MAY 15, 1996

Mr. Chairman and Members of the Committee:

Good Morning. I thank the Committee for permitting me to substitute for our acting chairman, John E. Tull, Jr., who was previously scheduled to testify this morning before the Senate Agriculture Committee, one of the Commission's authorizing Committees. This Committee has requested the Commodity Futures Trading Commission ("Commission" or "CFTC") to testify on H.R. 3078, the "Federal Agency Anti-Lobbying Act." H.R. 3078 would establish a civil prohibition on the use of appropriated funds by federal agencies for lobbying purposes. The bill is designed to assure that these funds are not used to organize efforts to affect the outcome of Congressional action. Under the bill, virtually any communication by a federal agency intended to promote public support for, or opposition to, pending legislation would be prohibited.

There are exceptions to the prohibition in H.R. 3078. The President and the Vice President would be exempt from the bill's prohibition. In addition, the bill is not intended to prohibit federal employees from communicating with members of Congress or their staffs in order to request legislation or appropriations or to respond to a request for information or technical assistance made by members or their staff. Nor would the bill prohibit Presidential appointees confirmed by the Senate from communicating with the public on the views of the President for or against any pending legislation. However, these appointees would not be permitted to delegate to others, such as career civil servants, the authority to make communications to the public intended to influence legislation.

The bill also provides that, in exercising his authority to investigate the use of appropriated funds, the Comptroller General would be authorized to enlist the assistance of the Inspector General at the agency undergoing review. In addition, the Comptroller would report to Congress in one year on the implementation of the bill and annually to summarize the investigations he has undertaken with respect to the bill's prohibition.

Like many other federal agencies, the Commission has not promulgated its own separate anti-lobbying regulations but instead has looked to the guidelines prepared by the Department of Justice's Office of Legal Counsel on 18 U.S.C. 1913 ("Section 1913"), the criminal restriction on the use of public funds for lobbying, for guidance in this area. The Commission also understands that several appropriations acts passed by this and prior Congresses contain prohibitions on the use of appropriated funds for lobbying purposes which are similar to those imposed by Section 1913.

In view of the serious constitutional issues raised by the Department of Justice with respect to H.R. 3078, the Commission is unable to support passage of the bill. Moreover, H.R. 3078 also raises policy concerns for the Commission. As an independent agency led by a five-person, bipartisan commission, we believe that the exception found in subsection (b)(3) for Presidential appointees confirmed by the Senate is too narrow. This exception would only allow these appointees ". . . [to] communicat[e] with the American public, through radio, television, or other public communication media, on the views of the President for or against any pending legislative proposal."

The Commission believes that appointees should be allowed to express their views on legislative proposals within their area of responsibility using any form of communication media, and even where the President has not taken a position on a bill. It is particularly important for all members of bipartisan commissions across the Federal Government to be able to speak publicly about the important issues before their agencies. The narrow exception in H.R. 3078 would prohibit Presidential appointees serving on commissions who were not appointed by the current President, or who are asked to comment on issues for which the current President has not yet publicly announced a position, from commenting on matters within their own area of responsibility. This would hinder independent regulatory agencies like the Commission whose policies are developed by appointees from different political parties. Also, the many complex technical issues with which we deal, and which primarily affect our regulatees, may not routinely be the subject of Presidential pronouncements.

For example, several years ago, there were pending before the House and Senate differing versions of bills reauthorizing appropriations for the Commission and making substantive amendments to its organic statute, the Commodity Exchange Act. CFTC Commissioners should be free to use government resources to prepare a speech for delivery to an industry trade association expressing their views, or the agency's views, on the relative merits of differing bills of this type.

The Commission also has a concern with respect to the "intent" standard of the prohibition. Arguably, an employee who furnishes copies of an agency's otherwise permissible views on legislation to the public might fall within the prohibition. For example, it should not be deemed a violation if, pursuant to a Freedom of Information Act request or other form of request, an agency employee provides copies of a Chairman's testimony given at a Congressional hearing summarizing the agency's views on pending legislation.

Thank you for the opportunity to testify today. I would be pleased to answer any questions you may have.