Government: The Headless Branch

Though they are not provided for in the Constitution, they make important policy, execute it and sit as judges. There is hardly anyone in the U.S. who is not in some way affected by one or another of their acts. They fix the price of milk and electric power, decide where airlines can fly and pipelines snake, police the stock market and determine the content of a tube of lip stick. They are the nation’s 30 federal regulatory agencies — and their great powers over American life and business have become increasingly controversial. Senator Everett Dirksen calls them “the headless fourth branch of government.”

Last week a Senate judiciary sub-committee began intensive hearings aimed at revising drastically the way the regulatory agencies handle their work. Whatever the committee decides, its hearings are sure to add further to the argument over the federal agencies. The Senate is already considering creation of a permanent administrative body that would serve as a watchdog over the entire regulatory process. The Republican platform singles out “power-grabbing regulatory actions” as a campaign issue, and Lyndon Johnson has made it plain that he wants the agencies to concentrate on “more cooperation with, instead of more regulation of business.”

Tough Watchdog. The most influential, and consequently the most controversial, of Washington’s alphabet soup of agencies are the Big Seven independents—the Federal Trade Commission (FTC), Federal Power Commission (FPC), Federal Communications Commission (FCC), Interstate Commerce Commission (ICC), Securities and Exchange Commission (SEC), Civil Aeronautics Board (CAB) and the National Labor Relations Board (NLRB). In addition, the Food and Drug Administration must clear all prescription drugs and the Federal Aviation Agency, whose annual budget of $775 million is the largest of the agencies, sets safety standards and regulates the design and production of aircraft. The agencies spend about $1 billion and conduct 40,000 hearings annually.

By suggestion, threat or litigation, the agencies can shake and reshape industries. The SEC in particular has recently been a tough watchdog on Wall Street. FTC’s summary order to cigarette makers to put health warnings on packages and in their advertising has raised a storm that is headed for the courts. The ICC has so far held up the badly wanted merger of the Pennsylvania and New York Central railroads, and the CAB has turned thumbs down on the plans of American and Eastern airlines to merge.

Molasses-Slow. Starting with the ICC, established in 1887 to regulate railroads, the agencies were called into being to correct abuses that industries and institutions could not or would not correct themselves. But as the agencies have grown in number and power, they have also grown their own faults. Molasses-slow bureaucracy is the chief of them: it can take three years to settle an ICC case, five years for the FPC to act on a gas pipeline rate change and 70 days for the SEC to process a new stock issue. One FTC case cost a company $285,000, and by the time it was finally settled—after six years of delay—the company had gone out of business.

Inevitably, the regulators are targets of aggressive lobbying, and occasionally they get involved in a scandal with a Bobby Baker or a Sherman Adams. One of their traditional weaknesses is that many appointees come with little firsthand knowledge of the fields they will regulate. The men who regulate million-dollar industries are not highly paid—commission chairmen get up to $21,500 and powerful examiners get about $13,000.

A rundown of the men who head the Big Seven:

> CAB’s Alan S. Boyd is a lawyer and former Florida utilities commissioner whose tough efficiency has made him the Government’s indisputable “Mr. Aviation.” He has turned the CAB into one of the best-run agencies.

> SEC’s Manuel Cohen, a Brooklyn-born career lawyer for the commission, was recently appointed successor to William L. Cary. But no change is expected in the 1,500-man agency’s vigorous policing of the stock market.

>FPC’s Joseph Swidler, a former New Dealer and TVA general counsel, preaches the advantages of a dual system of public and private utilities. Since 1961, he has helped clear up the overwhelming backlog of 4,000 rate cases, expanded the 1,200-man agency’s enforcement authority.

> FCC’s E. William Henry is a Memphis lawyer who succeeded Newton Minow, and echoes his “wasteland” criticism of TV, is still feeling his way.

> FTC’s Paul Rand Dixon, another Tennessee lawyer and former antitrust investigator for Senator Estes Kefauver, has become a noisy but erratic defender of the little consumer.

> ICC’s Abe Goff, an Idaho Republican and former Congressman, holds the chairmanship this year under the commission’s annual rotation system. In the unwieldy 2,500-man agency, the turnover of cases is much less rapid: a decision in the Pennsylvania-New York Central merger is not expected until well into 1965.

> NLRB’s Frank McCulloch is a strong-minded Illinois Democrat, under whom the board has rarely risen above routine in handling the massive paper work of some 22,000 cases a year involving complaints of unfair labor practice and union jurisdictional disputes.

Once a month the chairmen of the regulatory agencies get together at an informal meeting, which they pointedly call “The Tightrope Club.” Congress seems to feel that the men in the Tightrope Club could stand a little more regulation themselves, and the current Senate hearings open a drive for the first major overhaul of the agencies in 18 years.