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This file contains material relating to the Domestic Council Review Group on Regulatory Reform and President Ford's meetings with regulatory commissioners.
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Regulatory Reform (8)
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16988387
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Regulatory Reform (8)
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This file contains material relating to the Domestic Council Review Group on Regulatory Reform and President Ford's meetings with regulatory commissioners.
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James M. Cannon Files (Ford Administration)
James Cannon's Issues Files
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Aeronautics, Commercial
Antitrust law
Government regulation
Independent regulatory commissions
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1976
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1975-06-01
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1975
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The original documents are located in Box 29, folder "Regulatory Reform (8)" of the James
M. Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
ASSISTANT ATTORNEY GENERAL
ANTITRUST DIVISION
Department of Justice
Mashington, D.C. 20530
November 26, 1975
MEMORANDUM FOR: CALVIN COLLIER
PAUL MacAVOY
MICHAEL MOSKOW
ROGER B. PORTER
DAVID HARTQUIST
PAUL LEACH
FROM:
TEK
THOMAS E. KAUPER
ASSISTANT ATTORNEY GENERAL
ANTITRUST DIVISION
SUBJECT:
ANTITRUST IMMUNITIES TASK GROUP --
ROUND TABLE MEETINGS ON INSURANCE
Attached is a schedule of the meetings on insurance
to be held during the week of December 1st, in the Andretta
Conference Room, Department of Justice, which is located on
10th Street at Constitution Avenue, N.W. The schedule indicates
the list of invitees for each of the meetings. Also enclosed
is a copy of the letter mailed to the invitees and an attach-
ment indicating the issues to be discussed at the meeting.
GERALD LIBRATY GERALDR. FORD
REVOLUTICA
/
:
Digitized from Box 29 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
SCHEDULE OF ROUND TABLE MEETINGS
Monday, December 1, 1975 - 1:00 p.m.
The state regulators invited to this meeting are
as follows:
Mr. James J. Sheeran
Commissioner of Insurance
Mr. Phil Stern, accompanying
State of New Jersey
Mr. Sheeran
Mr. Wesley J. Kinder
Commissioner of Insurance
Mr. Mark Kai-Kee, accompanying
State of California
Mr. Kinder
Mr. James M. Stone
Commissioner of Insurance
State of Massachusetts
Mr. John G. Day
Commissioner of Insurance
State Corporation Commission
Commonwealth of Virginia
Robert E. Dineen, Esquire
Consultant
Mr. Jon Hanson, accompanying
National Association of
Mr. Dineen
Insurance Commissioners
Milwaukee, Wisconsin
Mr. Ark Monroe, III
Commissioner of Insurance
State of Arkansas
Mr. William H. Huff, III
Commissioner of Insurance
State of Iowa
Mr. Dick L. Rottman
Commissioner
State of Nevada
Mr. Robert B. Wilcox
Director of Insurance
State of Illinois
FORD
LIBRARY
Tuesday, December 2, 1975 - 1:00 p.m.
Representatives of mutual insurance companies
invited to attend this meeting are as follows:
Mr. Donald P. McHugh
Vice President & General Counsel
Pro
State Farm Insurance Companies
Mr. John K. Dane
Vice President & Counsel
Liberty Mutual Ins. Co.
Mr. William McCrae "BiLL"
Senior Vice President - General Counsel
United Services Automobile Association
of San Antonio
Mr. Roland J. Wendorff
Vice President - General
Counsel and Secretary
Employers Insurance of Wausau
Mr. Edmund J. O'Brien
General Counsel
Kemper Insurance Companies
Mr. Dean W. Mitchell "MITCH"
Executive Vice President
Farm Bureau Insurance Companies
Mr. Lorne Worthington
Vice President
Preferred Risk Insurance Companies
Mr. George Reall
President
National Council on Compensation
Insurance
Mr. Samuel C. Cantor
Senior Vice President
Mutual Life Ins. Co. of New York
Mr.
Gorman
2
Mr.
Massonpierre
FORD LIBRARY
Mr.
Mertz
Mr. Manuel Gorman
Vice President & General Counsel
American Life Insurance Association
Mr. A. D. Sappington
President
MF A Insurance Companies
Mr. Arthur C. Mertz
Executive Vice President
National Association of Independent
Insurers
Mr. Andre Maisonpierre
Vice President
American Mutual Insurance Association
Wednesday, December 3, 1975 - 1:00 p.m.
Representatives of stock insurance companies invited
to attend this meeting are as follows:
Mr. Newell G. Alford, Jr.
Senior Vice President - General Counsel
Chubb & Sons, Inc.
Mr. William O. Bailey
Executive Vice President
Aetna Life & Casualty
Mr. B. P. Russell
Chairman of the Board
Crum & Forster Ins. Cos.
Mr. Donald Schaffer
Vice President - Secretary and
General Counsel
Allstate Insurance Co.
Mr. Edmund Rondepierre
Vice President
INA Corporation
Mr. John Carton
Vice Chairman of the Board of
PHF Insurance Co.
FORD
Chairman of the Boards of Wolverine
and Riverside Insurance Cos.
LIBRARY
3
Mr. Frank Barrett
Executive Vice President and
Chief Counsel
Mutual of Omaha and Its Affiliates
Mr. Y. Lawrence Jones
President
American Insurance Assoc.
Mr. J. Maurice Miller
Senior Vice President
Lie Insurance Co. of Virginia
Mr. Daniel J. McNamara
President
Inurance Services Office
Mr. Leslie P. Hemry
President
Health Insurance Assoc. of America
Mr. James M. Tulloch
President
Dairyland Insurance Company
Thursday, December 4, 1975 - 1:00 p.m.
Representatives of the insurance agents associations
invited to attend this meeting are as follows:
Mr. Jay Wanamaker
President
National Association of
Insurance Agents
Mr. Bruce T. Wallace
Executive Vice President
National Association of
Casualty & Surety Agencs
Mr. R. L. Remington
Executive Director
National Association of Insurance Brokers
Mr. Ralph J. Marlatt
Vice President
Government Affairs
National Association of Mutual
FORD of LIBRARY
Insurance Agents
4
Mr. Tom C. Johnson
Executive Vice President
Florida Association of Insurance Agents
Friday, December 5, 1975 - 9:00 a.m.
Representatives of state legislatures, consumer groups
and the academic communities invited to attend this meeting
are as follows (list incomplete) :
Mr. Thomas A. Harnett
Superintendent of Insurance
Mr. Stanley Dorf, accompanying
State of New York
Mr. Harnett
State Senator Walter Briston
State of South Carolina
State Senator Daniel J. Foley
State of Massachusetts
State Representative Bernard Epton
State of Illinois
Dr. Paul L. Joskow
Associate Professor
Department of Economics
Massachusetts Institute of Technology
Dr. Willimam H. Wandel
Director, Ohio Retirement
Study Commission
Mr. Spencer Kimball
American Bar Foundation
Mr. Michael Gildea
Assistant to the Director
Legislative Department
AFL - CIO
Mr. Howard R. Wilde
Commissioner
Department of Insurance
State of Wisconsin
Mr. Herbert Denenberg
FORD LIBRARY
Dear [
]
As you may be aware, the President has established
a Task Group on Antitrust Immunities as part of the
Administration's overall regulatory reform effort. The
Task Group is charged with analyzing existing exemptions
and immunities from federal antitrust laws and making
recommendations as to their modification, if appropriate.
In this connection, we have under consideration the
extensive antitrust exemption conferred upon the insurance
industry by the McCarran-Ferguson Act, and its effect on
meaningful price competition.
As Chairman of the Task Group, I extend to you an
invitation to meet with us, in order to discuss certain
specific issues which we have identified in the attachment
to this letter.
The meeting will be held [Monday, December 1, 1975,
at 1:00 p.m. ] in the Andretta Conference Room, Department
of Justice, which is located on 10th Street at Constitution
Avenue, N.W., Washington, D. C. We would also appreciate
your written comments on these specific issues. It would
be very useful if you could bring such comments with you,
but if this is not possible, we would very much like to
have them before the holiday season.
In view of our very limited seating accommodations, I
would appreciate your informing us as to whether or not you
will be able to attend the meeting. Please confirm by
calling Mrs. Dorsey or Mrs: Hill at (202) 739-2512.
I look forward to meeting you at our round-table
session.
Sincerely yours,
THOMAS E. KAUPER
Assistant Attorney General
Antitrust Division
FORD LISNARY
ATTACHMENT
ISSUES FOR DISCUSSION
AT THE
ROUND-TABLE MEETINGS
ON INSURANCE
The study of the Presidential Task Group on Antitrust
Immunities has raised a number of questions concerning the
effectiveness of state insurance regulation in achieving
reasonable prices, maximum efficiency," and innovation in the
sale and distribution of property-liability ("P-L") insurance.
These goals are relevant to both state regulation of insurance
and federal antitrust policy:
In particular, the Task Group is concerned that the
insurance rates may not be closely related to costs, that
insurers are unnecessarily restricted in their ability to
market their services, and that, as a consequence, the public
is being denied the benefits of an efficient system for the
sale and distribution of P-L insurance. The fundamental issue
before the Task Group is whether unrestricted price competition
enforced through the application of the federal antitrust laws
is, at this time, a necessary and appropriate alternative to
conflicting state regulation.
FORD & 07V839 LIBRARY
In this connection, we raise the following questions for
your consideration:
(1) Has rate regulation generally produced a price
structure reasonably related to costs, including a fair return
on capital?
(2) Is there a significant difference between the
extent of independent pricing by P-L insurers in "open
competition" and "prior approval" states?
(3) Are the rates for life insurance and health insurance
regulated by the states? If not, has competition provided
effective controls over the price for such services?
(4) Can competitive forces in the sale of P-L insurance
serve as an effective substitute for rate regulation in pre-
venting (a) excessive rates, (b) inadequate rates, or (c)
unfairly discriminatory rates?
(5) Identify and explain the specific lines of P-L
insurance or conditions, if any, where price competition
may not provide effective controls.
(6) Do the assigned risk and FAIR plans, or workman's
compensation, require special consideration with respect to
state controls in a fully competitive rate environment?
2
april
STATE R FORD CIBRENT
(7) Has rate regulation adversely affected the availability
of P-L insurance, i.e., the ability of nonpreferred risks to
obtain adequate insurance protection through standard channels
at prevailing market rates, or at rates they can afford?
Would a fully competitive rate structure significantly affect
the availability of insurance?
(8) Would any necessary pooling of loss experience in
P-L insurance (or, perhaps, mortality experience in life
insurance and morbidity experience in health insurance)
require a special exemption if the federal antitrust laws
were to be fully applicable to rate making?
(9) Would full application of the federal antitrust
laws to the pricing of insurance services have adverse effects
on the ability of the industry to pool large risks?
(10) What is the justification, if any, for the perpetu-
ation of various state restrictions on collective merchandising
(e.g., "fictitious group" statutes, "guide line" legislation) ?
(11) Has the relatively unrestricted collective
merchandising of life and health insurance generally resulted
in benefits to the consuming public?
(12) What are the impediments in the P-L field to an
agency company converting its method of marketing, in part,
to direct writing? What are the impediments to a direct
GEORGE FORD LIBRAR
3
writer relying, in part, on independent agents to market
their insurance?
(13) What is the justification, if any, for the
perpetuation of state antirebate laws with respect to agents'
commissions in a competitive rate environment?
(14) What is the relevance of investment income in the
determination of rates by insurers?
(15) Would the application of the federal antitrust
laws to the determination of rates affect regulation or the
operations of life or health insurers?
(16) What bearing, if any, do state no-fault laws have
on the effectiveness of price competition in controlling
rates?
FORM LIBRARY 19
THE WHITE HOUSE
WASHINGTON
December 19, 1975
Dear Mr. Chairman:
At my hearing before your Committee on October 22, 1975, we
discussed Executive Branch reporting and paperwork require-
ments. I am submitting the following information and
selected examples for your consideration.
As you may know, in March of this year, G.A.O.'s Office of
Program Analysis began a survey of recurring reports which
the Executive Branch must transmit to Congress. Although
this information has not yet been correlated, executive
agencies have already identified more than 1,200 recurring
reports per year, and G.A.O. estimates that the final total
will exceed 1, 700. The reports range from 1 to 600 pages;
five legal size filing drawers are required to hold one
copy of each report filed in FY 1975.
The President must submit 124 reports to Congress each year
in addition to the 118 reports which are prepared by
Departments for presidential signature and transmitted by
him to Congress.
There are a number of reports now required by law to be
filed by the Executive Branch which might be eliminated with
no loss of information to Congress or the general public.
A few examples follow.
The Department of Health, Education, and Welfare has one of
the heaviest reporting burdens in the Executive Branch, and
also imposes heavy reporting burdens on the public. For
example, in FY 1975, HEW received 180.4 million responses
from the general public on forms required to be filled out
by the Federal Government. This corresponds to 43.6 million
person hours, or 21, 702 person years required for filling
out governmental forms. Approximately 66% of this burden
is attributable to the Social Security system's 28 million
beneficiaries, and to hospital insurance claims.
is
FORD
-2-
HEW is also required to submit approximately 102 annual
reports to Congress including:
1. The Report to Congress on the National Advisory
Council on Health Research Facilities, (PHS Act,
Sec. 710). Congress has not funded any activities
since FY 1969 under this Act, the Advisory Council
has not met since 1970, and the information trans-
mitted in the Report could be shared in an appro-
priations hearing.
2. The Annual Report on the Administration of the
Radiation Control for Health and Safety Act of
1968. In the 1975 Report the Department made the
following recommendation:
"All of the information in the Report is available
to Congress on a more immediate basis through
Congressional Committees, Over-Sight and Budget
Hearings. The Department and FDA have concluded
that this Report serves little useful purpose and
diverts Agency resources from more productive
activities.
"
3. The Annual Report on the Administration of Sections
304-307 of the PHS Act. Most of the information
from this report is also found in Congressional
budget justifications, and pamphlets published by
the National Center for Health Services Research
and the National Center for Health Statistics.
4. NIH is required to submit 20 reports, 10 of which
are annual. According to HEW recommendations now
undergoing OMB review: "Two of the ten, the Annual
Report of the National Heart and Lung Advisory
Council and the Annual Report of the National
Cancer Advisory Board (Appendix, page 11, No. 5
and 7), should continue as separate reports. How-
ever, the remaining eight could be covered in the
annual report of all of the Institutes, the NIH
Almanac. The eight reports are:
Number
Title
1
Report of the International Health
Research Act of 1960
2
Sickle Cell Anemia Report
FORD
LIBRARY
-3-
Number
Title
3
Cooley's Anemia Report
4
Annual Report of the Director of the
National Heart and Lung Institute
6
Annual Report of the Director of the
National Cancer Institute
14
Report on the Activities of Diabetes
Research and Training Centers
15
Annual Report on Arthritis
18
Annual Report on Activities of
Comprehensive Arthritis Centers."
Three report requirements of the Department of Housing and
Urban Development might be eliminated.
1. No report has ever been prepared for the Status of
Demonstration Projects Concerning Housing Abandonment,
84 Stat 1788, because Section 505 (f) has never been
implemented.
2. The Solar Energy Research and Demonstration Report,
PL 91-609, Section 506 (e) seems no longer necessary:
Enactment of PL 93-409 means that no projects will
be undertaken under 506 (e).
3. ERDA's creation and reporting requirements may
eliminate the need for the Federal Activities Under
the Solar Heating and Cooling Demonstration Act of
1974, PL 93-409, Section 12 (c).
Two reports required by Congress which GSA feels it does not
need and which it has found no evidence of use by Congress are:
The Report on Violations by Federal Agencies of the Federal
Records Act of 1950, and the Report on Services Provided to
State and Local Governments. Two reports on GSA procurement
duplicate each other -- Procurement by Civilian Executive
Agencies, and Report of GSA Procurement.
The Department of Transportation has recommended the following
reports for discontinuance:
1. On approved projects re urban area traffic operations
improvement programs (TOPICS)
2. On management improvements and review of positions
vacated; required by Government Employees Salary
Reform Act of 1964. (Semiannual)
FORD & 078849 LIBRARY
-4-
3.
On findings re performance of Federal-aid highway con-
struction work that a method other than competitive-bid
contract is in the public interest (Semiannual)
4. On effectiveness of anti-hijacking measures and recommend-
ations (Semiannual)
5. Joint report by Secretaries of DOT and HUD on how Federal
activity can assure that urban transportation systems
best serve national transportation needs and urban
development
6. On use of USCG housing authority
7. On activities under the High Speed Ground Transportation
8. On nonappropriated Fund Facility Construction
9. SLS Annual Report
10. On implementation of National Transportation Policy
11. On management improvements and review of positions vacated;
required by Government Employees Salary Reform Act of 1964
(Semiannual)
12. On DOT personnel ("Whitten Amendment" review report)
13. On location of new offices and other facilities (to Dept.
Agri.)
14. On effectiveness of anti-hijacking measures and recommenda-
tions. (Semiannual)
15. On extent to which Ready Reserve units and individuals have
met training and mobilization readiness requirements in
the FY
16. . On disposal of foreign excess property; required by Federal
Property and Administration Services Act of 1949 (Sec. 404)
17. On status of the FHWA Equal Employment Opportunity Program,
its effectiveness, and progress made by the States and the
FHWA in carrying out Section 22 of the 1968 Highway Act
18. On military incentive awards programs
FORD
-5-
The Department of Defense considers the following reports
superfluous, too costly to prepare, or unused by Congress:
1. Report on Minor Construction
2. DOD Cataloging Standardization Program
3. DOD Consolidated Certification
4. Waiver of Requirement for Inclusion of the Examination
of Records by Compt. Gen. Clause
5. Military Manpower Training Report
6. Annual Report of the Secretary of Defense on Reserve Forces
7. Independent Research and Development and Bid and Proposal
Negotiations and Results
8. The Federal Voting Assistance Program (Number) Report
9. Medical and Dental Continuation Pay Program Report to the
Congress
10. Separations from United States Service Academics
1 July 19-- - 30 June 19--
11. Section 603 (d) Report, Annual Military Construction
Authorization Act
Among the annual reports required to be filed by the Department
of Labor is the Annual Report of Labor Statistics in the
Territory of Hawaii, 29 U.S.C., Sec. 7. Hawaii, of course, has
been a state since August 21, 1959, and all data for this report
is also included in other Labor Department reports for the 50
states.
The National Science Foundation is required to prepare for
Presidential review, signature and transmittal the Annual
Federal Ocean Program Report, pursuant to PL 94-90, Sec. 3.
This reporting requirement is the only remaining operative
portion of PL 94-90. NSF officials feel there is no need for
Presidential oversight of this report.
The National Endowment for the Arts and the National Endowment
for the Humanities are bound by the statutes to issue separate
reports. It has been claimed that it would be difficult to
FORD
-6-
combine these two reports because the two agencies are located
at opposite ends of town. However, some accommodation might
be worked out because GPO does the printing for both.
As you know, some lessening of Executive Level paperwork has
already begun. By the end of 1975, the Environmental Protection
Agency will have discontinued 33 public use repetitive type
reports. Moreover, the Commission on Federal Paperwork has
recommended that detailed quarterly wage reporting under IRS
Form 941 (numbers 4,5,6, and 7) be reduced to once a year.
The Secretary of Treasury and the Secretary of Health, Education,
and Welfare estimate that this will eliminate 24 million pages
of wage data annually, and save approximately $250 million to
business and $20 million to Government. NASA issues about
2,000 on-going management reports a year, 400 of which are
controlled and inspected by NASA headquarters. Although NASA
feels that none of the 400 controlled reports could be reduced,
they are trying to reduce the 1,600 reports from the field and
expect 5 to 10 percent reduction by the end of next year.
The Domestic Council has recently concluded a series of six
regional Public Forums, chaired by the Vice President, and
designed to obtain information and ideas from State and local
officials and from the public at large on national problems.
A strong and recurring theme at every Forum was the paperwork
mountain and the red tape jungle in Washington. As Governor
Dan Evans of Washington put it on Tuesday, December 9, in
Los Angeles: "If we have one message for the Federal Govern-
ment today, it's 'Get off our backs, and let us do our job. "
You are to be commended for your efforts to reduce the Federal
paperwork burden. The reporting examples I have listed may be
of some help in those efforts. As additional examples come to
my attention, I will forward them to you. If I can be of
further assistance in this regard, please feel free to call
upon me.
Sincerely,
James M. Cannon
Assistant to the President
for Domestic Affairs
The Honorable Tom Steed
House of Representatives
Washington, D.C. 20515
#
THE WHITE HOUSE
INFORMATION
WASHINGTON
December 24, 1975
MEMORANDUM FOR THE PRESIDENT
THROUGH:
JIM CANNON
FROM:
EDWARD SCHMULTS
PAUL MacAVOYPane
man any
SUBJECT:
Current Regulatory Reform Efforts and Future
Initiatives of the Domestic Council Review Group
The Domestic Council Review Group on regulatory reform would like to
meet with you to discuss our current progress. We need your personal
views and guidance on our future efforts and would like to establish
a better sense of your priorities in order to direct our limited
resources to those areas that you want to pursue in the second year
of regulatory reform. To continue the group's enthusiasm, we would
suggest inviting a few members of the DCRG to participate in the
meeting.
INITIAL PROGRAM
In your October 8, 1974 address to the Congress, you began the reform
of government regulations by announcing a four-point program. First,
you assigned the Council on Wage and Price Stability a watchdog
role over inflationary costs of government actions and they continue
in this role. Your second proposal was for a National Commission
on Regulatory Reform to examine the independent regulatory agencies.
Although this proposal was not acted upon, Congress has recognized
the need for such a review and several committees in the House and
Senate have major studies underway. The third proposal required
agencies to prepare inflation impact statements on all major proposals
and this effort has been implemented. Finally you encouraged State
and local governments to review their own regulations and some interest
has been expressed by State and local organizations in pursuing these
issues.
CURRENT INITIATIVES
Since our initial efforts, two legislative proposals have been
LIBRAR
THE WHITE HOUSE
WASHINGTON
December 24, 1975
MEMORANDUM FOR THE PRESIDENT
THROUGH:
JIM CANNON
FROM:
EDWARD SCHMULTS
PAUL MacAVOY
SUBJECT:
Current Regulatory Reform Efforts and Future
Initiatives of the Domestic Council Review Group
The Domestic Council Review Group on regulatory reform would like to
meet with you to discuss our current progress. We need your personal
views and guidance on our future efforts and would like to establish
a better sense of your priorities in order to direct our limited
resources to those areas that you want to pursue in the second year
of regulatory reform. To continue the group's enthusiasm, we would
suggest inviting a few members of the DCRG to participate in the
meeting.
INITIAL PROGRAM
In your October 8, 1974 address to the Congress, you began the reform
of government regulations by announcing a four-point program. First,
you assigned the Council on Wage and Price Stability a watchdog
role over inflationary costs of government actions and they continue
in this role. Your second proposal was for a National Commission
on Regulatory Reform to examine the independent regulatory agencies.
Although this proposal was not acted upon, Congress has recognized
the need for such a review and several committees in the House and
Senate have major studies underway. The third proposal required
agencies to prepare inflation impact statements on all major proposals
and this effort has been implemented. Finally you encouraged State
and local governments to review their own regulations and some interest
has been expressed by State and local organizations in pursuing these
issues.
CURRENT INITIATIVES
Since our initial efforts, two legislative proposals have been
FORD
SERALD
LIBRARY
2
passed by Congress. The Securities Acts Amendments that you signed
in June restored competition in brokerage fees in the securities
markets after nearly two hundred years of fixed fees. In addition,
the repeal of the fair trade laws signed last week removed significant
restrictions on offering discount prices to consumers.
Action on other initiatives is still pending:
Financial Institutions - A revised Financial Institutions Act was
submitted to the 94th Congress. On December 11, 1975 the
Senate passed legislation similar to most of the Administration's
proposals, but new tax laws for banks must be considered
further in Committee before the total package is complete.
The House Banking Committee is studying similar reforms.
Prospects for some legislation appear fairly good in this
Congress.
Railroad Revitalization Act - The final Senate version of the rail
bill contains unacceptable financing provisions; however, it
achieves most of the regulatory reform objectives of the
Administration's bill. While the House version is more to our
liking, the conference bill may still be a candidate for veto.
Aviation Act of 1975 - The bill has been introduced in both Houses.
Hearings in the Senate and the House are expected early in
the next session.
Motor Carrier Reform Act - The bill has been introduced in the House.
Pending introduction of the bill in the Senate, the Department
of Transportation has received a tentative commitment for
Senate hearings in March or April next year.
New Natural Gas - The Senate has passed a measure dealing with
expected shortages which included long-term deregulation of
new natural gas. The House is also expected to include dereg-
ulation provisions in its bill. Prospects for passage are
encouraging.
Forms Reduction - The Commission on Federal Paperwork has been
created and its members appointed. Its report is due on
October 3, 1977. In the interim, OMB has prepared draft
guidelines to reduce the number and the burden of Federal forms.
FORD & LIBRARY
3
Simolification and Modemization of Pegulatory Activities - In
addition to these highly publicized elements of the program,
the Administration has proposed legislation to eliminate and
simplify anachronistic and unnecessary regulatory procedures
and paperwork in some of the oldest Federal agencies: Patent
reform legislation will improve and simplify procedures in the
patent system and accelerate disclosures of technological
advancements; simplification of detailed Coast Guard regulations
and procedures established nearly 200 years ago will result
in a savings of $1 million; proposed modernization of the
customs laws will reduce unnecessary paperwork and ease
restrictions governing goods brought into the United States.
POSSIBLE FUTURE INITIATIVES
Health and Safety - Alternative approaches to achieving environmental,
health and safety goals are currently under discussion. The
range of possibilities include broadening exemptions for small
business, improving cost-benefit analysis, and using taxes and
charges as incentives as opposed to detailed agency specifica-
tions and enforcement of standards to achieve our health and
safety goals.
Dependent Agencies - The regulatory activities of six Executive
branch departments and agencies are currently under review.
The agencies will be recommending both administrative and
legislative reforms in the next month.
Administrative Procedure - The independent commissions will be
reporting by Dec. 31, 1975 on their efforts to achieve
improved administrative procedures and to give greater weight
to the importance of competition in their decisions. DCRG will
analyze their responses and will make recommendations on possible
future actions including the possibility of a follow-up meeting
with the commissioners.
Substantive Review of Regulation - More analyses of the costs
and benefits of existing regulation could provide the basis
for substantive changes in areas where legislation has not yet
been proposed. DCRG will consider the desirability of submitting
a comprehensive legislative proposal requiring a "zero-based"
review of major regulatory agencies, both the independents
and those in the Executive branch. The end result of such a
review could be the elimination of regulatory overlap and
duplication or the abolition of some regulatory agencies.
Similar legislation is currently under consideration by the
Congress.
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Cable Communications - Federal Communications Commission regulations
governing cable television have restricted the growth of the
cable industry. DCRG has considered a number of options for
reform. A status report on this matter has already been
forwarded to you.
Robinson-Patman - This legislation raises consumer prices by
making it difficult to offer discount prices on particular
sales at the wholesale level. The DCRG has held public
hearings on possible modification or repeal of the Act. A
decision memorandum will be prepared for your review.
Insurance - Currently the McCarran-Ferguson Act allows States to
give antitrust exemptions to insurance rate bureaus. Meetings
have been held with industry groups, State regulators, and
consumer groups to discuss the desirability and effects of
restoring competition to insurance rate setting. Next steps
in this area include analyzing the benefits of competition and
weighing the effect Federal action might have on the State
prerogatives with respect to insurance regulation.
Maritime - The maritime laws currently sanction rate setting by
shipping conferences. A study of this issue is underway and
an interim report to the DCRG is due in the next week.
In addition to the above initiatives, we are concerned with improving
public understanding of the issue of regulatory reform. We are planning
to meet with a number of leading business leaders, journalists and
others who have given thought to the appropriate relationship between
government and business. We would hope that such meetings would help
us in formulating and explaining your program thereby increasing
public support. We would like to meet with you soon after the
first of the year and preliminary to scheduling these outside
discussions.
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THE WHITE HOUSE
WASHINGTON
February 2, 1976
MEMORANDUM FOR THE PRESIDENT
THROUGH:
JAMES CANNON
FROM:
EDWARD SCHMULTS
PAUL MacAVOY
Phang
SUBJECT:
Regulatory Reform - Problems,
Perspectives and Opportunities
In response to our December 24, 1975 memorandum (Tab A), you
agreed to meet with several members of the Domestic Council Review
Group who believe the program is now at a threshold and that there are
several alternative directions which we might take.
The regulatory reform program, as it now exists, is the result of a
number of events and circumstances: The 1974 Economic Summit,
Congressional proposals, our search for ways to curb inflation and
the increased public attention generated by your earlier speeches on
excess government intervention.
The job of implementing reform initiatives outlined in your October 8,
1974, speech brought together a number of people in the Executive
Office and the Departments concerned with the regulated industries.
Over the last year, the effort has become organized as the Domestic
Council Review Group on Regulatory Reform ("DCRG"), consisting of
White House and Department executives who devote a portion of their
time to regulatory reform issues.
Progress to Date
Since reform efforts began, two legislative proposals have been passed
by Congress and signed into law. The Securities Acts Amendments
restored competition in securities market brokerage fees. The repeal
of fair trade laws removed significant state restrictions on retail
discount pricing.
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Far-reaching proposals have been made for reform of railroad,
airline and motor carrier regulation. Phased deregulation of
natural gas prices has been proposed as well. Each of these
proposals is expected to be the subject of vigorous debate in this
Congress. The Financial Institutions Act was submitted and has
been acted upon by the Senate. However, new tax laws remain to
be considered in the Senate and House approval has to be obtained
before the total package is completed.
We are now at a critical point in the program. Sources of difficulty
are as follows:
-- Consumer groups have only been lukewarm supporters
of the program to date.
-- The business community has only begun to assist in the
systematic analysis and presentation of well-documented
cases of excessive and costly regulation.
Both the unions and the corporations in the regulated
industries have begun well-financed campaigns against
reform proposals in transportation and communications.
-- More factual evidence is needed to support a credible
argument against overzealous and unnecessarily costly
health, environmental or safety standards.
Additional support must be forthcoming from business and consumer
groups if substantial progress is to be made in passing even the
legislation previously proposed. More support is necessary from
newspapers, public opinion leaders and university thinkers, as well.
This support can probably be obtained if special efforts are targeted
on each of these groups. Also, we must better educate those who have
not been party to the debate and devise a strategy to overcome existing
and anticipated opposition.
Next Steps
1. We must secure enactment of legislative proposals already before
the Congress which will increase competition in regulated industries
such as banking, transportation and natural gas. This will take a
concerted effort on the part of the responsible agencies and Executive
office organizations.
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Continuous Presidential reinforcement of the importance of these
efforts will be needed. A special message to Congress on regulatory
reform could provide substantial assistance.
2. We must expand the scope of the present program. Action is
already underway to examine new areas of economic regulation such
as the communications, insurance, and maritime industries and
Robinson-Patman and develop appropriate recommendations for reform.
Reform actions will take the form of specific legislative recommen-
dations or Administration reports.
A noticeable gap in the present program exists in the areas of safety,
environmental and health regulation. We must determine whether
or not our social goals might be achieved through more efficient,
less costly means.
Consideration should be given to expanding the organization of the
regulatory reform group in order to get more work done. Should a
Cabinet officer be named as the official head of the effort? How do
we assure fair, more complete and more numerous hearings of the
reform issues within the Administration? What organizational
arrangement will best accommodate any new initiatives or new
direction in the effort?
3. We must work to mobilize public support for the program. Cabinet
members and other top level policy officials should be more actively
involved in giving speeches and testimony in support of the program.
It is important now to demonstrate that our efforts do not stop with
simply reducing the size of government, but that you have a positive
program to promote economic growth by restricting government to
its proper role in the economy.
To that end, we are preparing a "white paper" which summarizes
the philosophical assumptions underlying the reform effort and sets
forth a clear statement of our long-term goals, such as: encouraging
individual choice and initiative and reducing government intervention
in the private sector; assuring efficient use of scarce economic
resources and achievement of our social goals at minimum cost;
directing government expenditures to the broadest possible public
benefit; assuring efficient and equitable enforcement of government
policies; and minimizing the ability of special interest groups to
prevail against the public interest.
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Such a paper would be used as the basis for informal discussions
with several thoughtful leaders businessmen, journalists and
academics to get their views on the direction of the program and
how best to achieve and articulate our goals. We might also want
to plan for a major Presidential address or several newspaper or
magazine articles to explain our philosophy and generate a broader
public understanding of the reform effort. Additional meetings
should be scheduled with Congressional members and staff and the
independent regulatory commissioners to demonstrate our continuing
interest and obtain their thoughts on how best to achieve reform.
Future Directions
The DCRG is currently considering a two-phase plan to overcome
opposition from the special interests and maintain our momentum.
The first element is a short-term mobilization of individual agency
reviews to improve the present regulatory process. The second
phase would call for a broader, more fundamental review of govern-
ment's role in the economy.
These efforts are intended to begin to shift the burden of proof away
from those who advocate reform toward those who stubbornly resist
any change in the status quo. The building of a broader constituency
to support reform is essential if we are to counterbalance increasingly
vocal opposition from the special interests.
Phase I. A fulltime, sustained effort would be undertaken to achieve
administrative reform in each agency. This effort would be aimed
at eliminating archaic and obsolete regulations, reducing regulatory
lags, rewriting in understandable English all regulations and attempting
to reconcile conflicting regulatory overlaps. The primary focus would
not be on legislation and it would not greatly alter the degree and scope
of regulation. However, it should generate broad public and Congressional
support. Such an effort is what most people mean by getting government
"off the backs" of the people.
Each agency head would designate a senior agency official and necessary
fulltime staff to work with concerned public interest groups, e. g.,
committees of bar associations, labor organizations, consumer groups
and others to revitalize the agency's regulation process. Some funding
for outside assistance must be found. The key to such effort would be
sustained Presidential interest and follow-up.
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Phase II. The Administration would propose or support legislation
calling for an Executive-Congressional phased review of key regulatory
areas such as energy, communications, transportation, health,
environment, and banking within a specified time table. The Executive
branch would provide legislative proposals for reform and the Congress
would be required to enact reform legislation.
The need for a longer-term examination of government's role in the
economy was articulated most recently in the introduction of legislation
sponsored by Senators Percy and Byrd. Whether or not such legis-
lation is ultimately enacted, the development of a long-term agenda
would have a number of benefits: It would provide a clear indication
that we intend to examine all areas of government activity which have
major economic effects. This would encourage the intellectual
community to devote attention on upcoming issues and develop concrete
data on alternative reform proposals. Announcing such an agenda now
would also provide an organizing perspective to the efforts already
underway in individual Department reviews and assure that the nec-
essary data becomes available for the longer-term study. Such an
approach would be oriented to results and less apt to be viewed as
just another study effort.
Summary
If this plan appears reasonable, we will begin to explore more fully
the means by which it could be implemented and outline the substantive
elements of an agenda. Our forthcoming meeting is not intended to
reach decisions on the specifics of the program, but rather to obtain
a better sense of your priorities and an indication of the approaches
and areas you feel should be more fully explored.
Attachment (Tab A)
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THE WHITE HOUSE
WASHINGTON
February 12, 1976
MEMORANDUM FOR JIM CANNON
FROM:
ED SCHMULTS
SUBJECT:
Regulatory Problems
You asked for a reaction to the suggestion that a two-
year moritorium be declared on new Federal regulations.
While it may appear on the surface to be an appealing
idea, I am concerned that, like most government-wide
solutions, it would soon prove to be overly simplistic
and unrealistic.
It is easy to understand the suggestor's concern over
the proliferation of government regulations. However,
his suggested moritorium, including the "loophole"
clause might easily result in adding to the complexity
of Federal regulations. Given the patchwork nature of
our regulatory system, I'm afraid that we'd end up
approving exemptions for everything to the point where we
actually defeat the purpose of a moritorium.
I suggest that a better solution would be to more care-
fully examine the need for new regulations before they
are put into effect. The inflation impact analysis
does this in part. Continued efforts to achieve better
economic analysis in the independent commissions and
Executive agencies will also help. In addition, in the
coming months we will be taking additional steps to
encourage these agencies to examine existing regulations
to eliminate those which are conflicting, duplicative,
and unnecessary. For example, the DCRG is currently
working on a plan to implement the President's suggested
task force approach to improve existing regulatory
procedures within the Executive Branch.
While this approach does not provide an "instant"
solution, I feel it will produce much more satisfactory
and lasting results in the long-run.
FORD
THE WHITE HOUSE
WASHINGTON
January 23, 1976
MEMORANDUM FOR:
ED SCHMULTS
FROM:
SUBJECT:
Regulatory Jun Problems
JIM CANNON
At the briefing with corporate executives yesterday
afternoon, one suggested that the President and the
Congress declare a moratorium on writing any new
Federal regulations for two years.
The executive, whose name I did not get, said he
felt that employers should be given an opportunity
to "digest the regulations we have" before more and
more Federal regulations are imposed.
He also commented that many regulations seem to be
published in the Federal Register as trial balloons
to test the reaction of regulatees, rather than as
serious proposals.
What is your reaction to the suggestion that the
President propose to the Congress such a moratorium
for a stated period of time?
To provide for emergency situations, such a resolution
might include a loophole to exempt specific matters
that might be agreed upon at the time by the President
and Congress.
FORD is GERALD LIBRARY
THE WHITE HOUSE
WASHINGTON
February 17, 1976
MEMORANDUM FOR:
JIM CONNOR
FROM:
ED SCHMULTS
W
SUBJECT:
Next Steps in the Administration's
Regulatory Reform Program
As you requested, I have combined the two cover memos
on the regulatory reform program into one decision memo
for the President. It recommends that he preside over
a follow-up session with the heads of the independent
regulatory commissions and lays out a schedule of next
steps to be accomplished this spring.
FORDO & LIBRARY 538870
THE WHITE HOUSE
Raport
WASHINGTON
February 24, 1976
MEMORANDUM FOR THE VICE PRESIDENT
THROUGH:
JAMES CANNON Jun
FROM:
EDWARD SCHMULTS
SUBJECT:
Meetings on Regulatory Reform
As you recall, we talked briefly within the last ten days about the
importance of improving the Administration's effectiveness in
communicating to the public the purposes and benefits of our
regulatory reform program.
At the present time, we are working to lay out some shorter
range task forces which the President wants to see streamline the
present regulatory procedures and make existing regulations more
understandable to the average person. We are also developing
thoughts on a longer range study to assess the ways in which the
Federal government impacts the private economy and to develop
useful legislative and administrative recommendations to lessen
this burden wherever possible.
Since our discussion, I have talked to Jim Cannon, Bill Seidman,
Jack Marsh and others to get their initial views. I believe, and
they concur, that one very important step in designing our future
regulatory program would be three meetings with small groups of
private citizens to gain their insights. Specifically, we want to
obtain their views on better ways to communicate the President's
objectives and to test our notions on both the short and long range
strategies necessary to accomplish this task.
We would expect about six thoughtful people who have an interest
in the subject to attend each session. In order to elevate the
importance of these meetings, to attract the most knowledgeable
people, and to gain your valuable advice, I think it is very
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important that you chair them. Attached is a tentative schedule
proposal and a suggested list of invitees. We would appreciate
your thoughts on additional people, and if you agree to preside,
we will work with your staff and the White House Public Liaison
Office to establish the most convenient times.
I had a nice talk with Heath Larry last week about the work of the
Productivity Center. He explained their program and resources
in some detail and we agreed to work closely with the Center in
further developing the President's regulatory program.
Attachments
cc: Bill Baroody
Bill Seidman
GERALD FORD LIBRARY
Proposed Outline for White House Meetings
on Regulatory Reform
1. Objectives
A. To gain the views of knowledgeable and concerned private
citizens about ways in which the Administration can better
communicate the purposes and benefits of the President's
regulatory reform program to the public and;
B. To ask for advice on suggested short and long range programs
designed to improve our understanding of the effects of
government intervention in the private economy.
2. When:
Beginning the week of March 1
3. Where:
Roosevelt Room
4. Time:
Two hours in the morning,
preferably 10:00 - 12:00
5. Major Administration Participants
The Vice President, Chairman
James Cannon, Assistant to the President for Domestic Affairs
William Seidman, Assistant to the President for Economic Affairs
William Baroody, Assistant to the President for Public Liaison
Edward Schmults, Deputy Counsel to the President
Paul MacAvoy, Council of Economic Advisers
6. Possible Participants for Three Sessions
I
I
II
III
George Lodge
Joseph Pechman
Walter Wriston/ or
Kingman Brewster
Anthony Downs
Gabriel Hauge
Phillip Areeda
Arjay Miller/or
Richard Neustadt
Herb Stein
Kermit Gordon
Irving Kristol/ or
George Shultz
John Gardner
Daniel Bell
Mark Green
Amitai Etzioni
James Q. Wilson
Willard Wirtz/ or
Arthur Goldberg
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Reg Reform
THE WHITE HOUSE
WASHINGTON
February 24, 1976
ADMINISTRATIVELY CONFIDENTIAL
MEMORANDUM FOR:
ED SCHMULTS
FROM:
JIM CONNOR JEE
SUBJECT:
Next Steps in the Administration's
Regulatory Reform Program
The President reviewed your memorandum of February 17 on the
above subject and approved your recommendation for a follow-up
meeting with the Commissions.
The following notation was also made:
"Good - proceed".
Please follow-up with appropriate action.
CC: Dick Cheney
Jerry Jones
to f. FORD LIBRARY