ants, it was limited by all relevant constitutional restrictions on governmental action, including the rights to privacy, due process, and a fair trial. The defendants again argued that the electronic surveillance statute did not authorize disclosure under any of its subsections. The defendants' reading of the relevant legislative history convinced them that section 2517(2) (which the Government cited as authorization for release) applied only to law enforcement officers. With respect to section 2517(3) (which the committtee cited as the primary authorization for release), the defendants contended that it applied to the giving of testimony only, not the turnover of actual recordings and transcripts of recordings. In any event, the defendants reiterated that they should be permitted to litigate the legality of the interceptions before any disclosure was permitted. They noted that even a preliminary review had indicated that, for example, some privileged attorney-client conversations had been intercepted. According to the defendants, section 2517 limited use and disclosure to legally obtained interceptions, and therefore the Government lacked the authority to release illegally intercepted material. Turning to the issue of grand jury secrecy, the defendants claimed that the material was within the scope of Rule 6(e) because it was at the "very heart" of the grand jury investigation and would reveal what occurred before it. Furthermore, the defendants noted, the Committee has failed to make a particularized showing of compelling need to justify the disclosure of the large amount of material involved. Finally, the defendants again argued that a protective order was necessary to protect their right to a speedy and fair trial. They insisted that they did not have to show that actual prejudice would result from the release of the material but only that there was a risk of prejudicial publicity. On July 1, 1981, U.S. District Judge Marshall heard arguments on the defendants' motion for a protective order and ruled from the bench that it was denied. The Justice Department was, however, directed by the court to notify counsel for the defendants if it received notification from the Committee of any anticipated disclosure pursuant to the Committee's resolution of June 16, 1981. In sum, Judge Marshall stated that the disclosure by the Justice Department to the Committee "clearly" fell within the scope of the electronic surveillance statute, both because the Committee fit within the definition of "investigative officers" to whom material could be released, and because section 2517(3) explicitly authorized such disclosure. The Judge specifically rejected the defendant's arguments that disclosure was limited to civil proceedings. Judge Marshall also rejected the defendants' contention that Rule 6(e)-dealing with grand jury secrecy-barred disclosure, ruling that the materials involved had "an independent evidentiary existence" from the grand jury. With respect to possible adverse pre-trial publicity, Judge Marshall, while expressing his concern, concluded that he had "confidence" in the procedures the Committee had worked out with the Justice Department, and in the Senate itself, to keep the information confidential. The Judge noted as well that the Senate had an important responsibility under the Constitution to police its own members and it should not be denied relevant information to enable it to do so without sufficient cause. Finally, Judge Marshall refused to withhold release of the materials to the Committee while the defendants attempted to have the evidence suppressed because the surveillance was allegedly unlawful. Agreeing with the amicus brief that the relevant legislative history demonstrated that Congress did not contemplate that suppression would be an available remedy as far as a Congressional investigation was concerned, Judge Marshall ruled that he did not have the authority to suppress the tapes with respect to their use by the Committee and therefore it would serve no purpose to withhold them until he entertained a motion to suppress their use at trial. Status-The criminal case is pending in the U.S. District Court for the Northern District of Illinois, although the involvement of the Senate Ethics Committee terminated-for the time being at least-with Judge Marshall's ruling of July 1, 1981. It is possible that the Committee may once again become involved in the case if the investigation of Senator Cannon should warrant it. The transcript of the July 1, 1981 ruling of the district court is printed in the "Decisions" section of this report at page 407. XIII. Congressional Interference With the Administrative Process Securities and Exchange Commission v. Wheeling-Pittsburgh Steel Corp. No. 80-1375 (3rd Cir.) and Misc. No. 7507 (W.D. Pa.) Beginning in 1977, Wheeling-Pittsburgh Steel Corporation ("WP"), a Delaware Corporation with offices in Pittsburgh, Pennsylvania, sought to obtain loan guarantees from the Economic Development Administration of the U.S. Department of Commerce ("EDA") and the Farmers Home Administration of the U.S. Department of Agriculture ("FMHA") to install pollution control equipment and a rail mill at Monesson, Pennsylvania. The loan was critical to W-P and was vigorously opposed by its competitors, one of which was Colorado Fuel and Iron Company ("CF&I"). W-P received one "letter of intent" on December 28, 1978, and another on January 9, 1979 indicating that EDA and FMHA would recommend loan guarantees of $100 million and $40 million, respectively. On April 27, 1979, in a "Report to the Annual Meeting of Stockholders," Dennis J. Carney, Chairman, President and Chief Executive of W-P, referred to the status of the loan guarantees. Mr. Carney's report stated: We obtained commitments for federal loan guarantees of $140 million, and for a $10-million direct loan through the State of Pennsylvania. These commitments will enable us to finalize financial arrangements in June through a consortium of insurance companies. On June 11, 1979, Mr. Carney appeared before a subcommittee of the Committee on Appropriations of the U.S. Senate. He was interrogated at length by Senator Lowell Weicker of Connecticut, an opponent of the loan guarantees, concerning the use of the word "“commitments" in the report to the shareholders. On June 14, 1979, Senator Weicker sent a letter to the Securities and Exchange Commission ("SEC") suggesting that violations of the Securities and Exchange Act (17 U.S.C. § 202.5(a)) and Rule 10b-5 had occurred because the word "commitments" was a material misrepresentation of fact. On July 31, 1979 the SEC ordered a private formal investigation into the activities of W-P and the statements of Mr. Carney. The order empowered SEC officers to issue subpoenas, take testimony, and compel the production of documents. The SEC issued a subpoena duces tecum to Mr. Carney on August 2, 1979. Mr. Carney appeared for questioning before Martin Aussenberg, a SEC staff attorney, whose inquiry focused primarily on the loan guarantee process of EDA and FMHA. During the final phase of the deposition, Mr. Aussenberg instructed Mr. Carney to disclose the names of every company that had approached him, or he had approached, since January, 1979, concerning possible acquisition by or of W-P. Mr. Carney refused to divulge names or turn over any documents pertaining to those discussions. On August 17, 1979, a civil action to enforce the subpoena was filed by the SEC in the U.S. District Court for the Western District of Pennsylvania. On August 27, 1979, W-P, in its answer and counterclaim, set forth four separate defenses: (1) the information sought was irrelevant to any legitimate inquiry by the SEC; (2) the subpoena demanded confidential information and disclosure would cause irreparable harm to the company; (3) the subpoena was issued in bad faith and for the purpose of harassment; and (4) the investigation constituted a misuse and abuse of an administrative agency by persons who opposed the grant of Federal loan guarantees to W-P. On December 17, 1979, the district court issued its decision. [Securities and Exchange Commission v. Wheeling-Pittsburgh Steel Corp., 482 F. Supp. 555 (W.D. Pa. 1979)] The SEC's request for enforcement was denied. Although the court rejected W-P's arguments that the information sought was irrelevant and confidential, and that the SEC had acted in bad faith, the court found that the evidence established that the SEC's investigative process had been used by CF&I, Senator Weicker, and his staff for the improper purpose of blocking consummation of the Federal loan guarantees. In support of this conclusion, the court made detailed findings of fact. The court found that in September 1978, before W-P had received the letters of intent, CF&I had hired a Washington, D.C. attorney to assist in opposing the granting of the loan guarantees. Subsequently, in February 1979, two members of Senator Weicker's staff met with the attorney. (At the time, Senator Weicker was ranking minority member of the Subcommittee for State, Justice and Commerce Appropriations of the Senate Committee on Appropriations, which had jurisdiction over supplemental appropriations for the EDA and was essential for the W-P loan guarantees.) Between February and October 1979, the attorney met with Senator Weicker's administrative assistant ten to twenty times. The attorney furnished copies of the controversial report to the SEC, along with the letters of intent from EDA and FMHA, and requested that W-P withdraw statements using the word "commitments." Senator Weicker publicly attacked the proposed loan guarantees at a June 4, 1979 hearing. The attorney and Senator Weicker's staff met to discuss strategy prior to the key June 11, 1979 hearing. The subcommittee approved the EDA appropriation for the W-P loan guarantee over the objection of Senator Weicker, who declared he would take the matter to the floor of the Senate. He did so, and at the same time solicited the cooperation of the SEC. Three days later after the Senate subcommittee hearing, Senator Weicker had a letter hand delivered to the head of the SEC's Division of Enforcement requesting an investigation of the use of the term "commitments" instead of "letters of intent." After the inquiry had begun, Senator Weicker, on June 25, 1979, introduced an amendment on the floor of the Senate, along with nine others, to the supplemental appropriations bill for EDA to preclude EDA from providing Federal loan guarantees to corporations under investigation by the SEC. During the Senate debate on the amendment, a heated exchange occurred in which U.S. Senator John Heinz of Pennsylvania questioned the motives of Senator Weicker. The amendment was defeated. On the basis of its findings of fact, the court concluded that the SEC had allowed, and even encouraged, third parties to unduly influence its decisions. In this regard, the court stated: In our view, the Commission owes a duty to the public, who are its clients, to disassociate itself from persons who are knowingly abusing its process. While we do not suggest that the agency adopted the motives of the third-parties, the totality of the circumstances here presented creates the appearance of a partnership between the Commission and these persons. Wittingly or not, the agency has permitted, and at times encouraged, the abuse of its investigating function. This court will not compound the gross lack of judgment by sanctioning such abuse. [482 F. Supp. at 565-66] The court rejected the SEC's argument that the motivations of its sources were totally irrelevant, stating: [W]e reject the proposition that the motivations and ac- On February 14, 1980, the SEC filed a notice of appeal to the U.S. Court of Appeals for the Third Circuit. The case was argued on July 8, 1980, and reargued on November 17, 1980. The issue on appeal was whether abuse of the investigatory function by the SEC was sufficient grounds to deny enforcement of the agency subpoena without a showing of bad faith by the agency. A decision by the court of appeals was rendered on January 21, 1981. [Securities and Exchange Commission v. Wheeling-Pittsburgh Steel Corp., 648 F.2d 118 (3rd Cir. 1981)] The order of the lower court was vacated and the case was remanded for additional testimony and clarification of the prior district court opinion. The court of appeals noted that the proper focus in this litigation was limited to the integrity of the judicial process-that is the propriety of allowing the SEC to utilize the court to enforce the SEC's subpoena. The court of appeals expressed doubt as to "whether the parties correctly perceived the distinction between abuse by an agency of the court's process and abuse by third parties of the administrative process". [648 F.2d at 125] In the appellate court's view, the district court itself failed to make that distinction. Accordingly, the case was remanded in order to clarify the issue. In this regard, the appellate court noted: We are unable to determine from the district court's memorandum whether it properly focused on the motivation of the Commission rather than on the motivations of third parties. Although the court rejected W-P's argument that the SEC had acted in bad faith, district court op., 563564, and that the SEC had adopted the illicit motivations of the third parties, id. at 565, it did find that the SEC had "permitted, and at times encouraged, the abuse of its investigative process," id. The court further determined that the charges of securities law violations were "patently frivolous," Id. at 566. This court has previously made clear that the proper focus in a challenge to an administrative subpoena is motivation of the agency itself, not that of third parties. See Cortese, 614 F.2d at 921. Today we make clear that the ultimate determination is whether judicial enforcement, as requested by the agency, will result in an abuse of the judicial process. From the record before us we are unable to ascertain whether the district court's determinations accord with these precepts. In addition, we have difficulty reconciling the court's refusal to find that the Commission was improperly motivated with its determination that the Commission permitted third parties to abuse its process by its decision to pursue frivolous charges. In these circumstances, we conclude that the proceeding should be remanded for clarification of these issues. [Id. at 127-128] The court of appeals concluded by noting that if the district court, after remand, "adheres to its conclusion that the court's processes were being abused, but, at the same time, that no case of SEC bad faith was proved, the district court should explain more clearly the other reason or reasons for its determination." [Id. at 128] While the appellate court did not list all possible "other reason or reasons," it did note that a court may properly refuse to enforce an agency subpoena not only when the agency had demonstrated bad faith, but also when an agency has acquiesced in an abuse of its process. The appellate court then noted the difference between bad faith and acquiescence: |