S.R. 1259
Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
 Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
4
other words, participate first as an investigator or advocate and then
turn around and act as decisionmaker or confidential adviser to the
decisionmaker in the same case. This principle is not limited to the
decision by the presiding officer, but is applicable at all decisonal levels
within the agency.
Since section 554 is addressed only to formal adjudications, the
three provisions described above are not applicable to formal rule-
making proceedings, nor are they applicable to certain categories of
adjudication-initial license proceedings and proceedings to determine
the validity of past rates-which are excepted from the coverage of
section 554(d) because of their similarity to rulemaking in the rela-
tive significance of policy as against purely factual issues. (See, AG
Manual 50-51.) It was the judgment of the drafters of the APA that
to impose the requirements of section 554(d) on formal rulemaking
and initial licensing would undesirably restrict the flexibility of such
proceedings.
Experience, however, has belied these fears. In point of fact nearly
all agencies in conducting formal proceedings not covered by section
554(d) nevertheless follow procedures consistent with the require-
ments of the subsection. The Congress has already enacted a provision
to apply the ex parte prohibitions in the Administrative Procedure
Act to formal rulemaking proceedings. (See, Public Law 94-409.)
Further, both the American Bar Association and the Administrative
Conference of the United States have proposed that the separation-
of-functions requirements contained in section 554(d) be expanded
in their application to cover all formal proceedings, both adjudication
and rulemaking. S. 798 would accomplish this objective.
The committee had before it alternative bills dealing with separation
of functions. S. 797, the bill proposed by the American Bar Associa-
tion, would have extended without qualification to all formal proceed-
ings the three provisions of section 554(d) described above. S. 798, the
bill proposed by the Administrative Conference, would do the same,
with a single qualification : The bar on participating or advising in the
agency decision would not extend to agency officials who have not
personally been involved in the case but who have general supervisory
responsibility over employees who have participated in the case. For
example, the general counsel of an agency would not be disqualified
from advising the agency members with respect to a formal rule-
making proceeding simply because attorneys in the general counsel's
office participated in the hearing.
It should be pointed out that it is not entirely clear that section
554(d) regards such general supervisory responsibility as disqualify-
ing in and of itself. The AG's Manual raised but did not answer the
question. (See, AG Manual 57-58; see also, Davis, Administrative Law
Treatise sec. 13.07; R. A. Holman v. SEC, 366 F.2d 446, 453 (2d
Cir. 1966) cert. denied, 389 U.S. 991 (1967).) However, in those
agencies which conduct adjudications subject to section 554(d), the
problem does not arise because of strict organizational separation
between prosecuting and advisory functions.
However, if the separation-of-functions requirements of section
554(d) are extended to all formal proceedings, the question of dis-
qualification because of supervisory responsibility will create problems
in at least one major agency, the Federal Power Commission. It is
Commission practice to require every staff member who is specifically
assigned to work in the investigation or trial of a case set for a hearing
Approved For Release 2002/06/05 : CIA-RDP77M00144 OO8O0160003-7
 Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
-5
to enter his appearance upon the record. Each- such person must
exclude himself from any Commission meeting involving that or a
factually related case. However, the top staff members, the General
Counsel, Assistant General Counsels, and Bureau chiefs, who might
supervise those who are engaged in trying a case, usually attend
Commission meetings at which the resolution of cases is -discussed and
are available to give legal advice to the Commission on request or on
their own motion. Thus, these senior agency officials who may have
had contact with the staff trying the case may later give legal or policy
advice to the Commission.
The Commission vigorously opposes being required to sever either
the advisory link between the Commissioners and the senior staff or
the supervisory link between senior and trial staffs. Either separation
would create both budgetary and personnel problems, since it would
require separate advisory and supervisory staffs, and the Commission
anticipates significant difficulty in recruiting additional staff with
the legal and technical expertise required by the Commission's work.
Furthermore, it must be recognized that even if a separate advisory
staff were obtained, cutting off the Commission from the advice of
its top officials with operating responsibilities would.not be an un-
mixed blessing. (See, Federal Power Commission Report on S. 797 and
S. 798 in 1976 Hearings.) Finally, apart from the particular needs of
the Federal Power. Commission, complete separation of supervisory
and advisory responsibilities may create problems in those` agencies
which conduct formal rulemakings only. occasionally and consequently
have a need for some organizational flexibility. (See, Hamilton, "Pro-
cedures for the Adoption of Rules of General Applicability : The Need
for Procedural Innovation in Administrative Rulemaking," 2 ACUS
834 (1972).) For these reasons, and in reliance on the deliberate judg-
ment of the Administrative Conference, the committee has .decided to
adopt the Conference rather than the bar association proposal.
Accordingly, S. 798 provides specifically that in proceedings not
subject to section 554(d), that is, in those formal proceedings to which
the separation-of-functions provisions are being extended by this
bill, general organizational or supervisory responsibility for investi-
gative or litigating functions will not disqualify an agency official
from advising the agency on the disposition of a case if the, official
has not personally participated, including actual .exercise of super-
visory authority, in the investigation or litigation of the same or a
factually related case. In specifying that these circumstances are not
to be deemed a violation of the principle of separation of functions in
cases not subject to section 554(d), it is not the intent of the com-
mittee to alter in any way the law applicable in cases subject to sec-
tion 554(d).
COST
The committee believes that there will be no additional cost imposed
on any. agency of the Federal Government by virtue of enactment of
8.798.
In compliance with subsection (4) of rule XXIX of the Standing
Rules of the Senate, changes in existing law made by the bill as
reported are shown as follows (existing law proposed to be omitted is
Approved For Release 2002/06/05 : CIA-RDP77M00144R09O800160003-7
 Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
6
enclosed in black brackets, new matter is printed in italic, existing
law in which no change is proposed is shown in roman) :
? 554. Adjudications
(a) This section applies, according to the provisions thereof, in
every case of adjudication required by statute to be determined on
the record after opportunity for an agency hearing, except to the
extent that there is involved-
(1) a matter subject to a subsequent trial of the law and the
facts de novo in a court;
(2) the selection or tenure of an employee, except a hearing
examiner appointed under section 3105 of this title;
(3) proceedings in which decisions rest solely on inspections,
tests, or elections;
(4) the conduct of military or foreign affairs functions;
(5) cases in which an agency is acting as an agent for a court;
or
(6) the certification of worker representatives.
(b) Persons entitled to notice of an agency hearing shall be timely
informed of-
(1) the time, place, and nature of the hearing;
(2) the legal authority and jurisdiction under which the hear-
ing is to be held; and
(3) the matters of fact and law asserted.
.When private persons are the moving parties, other parties to the
proceeding shall give prompt notice of issues controverted in fact or
law; and in other instances agencies may by rule require responsive
,leading. In fixing the time and place for hearings, due regard shall
be had for the convenience and necessity of the parties or their
representatives.
(c) The agency shall give all interested parties opportunity for-
(1) the submission and consideration of facts, arguments,
offers of settlement, or proposals of adjustment when time, the
nature of the proceeding, and the public interest permit; and
(2) to the extent that the parties are unable so to determine a
controversy by consent, hearing and decision on notice and in
accordance with sections 556 and 557 of this title.
[(d.) The employee who presides at the reception of evidence pur-
suant to section 556 of this title shall make the recommended decision
or initial decision required by section 557 of this title, unless he be-
comes unavailable to the agency. Except to the extent required for the
disposition of ex party matters as authorized by law, such an employee
may not-
[ (1) consult a person or party on a fact in issue, unless on
notice and opportunity for all parties to participate; or
[(2) be responsible to or subject to the supervision or direction
of an employee or agent engaged in the performance of investi-
gative or prosecuting functions for an agency.
An employee or agent engaged in the performance of investigative
or prosecuting functions for an agency in a case may not, in that or a
factually related case, participate or advise in the decision, recom-
S.R, 1259
Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
 Approved For Release 2002/06/0: CIA-RDP77M00144R000800160003-7
.mended decision, or agency review pursuant to section. 557 of this
title, except as witness or counsel in public proceedings. This subsec-
tion does not apply-
[(A) in determining applications for initial licenses?
[ B) to proceedings involving the validity or application of
rates, facilities, or practices of public utilities or carriers; or
[(C) to the agency or a member or members of the body com-
prising the agency.]
(d) The employee who presides at the reception of evidence pur-
suant to section 556 of this title shall make the recommended decision
or initial decision required by section 557 of this title, unless he be-
comes unavailable to the agency, in which case such decision may be
made by an employee qualified to preside at hearings pursuant to sec-
tion 556 o f this title, or the entire record may be certified to the agency
for decision. This subsection does not apply-
(A) in determining applications for initial licenses;
B) to proceedings involving the validity or application of
rates, facilities, or practices of public utilities or carriers; or
(C) to the agency or a member or members of the body com-
prising the agency.
(e) The agency, with like effect as in the case of other orders, and
in its sound discretion, may issue, a declaratory order to terminate a
controversy or remove uncertainty.
556. Hearings; presiding employees; powers and duties; burden
of proof; evidence; record as basis of decision
(a) This section applies, according to the provisions thereof, to
hearings required by section 553 or 554 of this title to be conducted
in accordance with this section.
(b) There shall preside at the taking of evidence-
(1) the agency;
(2) one or more members of the body which comprises the
agency; or
(3) one or more hearing examiners appointed under section
3105 of this title.
This subchapter does not supersede the conduct of specified classes of
proceedings, in whole or in part, by or before boards or other em-
ployees specially provided for by or designated under statute. The
functions of presiding employees and of employees participating in
decisions in accordance with section 557 of this title shall be con-
ducted in an impartial manner. A presiding or participating employee
may at any time disqualify himself. On the filing in good faith of a
timely and sufficient affidavit of personal bias or other disqualification
of a presiding or participating employee, the agency shall determine
the matter as a part of the record and decision in the case.
(c) Subject to published rules of the agency and within its powers,
employees presiding at hearings may-
(1) administer oaths and affirmations;
(2) issue subpenas authorized by law;
(3)) rule on offers of proof and receive relevant evidence;
(4) take depositions or have depositions taken when the ends
of justice would be served;
S.R. 1259
Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
 Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7
8
(5) . regulate the course of. the hearing;
(6) hold conferences for the settlement or simplification of the
issues by consent of the parties;
(7) dispose of procedural requests or similar matters;
(8) make or recommend decisions in accordance with section
557 of this title; and
(9) take other action authorized by agency rule consistent with
this subchapter.
(d) Except as otherwise provided by statute, the proponent of a rule
or order has the burden ofpproof. Any oral or documentary evidence
may be received, but the agency as a matter of policy shall provide
for the exclusion of irrelevant, immaterial, or unduly repetitious evi-
dence. A sanction may not be imposed or rule or order issued, except
on consideration of the whole record or those parts thereof cited by a
party and supported by and in accordance with the reliable; probative,
and substantial evidence. A party is entitled to present his case or de-
fense by oral or documentary evidence, to submit rebuttal evidence,
and to conduct such cross-examination as may be required for a full
and true disclosure of the facts. In rulemaking or determining claims
for money or benefits or applications for initial licenses an agency
may, when a party will not be prejudiced thereby, adopt procedures
for the submission of all or part of the evidence in written form.
(e) The transcript of testimony and exhibits, together with all
papers and requests filed in the proceeding, constitutes the exclusive
record for decision in accordance with section 557 of this title and, on
payment of lawfully prescribed costs, shall be made available to the
parties. When an agency decision rests on official notice of a material
fact not appearing in the evidence in the record, a party is entitled,
on timely request, to 'an'opportunity to show the contrary.
(f) (1) Except to the extent required for the disposition of ex parte
matters as authorized by law, the employee who presides at the re-
ception of evidence may not-
(i) consult a person or party on a fact in issue, unless on notice
and opportunity for all parties to participate; or
(ii) be responsible to or subject to the supervision or direction
of an employee or agent engaged in the performance of investiga-
tive or litigating functions for an agency.
() An employee or agent engaged in the performance of i~vvesti-
gative or litigating functions for an agency in a case may not, in
that or a f actually related case, participate or advise in the decision,
recomnnended decision, or agency review pursuant to section 557 o f
this title, except as witness or counsel in public proceedings or as
authorized by section 557 (b) (1), except that in cases not subject to
section 551, (d) of this title, an employee shall not be deemed to have
engaged in the performance of investigative or litigating functions
solely by virtue of his general organizational or supervisory responsi-
bility for such functions.
(3) This subsection does not apply to the agency or any member
,of the body comprising the agency.
S.R. 1259
Approved For Release 2002/06/05 : CIA-RDP77M00144R000800160003-7