The legal status of the ICESA and the basis for its relationship with DOL are unclear. The ICESA was set up in 1937 as a result of informal discussions between the state agencies and the Social Security Bureau. It was and continues to be -- funded out of the payroll tax trust fund, although it has never been authorized by Congress and, until 1970, never had a constitution or bylaws. We question whether its operations violate 31 U.S.c. 8696, which states that: "No part of any appropriation or fund ..shall be alloted to. .any agency or instrumentality .if the Congress has not appropriated any money specifically for such agency or instrumentality or specifically authorized the expenditure of funds by it." A draft constitution has been prepared, which is presently under review by the Manpower Administration. The stated primary purpose of the ICESA is to represent the needs and interests of the state agencies in their "partnership" with the federal government and, in turn, to keep the states informed on developments in Washington.

Despite its Labor Department funding, the ICESA is included in Departmental deliberations on new policies that affect the employment service, as chief spokesman for "outside" interests. The group is viewed as the USTES' public constituency; in many ways, it plays the same role as the American Hospital Association plays vis-a-vis HEW in the drafting of regulations pertaining to hospitals, that the American Bankers Association plays in regard to the Congressional committees responsible for regulating banking, or that a trade association plays before the FTC. But, the ICESA role is even more significant than that of the other powerful lobbies because there are virtually no other organized constituent groups informed about the employment service. There has been no "consumer movement" seeking to hold the feet of the federal manpower tsars to the fire.

Basic changes in the administration and operation of the ES (and related programs) such as the decision to make the ES the key delivery system for all manpower programs., the decision to continue serving the job-ready, the transfer of many of the functions formerly performed by OEO agencies to the ES, and other crucial policies are not hammered out in an open forum where members of the public or recipients of manpower services can participate, but in ex parte discussions between Manpower Administration and ICESA officials.

The ICESA began as a communications device, a mechanism for sharing information. Since then, it has evolved into a formal structure to advance the interests of the state ES

administrators.

76-736 72 - pt. 2 - 14

"The power and influence of the Interstate
Conference is not limited to major issues
of legislation or policy determination.
Often the Conference intervenes in minor
administrative matters as well. The de-
gree of its involvement in day-to-day
operations of manpower affairs is limited
only by the willingness of federal offi-
cials to recognize and call a halt to the
pervasive insinuation of the Conference
into routine administrative matters. .
as presently constituted, it is not just
a channel. It is also a quasi-legislative
body, assuming to itself authority over
matters which are in the Federal adminis-
trative jurisdiction." (Ruttenberg &
Gutchess, The Federal-State Employment
Service, p. 56).

The main policy goal of the ICESA has been to retain as much power as possible in the hands of the states, without diluting the flow of federal manpower funds. It has been a staunch supporter of the universal service concept, resisting federal efforts to direct ES resources primarily towards the disadvantaged. In addition, it has directly and indirectly insisted that the ES must meet the needs of employers at least as much as it tries to help job seekers, stating as one of its prime objectives "the provision of efficient and adequate service to private and public employers to assure their confidence, cooperation and support." (1970 draft Constitution). These underlying premises have, in the past few years, placed the Conference in direct opposition to many of the DOL and OEO efforts to meet the nation's massive problem of unemployment and underemployment; it explains, in part, why much of the fine-sounding rhetoric of the Manpower Administration has not penetrated far outside of Washington.

-

The lobbying activities of the Conference supported by federal dollars and frequently in direct opposition to administration policy raise important legal questions. Such lobbying, by what appear to be representatives of the Labor Department, is misleading to members of the Congress and to the public, in violation of the underlying goals of the Federal Lobbying Act. That Act requires all lobbying groups to register, indicating their purpose and source of support, in order to identify the pressure groups interested in legislation so that lawmakers can more accurately evaluate their suggestions, and can be alert to the biases of their hired representatives. The Supreme Court has interpreted the underlying purposes of the Act in words that highlight the problem posed by the ICESA:

"Present-day legislative complexities are such
that individual members of Congress cannot be
expected to explore the myriad pressures to
which they are regularly subjected. Yet, full
realization of the American ideal of government
by elected representatives depends to no small
extent on their ability to properly evaluate
such pressures. Otherwise, the voice of the
people may all too easily be drowned out by the
voice of special interest groups seeking fa-
vored treatment while masquerading as propo-
nents of the public weal. This is the evil
which the Lobbying Act was designed to help
prevent." (U.S. v. Harriss (1954), 74 S.
Ct. 808, at 816)

Ostensibly, the ICESA is a federally funded agency set up to improve communications between the DOL and the state ES agencies; in actuality, it is a vested interest group that often works to defeat Labor Department goals for reforming the ES.

A restructuring of the role of the ICESA is long overdue. Its functions must be defined and clearly articulated to the Congress and the public. If it is to continue to receive federal funding, it should not be permitted to play a lobbying role; if it is to remain a division of the Manpower Administration,it should not be regarded as the primary "outside group" consulted on manpower policy. The soundest approach would be to recognize the group for what it is -representative of the vested interests in the state ES bureaucracies -- and to separate it physically and fiscally from the Department of Labor.

Fortunately, an opportunity to do just this is presently available: the approval of the ICESA Constitution now pending before the Manpower Administration should be used as a vehicle for achieving the separation of the ICESA and its establishment as an independent entity.

1/ Prior to 1964, a number of state employment serviees openly maintained segregated offices.

2/ Title VI of the Civil Rights Act of 1964 forbids Federal agencies from giving any financial support to programs that are operated in a discriminatory manner and Title VII specifically includes the USTES system in its prohibition of discrimination by employment agencies, in referrals and

otherwise.

3/

This was the explanation offered at the hearings before Sen. Nelson's subcommittee by officials of the ICESA, see p. 1286, and by the defendant in Johnson v. Louisiana State Employment Service, 301 F. Supp. 675, 677 (W.D. La. 1968)

4/ In United States v. Frazer, 317 F. Supp. 1079 (M.D. Āla. 1970), Judge Johnson found the Alabama ES and five other state agencies receiving federal funds were discriminating racially in hiring and working conditions. He found that the Alabama Civil Service rules permitted employment decisions on the basis of race, in direct violation of the Federal Merit Standards, 45 C.F.R. § 70.4, and ordered an end to the discrimination.

5/ "Equal Opportunity in State Agency Staffing," August, 1967, discussed in Jobs & Civil Rights, a 1969 study conducted by Richard M. Nathan of the Brookings Institution for the United States Commission on Civil Rights.

6/ The Texas ES also suffered from an underrepresentation of Mexican-Americans. Despite the fact that they comprised 15% of the state's population, they constituted only 8.8% of ES employees, and were mainly in menial jobs.

8/

Johnson v. La. State Employment Service, (W.D.La. 1968) 301 R. Supp. 675. (See note 89, Supra).

9/ The Department of Labor is in the process of developing procedures for insuring that paraprofessionals are included within the agency career ladder. These have not yet been implemented.

10/ Title VII of the Civil Rights Act of 1964 declares: "It shall be an unlawful employment practice for an employment agency [defined in the Act to include the ES] to fail or refuse to refer for employment, or otherwise to discriminate against, any individual because of his race, color, religion, sex, or national origin. . . . ."§ 703(b).

11/ The Labor Department Regulations, promulgated under Title VI of the Civil Rights Act of 1964, elaborate on the premise that: "[t]he registration, counseling, testing, recruitment, selection and referral of individuals for job openings or training opportunities and all other activities performed by or through employment service offices financed in whole or in part from Federal funds . . . shall be conducted without regard to race, color or national origin." 29 CFR 31.4 (a).

12/ Statement of Arthur A. Chapin, director of the unit, at the House hearings on the Labor Department appropriations for FY 1968, cited and quoted in Jobs and Civil Rights, p. 162.

13/ Morris v. Jefferson County Committee for Economic Opportunity, N.D. Ala., CA 70-197.

14/ U.S. v. Dudley, S.D. Ohio, CA 68-391

15/

Johnson v. Louisiana State Employment Service, supra, n. 87, at 667.

16/ Jobs & Civil Rights, p. 163.

17/ And see Johnson v. Louisiana State ES, supra.