B-31941, MARCH 1, 1943, 22 COMP. GEN. 843

B-31941: Mar 1, 1943

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RECEIVES A PENSION FROM A COMPANY ENGAGED IN THE MANUFACTURE OF TELEPHONE EQUIPMENT IS "FINANCIALLY INTERESTED" IN SUCH COMPANY SO AS TO BE BARRED FROM EMPLOYMENT BY THE FEDERAL COMMUNICATIONS COMMISSION BY THE PROVISIONS OF SECTION 4 (B) OF THE COMMUNICATIONS ACT OF 1934 THAT NO PERSON IN THE EMPLOY OF THE COMMISSION SHALL BE FINANCIALLY INTERESTED IN CERTAIN SPECIFIED ACTIVITIES OR ENTITIES. YOUR OPINION IS REQUESTED AS TO WHETHER IN ACCORDANCE WITH THE ABOVE PROVISION THE COMMISSION MAY EMPLOY A PERSON WHO AS AN EX-EMPLOYEE RECEIVES A PENSION FROM A COMPANY ENGAGED IN THE MANUFACTURE OF TELEPHONE EQUIPMENT AND WHICH IS A SUBSIDIARY OF A HOLDING COMPANY WHICH HAS AS OTHER SUBSIDIARIES TELEPHONE CARRIERS SUBJECT TO THE JURISDICTION OF THE COMMISSION.

B-31941, MARCH 1, 1943, 22 COMP. GEN. 843

ELIGIBILITY FOR EMPLOYMENT IN FEDERAL COMMUNICATIONS COMMISSION - PERSONS "FINANCIALLY INTERESTED" IN COMPANIES MANUFACTURING TELEPHONE EQUIPMENT A PERSON WHO, AS AN EX-EMPLOYEE, RECEIVES A PENSION FROM A COMPANY ENGAGED IN THE MANUFACTURE OF TELEPHONE EQUIPMENT IS "FINANCIALLY INTERESTED" IN SUCH COMPANY SO AS TO BE BARRED FROM EMPLOYMENT BY THE FEDERAL COMMUNICATIONS COMMISSION BY THE PROVISIONS OF SECTION 4 (B) OF THE COMMUNICATIONS ACT OF 1934 THAT NO PERSON IN THE EMPLOY OF THE COMMISSION SHALL BE FINANCIALLY INTERESTED IN CERTAIN SPECIFIED ACTIVITIES OR ENTITIES, SUCH AS THE MANUFACTURE OR SALE OF APPARATUS FOR WIRE OR RADIO COMMUNICATION, OR IN COMPANIES FURNISHING APPARATUS TO OTHER COMPANIES ENGAGED IN WIRE OR RADIO COMMUNICATION, ETC.

COMPTROLLER GENERAL WARREN TO THE CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION, MARCH 1, 1943:

THERE HAS BEEN CONSIDERED YOUR LETTER OF JANUARY 22, 1943, AS FOLLOWS:

SECTION 4 (B) OF THE COMMUNICATIONS ACT OF 1934 (47 U.S.C. SECTION 154 (B) ( PROVIDES IN PART AS FOLLOWS:

"NO MEMBER OF THE COMMISSION OR PERSON IN ITS EMPLOY SHALL BE FINANCIALLY INTERESTED IN THE MANUFACTURE OR SALE OF RADIO APPARATUS OR OF APPARATUS FOR WIRE OR RADIO COMMUNICATION; IN COMMUNICATION BY WIRE OR RADIO OR IN RADIO TRANSMISSION OF ENERGY; IN ANY COMPANY FURNISHING SERVICES OR SUCH APPARATUS TO ANY COMPANY ENGAGED IN COMMUNICATION BY WIRE OR RADIO OR TO ANY COMPANY MANUFACTURING OR SELLING APPARATUS USED FOR COMMUNICATION BY WIRE OR RADIO, OR IN ANY COMPANY OWNING STOCKS, BONDS, OR OTHER SECURITIES OF ANY SUCH COMPANY; . . .'

YOUR OPINION IS REQUESTED AS TO WHETHER IN ACCORDANCE WITH THE ABOVE PROVISION THE COMMISSION MAY EMPLOY A PERSON WHO AS AN EX-EMPLOYEE RECEIVES A PENSION FROM A COMPANY ENGAGED IN THE MANUFACTURE OF TELEPHONE EQUIPMENT AND WHICH IS A SUBSIDIARY OF A HOLDING COMPANY WHICH HAS AS OTHER SUBSIDIARIES TELEPHONE CARRIERS SUBJECT TO THE JURISDICTION OF THE COMMISSION.

SECTION 4 (B) OF THE COMMUNICATIONS ACT OF 1934, 48 STAT. 1066 (PARTIALLY QUOTED IN YOUR LETTER), PROVIDES IN PERTINENT PART THAT:

* * * NO MEMBER OF THE COMMISSION OR PERSON IN ITS EMPLOY SHALL BE FINANCIALLY INTERESTED IN THE MANUFACTURE OR SALE OF RADIO APPARATUS OR OF APPARATUS FOR WIRE OR RADIO COMMUNICATION; IN COMMUNICATION BY WIRE OR RADIO OR IN RADIO TRANSMISSION OF ENERGY; IN ANY COMPANY FURNISHING SERVICES OR SUCH APPARATUS TO ANY COMPANY ENGAGED IN COMMUNICATION BY WIRE OR RADIO OR TO ANY COMPANY MANUFACTURING OR SELLING APPARATUS USED FOR COMMUNICATION BY WIRE OR RADIO; OR IN ANY COMPANY OWNING STOCKS, BONDS, OR OTHER SECURITIES OF ANY SUCH COMPANY; NOR BE IN THE EMPLOY OF OR HOLD ANY OFFICIAL RELATION TO ANY PERSON SUBJECT TO ANY OF THE PROVISIONS OF THIS ACT, NOR OWN STOCKS, BONDS, OR OTHER SECURITIES OF ANY CORPORATION SUBJECT TO ANY OF THE PROVISIONS OF THIS ACT. * * *

THE WORDS "PERSON" AND "CORPORATION" ARE DEFINED IN SECTION 3 OF THE SAID ACT AS FOLLOWS:

" PERSON" INCLUDES AN INDIVIDUAL, PARTNERSHIP, ASSOCIATION, JOINT- STOCK COMPANY, TRUST, OR CORPORATION.

" CORPORATION" INCLUDES ANY CORPORATION, JOINT-STOCK COMPANY, OR ASSOCIATION.

BY THE SAID COMMUNICATIONS ACT OF 1934, VARIOUS POWERS AND DUTIES THERETOFORE VESTED IN THE FEDERAL RADIO COMMISSION, THE INTERSTATE COMMERCE COMMISSION, AND THE POSTMASTER GENERAL WERE BESTOWED UPON THE FEDERAL COMMUNICATIONS COMMISSION, AND THE ABOVE-QUOTED RESTRICTIVE PROVISIONS WITH RESPECT TO THE QUALIFICATIONS OF OFFICERS AND EMPLOYEES OF THE FEDERAL COMMUNICATIONS COMMISSION ARE SIMILAR TO PROVISIONS OF SECTION 11 OF THE INTERSTATE COMMERCE ACT OF FEBRUARY 4, 1887, 24 STAT. 383, AND SECTION 3 OF THE RADIO ACT OF FEBRUARY 23, 1927, 44 STAT. 1162, WHICH PROVIDED--- AS TO THE QUALIFICATIONS OF MEMBERS OF THE SAID COMMISSIONS--- AS FOLLOWS, ESPECTIVELY:

* * * NO PERSON IN THE EMPLOY OF OR HOLDING ANY OFFICIAL RELATION TO ANY COMMON CARRIER SUBJECT TO THE PROVISIONS OF THIS ACT, OR OWNING STOCKS OR BONDS THEREOF, OR WHO IS IN ANY MANNER PECUNIARILY INTERESTED THEREIN, SHALL ENTER UPON THE DUTIES OF OR HOLD SUCH OFFICE. * * *

* * * NO MEMBER OF THE COMMISSION SHALL BE FINANCIALLY INTERESTED IN THE MANUFACTURE OR SALE OF RADIO APPARATUS OR IN THE TRANSMISSION OR OPERATION OF RADIOTELEGRAPHY, RADIOTELEPHONY, OR RADIO BROADCASTING. * * * HOWEVER, THERE HAVE NOT BEEN FOUND ANY DECISIONS OR OTHER AUTHORITIES WHICH APPEAR CONCLUSIVE AS TO THE PROPER APPLICATION OF ANY OF THE QUOTED PROVISIONS TO SUCH A SITUATION AS THAT PRESENTED IN YOUR LETTER. NEITHER HAS THERE BEEN FOUND IN THE LEGISLATIVE HISTORY OF THE SAID SECTION 4 (B) OF THE COMMUNICATIONS ACT, SO FAR AS EXAMINED, ANY DISCUSSION AS TO THE INTENDED EFFECT OF THE SAID SECTION.

IN THE CASE OF MUMMA V. TOWN OF BREWSTER, 24 P. (A) 439, THE SUPREME COURT OF WASHINGTON CONSIDERED A STATE STATUTE WHICH PROVIDED:

NO OFFICER OF SUCH TOWN SHALL BE INTERESTED, DIRECTLY OR INDIRECTLY, IN ANY CONTRACT WITH SUCH TOWN, OR WITH ANY OF THE OFFICERS THEREOF IN THEIR OFFICIAL CAPACITY, NOR IN DOING ANY WORK NOR FURNISHING ANY SUPPLIES FOR THE USE OF SUCH TOWN, OR ITS OFFICERS IN THEIR OFFICIAL CAPACITY * *. AND THE COURT HELD THAT ALTHOUGH THE MAYOR OF THE TOWN ALSO WAS DISTRICT MANAGER OF A PUBLIC SERVICE CORPORATION WHICH FURNISHED ELECTRIC POWER TO THE TOWN, HE WAS NOT "INTERESTED" IN SUCH FURNISHING OF ELECTRIC POWER, WITHIN THE MEANING OF THE SAID STATUTE WHICH CONTEMPLATED ONLY A FINANCIAL INTEREST.

HOWEVER A DIFFERENT VIEW PREVAILS IN OTHER JURISDICTIONS. SEE, FOR EXAMPLE, MILLER V. CITY OF MARTINEZ, 82 P. (2) 519, IN WHICH THE CALIFORNIA COURT EXPRESSLY DECLINED TO FOLLOW THE DECISION IN THE MUMMA CASE. THE CALIFORNIA CASE INVOLVED A STATE STATUTE PROVIDING:

NO OFFICER OF SUCH CITY * * * SHALL BE INTERESTED, DIRECTLY OR INDIRECTLY, IN ANY CONTRACT WITH SUCH CITY * * * OR IN DOING ANY WORK OR FURNISHING ANY SUPPLIES FOR THE USE OF SUCH CITY * * * AND THE COURT HELD THAT A MEMBER OF THE CITY COUNCIL WHO ALSO WAS MANAGER OF AN OIL COMPANY WHICH FURNISHED PETROLEUM PRODUCTS TO THE CITY WAS "INTERESTED" IN SUCH FURNISHING OF PETROLEUM PRODUCTS, WITHIN THE MEANING OF THE STATUTE. ALTHOUGH THE COURT STATED THAT THE DISQUALIFYING INTEREST OF A PUBLIC OFFICIAL NEED NOT BE A FINANCIAL INTEREST--- CONTRARY TO THE HOLDING OF THE MUMMA CASE, SUPRA--- IT APPARENTLY WAS OF THE OPINION THAT THE INTEREST OF THE SAID COUNCILMAN WAS IN FACT FINANCIAL, AS INDICATED BY THE LANGUAGE AT PAGE 522, AS FOLLOWS:

* * * WHILE IT MAY TRULY BE SAID THAT HE WOULD NOT DERIVE DIRECT PECUNIARY GAIN FROM THE CONTRACT, HE CERTAINLY WOULD INDIRECTLY BE SO BENEFITED, SINCE UPON THE SUCCESS OF PETITIONER'S BUSINESS FINANCIALLY PRIMARILY DEPENDS THE CONTINUED TENURE OF HIS POSITION AND THE COMPENSATION WHICH HE RECEIVES FOR PERFORMING THE SERVICE REQUIRED OF HIM AS THE FOREMAN OF THE DEPARTMENT REFERRED TO. * * *

THE COURT FURTHER STATED AT PAGE 523:

* * * THE CITY PURCHASES PETROLEUM PRODUCTS FROM HIS COMPANY. IS HE A FREE AGENT IN RESPECT TO THIS TRANSACTION? IF HE VOTED AGAINST THE PURCHASE WOULD HE NOT BELIEVE THAT SUCH A COURSE WOULD BE PREJUDICIAL TO HIS STANDING WITH THE CORPORATION? OBVIOUSLY, APPLYING THE ORDINARY RULES OF HUMAN CONDUCT AND BEHAVIOR, HE WOULD CONSIDER THAT IT WOULD BE TO HIS INTEREST TO APPROVE THE TRANSACTION, AND THIS IS NOT IMPUGNING THE GOOD FAITH AND HONESTY OF SEVERNS. AS WAS STATED IN THE HOBBS, WALL AND CO. CASE, SUPRA,"THE PURPOSE OF THE STATUTE IS TO REMOVE ALL INDIRECT INFLUENCE OF AN INTERESTED OFFICER AS WELL AS TO DISCOURAGE DELIBERATE DISHONESTY.' ( ITALICS OURS.)

SEE, ALSO, STOCKTON PLUMBING AND SUPPLY CO. V. WHEELER, 229 P. 1020, WHEREIN THE COURT STATED THAT A MEMBER OF THE CITY COUNCIL WHO ALSO WAS A FOREMAN IN AN ESTABLISHMENT WHICH WAS AWARDED A CONTRACT BY THE CITY "WOULD NOT DERIVE DIRECT PECUNIARY GAIN" FROM THE CONTRACT BUT "WOULD INDIRECTLY BE SO BENEFITED.'

THE LANGUAGE OF THE ENTIRE SECTION 4 (B) COMPELS THE CONCLUSION THAT THE CONGRESS WAS INTENT ON PROHIBITING THE EMPLOYMENT OF ANY PERSON WHO COULD BE REGARDED AS HAVING ANY FINANCIAL INTEREST WHATSOEVER IN ANY ACTIVITY OR ENTITY SUBJECT TO ANY PROVISION OF THE ACT, IN ORDER THAT THERE MIGHT BE NO GROUND FOR SUSPICION THAT THE OFFICIAL SERVICES OR ACTS OF ANY EMPLOYEE OF THE COMMISSION MIGHT BE ACTUATED, CONSCIOUSLY OR UNCONSCIOUSLY BY ANY ULTERIOR MOTIVE OR INFLUENCE. IT IS TO BE OBSERVED, ALSO, THAT THE FEDERAL COMMUNICATIONS COMMISSION IS "A COMMISSION IN WHICH IS VESTED BY CONGRESSIONAL ACTION QUASI JUDICIAL POWERS AND DISCRETION" ( UNITED STATES V. MITCHELL, 89 F. (2D) 805, 809). BY THE COMMUNICATIONS ACT, THE COMMISSION IS GIVEN BROAD POWERS AND WIDE DISCRETION WITH RESPECT TO THE REGULATION OF THE COMPANIES, ETC., UNDER ITS JURISDICTION. THESE FACTS TEND TO ESTABLISH A SUFFICIENT EXPLANATION OF THE ALERTNESS OF THE CONGRESS IN ATTEMPTING TO INSURE THAT THE PERSONNEL OF THE COMMISSION SHALL BE WHOLLY FREE FROM ANY SELF-INTEREST WHICH MIGHT CONFLICT WITH OFFICIAL DUTIES. IN THAT CONNECTION, IT IS TO BE NOTED THAT IN THE SAID SECTION 4 (B) THE CONGRESS HAS MADE THE SAME STRICT REQUIREMENTS APPLICABLE TO ALL EMPLOYEES OF THE FEDERAL COMMUNICATIONS COMMISSION AS TO THE MEMBERS OF THE COMMISSION.

ACCORDINGLY, IN LINE WITH THE PREVAILING VIEW OF THE COURTS STATED IN THE DECISIONS, SUPRA, AND IN VIEW OF OTHER CONSIDERATIONS ABOVE SET FORTH, I AM CONSTRAINED TO HOLD THAT ANY FINANCIAL INTEREST, WHETHER LARGE OR SMALL, DIRECT OR INDIRECT, IS SUFFICIENT TO PRECLUDE THE EMPLOYMENT BY THE COMMISSION OF ANY PERSON SO INTERESTED. ALTHOUGH THE PERSON WHOSE EMPLOYMENT IS UNDER CONSIDERATION BY YOUR COMMISSION HAS NO DIRECT CONNECTION WITH THE COMPANY WHICH FORMERLY EMPLOYED HIM, OTHER THAN HIS RECEIPT OF A PENSION AS A FORMER EMPLOYEE, THERE WOULD APPEAR TO BE SUFFICIENT BASIS FOR HOLDING THAT HE IS "FINANCIALLY INTERESTED" IN SUCH COMPANY, WITHIN THE MEANING OF THE INVOLVED STATUTE. CERTAINLY, HE HAS MORE THAN A MERE SENTIMENTAL INTEREST IN SUCH COMPANY.