S.3681 (REPORT NO. 2579) IN THE HOUSEOF REPRESENTATIVES JULY 12, 1954 REFERRED TO THE COMMTTEE ON POST OFFICE AND CIVIL SERVICE JULY 30,1954 COMMITTED TO THE COMMITEE OF THE WHOLE HOUSE ON THE STATE OF THE UNION AND ORDERED TO BE PRINT

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CIA-RDP58-00453R000200150004-4
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20
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November 17, 2016
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May 11, 2000
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REGULATION
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Approved For Re,gase 2000/08/25: CIA-RDP58-0653R000200150004-4 83D CONGRESS 2D SESSION Union Calendar No. 885 S. 3681 [Report No. 2579] IN THE HOUSE OF REPRESENTATIVES July 12, 1954 Referred to the Committee on Post Office and Civil Service JULY 30, 1954 Committed to the Committee of the Whole House on the State of the Union and ordered to be printed AN ACT To authorize the Civil Service Commission to make available group life insurance for civilian officers and employees in the Federal service, and for other purposes. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the "Federal Employees' 4 Group Life Insurance Act of 1954." 5 SEc. 2. (a) Except as provided in (b) of this section, 6 each appointive or elective officer or employee (hereinafter 7 called employee) in or under the executive, judicial, or legis- 8 lative branch of the United States Government, including 9 a Government owned or controlled corporation (but not in- Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 Approved For Release 2000/08/25: CIA-RDP58-0045500000150004-4 2 1 eluding any corporation under the supervision of $,he Farm 2 Credit Administration of which corporation any niember of 3 the board of directors is elected or appointed by private in- 4 terests) , and of the municipal government of the Iistrict of 5 Columbia shall, at such time and under such conditions of 6 eligibility as the Civil Service Commission (ereinafter 7 called the Commission) may by regulation prescrL be, come 8 within the purview of this Act. Such regulations may pro- 9 vide for the exclusion of employees on the basis of the nature 10 and type of employment or conditions pertaining thereto 11 such as, but not limited to, short term appointment seasonal 12 or intermittent employment, part-time employ ent, and 13 employment of like nature, and shall be issued my after i 14 consultation with the head of the department, establishment; 15 agency, or other employing authority concerned : (Provided, 16 That no employee or group of employees shall bI excluded 17 solely on the basis of the hazardous nature of employment. 18 (b) This Act shall not apply to noncitizen employees 19 whose permanent duty station is located outside State of 20 the United States or the District of Columbia, nor shall it 21 apply to commissioned officers and enlisted person el on ac- 22 tive duty. in or with the Army, Navy, Air Ford, Marine 23 Corps, or Coast Guard of the United States, ho have indemnity coverage under the Servicemen's Inde ity Act 25 of 1951 (65 Stat. 33). Approved For Release 2000/08/25: CIA-RDP58-00453R000~00150004-4 Approved For ReLase 2000/08/25: CIA-RDP58-00 3R000200150004-4 3 1 SEC. 3. (a) Each employee to whom this Act applies 2 shall be eligible to be insured for an amount of group life 4 ceeding $20,000 plus an equal amount of group accidental insurance approximating his annual compensation not ex- death and dismemberment insurance, in accordance with the following schedule : If annual compensation is- The amount of The amount of group accidental Greater than I3ut not greater than group life insurance shall be- death and dis- memberment insurance shall be- 0 $1, 000 $1, 000 $1, 000 $1, 000 2, 000 2, 000 2, 000 2, 000 3, 000 3, 000 3, 000 3, 000 4, 000 4, 000 4, 000 4, 000 5, 000 5, 000 5, 000 5, 000 6, 000 6, 000 6, 000 6, 000 7, 000 7, 000 7, 000 7, 000 8, 000 8, 000 8, 000 8, 000 9, 000 9, 000 9, 000 9, 000 10, 000 10, 000 10, 000 10,000 11,000 11,000 11,0()0 11, 000 12, 000 12, 000 12, 000 12, 000 13, 000 13, 000 13, 000 13, 000 14, 000 14, 000 14, 000 14, 000 15, 000 15, 000 15, 000 15, 000 16, 000 16, 000 16, 000 16, 000 17, 000 17, 000 17, 000 17, 000 18, 000 18, 000 18, 000 18, 000 19, 000 19, 000 19, 000 19,000 _ _ _ _ _ _ _ _ _ - 20,000 20,000 7 (b) Subject to the conditions and limitations of the 8 policy or policies purchased by the Commission under this Act, as may be approved by the Commission, the group accidental death and dismemberment insurance shall provide payments as follows : Loss Loss of one hand or of one foot or loss of sight of one eye. Loss of two or more such members. Amount payable Full amount shown in the schedule in (a) of this section. One-half the amount shown in the schedule in (a) of this section. Full amount shown in the schedule in (a) of this section. Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 Approved For Release 2000/08/25: CIA-RDP58-00453R000~00150004-4 4 1 For any one accident the aggregate amount of gr up acci- 2 dental death and dismemberment insurance that may be paid 3 shall not exceed the amount shown in the scbedul in (a) 4 of this section. 5 (c) The Commission shall by regulation provide for the 6 conversion of other than annual rates of compensatil'oon to an 7 annual basis, and shall further specify the types of c4mpensa- 8 tion to be included in annual compensation. 9 (d) Each of such amounts of insurance shall bq reduced 10 by 2 per centum thereof at the end of each full calendar 11 month following the date the employee attains age sxty-five, 12 subject to minimum amounts prescribed by the Commission, 13 but not less than 25 per centum of the insurance 17 in force immediately preceding the first reduction provided herein : Provided, That the amounts of insurance in force fkom time to time on an employee who becomes insured undeit this Act after having attained the age of sixty-five shall be thl same as would be in force had he been insured at age sixtyffive, and shall be based o ~ the lesser of his annual compens9 ion (1) at the time he becomes so insured, or (2) at age Oixty-five, provided he was eligible at that time to be insulted under this Act. SEC. 4. Any amount of group life insurance and group accidental death insurance in force on any employee at the 25 date of his death shall be paid, upon the establishment of a Approved For Release 2000/08/25: CIA-RDP58-00453R000 00150004-4 Approved For Rq[ ase 2000/08/25: CIA-RDP58-00*53R000200150004-4 5 1 valid claim therefor, to the person or persons surviving at the 2 date of his death, in the following order of precedence : 3 First, to the beneficiary or beneficiaries as the employee 4 may have designated by a writing received in the employing 5 office prior to death; 6 Second, if there be no such beneficiary, to the widow 7 or widower of such employee; 8 Third, if none of the above, to the child or children 9 of such employee and descendants of deceased children by 10 representation; 11 Fourth, if none of the above, to the parents of such em- 12 ployee or the survivor of them; 13 Fifth, if none of the above, to the duly appointed execu- 14 tor or administrator of the estate of such employee; 15 Sixth, if none of the above, to other next of kin of such 16 employee entitled under the laws of domicile of such em- 17 ployee at the time of his death. 18 If any person otherwise entitled to payment under this 19 section does not make claim therefor within one year after 20 the death of the employee, or if payment to such person 21 within that period is prohibited by Federal statute or regula- 22 tion, payment may be made in the order of precedence as 23 if such person had predeceased the employee, and any such 24 payment shall be a bar to recovery by any other person. 25 Si.c. 5. (a) During any period in which an employee Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 Approved For Release 2000/08/25: CIA-RDP58-0045 000 00150004-4 1 under age sixty-five is insured under a policy of i 2 purchased by the Commission as authorized in see on 7 of 3 this Act, there shall be withheld from each salary payment 4 of such employee, as his share of the cost of his group' life and 5 accidental death and dismemberment insurance, an_' amount 6 determined by the Commission, but not to exceed th rate of 7 25 cents biweekly for each $1,000 of his group life insurance: 8 Provided, That an employee who is paid on other than a 9 biweekly basis shall have an amount so withheld, de ermined 10 at a proportionate rate, which rate shall be adjusted to the 11 nearest cent. 12 Any policy of insurance purchased by the Com fission as 13 authorized in section 7 of this Act shall provide thai all em- 14 ployees eligible under the terms of this Act will e auto- 15 matically insured thereunder commencing on the d to they 16 first become so eligible : Provided, That any employee de- 17 siring not to be so insured shall, on an appropriated form to 18 be prescribed by the Commission, give written noti e to his 19 employing office that he desires not to be insured. If such 20 notice is received: before the employee shall have be~ome in- sured under such policy, he shall not be so :insured; if it is 22 received after he. shall have become insured., his insurance 23 under the policy will cease effective with the end of 24 period during which the notice is received by the et 25 office. the pay Lploying Approved For Release 2000/08/25: CIA-RDP58-00453R000400150004-4 Approved For Rejoase 2000/08/25: CIA-RDP58-00 53R000200150004-4 7 1 (b) For each period in which an employee is insured 2 under a policy of insurance purchased by the Commission as 3 authorized in section 7 of this Act, there shall be contributed 4 from the respective appropriation or fund which is used for 5 payment of his salary, wage, or other compensation (or, in 6 the case of an elected official, from such appropriation or fund 7 as may be available for payment of other salaries of the same 8 office or establishment) a sum computed at a rate determined 9 by the Commission, but not to exceed one-half the amount 10 withheld from the employee under this section. 11 (c) The sums withheld from employees under sub- 12 section (a) and the sums contributed from appropriations 13 and funds under subsection (b) shall be deposited in the 14 Treasury of the United States to the credit of a fund which 15 is hereby created. Said fund is hereby made available with- 16 out fiscal year limitation for premium payments under any 17 insurance policy or policies purchased as authorized in sections 18 7 and 10 of this Act, and for any expenses incurred by the 19 Commission in the administration of this Act within such limi- 20 tations as may be specified annually in appropriation acts: 21 Provided, That appropriations available to the Commission 22 for salaries and expenses for the fiscal year 1955 shall be 23 available on a reimbursable basis for necessary administrative 24 expenses of carrying out the purposes of this Act until said 25 fund shall be sufficient to provide therefor. The income Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 Approved For Release 2000/08/25: CIA-RDP58-00450000 00150004-4 8 1 derived from any dividends or premium rate adjustments 2 received from insurers shall constitute a part of said fund. 3 SEC. 6. Each policy purchased under this 4ct shall 4 contain a provision, in terms approved by the Commission, 5 to the effect that any insurance thereunder on any employee 6 shall cease upon his separation from the service or twelve 7 months after discontinuance of his salary payments, which- 8 ever first occurs, subject to a provision which sha 1 be con- 9 tamed in the policy for temporary extension of coverage and 10 for conversion to an individual policy of life insura ice under 11 conditions approved by the Commission, except th' t if upon 12 such date as the insurance would otherwise cease the em- 13 ployee (a) retires on an immediate annuity, and (b) unless 14 retired for disability, has had fifteen years of creditable 15 civilian service, as determined by the Commission, his life 16 insurance only may, under conditions determine by the 17 Commission, be continued without cost to him in thT, amounts 18 for which he would have been insured from time toj time had his salary payments continued at the same rate date of cessation. s on the SEC. 7. (a); The Commission is authorized, gard to section 3709 of the Revised Statutes as an~ ithout re- ended, to 23 purchase from one or more life insurance companies,, as deter- 24 mined by it, a policy or policies of group life and accidental 25 death and dismemberment insurance to provide the benefits Approved For Release 2000/08/25: CIA-RDP58-00453R000 100150004-4 Approved For Reuse 2000/08/25: CIA-RDP58-OOv3R000200150004-4 9 1 specified in this Act: Provided, That any such company must 2 meet the following requirements : (1) Be licensed under the 3 laws of forty-eight of the States of the United States and the 4 District of Columbia to transact life and accidental death and 5 dismemberment insurance, and (2) the amount of its em- 6 ployee group life insurance on the most recent December 31 7 for which information is available to the Commission shall on 8 that date equal at least 1 per centum of the total amount of 9 employee group life insurance in the United States in all life 10 insurance companies. 11 (b) The life insurance company or companies issuing 12 such policy or policies shall establish an administrative office 13 under a name to be approved by the Commission. 14 (c) The Commission shall arrange with the life insur- 15 ance company or companies issuing any policy or policies 16 purchased under this Act to reinsure, under conditions ap- 17 proved by it, portions of the total amount of insurance under 18 the policy or policies, determined as provided in subsection 19 (d) of this section, with such other life insurance companies 20 as may elect to participate in such reinsurance. 21 (d) The Commission shall determine a formula so that 22 the amount of insurance in force to be retained by each issuing 23 company after ceding reinsurance and the total amount of 24 reinsurance ceded to each reinsuring company shall be in S.3681-2 Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 A Approved For Release 2000/08/25: CIA-RDP58-00453f000 00150004-4 10 1 proportion to the total amount of each such company's group 2 life insurance in force in the United States on December 31, 3 1953: Provided, That in determining such proportions, that 4 portion of any company's group life insurance in f~rce on 5 December 31, 1953, which is in excess of $100,000,OQO shall 6 be reduced by 25 per centum of the first $100,000,000 of 7 such excess, 50 per centum of the second $100,000,000 of 8 such excess, 75 per centum of the third $100,000,,000 of 9 such excess; and .95 per centum of any excess thereafter : 10 Provided further, That the amount retained by or ~eded to 11 any company shall not exceed 25 per centum of the amount 12 of that company's total life insurance in force in the! United 13 States on December 31, 1953: Provided further, That if, 14 at the end of one year following the date of enactment of 15 this Act, in the case of any issuing company or r insurer 16 which insured employees of the Federal Government; on De- 17 cember 31, 1953, under policies issued to an association of 18 Federal employees, the amount which results from 19 plication of this formula is less than the decrease, the ap- if any, 20 in the amount of such company's insurance under si~ch poli- 21 cies, the amount allocated to such company shall, pon the i 22 first reallocation as provided in subsection (e) of this sec- 23 tion, be increased to the amount of such decrease: 4nd pro- 24 vided further, That any fraternal benefit associatio' which I Approved For Release 2000/08/25: CIA-RDP58-00453R000 00150004-4 Approved For Re,,jgpase 2000/08/25: CIA-RDP58-00*53R000200150004-4 it is licensed under the laws of a State of the United States or the District of Columbia to transact life insurance and is engaged in issuing insurance certificates on the lives of employees of the Federal Government exclusively shall be eligible to act as a reinsuring company and may be allocated an amount of reinsurance equal to 25 per centum of its total life insurance in force on employees of the Federal Government on December 31, 1953. (e) The companies eligible to participate as rein- 10 surers, and the amount of insurance under the policy or 11 policies to be allocated to each issuing company or reinsurer 12 may be redetermined by the Commission for and in advance 13 of any policy year after the first, on a basis consistent with 14 subsections (c) and (d) of this section, with any modifica- 15 tions thereof it deems appropriate to carry out the intent 16 of such subsections, and based on each participating com- 17 pany's group life insurance in force, excluding that under 18 any policy or policies purchased under this Act except in the 19 case of companies covered in the third proviso of subsection 20 (d) , in the United States on the most recent December 31 21 for which information is available to it, and shall be so 22 redetermined in a similar manner not less often than every 23 three years or at any time that any participating company 24 withdraws from participation. Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 Approved For Release 2000/08/25: CIA-RDP58-00453 `0002100150004-4 12 (f) The Commission may at any time discontinue any policy or policies company. it has purchased from any insurance SEC. 8. (a) Each policy or policies purchased ulpder this Act shall include, for the first policy year, basic (tables of premium rates as follows : (1) For group life insurance, a schedule of b mium rates by age which the Commission shall termined on a basis consistent with the lowest sel ,sic pre- tave de- .edule of basic premium rates generally charged for new group life insurance policies issued to large employers, this se edule of basic premium rates by age to be applied, excepts other- wise provided in this section, to the distribution b age of the amounts of group life insurance under the poli~y at its date of issue to determine an average basic premium rate per $1,000 of life insurance, and (2) For group accidental death and disme berment insurance, a basic premium rate which the Commission shall have determined on a basis consistent with the lo generally charged for new group accidental death and dis- memberment insurance policies issued to large e plovers. Each policy so purchased shall also include provisions whereby the basic rates of premium determined foil the first policy year shall be continued for subsequent policy years, except that they may be readjusted for any subsequ nt year, Approved For Release 2000/08/25: CIA-RDP58-00453R000~00150004-4 Approved For Rase 2000/08/25: CIA-RDP58-0W53R000200150004-4 13 1 based on the experience under the policy, such readjustment 2 to be made by the insurance company or companies issuing 3 the policy on a basis determined by the Commission in ad- 4 vance of such year to be consistent with the general prac- 5 tice of life insurance companies under policies of group life 6 and group accidental death and dismemberment insurance 7 issued to large employers. 8 (b) Each policy so purchased shall include a provision 9 that, in the event the Commission determines that ascertain- 10 ing the actual age distribution of the amounts of group life 11 insurance in force at the date of issue of the policy or at 12 the end of the first or any subsequent year of insurance 13 thereunder would not be possible except at a disproportion- 14 ately high expense, it may approve the determination of a 15 tentative average group life premium rate, for the first or 16 any subsequent policy year, in lieu of using the actual age 17 distribution. Such tentative average premium rate shall be 18 redetermined by the Commission during any policy year 19 upon request by the insurance company or companies issuing 20 the policy, if experience indicates that the assumptions made 21 in determining the tentative average premium rate for that 22 policy year were incorrect. 23 (c) Each policy so purchased shall contain a provision 24 stipulating the maximum expense and risk charges for the 25 first policy year, which charges shall have been determined Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 Approved For Release 2000/08/25: CIA-RDP58-00453MO0400150004-4 14 1 by the Commission on a basis consistent with the general 2 level of such charges made by life insurance companies under 3 policies of group life and accidental death and disn.ember- 4 ment insurance issued to large employers. Such mximum 5 charges shall be dontinued from year to year, except that 6 the Commission may redetermine such maximum 6harges 7 for any year either by agreement with the insurance com- 8 pany or companies issuing the policy or upon writter notice 9 given by it to such. companies at least one year in ad~,ance of 10 the beginning of the year for which such redetermined maxi- 11 mum charges will be effective. 12 (d) Each such policy shall provide for an accounting 13 to the Commission; not later than ninety days after the end 14 of each policy year, which shall set forth, in a form approved by the Commission, (1) the amounts of premiums actually accrued under the policy from its date of issue to they end of such policy year, (2) the total of all mortality and other claim charges incurred for that period, and (3) the amounts of the insurers' epense and risk charges for that period. 20 Any excess of the !total of item (1) over the sumo items 21 (2) and (3) shall be held by the insurance company or 22 companies issuing the policy as a special contingency eserve 23 to be used by such insurance company or compan. es for Approved For Release 2000/08/25: CIA-RDP58-00453R000400150004-4 Approved For Neelease 2000/08/25: CIA-RDP58-0"C 453R000200150004-4 15 1 charges under such policy only, such reserve to bear interest 2 at a rate to be determined in advance of each policy year by 3 the insurance company or companies issuing the policy, 4 which rate shall be approved by the Commission as being 5 consistent with the rates generally used by such company or 6 companies for similar funds held under other group life in- 7 surance policies: Provided, That, if and when the Commis- 8 sion determines that such special contingency reserve has 9 attained an amount estimated by it to make satisfactory pro- 10 vision for adverse fluctuations in future charges under the 11 policy, any further such excess shall be deposited in the 12 Treasury of the United States to the credit of the fund. If 13 and when such policy is discontinued, and if after all charges 14 have been made, there is any positive balance remaining 15 in such special contingency reserve, such balance shall be 16 deposited in the Treasury of the United States to the credit 17 of the fund, subject to the right of the insurance company 18 or companies issuing the policy to make such deposit in 19 equal monthly installments over a period of not more than 20 two years. 21 SEC. 9. The Commission shall arrange to have each 22 employee insured under such policy receive a certifi- 23 cate setting forth the benefits to which the employee is Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 1 entitled thereunder, to whom such benefits shall be Approved For Release 2000/08/25: CIA-RDP58-00453#0000150004-4 16 payable, 2 to whom claims should be submitted, and summarizing the 3 provisions of the policy principally affecting the e ployee. 4 Such certificate shall be in lieu of the certificate 5 which the insurance company or companies would otherwise 6 be required to issue. I 7 SEC. 10. (a) The Commission is authorized tot arrange 8 with any nonprofit association of Federal emplc~ yees for 9 the assumption by the fund of any existing life i lsurance 10 agreements of such association with its members retired or 11 otherwise separated from the Federal service and o insure 12 the obligations assumed with any company or companies 13 meeting the requirements of section 7 (a) . 14 (b) Any such arrangement shall provide that payments 15 by such insured members for life insurance only shal1 there- after be made at the same rates to the fund, under sch con- ditions as the Commission may prescribe. (c) Any such arrangement shall further prov de that there be transferred to and deposited in the fund the esser of the following amounts : (1) The total assets of the life insurance such association; or fund of (2.) The amount required to meet the liabilities 24 under life insurance agreements assumed, taking nto ac- 25 count the payments as provided in paragraph (b) . The Approved For Release 2000/08/25: CIA-RDP58-00453R000 00150004-4 Approved For .ease 2000/08/25: CIA-RDP58-O 453R000200150004-4 17 1 determination of this amount shall be based on an ac- 2 tuarial valuation satisfactory to the Commission, pro- 3 cured by the association without expense to the 4 Commission. 5 (d) The arrangements authorized by this section shall be 6 made only with those associations which terminate life insur- 7 ance agreements with all of their members within one year 8 after the date of enactment of this Act, and such arrange- 9 ments shall apply only to life insurance granted to any mem- 10 ber by any such association before January 1, 1954. 11 (e) In any case in which the fund assumes a lia- 12 bility for life insurance as provided in this section in 13 respect to a person who (1) subsequently becomes eli- 14 gible to be insured as an employee under this Act, and 15 (2) does not give notice, as provided in section 5 (a) , 16 of his desire not to be so insured, the life insurance pro- 17 vided under this section shall terminate as of the date 18 such person becomes insured as an employee. 19 SEC. 11. Except as otherwise provided herein, the Com- 20 mission is hereby authorized to promulgate such regulations 21 as may be necessary and proper to give effect to the intent, 22 purposes, and provisions of this Act. 23 SEC. 12. (a) There is hereby established an Advisory 24 Council on Group Insurance consisting of the Secretary of the 25 Treasury as Chairman, the Secretary of Labor, and the Direc- Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 Approved For Release 2000/08/25: CIA-RDP58-00453#f"f0000150004-4 3 year, or oftener 18 1 tor of the Bureau of the Budget, who shall sere without 2 additional compensation. The Council shall met once a at the call of the Commission, and shall re- view the operations of this Act and advise the Commission on matters of policy relating to its activities there (b) The Chairman of the Commission shall committee composed of five employees insured under ender. tppoint a this Act, who shall serve without compensation, to advise the!Commis- 9 sion regarding matters of concern to employees Act. der this SEC. 13. The Commission shall report annuallf to Con- gress upon the operation of this Act. SEC. 14. The district courts of the United St~tes shall 14 have original jurisdiction, concurrent with the I Court of 15 Claims, of any civil action or claim against the United States 16 founded upon this Act. 17 SEC. 15. The insurance provided by this Act and the 18 withholdings and' contributions for that purpose shall become 19 effective when directed by the Commission. Passed the Senate July 8 (legislative day, July 2), 1954. Attest : J. MARK TRIC , Secretary. Approved For Release 2000/08/25: CIA-RDP58-00453R000I~00150004-4 Approved For R ase 2000/08/25: CIA-RDP58-OO 53R000200150004-4 Approved For Release 2000/08/25: CIA-RDP58-00453R000200150004-4 *alp* I Approved For Release 2000/08/25: CIA-RDP58-004531MOO 00150004-4 H Op