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As a means of correcting this situation, the Hoover Commission recommended that ** * * all administrative responsibility be vested in the chairman of the commission." In support of this recommendation, it was stated that

*** Administration by a plural executive is universally regarded as inefficient. This has proved true in connection with these commissions. Indeed, those cases where administration has been distinctly superior are cases where the administrative as distinguished from the regulatory duties have been vested in the chairman. There are many of these administrative duties. Their efficient handling will frequently make the difference between a com

mission's keeping abreast of its work or falling woefully behind. In further explanation of this recommendation, the Hoover Commission stated that it would be the chairman's responsibility

*** to deploy the work force most effectively in order to carry out the program developed by the commission as a whole. It would similarly be his responsibility to see that business is dispatched in an orderly manner.

*** This recommendation does not derogate from the statutory responsibilities placed upon other members of the commission. They remain exactly as they are, and because of the better functioning of the organization the commission members will be enabled to discharge these responsibilities more effectively.

One consequence of this recommendation will be to center responsibility for the functioning of the commission. The chairman will be the commission's principal spokesman before the Congress as well as before the executive

branch. It may be noted that although the Tariff Commission is not a regulatory agency, Chairman Hoover, in a footnote to the loover (ommission's report stated his belief that the concepts discussed above should apply as well to the Tariff Commission.

ORGANIZATION, PURPOSE AND ACTIVITIES OF THE U.S. TARIFF COMMISSION

Organization and purpose

The l’nited States Tariff Commission was created by the Act of September 8, 1916 (39) Stat. 7995). The Commission's present powers and duties are provided for primarily in the Tariff Act of Jue 17, 1930 (Title III, part I. 46 Stat, 696 ; 19 U.S.C. 1330 et seq.); the Antidumping Act, 1921, as amended; the Agriculture Adjustment Act, amended : the Trade Expansion Art of 1902, as amended; and the Automotive Products Trade Art of 186.).

The primary duty of the Commission is to investigate and report upon tariff and foreign trade matters, as required by statute. It makes such investigations and reports at the request of the President, either House of the Congress, the House Committee on W:lys and Means, or the Senate Committee on Finance. Investigations into the effects on domestic industries, firms or groups of workers, of increased imports resulting from trade agreements concessions may be initiated by intereted parties. The ('ommission also makes studies, surveys, or investigations on its own initiative. The Commission consists of six members, appointed by the President, subject to Senate confirmation, for terms of 6 years, one term expiring pach year. Vat more than three commissioners may be of the same political party. The President is authorized to designate the Chairman and Vice Chairman annually from the membership of the Commission. The Staff Coordinating Committee, composed of senior officers of the Commision's staff and chaired by the Director of Investigation, plans and supervises the substantive work of the Commission. The operating divisions of the staff consist of the office of the General Counsel; the office of the Director of Investigations: the Economics Division; and, under the direction of the Chief, Technical Services, seven commodity divisions, the Accounting Division, the Statistical Division, and an Invoice Analysis Section. The Office of the Secretary acts as the secretariat for the Commission. It is charged with the condut of relations with the public and other Government agencies, and issues, publications and notices. Personnel, budget activities and general administrative and anxiliary services are muer the Director of Admin

istration. Actirities

The Tariff Commission conducts a variety of public investigations which usually involve public notice, public hearing and a formal report. It also under

takes research activities and studies relating to commercial and customs polics. In general, the major portion of the Commissions' activities relate to public investigations with respect to (1) the Trade Agreements program; (2) dumping; (3) import interference with agricultural programs; (4) specific requests from the President or the Congress ; (5) tariff schedules and classification; (6) differences in costs of foreign and domestic production; and (7) unfair practices ili import trade.

ELI E. NOBLEMAN,

Professional Stati Member. Approved :

JAMES R. CALLOWAY,

Chief Clerk and Staff Director. Senator RIBICOFF. The first witness this mornring is Phillip S. Hughes, Deputy Director, Bureau of the Budget, accompanied by Howard Schnoor, Assistant Chief, Office of Management and Orgnization, Bureau of the Budget.

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STATEMENT OF PHILLIP S. HUGHES, DEPUTY DIRECTOR, BUREAU

OF THE BUDGET; ACCOMPANIED BY HOWARD SCHNOOR, ASSISTANT CHIEF, OFFICE OF MANAGEMENT AND ORGANIZATION

Mr. Hugues. Thank you, Mr. Chairman.

I would like to have with me Mr. Schnoor, Assistant Chief of Office of Management and Organization.

Senator RIBICOFF. Certainly.
You may proceed, sir.

Mr. HUGHES. We are here, Mr. Chairman and members of the subcommittee, in support of Reorganization Plan No. 2 of 1967, which the President transmitted to the Congress on March 9, 1967.

In his message of transmittal, the President stated: The plan is a step toward fulfilling my pledge to the American people that government must be reshaped to meet the tasks of today. It underscores mę conviction that progress can be achieved by building upon what is strong and enduring, but that we shall never hesitate to discard what is inefficient or outinoded. This plan has a single, clear objective-to strengthen the operations of the Tariff Commission by transferring to its Chairman certain routine executire aud adıninistrative functions now divided among its six Commissioners.

The principle which the reorganization plan applies to the Tarifi Commission was enunciated by the first Hoover Commission in its 1949 Report on Regulatory Commissions. In that report it stated:

Purely executve duties—those that can be performed far better by a single administrative official-have been imposed upon these commissions. ... The necessity for performing them has interfered with the performance of the strictly regulatory functions of the commissions.

It added:

There are many of these administrative duties. Their efficient handling frequently makes the difference between a commission's keeping abreast of its work or falling woefully behind.

The Hoover Commission concluded that all administrative responsibility should be vested in the chairman of a commission.

In the intervening years, every President has endorsed the Hoover Commission's recommendation and transmitted to the Congress one or more reorganization plans applying the principle to multiheaded agencies. Plans have become effective for most of the regulatory com; missions and for agencies such as the Civil Service Commission and the Federal Ilome Loan Bank Board.

Reorganization Plan No. 2 of 1967 applies the principle to the Tariff Commission. More specifically it transfers to the Chairman of the Commission the executive and administrative functions of:

Appointing, directing, and removing personnel;

Distributing business among, and communicating Commission policies to, the staff;

Overall management, functioning, and organization of the Commission;

Carrying out Commission functions under the Budget and i

Accounting Act; and

Allocating, using, and expending funds available to the Commission. Under the terms of the plan, the chairman will be governed by the general policies of the Commission in the performance of his functions. The plan does not disturb the substantive aspects of the Commission's work—the determination of policies, the formulation and issuance of rules and schedules, and the resolution of particular cases. All of these crucial functions remain vested in the Commission as a whole to be decided by a majority of the six Commissioners. Finally,

the Commission as a whole will retain the right to approve major staff of appointments, and each Commissioner will retain the responsibility

for the staff of his immediate office.

The division of labor, exemplified by this plan and the others which have become effective over the years has been demonstrated by experience to provide a sound basis for the efficient operation of a multiheaded agency. We believe it is particularly important for the Tariff Commission, which by law, must decide matters within strict time limits. As the Commission's workload has grown in recent years through additional assignments under the Trade Expansion Act of 1962 and the Automotive Products Trade Act of 1965, the need for relieving the Commission of its purely administrative workload has become increasing clear.

The plan will strengthen the Tariff Commission in two ways: administrative functions will be performed with dispatch; and the Commission, relieved of the mass of detail by day-to-day management (approving travel requests, for example), will be able to deal nore effectively with the substantive and policy matters before it. It will fix responsibility for executive action in a single individual accountable to the President and Congress and provide him with the necessary authority to match that responsibility, and it will provide for improved direction of staff work and i clear channel of communication to the staff.

In summary, we believe that Rorganization Plan No. 2 would result in more efficient and economical management of the Commission, thereby strengthening the Commission's overall capacity for effective performance of its functions. We urge that Congress allow the reorganization plan to become efiective.

Senator RIBICOFF. If there is no objection from Senator Baker, I think what we might do before asking questions is allow the four witnesses to testify. Then they can all sit together and we can ask questions of them all.

Senator BAKER. I think that will be fine. Senator RIBICOFF. Without objection, the next witness will be Mr. Paul Kaplowitz, Chairman of the Tariff Commission.

Mr. HUGHES. Would you like us to stay here, Mr. Chairman, for the moment?

Senator RIBICOFF. I think so, as you please.

STATEMENT OF PAUL KAPLOWITZ, CHAIRMAN, U.S. TARIFF

COMMISSION

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Mr. KAPLOWITZ. Mr. Chairman, Senator Baker, my colleagues and I wish to thank you for this opportunity to appear on this important #t matter. All members of the Commission are present except Vice Chairman Glenn W. Sutton, who is out of town.

I have been associated with the Tariff Commission in various ca. pacities for many years as an attorney, as General Counsel for 15 years, and as a Commissioner and Chairman since January 1966. Over this long period, I have had ample opportunity to observe the workings of the Commission in both the substantive and the administrative areas. At no time in my experience have the individual members of the Commission been as concerned with improving management as at present.

Much time, thought, and discussion have been devoted by the Commission to the means by which it can best carry out its management responsibilities.

Sometime before my appointment to the Commission, in cooperation with the Bureau of the Budget, the Commission arranged for a professional management survey of its entire operation by a management consulting firm. The following findings which were included in the consultant's report reflect the first hand impressions of outside management experts: 1

The Commission as a collective body is not well suited to routine administrative functions. Its collective actions sometimes slow and hamper day-to-day agency operations without contributing to the effectiveness of its managerial control. Further, they divert a portion of each Commissioner's valuable time and attention (as well as that of the Commission as a whole) from important substantive matters.

If I might interpolate at this point, departing from my prepared statement, Mr. Chairman, the report goes on to say that the Commission's "retention of many routine and time-consuming chores appears to be due to concern about loss of control and disagreement regarding the proper functions of individual Commissioners and the Commission as a whole.” Another of what are described as key conclusions is:

There is no single, clear authoritative source through which the Commission's management policy and general management decisions are issued. The Commission's lack of such a single authoritative source or spokesman, along with the absence of a basic policy in achieving unity in management policy and general management matters, is a major cause of the staff's uncertainty concerning what the Commission really wants.

I, as a former staff member, would like to emphasize that as being a fact from my own experience.

Another key conclusion in this report is:

The special sphere of responsibility and scope of authority of the Chairman is indefinite. The lack of definition has been a source of friction between most

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1 A Survey of Organization and Administration, U.S. Tariff Commission; prepared by C. W. Robinson & Co., Inc., New York, N.Y., November 1963.

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In: Chairmen and the Commissioners, and of confusion and misunderstanding be

tween them and the staff.

The management consultants proposed three alternatives for meeting the deficiencies they found present in the Commission's manageEment system. The first alternative suggested was a program along the

lines of that in Reorganization Plan No. 2 now before this committee. I am convinced that this plan represented the best approach to the solution of the problem in the minds of the consultants. However, in my view, they were prevented from recommending the adoption of this plan by a directive of the Commission which instructed them to make no proposals that would involve either legislative or presidential action.

I should point out that I was not a member of the Commission during this period, but my colleagues here present, Commissioners C'ulliton and Fenn, were. If you will permit me, Mr. Chairman, I would like to read for the record what the management consultants had to say about their first alternative plan.

One alternative is that of the so-called strong Chairman. Its essence is that a board or commission transfers its collective managerial responsibilies and authority to its Chairman. While it is usual for a "strong" Chairman to remain legally subject to the "general" policies of the board or commission, and for these bodies to retain certain limited residual rights, the key powers over employment, operations and expenditures are legally transferred to the Chairman.

This, in essence, is what plan No. 2 would do. The advantages achieved are numerous. Most are common to all alternatives which unify and concentrate chief executive authority in any chief executive office. They are:

1. It would clarify the sphere of responsibility and scope of authority of the Chairman's position as the Chief Executive Officer;

2. It would free the other Commissioners to devote their full energies and attention to nonadministrative matters ;

3. It would unite all elements of the general management responsibility in a single executive position, with clear and adequate authority to provide leadership to the Agency in management matters;

4. It would locate the focus of top management responsibility and the center of chief executive authority at the Commission level, where they would be subject to the general policies of the Commission; 5. It would establish a single, clear, authoritative source of Commission decisions and instructions ;

6. It would provide a single, clear channel of communication to the top management level.

And I think this is of great importance. 7. It would provide a basis on which the Chairman could delegate authority extensively within the Agency without risking impairment of coordination and control.

This No. 7, I might say, is a key element of plan No. 2, which authorizes the Chairman to delegate his authority. And in essence, what the plan is trying to do, as I see it, is not so much to make a strong Chairman or give him powers over the others, but to relegate these administrative functions to someone who could take care of them without having the Commission as a whole continually dealing with them. I would say that any Chairman that would get these powers under this plan would delegate a great deal of these authorities to the staff.

I might also say that we have developed in the last year since I came to the Commission a staff of experts. We have a very competent

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