Statement on Releasing a Report on Selected Independent Regulatory Agencies by the President's Advisory Council on Executive Organization.

TODAY, I am releasing an extensive study on the organization and structure of seven major independent regulatory commissions. Prepared by my Advisory Council on Executive Organization (the Ash Council ¹), the study contains far-reaching recommendations for change.

¹ Roy L. Ash was Chairman of the Council.

Of varying ages, the regulatory agencies were established for a variety of purposes.

Following the near collapse of the railroads after the Civil War, and the ensuing era of monopolistic and discriminatory practices, the Interstate Commerce Commission was established in 1887.

The desire to improve competitive markets and protect consumers and shareholders from fraudulent practices were the central goals of the Federal Trade Commission, created in 1914, and the Securities and Exchange Commission, created in 1934.

On the other hand, the development of Federal regulation of radio communication and the radio industry, culminating in the establishment of the Federal Communications Commission in 1934, was in response to an industry seeking regulation of the spectrum for its own protection.

However, there was a thread common to all--the effort of the Federal Government to protect the members of the consuming public against market abuses over which they had little or no control.

Since their establishment, all of these agencies have grown in haphazard fashion-and despite repeated criticism and calls for reform very little change has been undertaken beyond some modest internal reorganization.

As the agencies deal in areas of great sensitivity, in which major economic interests are affected and in which interrelationships exist between the Executive, the Congress, and the courts, the reluctance to reform can be readily explained.

The Ash Council found considerable merit in the following criticisms that some have leveled against the commissions:

1. That, lacking in direct accountability to anyone, their structures frozen into a cast set years ago, the commissions have at times been unresponsive to changing circumstances, and to new needs.

2. That they have at times failed to carry out their statutory responsibilities with either effectiveness or efficiency.

3. That the very constituency they were established to serve--the consuming public--is now the source of increasing and legitimate complaints.

4. That their collegial decision making is inefficient and permits avoidance of responsibility.

5. That the regulatory process has in some areas become so obscure and complex that it has effectively insulated vital issues of policy from public scrutiny and correction.

6. That the activities of the commissions are largely uncoordinated either with each other or with national policy goals.

However, it should be noted that the deficiencies of the independent agencies may not be entirely attributable to faulty organization and procedure.

The failure to review and reform outdated social and economic policies embedded in the regulatory fabric may also be partially responsible. In addition, the substantive goals of regulation often seem confused, unclear, or even contradictory. Regulation may have been extended to some fields in which market forces would better serve.

Too often, out of habit or inertia, governments maintain organization structures and agencies that are either no longer necessary, no longer relevant, or no longer truly responsive to the problems of the modern era.

The Ash Council's report persuades me that, despite the best efforts and intentions of the commissions' members, there is room for substantial improvement both in the way in which these organizations are structured, and in the way in which they carry out their functions.

At this point, I have made no final decisions on the merits of the Council's recommendations. But to stimulate a vigorous public discussion and to receive the benefit of the views of the agencies themselves, the regulated industries, the interested bar groups, consumer protection organizations, and others, I am releasing today this full report of the Advisory Council.

I have asked the Ash Council staff to solicit comments from the broadest possible range of groups and individuals concerned and affected, including consumer and user groups familiar with the industries involved.

I urge all concerned to respond with their comments or criticisms by no later than April 20 in order to help us restructure the regulatory process to make it realize the expectations of the American public. Following an evaluation of these views, I will recommend to the Congress, as may be appropriate, those reforms that appear desirable and in the public interest.