to translate the principle into operating practice in the administration of their programs varies widely. In the case of Title VI, some agencies have made efforts to enforce nondiscrimination requirements aggressively, but in no case have Federal agencies implemented these nondiscrimination requirements with maximum effectiveness.

Title VI and Federally Assisted Programs

Title VI of the 1964 Civil Rights Act has great potential for eliminating discrimination throughout the country. The loan and grant programs subject to its provisions affect the lives of most Americans and are of vital importance to the Nation's social and economic growth. Community development programs, such as urban renewal and Federal aid for the construction of highways, are necessary to the orderly development of cities and metropolitan areas. Federal aid for education is playing an important role in the effort to assure quality education for the Nation's children. Federal programs of health and welfare are needed to assist in caring for those who are infirm and indigent. Through these programs, substantial leverage is afforded to attack the problem of racial and ethnic discrimination on a broad front. Title VI provides Federal departments and agencies with strong authority to make use of this leverage. Thus far, however, the Federal effort under Title VI has failed to match the law's promise.

The mechanisms developed by Federal agencies with Title VI responsibilities have glaring deficiencies. For example, as of June 1970, some agencies with programs subject to that law, had not yet issued regulations to effect its provisions.

In addition, there are inconsistencies in the way agencies view the scope of their responsibilities under Title VI. Uniformity of interpretation has not yet been achieved even with respect to the meaning of basic statutory terms, such as "Federal financial assistance," "program or activity," or "discrimination."

In addition to the problem of lack of uniformity and inconsistent interpretations by agencies with Title VI responsibilities, there are a number of deficiencies common to nearly all Title VI agencies. All are severely handicapped by a lack of sufficient staff to carry out Title VI responsibilities adequately. In most

agencies, the official in charge of Title VI compliance has relatively low status, as measured by title, grade, authority, and relative position within the administrative hierarchy. In some instances, Title VI duties are secondary to other functions and are shared with program managers over whom the Title VI officers have no authority. Rarely do agencies conduct training programs for civil rights or program personnel to assist them in developing the knowledge and awareness necessary to carry out effective Title VI compliance programs. In those cases where training programs are conducted, they tend to be superficial and inadequate.

The methods agencies have devised for achieving and monitoring compliance with Title VI requirements have had serious weaknesses. Undue reliance has frequently been placed on paper assurances, with no attempt made to review the actual compliance status of the recipients. In the case of at least one agency a number of recipients have never even submitted assurances.

Further, although Title VI regulations provide for submission of compliance reports by recipients to assist agencies in determining their compliance status, few agencies have made adequate use of this important monitoring device. In some cases, recipients of Federal aid have never been asked to furnish compliance reports or to provide information showing racial or ethnic participation in their programs. In others, where such information is provided, the data lack sufficient detail to be of real use as a means of determining compliance. Many reporting systems which otherwise are adequate are rendered ineffective because information is elicited too infrequently (e.g., every second or third year).

Of those agencies which have developed good compliance reporting systems most have not developed the capacity to utilize the data collected to its fullest potential. Few agencies follow up on the information revealed in compliance reports by conducting onsite reviews of recipients' facilities and services to determine the actual state of compliance. Some agencies never have conducted a single onsite review of any of their recipients. No agency has reviewed more than a small fraction of its recipients and many of the reviews that have been conducted have been superficial or

otherwise lacking in thoroughness. Frequently persons assigned to conduct field reviews for purposes of Title VI compliance are drawn from program bureaus and lack any Title VI training. Further, to the extent compliance reviews are conducted, they are almost always conducted well after the funds are committed and the program is underway. In many cases, it is then too late for effective corrective action to be taken. For example, a water and sewer line planned and constructed so as to bypass those areas where minority families are heavily concentrated cannot easily be altered once it is built, nor can the configuration of a federally aided highway, which effectively seals off centers of minority population from the rest of the community, readily be changed after it is completed.

Another problem common to most agencies with Title VI responsibilities has been their passive approach to implementation. Most rely heavily on receipt of complaints as the principal indicator of compliance. The way they carry out their responsibility for complaint processing, moreover, leaves much to be desired. Inordinate delays in investigating complaints are commonplace. In some instances, complaint investigations are not performed adequately. Sometimes agencies fail to conduct any investigation at all.

One of the strengths of Title VI lies in the strong sanctions available to Federal departments and agencies to bring about compliance. Among the available sanctions is termination of Federal financial assistance. It has rarely been used. Rather, many agencies have placed sole reliance on voluntary compliance as the means of ending discrimination in their programs. Protracted negotiations with noncomplying recipients have taken place, sometimes extending over a period of several years, while Federal funds continue to flow. In most instances where the sanction of fund termination has been used, it has been imposed only after a prolonged course of investigation, negotiation, hearing, and appeal and review, during which time discriminatory practices have often continued unabated. Further, the mechanism of judicial enforcement, intended to be used in addition to the administrative procedure leading to fund termination, is currently being used instead of the administration

procedure, thus further weakening the force of Title VI.

Because Title VI involves well over 20 Federal departments and agencies and covers some 400 Federal loan and grant programs, coordination of agency efforts is of particular importance. It has been inadequate.

Under Executive Order 11247, the Department of Justice is vested with responsibility for coordinating and supervising enforcement of Title VI. The Department consistently has failed to devote adequate manpower or resources to the task. Over the years, Title VI coordination has become increasingly peripheral to the work of the Department. Originally, this responsibility was carried out by a Special Assistant to the Attorney General, who reported directly to the Attorney General. Now it is carried out by a relatively junior attorney, who directs a small unit within the Civil Rights Division. He reports to a junior Deputy Assistant Attorney General. Further, the Department of Justice views its Title VI responsibility narrowly, focusing on litigation rather than on assuring effective administrative enforcement by various Federal agencies. Liaison with agencies is maintained primarily on an ad hoc basis. The inconsistencies in agency interpretations of their responsibilities under Title VI and the general inadequacy of agency compliance programs can be attributed, at least in part, to the failure of the Department of Justice to carry out its coordination responsibility with maximum effectiveness. Programs of Insurance and Guaranty

Federally insured and guaranteed loan programs constitute a significant economic benefit for millions of persons in the United States. They involve assistance in such key areas as housing, education, business entrepreneurship, and agriculture. In terms of dollar value alone, these programs will amount to some $40 billion in fiscal year 1971. Although programs of insurance and guaranty, like Title VI programs, generally operate through intermediaries intervening between the Federal Government and individual beneficiaries, these programs are expressly excluded from coverage under Title VI to the extent they involve assistance solely in the form of insurance or guarantees. Despite this exemption from Title VI coverage, discrimination in programs of insurance and

guaranty is prohibited by the fifth amendment to the Constitution. Further, most agencies that operate these programs are prohibited from practicing or permitting discrimination, either by Presidential Executive order or by regulations which they have issued. The enforcement mechanisms established by these Federal agencies, however, have not been adequate to assure compliance with their nondiscrimination requirements. For example, no agency requires compliance reports from intermediaries such as lending institutions. The racial and ethnic data concerning program participation that agencies collect themselves are frequently inadequate to inform the agencies whether minority group beneficiaries are participating on an equitable basis. None of the agencies conducts affirmative compliance reviews to determine firsthand whether intermediaries are following nondiscriminatory policies and practices. Sole reliance for enforcement most frequently is placed on complaint procedures. These procedures have rarely been made formal, nor have specific guidelines been set down governing investigations and resolution of complaints. Further, little information is provided to the public or to Federal officials responsible for assuring compliance with nondiscrimination requirements concerning the existence of these requirements or the procedure to be followed when discrimination occurs.

If the mechanisms established to enforce Title VI have been inadequate, the civil rights enforcement mechanisms for programs of insurance and guaranty are in a barely rudimentary stage.

Direct Assistance Programs

Direct assistance programs-those in which Federal benefits flow directly to individual beneficiaries-involve benefits, such as social security, business loans, and assistance to veterans, which are of importance to many Americans. In terms of dollar value, they will

amount to some $75 billion in fiscal year 1971, three times as much as the amount represented by grant-in-aid programs covered by Title VI.

Discrimination in direct assistance programs clearly is prohibited by the fifth amendment to the Constitution. Unlike indirect assistance programs involving loans, grants, insurance, or guarantees where statutory and administrative procedures and requirements have been established to prevent discrimination by public and private program intermediaries, almost no action has been taken to implement nondiscrimination requirements in direct assistance programs. Congress has not addressed itself to the problem of discrimination in these programs, nor has the President or the agencies that operate these programs taken any significant action to assure against such discrimination. Thus, the Federal Government is in the position of holding itself to a lesser standard of nondiscrimination enforcement that it imposes on others.

These programs, which operate without intermediaries, frequently limit the discretion of Federal officials in determining the rights of beneficiaries. Hence the opportunities for discrimination here are somewhat more remote than in programs of indirect assistance. Nevertheless, the opportunities do exist and charges of discrimination have been made.

Currently, little in the way of mechanisms exists to assure equal opportunity in direct assistance programs. Compliance reviews are not conducted. Data on racial and ethnic participation frequently are not collected at all, and when collected, are not adequately used. There also are no complaint procedures specifically concerned with racial or ethnic discrimination, nor are personnel given special guidance on how such complaints are to be investigated or what steps should be taken to eliminate discrimination when found.

I. Introduction

Many of the Nation's largest business enterprises are subject to close Federal regulation and supervision. They are members of industries which Congress has deemed of sufficient public importance to warrant creation of independent agencies to oversee their activities, pursuant to specific rules and regulations.

Many of these business enterprises require Federal licenses in order to conduct business at all and, because of the limited number of licenses granted, enjoy, in a sense, a federally protected monopoly position. For example, radio and television stations, telephone companies, and other communications enterprises are licensed and regulated by the Federal Communications Commission (FCC). Railroads, motor carriers, freight forwarders, and other common carriers are licensed and regulated by the Interstate Commerce Commission (ICC), the oldest of the regulatory agencies. Hydroelectric plants and natural gas companies are licensed by the Federal Power Commission (FPC). In addition, many electric power companies are regulated by the FPC. Those in the business of providing air transportation are regulated by the Civil Aeronautics Board (CAB) and they may only operate on routes as approved by CAB.

In other industries, although individual companies are not licensed by the Federal Government, their activities, nonetheless, are subject to close Federal regulation. For example, those in the shipping business are regulated by the Federal Maritime Commission (FMC).

These Federal agencies are charged with responsibility for regulating specific industries, such as power, communications, and transportation. Other agencies have regulatory respon

Federal

sibilities that cut across industry lines. For example, the Trade Commission (FTC) has major responsibility for protecting consumers and enforcing antitrust laws, regardless of the industry involved. The Securities and Exchange Commission (SEC) has the responsibility to provide protection for investors and the public in securities transactions, without regard to the industry to which the company involved belongs. The overriding criterion governing the activities of these regulatory agencies is the public interest.

There are civil rights issues involved in the activities of these regulated industries and there are ways in which the agencies, charged with responsibility for regulating them, can contribute significantly to furthering the cause of equal opportunity. Under Title VII of the Civil Rights Act of 1964, all business enterprises, with 25 or more employees, including most members of regulated industries, are required to follow equal employment policies. Further, to the extent that regulated businesses are Government contractors, they also are subject to equal employment opportunity requirements by virtue of that status.1 Beyond the requirements imposed on Government contractors and other employers, members of regulated industries, because of the unique federally protected status that many of them enjoy, should feel a special obligation to further the cause of the key national policy of equal employment opportunity. In view of the size and resources of many of these regulated businesses, affirmative efforts to employ and upgrade minority group members could contribute significantly to furthering this cause. By

1 Executive Order 11246 (1965) prohibits discriminaation by all Government contractors and requires the adoption of affirmative programs to promote greater employment opportunities for minority group members.

the same token, action by the regulatory agencies to require and promote equal employment opportunity in the industries they regulate could also contribute significantly to the achievement of this national goal.

In addition to the issue of equal employment opportunity, which is common to all industries, special opportunities for facilitating the goal of increased minority entrepreneurship are available to certain of them. Some, such as shipping and airlines, require such large capital investments as to preclude the possibility of all but a very small number of minority group entrepreneurs from even applying for entrance. Other regulated industries, such as those involving communications and motor transportation, require relatively small capital investments and offer excellent opportunities for minority entrepreneurship. For example, the cost of operating a radio station or a trucking company, while considerable, is not so prohibitive as to bar minorities, solely on a financial basis, from entering this aspect of the business world. In view of the authority of the regulatory agencies concerned (FCC and ICC, respectively) to determine, through their licensing power, who may conduct business in these industries, a special opportunity is provided to promote minority business ownership. With respect to the radio and television industries in particular, greater minority group participation in ownership and operation could substantially increase understanding and sensitivity on the part of the majority community to the social and economic injustices that underlie the unrest of the minority groups.

Discrimination in the provision of services by the regulated business is another civil rights issue with which these industries and the agencies that regulate them should be concerned. For example, discrimination and segregation by railway and bus companies, regulated by the ICC, or by air carriers, regulated by the CAB, is unlawful, but instances of such discrimination and segregation continue to appear. Recreational facilities provided at hydroelectric projects, licensed and regulated by the FPC, may be operated on a racially discriminatory basis, even though such discrimination is unlawful. More subtle issues may arise with respect to the provision of services on a non

discriminatory basis. Railroad and bus routes may be designed for the convenience of the majority group alone, and recreational facilities may be located in a manner that effectively excludes use by minority group members or may be of a kind (boating marinas, for example) that would appeal mostly to the more affluent.

These are some of the civil rights issues with which members of regulated industries and the agencies that regulate them should be concerned. In this chapter, the policies and practices of the following major regulatory agencies will be examined to determine their current and potential role in furthering the cause of equal opportunity:

Interstate Commerce Commission (ICC)2
Federal Trade Commission (FTC)3
Federal Power Commission (FPC)
Securities and Exchange Commission

2 The ICC, the oldest of the regulatory agencies, was created in 1887, and charged with responsibility of regulating interstate railroad transportation. Throughout the years the responsibilities of the ICC have expanded. It now also exercises regulatory responsibility over motor carriers, inland water carriers, and freight forwarders.

'The FTC was created by Congress in 1914, under the Federal Trade Commission Act. Its regulatory duties are divided between direct consumer protection and enforcement of antitrust laws.

The FPC was created in 1920, under the Federal Water Power Act and given responsibility to issue licenses for non-Federal hydroelectric projects. The agency now also has responsibility for regulating the interstate transmission of electricity and the interstate transportation and sale of natural gas.

"The SEC was created in 1934, under the Securities Exchange Act. The laws administered by the SEC relate to fields of securities (stocks) and finance, and seek to provide protection for investors and the public in securities transactions.

"The FCC was created in 1934, under the Communications Act. It has responsibility for regulating interstate and foreign communication by radio, television, wire, and cable.

'The FMC was created by Congress in 1961, with responsibility to regulate waterborne foreign and domestic offshore commerce and to assure that American international trade is open to all Nations on fair and equitable terms. In contrast to the Federal Maritime Administration of the Department of Commerce, which