Administrative law and procedure under the NIRA

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Title:
Administrative law and procedure under the NIRA
Series Title:
Work materials - Office of National Recovery Administration ;
Physical Description:
vi, 368 p. : ; 28 cm.
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English
Creator:
Aiken, Paul C
United States -- National Recovery Administration
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NRA Organization Studies Section
Place of Publication:
Washington
Publication Date:

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Subjects / Keywords:
Administrative law -- United States   ( lcsh )
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bibliography   ( marcgt )
non-fiction   ( marcgt )

Notes

Bibliography:
Includes bibliographical references.
Additional Physical Form:
Also available in electronic format.
Statement of Responsibility:
by Paul C. Aiken.

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University of Florida
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All applicable rights reserved by the source institution and holding location.
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aleph - 020509169
oclc - 01159772
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AA00018845:00001

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OFFICE OF NATIONAL RECOVERY ADMINISTRATION

DIVISION OF REVIEW




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II -


ADMINISTRATIVE LAW AND PROCEDURE UNDER THE NIRA


By


Paul C. Aiken








WORK MATERIALS NO. 81


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NRA ORGANIZATION STUDIES SECTION
MARCH. 1936

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OFFICr OF T TINAL "^C(OER AITI"ISS"IAT'AIO

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Digitized by the Internet Archive
in 2012 with funding from
University of Florida, George A. Smathers Libraries with support from LYRASIS and the Sloan Foundation


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"OR7T7ORD


This studv of Ad'-iinistrativ' L.- Pnd Freot-iiur, und-r thep 7IRA
was rronrod by Fr. Paul C. Airn of the 1-A Or.-nnization Studies S-c-
tion, Hr. Willipni W. Brrdsleir in 'hpre.

As the title ineicptes tha autl or hp. ttrTotod nn administrative
law studOv of th0 I'ntionrl Industrial H'-covrr Act rnd its administra-
tion by I7A. He d00 it desirnblo to include an introductory
discussion of ad-inistrative theor". This is th- ouroose of Port I,
in -hich tho traditional theories are oxariin-d and a surv-r is then
madm of --hat th- -'ourts say they do -nd of -hat the courts actually
do in the cases -or-sntpd to thpm.

Th- r-ason for th0 study lis in !'hat -7A did or failed to do as
Smatter of "due processs" of la-,. Th subsinc of th a study, -ith
rpsnoct to nr_ nroc-durci is to be fo-u:ai. "'Yi'Part I! -in the consi-dat-ftion
of procedural an. suistentiv- nrobl-ris in noo-'-'-iing and code
administration, -hich might hnva be-n suj-act-d to r-.v-rsR judicial
treatment had not th, cocos bTon t=r-inat-d by th" Sior-nr- Court's
decision of ]Ty ?7, 1935.

The reader ,ho is -orimn.rilv int-r-st r in th- portions of the
study d0finiteOv r l tto. t 7TPA nlay th-reforp "'ish to turn at once
to Part II, b-inninr --ith Cha-ot-r V, although it is to be observed
that this chanter 7'as -ritten mRrely .s a -oart of the author's
concaot of the stud.-r as a '.holh. It -las not thought of merely 3as an
introductory cha-otr to Pprt II.

A third Dart of th- studr treats -ith th- constitutional -owers
and their delegation involved in the 7IRA and 3R-A. Tho lines of cases
and the theories nec-ssarv to th no-oers purported to have been granted
by. the ITIRA ar- nutlined. Th-n, the manner of the delegation of
thse -oor-ers is considered, '-ith -DarticUlar errohasis given to the
remote and numerous redplegations, as well as to the question of what
persons could rroT-rly -xercise the -oo-rs of thp Act.

LastlVr, in a desire to offer more than a critical analysis, the
studr points out possible mpens of for-stalling too close judicial
control.

It can hardly b- d-nied that under the provisions of the
R-covery Act the '`RA processes of code-makinp -nd code Prmndm-nt
'ere legislative in nature. 3-cause of this it cman be argued
reasonably that "due -rocess", in the procedural sense of notice and
the develo-ment of facts through hearings sufficient to justify the
approval of coco's and amendments, -ps not necessary in NPA code-
mp'"ing to any greater d-gree to Anv tr reatr degree than it is
necessary in the legislativ- pcinns of the Congress. In recognition
of this point of vieR the author has included a discussion of it in
Chaptr7 V. It is his intent that the stud.- should convey the
impression that the observance of -procedural "due process"' on the
part of YTRA in code-maR-ing ,-as dJsirnbl", because of the possibility


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tht thp courts in ca.ss arisin-. in connection -ith th" -nforcern nt
of codas would giva consid.orptio" to th0 ffct-findin'- methods of NRA.
It is not his intent that the st'i'i" should cnv"-, th- i'nrossion that
tho obsorv.rnc0 of ororolur.l "'r.- rrocess" was a =ra.uirLont of r.od-_
mn'king in an absolute s ns .

It is fully rcngni'ce. that students of the subject of this studv,
Particularly as it Pnters into a^-ects of administrative In-T in which
th- courts have hpood Oo,-n f,- ricisiors, ny hav= points of vi,- in-
consistont -ith the authors. Tl1o study, of course, presents the
author's -noint of vip and. th comm-nts Pne conclusions are his own
end not official utterances. In tho addend'.im -ill be found a comment
by one reviewer of th1 '-anuscri-ot.

At the back of this r--ort r'ill be found a brief st1teP1nt of the
studies undertaken 'b- tho Division of Rovipm,.







L. C. IIershall
Director, Division of RBview


!'nrch 23, 1936


-ii-


983






TABLE: Gk CGITMYTS
P, Letter of Trnrnsmittal ..................................... .... i

A C.'- e Review .................................. ...........1

CHAPTEi-2 I

Introduction
Part 1. An Adminirtr.-tivp Lay background .................. 4
.AYT E]" I
CHAP'T,,R II

ThThe TIhecr- f Adninistration
I. Sevara.tion of Governmental Povwers .................... 7
II. Gro'.-'th of A.'.,'i-iistration an(d
Ad -inistrative LT.i .................................. . 8

III. Delection of Povier 'nd Pinlity in
its Exercise ...... .................... ............................. 8
cu.r-':- iii
CHA?... Il

Revie'- byr the Courts and S,- efuards A-,.inst Abuse
of Ac'.:inistrative Poier

naturall" a. "i ier" law.................................. 13
"D.e Process of L'-". . . ............ .......... .. .... 14
Ultra c-nC Intra Vires ....... ............... ............ ............ 15
Jurisdictional Pnd Constitutional Fact..................... 15
Qaestionscf'La ........ ....... ................ 16
Discretionary and ministerial Action ........................ 16
Requirements of Evidence... .... . . . .. .. .. .. . . . 17
Self-Limitation by the Courts "Political
questions" Exhausting Available Administrative
Remedies. ............................... ............. 18

CHAPTEll IV

Administrative Finality anC the C,,ases.
I. -arrow Review.......... ............................... .. ............ 20
The Government and. its Internial Af'ffirs................. 21
The Government exten(.s a Privilege. ...................... 22
The Governmaent supplies v Service....................... 24
II. B c'a,2 Review ........ ...... 25
The Interstate Comerce Co mission...................... 25
The Fedoril Trade Comnissin .......................... 28
Sfubstantive Due Process anC- Private Property_
"Business Affected with a Public Interest".............. 29
III. Jurisdictional Fact .......... ......... ............ .. 32
Use to Circumvent Y.-.rroar Reviewv .............................. 32
Recent Imr ortance ... ... ....................... ........... 33
Avoiding the Theory..................................... 33


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9 S33,3





TABLE OF C0OITE1ITS 2

Page
IV. General ProcedurFl Requircments. .. .
Ill-Definepd ............. ...... ... .. .. .............. 74
Requirements Vary 'Jithin Field With Fields ........ 34
Usually Acceote,. 7equire.irnts Notice Hearing...... 35

Part II. Problems of Ad:inistration and Administrative
Law in IRA .............. .. .. .. ... .... .**. 37

CAFTER V

Th" Sc-'-i,: ie .. .
Legislation by Scheme. .................... ......... 38
Legislation or Aijudication -The Tariff Commission......... 41
The Interstate Commerce C -' mission Fearing Require-
ment of the Act ................... .................. . . ... 43
Forcing Issuance or llestraint (f C'.eLs... .................... 49
Ccnf.itional Approval.................. .......... ............... 50

CHAPi R VI

The A6-d:inistrative Approach ... .
The Problem and tie Technique........................... 52
Position of Industry war{;aini with MRA ................ 52
Rule by Majority Vote...................................... 53
Position of NRlA- Haste and Confusion...................... 54
Procedure Personnel............ ............... ......... 54
Industry Self-Government ................................... 56

CHAPTER VII

Jurisdiction and Jurisdiction-l Fnct

7i.thin Purposes of the Act.............................. 59
Relation with other Governmental Agencies.................. 59
Prr_)onents' Representative Character....................... 60

CHAPTER VIII

The Procedural Scheme and the Hearings.....
The Act and Procedure................ .......... .......... 61
Controversy and Facts ...................................... 62
Short and Inadequate Hearings ............................. 63
Ar!j Jent annd Opinion ........................ ............... 63
Cross E intin. .................................. 64
Rebuttal Testimncny anCd Confidential 2eports................ 65
Relation to Witnesses Subpoena ........................... 66
Oath ...................... .................... ............. 67
Oral Hearings .............................................. 67


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TADT3U: O CIiTiTTS 3
C:A?'7.I< IX

FinCin : '.r.J the Record :'
Adnlissibilit- ar. : 7..'ei{:ht rf Evidence ...................... .. 3
Contents of tAe Eecorc ...................................... 68
Iinc'-i1s n.' the Factual. Bsis Pnd Ex, ;.,les. ... ........... :-
Tacit Approvol Ti ......... ................... 74
Bu:ren of Proof... ..... .. ........ ........ ... 74
Publication of Findings ............ ........... .............. 77

CTAi'TER X

Prol1le.is in Publicn.tin, IYotice, and other Administrative
Action b', IR.-. ...
I. Publication of A&I':ini,-te-.tive Regulations ................. 79
II. i1otice an6 Participation in the Inidustries' ............... 81
Activities . ... ............................................. 83
III. Other Fo.-nw1 Actions b-7 uRA ............................. 83
Interpretations .... .......... ........... ................. ... 83
A lendr.; lents. ........... ................ ... .........
::en- r tions and. .:ce-:tions . .. .... ........ ....... ........ 84
Sttys................. ........ . . . . .............. 85
IV. S.ee.:3r Deterr.ii nations ............. ...... ... ....... . . . . 85
V. Violations by MRA -f Its O-n Procedure ................... 85

CHAPTER XI

Problems in Substantive Due Process of Law and
AC. 1i n -- otre .ti n.
I. Ref.'n.,nabbleness . .... ................. .... ..... .... 87
II. A Probleu in Adrinistration ................................ 89
III. Lfalfeasance ...................... ... . .... .. ....... . 94

CHAPTER XII

Coc.1ic:nce and Enforcement Activities.
The Problem of Enforcement.. ....................... .......... 97
T' e Staff............. ............. ... ................ ...... .. 97
Interpretations as a Problem................................ 97
LUethocs of Enf'rcrnent Limitation of Act Boycott -
"Conpliiance" -Suits by Indivicuals Enforcemient ......... 97
Proce.dure................. . . . . . . ..... . .. 98
Ar'.".ii-:i strative "Due Process".. ......................... .... 102

Part III. Powers cf thr T.I.R.A. and Their
Deler-Ption... ....................... 103





TABLI (. CCTE'-.TS 4


CIHAPTIE XIII

Po,.:c's of the I'.I.1.A..
Specific Povrers ........................................... 104
Ii- ie". cn Incidental Powers. ....... ............ 104
The Co ierce Concept ..................................... 106
The Concept of Unfair Conroetitinn........ .......... 109
T'e Conceot of "Business Affected with a Public Interest". 109
Lr.bor Cases. ......... 0 . . .... ... .. 1
The "Enc regency" Doctrine. .............. . ... .... .......... 111
The Problem of "Assessments" ............................. 111

Chapter XIV

Delegc.tion by Congress.
History of the '.---in "Deleta tests non Otest
ele. ari". .. ......... ................ ............... .... 113
Delegation of Legl Theory ................................ 114
Dele-ation and. StnJdards in the Cases................... 114

CHAPi-ER XV

Delegation b- the President end i.R.A.
Delegation A Chpr.ncteristic rf Ad:linistration .......... 117
Delegation by the PresiCent and Rernote'redelogation....... 117
Code Authorities as Private Persons....................... 119
Private Agencies in Administering Law ..................... 120
Public Character of Code Authority Activities............. 122
Cod.e Authorities as Interested Persons.................... 122
Conclusion on Legal Status of Code Authorities............ 124
Standards for the Ex:ercise of Poer ...................... 126
Powers Exercised by CodeAuthorities...................... 127

Part IV. Conclusions and Suggestions..................... 131

C-AJTi XVI

Forestalling "Broad Review"................ ............. 132

C:Arm: -XVII

Adriii.ictrative Safeguards and the Challenge of

Table. fini stration.ses .................. ..................... ....... 134
Table cf Cases...... .. ...... ...... .......... ...... ..... 345

Table of Treatises, Briefs, Reports, et cetera................. 355

Table of La7 Review Articles, iTotes and Comiment............... 359

Add.endu-.. . .................................................. ... 364


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A GEIE"AIL HRVI"

Th- writer 2!h"s long h"-d nn inter-st in problems of P'aninistra-
tive la- and acP'inistrntior. Soon after he b-<7pi- a -oart of the ITRA
staff he realiz-d that he hnd an oinortunity to ob7erv" nt first hnnd
the operations of one of th- lTrgest administrative efforts over
undartnaken by our Government. As AI'-'s -dministrntive history unfolded,
hp became acutely a'are that it res-nted 1"inv problems -hich could be
valuably ep-oroach'd from the vip-ooint of administrative la,.w At the
time of the Sch'chtgr d.pcision (]Try P7, 1935) h, had coll-cted a
consid-rable amount of material to be 'ispe in a study -hich he intended
to "mak ind.opndent of 7UFA.

The intent of this stud"- hns not P.lone bon to state merely the
-stablishd. administrative law found in the cases or logicplly de-
ducible from them. In th- empirical stat- of administrative law
there might be little of value in following such a narrow approach.
Rather, it has been intended to su.i7st -'hat a,- might reasonably
be assumed from the supe-stions mTc by the courts in their opinions,
or the future of the law indicated by judicial trends. This study
is not alone limited to "due -orocess of I-," in the limited sense that
tlpre must b- a. rell established$ rule based uwon this conc-nt before
a problem can be considered. It is felt that the courts have indicated
that, in the main, .oorl administrative -oractice rill provide good law.
The administrative orantice must be such that it does not sacrifice by
efforts toward efficiency thp affording of full justice to every
individual. This dops not m-an the tying doM'n of administration by petty
procedural requirements, but it does mpan that the old procedural re-
quirrvmnts and Pnri ne,' ones necessary to Pssure equal justice to those
affected by administration mist be maintained.

The first dutv of this study, since probably the majority of its
readers will not b- train-d in administrative law, is to establish a
background in that field. The lega 1 theory of the separation of
governmental oo,-rs, the delegation of oowors, is a necessary pert of
such background. To understand our l0.a. system, judicial review with
all its many aspects must be considered. The administrative law
created by our courts sets forth two theories of judicial. review, one
broad, the other narrow. The elements, historical, psychological, end
analytical entering into these theories of judicial review are essential
to an understanding of ho- the judicial mind might a-proach the
administrative -oroblem or-s-nted by NRA.


I/ The author's interest was first directed to the question of the
finality of administrative determinations -hen as a graduate
student at Princeton, Professor Bdward S. Corwin pointed out the
problem to him as a subject for research. Other questions of
administrative la- have been supirsted by another former teacher,
Professor J. Forrester Davison of the Georp 7ashington University
LpW School, to whom the author is socially indebted, as also he
is to Professor Charles S. Collier, of George 7ashington University
Law School, Dr. Henrv Zeining of Princeton University, Judge
P. W. Speard of the Federal Commu.niceations Commission and Mr.
Edmund H. Worthy, an attorineqr for the Securities and Exchange
Commission for their encouragement and assistance.
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The subject matter of the NIRA involved matters of disputed economic
and social character. Such problems when treated administratively have
been subject to the most careful scrutiny by the courts. Therefore, it
would seem that ITRA should have foreseen the possibility of "broad review0
and attempted to have met it. The scheme underlying the Act, both ad-
ministratively end procedurally, had little precedent, and none for the
extended use to which it was put. HPA should have reasonably expected
procedural requirements of the nature found in the "broad review" field-
to be imposed upon it. In fact, little thought seems to have been given
to the entire question of procedure until over a balf year after the
passage of the Act.
i
As an illustrative agency, ITRA was in a position considerably more
difficult to define than that of most administrative boards. As the
agent of the President, it may have been endowed with certain legal
attributes enjoyed by him. Obviously grec.t difficult lay in the fact
that the position of final administrative authority was occupied by the
President.

A variety of technical problems in code making and code administra-
tion provide the major portion of this study. There is little need to
fully state here all of these problems. A brief survey of the nature of
these problems, however, might serve to point the direction taken by
this study. The administrative approach was handicapped by hasty, in-
experienced personnel, and a failure to give early and thorough con-
sideration to possible problems of administrative law. Questions of jur.-
isdictional fact rose. Some were unavoidable, others might have been
more carefully handled if a consideration of the possibility of judicial
review had been had.

INTRA hearings were in the main- inadequate. They often placed a
premium upon short duration, rather than exhaustive development of a
factual basis. Rules against argument and opinion were abused and no
helpful result is seen in prohibiting them. The powers of subpoena and
punishment for perjury would have been useful instruments. "Notice of
opportunity to be heard" was as full as desirable in the sense of hearing,
notice, or an internal procedure within N.R.A.

Little attention was paid to the problem of admissibility of evl-
dence. The requirement that all evidence relied upon mast be in the
record was not adhered to. The factual basis for findings was often
inadequate, substantial evidence not having been taken. The problem
of burden of proof was frequently ill-considered. The statement of
the basis for action was not always as complete as desirable. Pub-
lication of administrative action was not complete or fully accessible.
Better legal draftsmanship would have been of material assistance to
1.R.A. iTotice was usually given quite fully. The approach to the
problem failed to consider just what persons were absolutely entitled to
it, and to how much time should have reasonably elapsed between notice
and hearing. Other formal actions by II.R.A. such as interpretations,
amendments, exemptions and exceptions, and stays were not given as full
safeguards procedurally as would have been desirable.



9838


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Compliance procedure as a hitter of statutory nnd. constitutional
law did not seem to be in harmony with the courtst views of the proper
character of administrative enforcement.

Examples of malfeasance by administrative officers -ire not un-
known in the administr-,tion of NRA. NRA was responsible for the actions
of its officers and those of code authorities, There are a number of
incidents where UIRA failed to properly control action by these persons.
NRA did not always follow its own procedure. Its substantive action
was not always buttressed by such an overwhelming factual basis that
it would have been impossible for the courts by use of the "due process
of law" concept to have controlled the administrative action.

A full consideration of constitutional powers and the indications
of the cases is not found either in the drafting of the NIRA or its
administration. The question of delegation did not appear to be im-
portant aside from the fact that extreme redelegations were indulged
in. The redelegation of power to interested persons and to private
persons not acting as public officers was open to serious question.

A more careful consideration of these problems of administrative
and constitutional law might have gone far to have made H.R.A. a mode
acceptable to the courts. This would probably have entailed serious
procedural and substantive changes, although the same general objectives
might have existed.


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P .- R T


AN ID I N- i1 S T R 'S T I V 1


L A 0 G E. C U IT 1)


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CHAP rEL I


T:rTOD c"C TI

The first o-" 'icirl st, tcnenet uoon the 7IL (1) made by
the Presi-de.it ("') aoint'L the Adriinistr't ivc ,joblem:

"It is, fLurLther , chr.lla'', to aAjiinistrc-
tion. r'e .re relaxin r soae :1' the safec'i'rcis of
the antitrust l:.'s. The public nust be .:rOte.ted
against the abuses th.-.t led to their enactment, and
to this end wve ar ,'-utting in -,l..ce of old princi-
ples of unch:ecked co;.ietition so,.ie new Government
controls. They must above all be imr -rtial and
just. Their ,ur-ose i-f, to f"ee business not to
IL 1. i t -n .n .
sh'acle it W nd no m.n who st. ndo on the construc-
tive for-,-rr1i-loo'-in. side of '.iis industry ha.s any-
tliin.7 to fear fro-i them. To such ncmn the opportun-
ities for in6ivi1'unl initiative .7ill be open more
aprly than ever. Lct me ma'ce it clear, however,
thint the antitrust l,;'s r.till 2t-.id firmly against
mono.-,olies that 'ectrein t' _o6.: r-nd price fixing
T;.iich alloa-w inord.lin-'te .,rot its or unfairly high
prices."

Our economic philololh:l, written into our statutes (3)
was one of free comr:,etition, 7it r.a.t coor.e..tion which might lead to
restraints u-on business an-. co0i.crce. Alt]hou-h the Anti-Trust Acts
were never completely an& enercetic-.ll.y enforced.(4), consent-decrees
and injunctions existed at the tine of th.:. passage of the IURA. cover-
ing many industries ..,nd tr.de-s ( .) These bear testimony to the fact
that certain industries -n,-i trale., ct le-.rt, felt the anti-trust laws
inadequate. Before the depression there '.e:-.? r:Iny suggestions that the
anti-trust la:s *?era Frocrustean bed -:-hich ill afforded needed ind-
ividual treatment to s oeci-1 -. robLlens(S' During the war these laws
received sli.-''t attention. The drive ris 'o -roduce (7). How this was
done, or hou the products r.ere m.-rketed mattered little, the demand
bein,- so great. e cur .rr'ts contracted., it was natural to desire to
continue or commence cooper:tiv-e action to check the frantic efforts of
individual -lants to wenther the storm (8',. M.any of the ills of the dep-
ression rnd its cont nur.nce '-ere laid -t the door of the anti-trust laws.
General Johlnson, more responsiblle for the lI-IA than any other person,
has forcefully e.oressed his views on this subject (9).

The tas': that IT?-A set for itself w-as to complete and admin-
ister a body of deleg-iated leislrtionri more voluminous and more import-
ant in subject matter iand effect ti-r.n ev," b-efore undertaken by an ad-
ministrative body in this (or a.r- other E-B-lish speaking) country. It
involved the definition and acceptm.ice of ..Lajor philosophies of social
and economic import. To intelli.entl- n ...nbly state such import-.
ant policies a.. giantic problem of fact-findinr wTas created. It involved
more tha.- the diLcov,-r;y o po'ir. f.-:.,.ts. It involved


9838





-6-


the analysis amn'. evaluation of such f:cts. The imnoort .-'ce of this
function, mnd the crryin.z nee'. for an r.d-iminitrmtive ngency and ex-
perts to reform it, r.cther thUn the courts or the le-islative bodies,
improperly" ea'-ix ec1. -s they are to od.courtei-r handle F.uch problems,
was fully reco.-tized b-- those in hi-h places in '-L-A (10). The adequacy
of the bo'.- create&,' and. the st.-tute attempting to authorize it, from
the vie'.ooints of administrative anC. suostantip.al "due process of laT7
conce:'ts %7ill be thie sco'e of this p-oper.


9838


- -M





-7-


CHAPTER II

THE TH40RY OF ADI;7TISTIRAT101i

I. SEPARATION OF CGOVERi;;-;7TAL POWE.iS (1)

Many of the difficulties which administration encounters
arise from the "separation of powers" doctrine. Although not as spe-
cifically recognized in the Constitution as it is in the primary laws
of some of our States (2), it finds support in the three fold divi-
sion of the governmental structure set up by the Constitution (3).
Whether the framers were consciously follo'ving Montesquieu, the
British Constitution or the Colonial governments, it is accepted
that Montesquieu (4) gnve voice to the doctrine which became pa-
triotic knIowledge to school children, and revered by our lawyers (5).
It was this very reverence that has created much of the difficulty(5a).
Not content with treating it as a fiction our jurists have frequent-
ly employed the theory in ways that have caused great limitations
upon the natural trend of government, or strange contortion to achieve
the needed or desired results (6). It seems well-established that in
actual practice there has always been an admixture of governmental
powers that is, no one division of government has exercised all
the powers analytically belonging to it under the theory (7). Leg-
islatures have as a matter of historical practice done judicial acts
such as granting divorces (8), setting aside a decree of probate
and orderiri:; a new hearing with liberty of appeal (which had not
before existed) be granted (9), declaring a person quilt of treason-
and inflicting penalties and confiscation of property of persons de-
clared guilty (10), and confiming; a doubtful title to land (11).
Although courts pretend to apply the doctrine to themselves (12),
they make rules for their own procedure (13) a matter conferred
upon Congress by the Constitution (14); they grant certificates of
naturalization (15), a function that seems administrative and one
not involving a "case" of "controversy" (16) as those terms have
been construed by the courts (17). The examples of executive exer-
cise of both legislative and judicial powers are so numerous and will
appear so often in this paper that tiey need no comment here. The
evidence indicates that the doctrine has never been realized in prac-
tice (18) in the national and state governments (19). Each depart-
ment inherently demands enough power whatever its nature (20) to
carry out functions essential to the preservation of its own integrity.
There has always been in our legal literature a recognition of this
admixture of powers and the political doctrine or legal fiction nature
of the theory (21). More recently there has been considerable criti-
cism directed at the reverence given Montesquieu's fiction (22) as
being unscientific (23), impractical (24) and a mere political doc-
trine (25). It can be seen by study that the development of the
doctrine in this country has been strongly flavored by judicial re-
view; that it could have just as well developed along the lines of
the "political question" notions (26) as it has in other governments
(27). The burden of this theory in relation to the growth of Admin-
istration and Administrative Law will be considered shortly.



9838




-8-


II. GROWTH OF ADMINISTRATION AND ADMINISTRATIVE LAW.

The use of the administrative technique has had a phenomenal
growth in the last half century (28). Up until then the
growth had been steady. With the recognition of the existence of
administrative law (29) came increased demands by the problem of
modern society (30) for the use of administrative machinery (31).
Even when there has been frank hostility to this growth it has gone
on relentlessly (32). At present both in this country and England
this situation presents a major battleground for opposing political
forces (33).

The opponents of this phenomenon rally to their support
both the doctrines of judicial review (34) and "separation of powers."
It is urged that each division of government iuast exercise the powers
entrusted to it and that this exercise can not be delegated (delegata
-potestas non potest delegari) (35). Necessity has rebutted these
arguments by pointing to the practical advantages of administrative
action (36). The saving of the legislature's time is probably the
chief value (37). Bat there are other pressing reasons for resort
to the administrative device, such as the contributions which can be
made by the expert (38), the fact that the legislature is not in con-
tinuous session and its slow procedure, when in existence, which will
not meet many of the demands for surumary or prompt action (39), and
the peculiar adaptability of administrative action to promote and pro-
tect individual and public interests (40). The result of these advan-
tages is a great mass of delegated legislation (41) having the full
force and effect of law (42).

Administration has grown up without benefit of Constitutional
recognition. It has, therefore, been forced to follow a
pattern which made no place for it. Certain formulae and fictions
are employed to circumvent the doctrinaire difficulties. Adminis-
trative offices and many students feel it would be highly desirable
that administrative action in its proper spheres be free from judi-
cial interference. More respect and greater prominence would inure
to administration, and there would be a greater fruition of adminis-
tration as a useful public agency. Administrative finality mast rest
upon one o'f two views, either that judicial review should not be had
of a fourth and equal division of government (43), or that government
is comprised of two functions: 1. representing the public will and
2. giving effect to the expressed will. Upon such theories it may
be reasoned that the judiciary should be no more powerful than the
executive or administrative.

III. DELEGATION OF POWER AlID FINALITY IN ITS EXERCISE.

Despite the hampering effect of governmental form and theo-
ries already discussed, administrative legislation and adjudication
continue to grow paying lip service to constitutional doctrine.
The legislature can not delegate its legislative power but it can
employ agents to find facts. It is in this function of fact-finder,
that courts first consciously recognized administration (44). The
.legislature declares the policy and the administration finds the


9838





: O-


facts uoon which the policy ",o's into Offect or to wilch the policy
shall be applied so runs the tr,'litional statement (45). If the
"details" to be lillol in or tae '.isis for deter":nriini wct'.,1r the
statute s.iall a 1'ly are important oncxi'li there is really a deli,',ation
of le-i1'-itivc pcwer though it :i.ay be so trivial as to not excite tihe
court. In fact, the courts :ecc-nize t.e dele-'gtion. They further
recognized that legislative or judicial 'o '.ers softened by a "quasi"
may be involved (46). The delegation may be anrJoous to the power
the court exercises in cases before it, of statutory interpretation
which frequently may decide that the lit. ro1 application of a statute
was not intended in certain instances or where tie statute does not
cover certain problems soecif.lly that it does So by i.mnlication.
Either tie ro,'vantages of tne administrative techninuo or dissatisfac-
tion with judicial approach (47) must have led to the attempt to
use administrative a.encies.

The next ste) after the frank recognition of dele:.,.ted power to
administrative a.:encies is to see what measure of the finality desired
by these -'encies is extended to their actions by the courts. The
traditional statement is that the nd"-iinist-rative bodies beinr proper
fact-finders, their findlings of fact will not be reviewed by the courts,
or the courts will not substitute its ju'?..;.mnt upon questionss of
facts" for that of the entrusted fact-finder (48) wit' certain ex-
ceptions later to be noted (49). "Questions of law" have long been
the peculiar province of the court (50), but as time went on acriinis-
trative bodies decided questions of law before thie problems reached
the courts. Often these questions were decided in a vwa, that pleased
the courts. There developed the notion that administrative deter-
mination of "questions of law' would be "persuasive" upon the courts
(51) that is, the court would not disturb thle administrativee de-
cision as long as it accorded witli thie court's onm feelings. A
further co:rniicaticn ansars. There is no clear cut distinction be-
tween "nuestinns of law" and "questions of fact" (52). Often a pro-
blem, which at one time is a "question of law" to the court, will be-
comie a questionn of fact" to the same court at another time (53).
In questicnable problems of this character thle curt :.i''t treat them
as "questions of law," a thin- ouite easy to do; if it did not desire
to review or to change the determination of the administrative body
these problems rinit be termed "mixed questions of law and fact" (-A)
and extended t-ie finality of "questions of law." This latter practice
is frcuentiz resorted to if an allegation of fraud or mistake is not
so clear that the court feels it should interfere (55).

The statement just made is couched in the court's terms and
approached '.vith a view to what the Court says. A'L,.i-inistrative law
is so new that vie can not expect to find it an orderly system perfect-
ly described oj tie courts (56). We must look at what the courts do
in each field. This will be done later. First we :,"ust see upon what
theories the courts review.


9 I8








-11-


COLPTAR III

RVIEV!; BY TIZ CCJL.TS AiT 3;2C-UAC-DS AGAIiST
A2USZ OP AD1,IJISTRATIVI DOTUR
Cne of the doctrines of English law, most distinjaishing it from
other o otinso n-
othor systems, was lon; th',uht to -.fford rdocuate protection to indivi-
dual rights. This was "the rule of law" (1). Its protection has 'been
found inpdoqiuate. If an aCuninistr:tive official by sunm.ary action does
$40,000 (or even $4,000) of damauye a j-itd,-nent may be forthcoming readily
enough, but its collection will prove far more troublesome. It is urged
that Congress or the legislatures should review administrative action,
since it hps given the mandate it t;hould. judge the desirability of its
administration. The nmractice, h]i.over, m-nr been otherwise (2). Some-
times the legislature delegates this check specifically to the courts
(3), more frequently, this is not done (4). There are even statutory
indications that it is not desired (5). In England, where such statutory
c.-tatements are ,iore common (6), this has been a strongly contested field.
Although, checks are desirable this does not posit that administrative
-ower is greatly abused (7).

It would be well to briefly survey the existing checks other than
those exercised by the Courts.

Aside from control by the courts, there should be checks upon ad-
ministration from other directions. In as far as the chief executive
must accept responsibility for the actions of adi rinistratiie bodies he
should have a general control over their policy. Until the Lm-o1re0s
decision (7a) it was thought that the rernovv!l power might afford such
control (7b). It may be that the President does not have to accept
responsibility for the actions of all aW:Jtiiistrative 1o'.rs. The Congress
must, however, be responsible for the policy of all administrative agen-
cies which it authorizes, if not their administration. Therefore, it
wviould seem that the legislature rmst deal with the problem of o oe.:Q.
assisted by the executive who, it is hoped, will be in harmony with it
(7c).

In -ngland Parliamentary control over delegated legislation has -one
sormevihat farther than the control exercised by legislatures in this
country (7d). There is the procec.urc 1ovmn as laying an administrative
rule upon the table. Such rules and regulations laid upon the table be-
fore Parliament .iny be disa-pDroved by either house within a certain -oeriod
(usually not over forty days of any session). If not disapproved they
have the full force of law. Other tyses of rules and regulations require
a definite Parliamentrp.r a--proval, by either or both houses, within a
certain number of legislative days. A provision that either house can
make suggestions to the body creating, the rules is often attached to both
methods of control. Farther than this, provision are frequently inserted
in s tatutes allowing rules to have full force until Parliament acts upon
them. Even if parlirient acts negatively r-jgr).irng a rule, any enforce-
ment of such a ru-le previous to the Parlianentary action is legal. This
system has raised a storm of criticism by EnT;lish lawyers who urge that
approval is made a mere formality while allowing the stamp of Parliamen-
tary authority to rest upon the regulation and so preclude control by the
courts. It is the contention of these men that there is no practical


9838







responsibility. The merit of their arguments is not a subject for con-
sideratinn here. It is merely intended to -)oint out that there should
be simple, efficient safe-uards to preclude abuses of -nower.

Other controls lie in the publication of rule" and the control over
budgets and >,, iroprn. tions. One of the most effective i;:eans seems to be
the system of interpellationn" of ministers to which, greatt resort is had.
Pointed questions union -oossible shaiay practices or questionable adminis-
tration, bringing with them the bright light of publicity, will go far
to remedy abuses of nower.

In most English speaking countries the 1-istoric controls of legis-
lative rowver over apororriations, legislative -)ow'er over personnel exer-
cised through irmneachment process and the right to confirm appointments,
and the -orrer of investigation are in most common use. The first two
methods are unwieldy and ineffective as against minor abuses of power.
The process of investigation is analogous to the English system of
"1inter-oellation", but is resorted to only sn-smodically, and then usually
onlj in the most odious cases.

Aside from these controls, little has been done in the United States
to provide safe-guards against adminiistrative abuses of power. Some five
years ago lTorth Caroline established a Director of Local Government,
"whose duties- will be to standardize and supervise the business methods
of counties, cities and tovwns." (?e) This is iot precisely in point as
a matter of control of administrative action, but it is referred to since
there is a great analogy between activities of munici-nal corporations
and those of administrative bodies.

ITew York has a grea+ amount of delegated legislation, but no control
over it (7f). The State Legislative Reference Librarian states regarding
this -)roblem, "As I understand it, the enforce.-ent of rules or orders
made in any state department is left wholly to the administrative officer
of such department, and the Legislature and Executive appear not to in-
terfere in such enforcement, after the authority has been once granted to
Ztae iDeoorttre.nt." Recently, in :Tev York it has even been oronosed
to clothe administrative bodies with greater rule making pow,,ers without
any specific legislative check over the exercise of these -powers.

In i.lassachusetts all departments, boards, commissions or officials
making general rules or regulations must file copies :ith the Secretary
of State, and imust secure the approval of the Governor and his council
(?g). The Secretary of State :.-rust file and index such rules .and regular
tions, and make them generally available. There is an appeal open to
citizens to the Governor and his council on questions of authority and
jurisdiction which does not preclude other legal redress. Annual reports
must be made to the Governor or to the General Court (7h). In most cases
such reports ?re made to the latter. Further than this, Mlassachusetts has
not gone, although the problem has been given serious consideration.

With the exception of Wisconsin, other regulations of administrative
law making are unimportant. The most widespread agitation in any state
for safeguards appears to have existed in Wisconsin. Wisconsin has a
system of "interpellation" modeled upon the foreign systems (7i). This
statute, however, has only been used three times, once in 1935 when the


9838





-I' -


Legislature, meeting in ,oint zc,--ion, cn.lld before it the iiembers of
the Board of Control, which h acdrinistcrs all lriws relating to the sttete
charitable and ioenal institutions. So luach time wns ricnt in controversy
over rules that no extensive _v'4.ti-niL .L.. had.. Tha statute was last
used before this in 1925, so it c-,i be scb that experience under it Ooes
not testify as to its possible value. A statute Trassed ir. 1931 created
an Executive Cotuicil of the Governor. This body was authorized to in-
vestigate the activities of quasi legislative a t.:c.cics, nd iLi':e rcorts
to the Legislatue'e. This secns to be, ho''evcr, oil.; one of the minor
functions of this council. TW.c .-rerent Governor and his predecessor :have
not ao-oointed all the m).'iIbcrs proviC.cdl by the statute. The council it-
self has not yet been called uponi to erform the functions for which it
was created.

This review indicates that little has been done in this country
along the line of develo-oing safegua.rds and controls in the field of ad-
ministration despite the fact that there Csee:-is to be a vital need for
action uoon this -roblem.

Although the legislature may choose between conflicting theories
(8), the courts are reluctant to allow s'ich -iowers to administration
apart from the supervising chech of judicial review (9). In the past
courts have usually allowed Administ.'-tive bodies to exercise such power.
Recently, this has been objected to, if the range of choice is too large
or involves subject matter of too great importance (10). Judicial review
in this country extends to statutes; in England it extends only to admin-
istrative action or by-laws (11). It is not clear that it always extends
that far (12). From a position of -or:-iea-L'tive inferiority to the legis-
lature (13) our courts have risen Until they now exercise review of legis-
lative and administrative action under a number of theories.

The naturala" or "higher law" b!.ses of review arie of the greatest
antiquity (14) of any of tnc courts' a-proaches. In early 7Enlish law
Bracton declared that the barons must out "the bridle of law" upon a ruler
acting outside the law1s-preceets (15);'again there is a reference in
laguna Charta to hir
1agna Chrta to hiher law (13); and there is the well knmow.nm attempt of
Lor.d Coke (17) to establish judicial review. The doctrine finds its first
utterance in the Supreme Court in the opinion by I1r. Chief Justice Chase
in Calder v. Bull in 1798 (18). The doctrine grew and ripened into an
accepted basis u on which to limit the power of government (19). It has
meant that common law precedents miay be employed (20), or that the court
would rely upon its own feeling of what it felt was universally considered
just or--.honest" action (21). It is in this latter aspect that the doc-
.trine has been most severely criticized. (22)

S "Natural law" theory has grown into, and has been greatly absorbed
by, the "due process of. law" concept (23). For a considerable time after
our constitution was written "due -orocess" of law had little significance
save -orocedural (24). This was true until as-late as 1870 (25). From
humble origin (26) administrative -rocedure (27) due process has be-
come an instrument '.hereby statutes and administrative action are over-
ruled as having no proper constitutional basis or unreasonableness (28).
The doctrine received a casual reference in D:red Scott v. S Dindford (29);
it next was broadened in the Legal Tener Caes (30). Despite later use
of the doctrine of "natural law" (31) the due process concept is in.vw

9,838




-14-


regarded as firmly established (32) even by those disa-onroving of its
extent.
That the relationship between the two is close is an-iarent from the
reference by judges to the doctrines as being identical (33). Due pro-
cess of law now gives the courts -power to introduce limiting principles
of taxation, formerly one of the chief problems of "natural law" (34),
to oonde:,in rate schedules as unreasonable (35), and to condemn other
social and economic legislation upon the same basis. This great growth
has been the cause of much heated debate. The late Justice Holmes ex-
pressed his views upon this subject strongly and often. Dissenting in
Baldwin v. Inissouri (36) he said:

II have not yet adequately expressed the more than anxiety that I
feel at the ever increasing scope given to the Fourteenth Amendment in
cutting down what I believe to be the Constituional rights of the States.
As the decisions now stand, I see hardly any limit but the sky to the
invalidating of those rights if they happen to strike a majority of this
Court as for any reason undesirable. I cannot believe that the Amend-
ment was intended to give us carte blanche to embody our economic or moral
beliefs in its prohibitions."

Many persons have felt that the concept is an agency to maintain
property interests (37).

That this type of judicial control is the common tendency of courts
can be seen from the fact, that, although England is said not to have
judicial review, and certainly no "Idue process of law" concept such as
is known to us (38), still English courts have a strong disposition to
review administrative action, even when clothed by statute with finality,
upon any of several theories (39). Of course, the English courts do not
go nearly so far as ours. and at times exercise no chec: (401. The signi-
ficant thing is that there is in existence as a characteristic of courts
a disposition to control administrative or legislative action. As we
shall see due process of law has t-wo problems: 1. Can power be exercised?
2. Has it been exercised properly? These two questions to test adminis-
trative action have broad powers to shape our course of government (41).

WithoUt either of the two theories discussed, the courts have a
check in the interpretation of statutes and the doctrine of ultra and
intra v.re~s. Courts in the exercise of their normal duties are called
upon to apply statutes or other law to the cases before them. Wherever
there is ambiguity or conflict as to meaning, and this is the stuff of
which lawsuits are made, the courts must interpret the law (42). Although,
there is no express Constitutional prohibition to the giving of finality
in the determination of certain disputes, to other agencies than to courts,
this has not been done without the courts' approval. Questions of law
and the interpretation of statutes the courts have successfully maintained
are their exclusive bailiwick. This nower of interpretation has been
often used to achieve results, not desired by the legislature (43). It
is obvious that the Dpower of interpretation is tremendous. The likeli-
hood that the exercise of such power will be colored by the n-personal
philosophies of those who have it, is even more apparent.


9838


-





-I. -


This doctrinaie of "i1Lcrretati n" is r.iother of the-Ultra ,iJd intra
vires concepts. A logical -h.' of statutory inte-pretation is tlit of
determining the limits of authorityy an,, jurisdiction conferred b' parti-
cular statutes. This action bo'-.oiec a liitation u'ioai both legislative
and adiiinistr-tive action (-1 i). As a nuostion of -,ow,'ers and of dclega-
tion of -;owers either under a. written or unwritten Constitution the
necessity of interpretation places great influen-.ce and control in the
hands of the courts. That there should be such a restraint u' on the
parties ui desire of the Administration to enlarge its own poucrs is ad-
mritted by students and advocates of administrative action (45). heree
the nropler (under our acce-oted views on "judicial review") limits of the
courts restraining power end, and the -nositive injection of the courts'
own views begin is a debated problemm that looms large in the administra-
tive field (46).

In the Unitedi States the ultrS vl S doctrine is bound up with the
problem of jurisdictional fact (47); it is in n,,land that the phrase
ultra vires has been most considered (48). A brief glance at the English
problem will point the consideration of jurisdictional fact. The so-
called "Henry VIII clauses" (named from a broad statute of similar
character in the reign of that monarch) provide in effect that rules
putting the statute into effect "shall not be questioned in any legal
proceeding." Stated differently, the rules shall "have effect as if
enacted in the Act" (49). Without the assistance of the open doctrine
of "judicial review1t, in vogue in this country, the English courts faced
a ticklish problem when the first cases under such a statute arose. The
first and a leading case is institute f Pa tent ALoi11s v. Locl, .o od (50).
Lord Herschell, L. C. is plainly troubled. The most difficult situation
he envisages is that of the administrative rule under the statute being
contrary in effect to the statute. would d this mean that the administra-
tive rule having the effect of a latter statute would override the sta-
tute? As the case did not involve the -point, whatever might be said
concerning it was dictum. As such, it is far from lucid. Lord 1.orris
(51) exDresced the o-oinion that the court should test for ultra vires.
This latter view seems to have prevailed. WThen it became obvious that
a statute might be grossly contorted the courts have felt a test of
ultra vires to be desirable (52). This test was used in "TE: arZte" Yaffe
(53) with the indication that an English judicial review, more limited
than our omwn, now rests established umon the theory interpretation and
the right to test for ultra nt "r e, 1 _eS (54).

The problem of jurisdiction is merely another form of ultra intra
vires.. And as the Constitution is merely a ,!higher statute," it can be
seen thcft once judicial review and the power of interpretation is estab-
lished the Courts feel they can review to see if either the statute or
the Constitution provide a basis for the powers attempted to be exercised
(55). Should this test of jurisdiction be limited to the Courts' de-
clared province "questions of law?" The indications are that the Courts
will not be thus restricted. The facts unon which jurisdiction is as-
sumed the "jurisdictional facts" will in proper instances be deter-
mined by the Courts. This may-be because jurisdictional fact often is
used "in the sense of the meaning of the word or terms into which those
circumstances (,)roved circumstances which are another sense of the term,
"fact") are summed u-o for the -ournose of attaching legal consequence to
them" (56). It is this dual sense of the word "fact" that provokes much


9838




16-c-


of the controversy. Probably, the most satisfactory solution would be
to allow the administrative agencies to determine the "proved circumstances"
and allow the legal consequences to be decided by the Courts (in those
fields here they invoke the doctrine) either administrative or judicial.
This would be only a compromise and subject to much attack: as such. The
problem looms so large as a device of judicial review of administrative action
that its use will be further examined (57),

A closely related doctrine is that of "questions of law" which, as.has
alret.d-c been indicated, the Courts have stoked out as their peculiar pro-
vince (58). The ambiguity (39) of the terms "law" and "fact" are such that
great confusion exists (60). It is evident that there is great overlappirng
that thie same question may variously present "law" or "fact" to different
courts, or even to the same Court (61). The difficulty is illustrated by
the C-ratz case (61a). It has been variously urged that the question of
whether a ty-ing contract is an unfair method of competition is one of
"law" c.nd that it is one of "fact". The courts, in many fields, are reluc-
tant to forejo the final word on. problems such as interpretation (62) so
they actually determine many questions of ultimate fact (63). It is doubt-
ful if any workable distinction or separation could be found (64), so we
may expect the Court will have open this ready avenue of eaporoach. The
ease with which the Courts utilize this approach is seen in fields of dis-
puted social policy (s5) or 'here the statute uses such an indefinite stan-
dard as "unfair competition" (66). Like use has been made of the concept,
as a colleague to "jurisdictional fact," to check the harshness of alien
determinations (67). From this ennumeration the usefulness of the concept
is apparent. ,

An early- doctrine, in use before the phenomenon of great administra-
tive action was observed, is that of discretionary powers and ministerial
duties. It' is well stated in the early cape of Decatur v. Pauldin, (68),
decic'ed in 1840. The Court held that the refusal of a pension to the widow
of Stephen Decatur. involved the exercise" of discretion u-oon the part of the
Secretary of the Navy. The basis for the decision seems to be the feeling,
that a choice in the judicial sense was involved, and that such a choice
made in good faith, should not be disturbed. It should be pointed out that
the Court expressed a willingness to overrule the Secretary's decision if a
wrong decision of law had been made. The exercise of discretion will not be
disturbed by injunction or mandamus. A failure to act may represent the
conscious choice not to act (69); while ma.ndamus will lie to force the per-
formance of ministerial duties (70). NIeed of choice and freedom from judic-
ial review in the -fields of "narrow review" (71) still exists (72) although
the doctrine is .little mentioned and has become dwarfed by other forms of
judicial control.

A new and subtle means of review lies in the Court's treatment of
questions of evidence. It may be that the court is attempting to under-
stand the administrative problems (73). The judicial technique, in so
trying to appreciate the administration's position, calls for a full consid-
eration of the evidence. The next step, and one often taken, is for the
Court itself to evaluate the evidence (74). In a large percentage of cases
where administrative.orders are upheld; the Court does so, only after full
consideration of the: evidence (75). It is of course natural to the judicial
technique to so consider evidence, but sometimes the purpose may be definite
to limit administrative action by resort to a statutory implication (76) or


9838




-17-
some notion of the Court's so p.. to '.,it evidence ouW.ht to be control] ing.

Although in s-ome of the earlier cases, especially those involving
the discretionary concept, there was often no evidentiary requirement, it
mi.'ht be said that evi.eLce is usually required" to support any positive
administration action (77). Tae e:.pl.nation of the "discretion" cases
lies in the fact that some e:.trnorCinrLry lei:,l reed' ;as sou,-ht which
the courts were reluctant to give, coupled with a feeling that the act
was judicial. Where a reasonable choice could be made the courts hecita-
ted to use the injunction; and where action might result in. leaving the
applic;-:it in the same position, the courts saw no advantage and only a
waste cf effort an,., prestige in .using mannd.amus. Where the statute re-
quires a hearing, an order wholl: unsupported. by evidence is of no effect
(78). Certainly, where there is no basis c.in evidence the action will be
closely scrutinized, and upon a proper shoring an attacking party may
have it reversed (79). In a recent case decided in 1933 (80), where a
Virgini- statute authorized an adn'iinistrative official to order grade cross-
ings eliminated, when in his opinion, it became necessary, but providing
only for a hearing if the railway was dissatisfied with the order, there
was held to be a denial of due process of law.. The. court apparently re-
lied u)on the necessity that adninistrative findings be supported by evi-
dence (81). The requirement as to the amount of' evidentiary support varies.
The sta.terients of the court are differently phrased in terms of "some evi-
dence" (32) "evidence" (83), and- "substantial evidence" (84) as being neces-
sary t-o sv.pport an order. Usually, where there is "substantial evidence"
to suppcort the order, or it is not manifestly against the weight of the
evice.--ce, it will not be molested (85). Statutory- requirements as to evi-
dence vary: from where the statutes is silent to where it may detail what
evidence should be present. This seems to have little effect upon the
courts. It is doubted if a statutory statement that there need. be no evi-
dentiarl:- basis would meet judicial requirements of "due process of law."

In cases where the evidence is abundant courts do not care to review.
In cases where there is none or the interference are absurd there is little
problem in tha courts' review. It is- in those doubtful cases where the
evidence is "meager or unsatisfactory"? that the difficulty arise-s (86).
Strictl: soea:ki-:-, what basis of judicial review of evidence exists other
thpin the residuary "due process1" concept is hard to determine. Why final-
ity as tr fact, even as to the v.'ei.'iht to be given evidence, can and should
not be determined by an administrative bcdr is difficult to see. It would
be unfortunate to reduce our administrativee tribunals to mere magistracies
for the ccnduct of hearings preliminary to judicial consideration" (87).
On tnh c'tier hand, arbitrary and capricious failure to act upon evidence
or actin- contrary to the obvious significance of the evidence, should be
as full,- subject to check as is any ad-inirstrative procedure.

Jurists feel that a grave responsibility is intrusted to administra-
tive agencies (88). By temper anC technique these agencies may not be as
considerate of individual rights as the courts. In the requirement that
there he a basis in evidence for the action taken in the courts merely hold
another check. The requirement will vary depenr:ir.ng upon such influence as,
whether the subject matter is considered governmental or involves inter-
fere:ice ;ith individual rights, the historical nature of the field, the
care useC. by ad jAinistrative agencies in gCathering and analyzing facts, as
well as rnany- other factors.


98:;8




-1i-


In addition to these theories whereby review is had by the Courts,
it should be considered that there are certain restraints imposed u-con the
courts either by themselves deliberately as a matter of policy or through
the force of circumstances. There is the doctrine that an administrative
remedy must be exhausted before aoolication is had to the courts for re-
lief (89). This is said to awoly in some cases to ao)lications for a
rehearing or a modification (90) or an original hearing (91). It is
especially a-nlicable to requests for the issuance of extraordinary
legal remedies, where any reasonable administrative remedy remains
available.

The doctrine of politicall questions" furnishes another self-
limitation uoon the courts (92) which is of long standing (93). It
has particular significance in international relations (94). questions
of grave executive -oolicy, and the -iroblem of whether a State is
maintaining a "reoublicen form of government (95). Another limi-
tation lies in the constitutional specification that "the judicial
cower shall extend to all cases - -and/- - controversies" (96).
It is under this clause that the courts may decline administrative
functions (97) and refuse to give declaratory judgments (98). -Thile
so limiting themselves the courts do not hesitate to review action
taken under formulae already considered.

What is the value of this process of judicial checks uoon a
field otherwise greatly independent? There are many advocates of the
administrative technique, 'vho see no advantages, and feel that un-
symoathetic courts are merely sabotaging a rival. But, it is wise
to remember the extreme youth of the extensive use of administrative
government. It is quite -orobrble that there are as many inconsist-
encies and injustices in the administrative orocess as there are in.
the.courts' review. True, alninistrative law is contr-dictory, un-
systematized and bewildering (c,9). Administration is also new. It
is without the eroerience of the courts in sa,'e-aarding individual
Rights. Policy often dominates so that adminzstLation may overlook
individual injustices and its own acts of urn.-iirness (100). And, al-
though, many of the courts' restraints are highly desirable, guiding
and tempering administrative Pction into its highest utility, the
courts' very technique often unfits them to exercise the great control
they do. The answer to the inadequacies of administration does not
lie alone in the courts (lO1). Yet in this country by subtle means
and often means most obvious the courts do fr-shion and guide adminis-
trative procedure and policy (102). New methods and devices are
needed to meet new situations. The use of specialized courts is grow-
ing (103); there is too, a growing demand for declaratory judgments
(104). Des-ite this need, we must not forget the value of a reasonable
judicial check. Such a check brings the legislature and administration
closer together (105). An understanding of the peculiar -oroblems of
the other is of extreme value to each. The judicial process has been
a ooverful agency in giving substance to the administrative technique;
it has made the development of this new instrument of government a
more orderly growth, a more useful and recoected form of government (106).

This review has not been made for the ouroose of praising or de-
nouncing judicial review of administrative action. There has been,
however, an attempt to carefully point out both the advantages and dis-
advantages. The ournose of this consideration has been to point the
problem -- to show the gantlet of possible judicial reviews (as stated
9838









by the court) thl-t thL -ction cof a ne,-' nninistr"tive ac:ency rnust run,

A st-tenment of thee formai1l- of review is not enough to r-ive
a urooner rersective. It is neeo.-o-r," ti see ho', the courts )ooly
their revie'.v to te v-rious fitL'.ds of ,biinistr-tive action, to ob-
serve rhat circtumstp-icEs Feom to influence the actionn of tie courts.
That vill be the burden of the ne-:t cha-tcr.





-2." -


CHAPTER. IV

ADI:TIISTRATIVE FIiALITY A2D THE CASES


I. ITA7JLO'J 7TVIE7 (1)

Administrative activity in the business of government has
been variously classified. One of the most useful classifiactions
for o-Lr purposes is that of Professor Dick-inson (2) dividing it into
three classes: 1. The individual seeks .a privilege; 2. The govern-
ment oerforias a. business; 3. The government performs a necessary funct-
ion. There are other clauses of acninistrative activity. A quite import-
ant one the Eovernment seeks to regulate private business will be
considered in a following section. It is this class, possibly coupled
with a new one here the government cooperates with industry in its
self-regulation which is most important in this study.

rThen the government is engaged in a function inherently and
historically necessary, the courts are reluctant to disturb adminis-
trative action (3). For efficiency, absolute control by the government
of its officials and employees is necessary (4). Salaries may be re-
duced by Congress without question (5), except those of judges of
"Constitutional Courts" (6). The removal and appointive power, until
recently (7), has been free of judicial restrictions, even where an
employee was dismissed so that a political debt could be paid (8), or
where the statute (9) only specifies removal "for causes prescribed by
law" after notice and hearing, and the President removes without hear-
ing or specification of grounds (10). The narrow revie- rule is close-
ly followed in this field upon such questions as inefficiency,incompet-
ency, and interdepartmental disputes (11). Tha-,t the courts are willing
to give great finality to the removal power over a subordinate officer
as necessary to the efficient administration of government was indicated
by the Oregon Postmaster Case (12). An even more significant case is
the recent "Hufihrcys decision (13), refusing to extend the doctrine
to app-orove the President's removal of a member of an independent board-
the Federal Trade Commission. liether the Commission is a legislative
agency or, an executive one because of its administrative duties is not
clear. The court in the Humphreys case probably operated upon the basis
of the former concept. The suggestion is obvious that there is a limit
to executive necessity, despite its recognized supremacy in internal
matters.

In the adPinistrative affairs and determination of the War
and Navy Departments great finality is also extended, it being felt by
the courts that "any other view might tend seriously to embarrass the
work of raising an army." (14)

The same line of decisions found in the removal power cases
is followed in regard to officers of the military or naval service (15),


9838











the courts e.xlaiiiin, tli-t there is no v''t interest in, or contract
right to office (16). Likewvise, review of militr," 1", under the "clue
process" concc!t is similarly n r ow.(17)

U.S.?. Cripaud. (18) indicates the -reat extent of delegation
of power and administrative finality allo,.ed the government in making
rules and reguk] tions to protect its own property. The making of rules
and regulations under a vague statutory standard was not thought impro-
per, nor did the fact that a violation of such rules Pnd regulations
was made a penal offense "oby Congress chan-e the situation. The language
of the case is broad. Limited to its peculiar facts, it is merely a
precedent for such action in the limited field of the government reg-
ulating its internal affairs, or its ovm property.

Another essential function is that of taxation. Here the
government comes more closely in contact with its citizens than in any
other field of administrative action considered in this section. The
leading case in this field, and probably the leading case for the narrow
review theory is Iurray's Lessee v, Hoboken Land and Improvement Company
(19). Here it was. held that the issuance of a distress warrant involv-
ing a summrary proceeding, under statutory authority, by the Treasury
against a delinquent collector, was not a denial of due process of law.
The court based its decision uoon the historical fact that such pro-
cedure was used inlEngland in tax nm.tters : nc had been used in the
Colonies (20). An additional fact that must have weighed heavily upon
the court was the then recent scandal of a 1r^e embezzlement by a col-
lector of the Port of ile'7 York. In cdd-ition, the p-oractical needs of
government for revenue are such that it would be highly impractical to
stop this life-blood of government, merely to give the taxpayer a right
to protest. hearing can be afforded later. Interests must be balanced.
Here, the governnent-ts far out-wei;'hs the individual's interest (20a).

The case, also, is famous for the classic statement of pro-
cedural due process requirements in the narrow review field:

"For though, due process of lait generally im-
plies actor, reus, juclex, regular allegations, oppor-
tunity to ansv-er, and a.trial according to some settled
course of judicial proceedings, yet, this is not
universally true." (21)

The doctrine of narrow review i, ap-olicable to procedure and
to the exercise of discretion in construing a statute. In the early
decisions and some of the present cases (22) the discretion of a high
official, such as the Secretary of the Treasury, in tax matters was
not questioned. L'ore recently where decisions by such an official in-
volve substantive principles of general imuortance.the courts have
exercise a considerable measure of control (23)..This control is ex-
ercised in terns of interpretation, and not of "due process of law"
which in this field is restricted to procedure. It is not used to the
same degree that review is in other fields of social and economic policy,


9838





-22-


nor is it found in cases which umey adversely affect individuals but do
not lay down statutory interpretations of such great importance in-
volving debatable fiscal Dolicy (24). iharrow review in this field
seems to mean that only arbitrary, fraudulent, or capricious action
will be questioned, with the exception of certain important questions
of general and substantial character which may be considered as orob-
lems in statutory interpretations.

Customs detenm.iinations are a particular class of tax matters.
They involve private property,, often of substantial value. In addition
to'.the tax character, the government'ss continuing policy of dis-
couraging importing has probably been of consid.er-.ble force in es-
tablishing narrow revie- here (25). 'Exoert k-nowledge is also invoked in
the evaluation of goods. (26). The couLts have no desire to involve
officials in "inextricable confusion" (27) by intrusion into this field.
Despite the narrow revie'-7 generally accorded to the customs decisions,
customs officers are not allowed to classify articles under their
statutory heads. This the court has done itself in some cases, while
in others the question has bee-i given to v jury (28). The courts have
kept. open the door of possible revie,-r b-- such qualifying statements as:

",While the general rule is that the valuation
is conclusive upon all parties, nevertheless
S the aperaisement is subject to be impeached where
the appraiser has proceeded on the wrong prin-
ciple, contrary to law or hes transcended the
powers conferred by statute." (29)

SThe courts are hesitant to use such bases unless the equity of the
situation clearly cldenands it.

Procedural requirene-nts ai'e ouite lax'. "Crrelessness or ir-
regularity" by officers "."ill not ooen the way for judicial review, (30).
The procedure described in Auffnordt v'. Heddin (31) illustrates the
informality and laxity of proper procedure in this field. 1. The
importer or his agent -:ere excluded from the reappraisement. 2. There
was .no opportunity for the importer to support his oath or entry, or
to confront opposing witnesses by testimony in his own behalf. 3. No
opportuJity wras available to sift the evidence openly or secretly heard
in opposition to the importer. 4. The importer was niiot permitted the
aid of counsel. The court di(. not condemn these practices. "ITmhe pro-
ceedings for appraisal must necessarily be, to so.--e extent, of a
summary character," it said (32).

Where the government extends a privilege (35) it does not meet so
many citizens. Usually, property interests are smaller, "Private
rights"1 ar-e little -ffected. The demand for review is, consequently,
not great. ITarro-, review is the established doctrine in the field of
land office determinations (34). Iandamus and injunctive remedies are
greatly restricted (35). Even an interpretation as to what is "vacant
land open to settlement" given by the de-oarti.ent while it had control
over. the subject matter, was made final, when brought up in e, pro-
ceeding for mandamus (36). Here, too, procedural requirements are
lax. In Burke v. Southern Pacific RR Co., (37) the court said that a
decision of the Lend Department made without investigation or hearing


9838








as to lands knoT-i1 publicly to be of 1in.'" cha-racter is irreu1lar,
"but as it is the r'ct of a I.e lls condtit'ite,' t ibiui. l ,..i is done
vA'ithin its jurisdiction, it is not void pni. t`.erefore losses title.t
Great finilit is f.ivcn to f i% ii.-s of ac (Z0). It is interesting
thst facts su o,-iclv finr'.ly ieteraineI -a'e open to direct attack by
the government, \'-ic]i c I 1ue to cccwol a ,,rtenrt is'.'d. by it (39),
although an attemteLd c.-..Incellation, b action within the Kepartment
without resort to the courts, is of no effect. (40). In addition to
review upon the '.e'i.ri..entts ar:'lication, a rovicw is sometimes riven on
grounds of such nistiLC.e or frau3 as to prevent a full presentation of
one's case the latter being really a procedura.l safeguard (41). Such
review con not be had in collateral proceedings such as ejectment.
Determinations are absolutely final a'"-inst such attack (42).. An
improper application or a misconstruction of the la 7 are -;rounds for
review (43). The courts determine jurisdiction if an attempt is made
to patent land, having certain disabilities mc.king it not patentable,
and will break the force of the ,atent (44). If twvo authorities conflict
as to jurisdiction the cou-'t -ill determine the matter (45). The in-
dications are that the courts will allow much leewa'-,r to officials uoon
such questions unless there is substantial doubt. Heath v. TTallace (46)
illustrates this. Here, althov-.h the coi1.-ts upheld an administrative
finding as to the jurisdictional fact of whether lands "subject to
periodic overflow" were "s',wamp 7-q,. ove:-flored," it did. so because it
felt the question resolved "itself into ovi of definition of v-orCs or
terms, more th,-.n one of inter-oretation of a statute," and for the more
significant reason thlt it Vthoi.oht the inter-oretation issued was a
proper one.

There is little need for extended review of cases in analogous
fields. It is enou. to -.point out that noa'ro'- revie- exists in fact
in such fields, alt.o'X-;i the courts by their language always reserve
an avenue by '-:ich relief -a1 be extended to chosen cases. In the
pensions field, we hrve alreacl- considered the early case of Decatur v.
Paulding (47). The field of patents is also one of narrow review (48).
The sane seems true of the regulation of radio broadcasting, despite
the fact that full statutory review is provided, where a grant is to be
made (49). This does not seem the case where an existing license is to
be cancelled (50). Other cases involve such problems as granting liquor
licenses (51) and allowing the uase of a trade-naue under the ILeat In-
spection Act. (52).

The im-'igration cases (53) are an important field and the unusual
treatment there have been acco:deC. demands some consideration. There is
involved a delicate problem of internatin relations, a field which the
courts have often been reluctant to touch (54). Fearing that they
would be s',iamped b," a flood of alien cases, the courts extended finality
even to the administrative determination of the jurisdictional fact of
citizenship, in the widely discussed .Ju Toy case (55). Finality as to
decisions of other facts was unquestioned in the early cases (56). An
analysis indicates some subtle distinction between exclusion and ex-
pulsion. In the latter the courts have been more prone to interfere (57).
This same basis has been used to avoid the Ju Toy decision in the case
of a person arrested within the territory of the United States (58).
As time has gone on the courts have overcoLe their first skittishness
and have found more reasons to demand their intervention. Alien


9838




-24-


procedure was harsh and open to unfavorable criticism (59). The pro-
cedural due process clause was iiore closely interpreted (60). The re-
quirements of evidence have been tightened (61), and questions which
might be said to involve questions of either .aw or fact are treated
as questions of law for the court's interoret.tio-i (62).

Governic.-it is supplying public services is taekinc on a new type
of duties. The ex-tension of government into such functions has been
continuous (63). Our postal service (once carried on as a private
business), until recently furnished one of the fen examples of such
activity on the paart of the federal government. The importance of
administrative orders (64) to the efficient conduct of the business is
so great that the courts are hesitant to interfere in uost cases (65).
Decisions by the administrative officer of questions of fact and "even
upon mixed questions of law and fact, or of law alone "will not or-
dinarily be reviewed"t (66), The court in the case, from which this
language is quoted, suggested that it had the power to review, "and
will occasionally exercise the right of so doing." Here as in other
fields, cases involving almost identical questions will be treated
differently. The determination that "faith healing" claims were fraud-
ulent, the court held to be a matter of opinion not supportable by
evidence (67) (although if medical questions are presented to the court
it will allow a jury to decide on ec-pert testincny), while a claimed
panacea maybe declared fraudulent upon evidence thought by the court to
be substantial (68).

The basis for most of the early cases and a criticism has been
voiced by M1r. Justice Holmes:

"The decisions thus far have gone largely, if not
wholly, on the ground that if the government chose
to offer a means of transportation which it was not
bound to offer, it could choose what it would trans-
port; which is well enough when neither law nor the
habit that the government's action has generated has
made that means the only one. But when habit and law
combine to exclude every other, it seems to me that
the 1st Amendment in terms forbids such control of the
post as was exercised here." (69)

In cases clearly involving a valuable and. substantial privilege
such -.s the second class mailing privilege, the courts in normal times
(70) 7ill probably exercise a more careful scrutiny (71) of adminis-
trative action than in routine matters (72).

This surve-- shows that narrow review is no precise doctrine,
easily stated .nd completely followed in any field. Rather it repre-
sents an r:o-,roach taken by the courts depending upon facts peculiar to
narrow review: fields generally, to some particular field, or even an
individual class of cases. Rules for the exercise of administrative
power may li'-ewise vary (73). In narrow review fields there exist such
statements by the courts, that the, could, if desired, exercise as
effective a check as they do in the broad review fields. The important
fact is, they onl-r upon rare occasions of individual hardship is such
exercise had.


98 38








II. BROAD R'EVIEW


Recently, j'overnnont is p.pus.ec. noe anc. more into the regulation
of private b.sirL3ss. An entircly no' problem hn: bKcn presented to the
cou-ts, Before an, re;r.ons a" offered. for the cou-rts' attitude as
shown b7 the c: ses, the t-o ,i.nst in io-rtvt fecleral fields should be
considered. Such revnlation presents urn; difficult problems in
adLiinistra.t o.i. ?ie-u1ant.io i.i should not wi)e o,.t private profits, if
State re-ulc.tinn, not Sta.te o'.;erershi,, is thie .(enir"C .im of the
statute (74-). B,-r! iced --.inai.ist this must be the public interest be-
hind the statute. Out problem is nt one of ._,oners, but rather, of
such fairness, as the courts 'ill a-prove. Then administrations have
failed to meet the end desired b the legislature, or have causes in-
dividu-al injustices in cffectin- t'ie ouroone of the statute, the coi.u.-ts
feel that there is cause to intervene (75). The problem of cu,.) 4-1
lation in fields of disnuted. socir.l -,.nd. economic colic:" r-'u:ie I .
cisions upon questions of fact. not susceptible to precise r-: , 4,,.tion.
The adequacy of service, thie reasonableness of a. ra.te, tL. .. :ness
of a trade practice, involve opinions 7hich ..ay vary cn; cial and
economic philoso-oplies of1 these entrusted "7it1. th-ir .' :-no.tion vary.
Such orobiems mi-ht be calle" "1-iixed questions of 1, fact," but
this roald be of little help, for this certe-o.'y .- D nave been
created for sach :roblei's rhich ti: courts do r -3 to hanCle (76).

The e-rl-- history of the Initer'stat-e Co'c Cori.;iission is one of
bein7 checlred ar.n-1. haompered., b"- the ro:-ts (77). The co'.rts full review
was soon distasteful to Congress. The nob'x.-rn Act, .atteLIpting to curb
the courts resulted (7?'). I'o-', rer..t ."in.lity is -iven to the Co.nmission's
determinations (79) The cou-.ts even cite n,.-rrow review decisions from
fields involvin- the ,ove-nmentIs o"n r:-op-erty (GO). There are few
cases Lroon procedural for'-i suh1 :..s the Alien Cases bring up, for the
Commission follo'-is a firly cor.olete -orocec.u--e. It is thlrourh the
evidence reauireuent thit the colu-ts exercise their greatest control.
The courts have no desi-re to reduce the Coi.,aission to "a mere instrument
for the prose of t,!:iv: testii.iony to be subr.iitte". to the courts for
their ultinr.te ?.ction". Altnou-t:, great finality is claimed for the
Commission, t.-iis nay apO..ea.l onl'" because the coL'urt is not so displeased
vith individual deterninations to review : the,.. Certainly, the court
has stated in some cases a brof'. br.sis of i-eviev. In Interstate Commerce
Commission v. Union Pacific _.. Co. (82) t~ie court st-ted the traditional
fornala ofi revie'- to test Con.ti+ut ional -nd statutory intra vire_, and
mistakes of la-':

"Questions of f-.ct ,i"- be involved in the determination
of questions of la:', so t.t r.' ort.er regular on its face,
'a be set aside if it ar#,ea.rs that --- the rate is so
low7 as to be confiscator-.: in violation of the Constitutional
prohibition against to :in- property, without due process of
la'7, if the Conmission acted so .rbitrarily or unjustly as
to fix rates contrary to evidence, or '-'ithout evidence to
support it; or if the authority therein involved has been
exercised unreasonably."

This case ignored. a long line of r'ece-ents urgedO. by counsel upon
the court (83). To save itself the burde.e of corrolete judicial review,


9838




-2 6.-


the court statef- that it "17oul,. not exnuine fc.cts further than to de-
termine whetherr there was substantial evidence to sustain the order"(84).
IIore in line with this latter statement, but staunchly demanding an
evidentiary requirement that Lt- finding be not contrary to the
"indisputable character of the evide-.ce" -was Interstate Commerce
Commission v. Louisville anC_ iTashville R. Co. (85). :eauire:ents of
evidence vary further with the statement t.'i.t an order may not be
issued "without any evidence whatever" to support it (86).

We have seen in this field a dis.:osition, at first, to carefully
review the Cormission's findings of fact. With a, new statute this
attitude was relaxed, but the court has kent a grip uoon the findings,
by its occasional requirements of substantial or some evidence. The
real problem has been practices rather than rates, although the courts
from time to time have tried their hand at valuation (87). On the
whole it may be said that after a bad start the co-mmission has become
a remarkably efficient instance of administrative action in the field
of regulation of private business (88). The Commission's orders have
received a finality approaching narrow review, though effective checks
rest in the courts, which the-., will not hesitate to exercise upon
occasion (89). qo one ,answer is readily available to the question,
why has this Comrnission achieved so much finality. i.uch credit must be
given to the fact that Congress intended a national system, and that
this need -7as a'rrecic.ted by the court (90). The problem had developed
to such acute proportions thc.t existing; la..' '7,s obviously inadequate.
It was not a,: situation of fittinG pieces into a.n e.:iztin- pattern, but,
rather, the demanC. was for an entirely ne'-r picture (91). Congress,
in fact, was most persistent in forcing upon the court the Counission's
continued demands for power an'- finality in its exercise. IThento, '"
sthe s r.Uy6, of u.se. of. ?,-ert A I ,.,. td q'1isJ i-*.. c t ri .il,;, ciPFar
L a th courts. In such situ .ti-..s, the rlos co1v:iint solution Irs
to refuse review (92).

The Federal Trade Comuission has not yret achieved the desirable
status which the Interstate Coru-ierce Commission enjoys with the courts.
MIainly, the Commission has been limited to false advertising (93), and.
to standards of unfair *practice known to the common law in which it has
been suite successful (94). The attempts to develop new concepts and
nev stancz'rds have until recently been uniformly disastrous. Its powers
of investi-r.tion have been liiaited (95). When it seeks to enforce aL
order, the -roceeding is such that the courts may, readily substitute
their ow7n views as to the conclusions to be drawn from the facts (95).
Such cases as the C-ratz Case (97) and the Curtis Publishing Company Case
(98), to mention but two of the better knowm cases, struck heavy blows
at the early usefulness and even raison d'etre of the CoLumission (99).
In the latter case, the court employed the substantial evidence re-
quirement in conjunction with its asserted authority, to rule whether
in law th3 fa).cts constituted an unfair method of competition. Although,
recognizing that the usur.l procedure where the evidence was inadequate
would be to remand the case to the fact-finding agency, the court saw
here a situation where "in the interests of justice, the controversy
should be decided without further delay" (100). This it proceeded to
do.
At the time Carl crland (101) wote his careful study the state
At the time Carl :c:Farland (I01) wrote his careful study the state


9838








of the cases i-.s suchll th.t he con,.d bitterly s !.1, ",v'13n juries n.r
accept or reject evidence and :' inferuees, but the 7!r'l e
Commission JVn do neitt'r" (102). This stui.v ',. scribes the dCifferent
.positio.i" of the Th^'.ral T":. Coitissic ,v,". the Inter2state Coi.uierce
Com'lission (].''). 1. 7`xc courts r. cnsider the entire record as a
basis for the orders of the federal Tr 'e Co-wnission, while the orders
of the Interst',te Coumarce Commission are challeor--cd only from the
atooc]c of ulr fie r
'aproaches of ultra vires -an. evidently sufficiency (104). 2. The
treatment of the *vide-icc is tempered b- the judicial attitude toward
the legislation involved, its subject natter, an&. its administration (105).
3. The court has acceoter. the policyy developed by the Interstate
Commerce Commission, but has refused that developed by the Trade
Commission.

lIr. UcFarl-nd next offers = ec7olanation for these rep-orted
differences. He suggests that the subject matter is fundam~ntally
different. The Interstate Commerce Connis'sion treats with public
utilities. The courts are used to their regulation by the government.
On the other hand, the mercantilee -orld of the past has been relatively
free from regulation. Thl 'courts, therefore, are reluctant to allow
innovations in this field. (106). 1. It is sug'.cested thrt the
personnel of the Interstate Co.ierce Coomzission h's exemplified the
best use of the expert and thca-t it is superior to the personnel of the
Trade Connission. Coupled 7ith the dishaanmony and lack of tact upon
th6 op-art of the Trade Commission in the conduct of its internal and
external affairs, L:r. IcF-rlid sees in this situation a basis for some
of the Trade Conmissionts 'difficulty (107). 2. He suggests that the
Trade Commission's procedure has been open to more uifavorable comment
than that of the Interstate Coym.erce Coaission. 3. Of particular
importance are the opinions given b- the two Cowuissions. There is an
indication t-hat, the Trade Con isionIs have been hasty, ill dravn and
based -apon insufficient evidence. The Interstacte Commerce Comnission,
on the other hand, has much nore careful-ly followed the judicial
technique, Ir.,wi.: its opinions carefuIJlj an.. fully considering the
evidentiary- basis for its action. Yr. :;ciarland. concludes that the
opinion by such Coinissions should- state facts and the reasons for the
conclusions dra'nn. The suggestion is obvious, that the more judicial
the opinion, the more likely it is to be clothed with finality (108).
4. The courts offer-- an e:.-ol.raation for the different treatment based
upon the statutory lnuAge r. cFarland thinks this is of little
importance as an e:.jlanetion. 5. The doctrine of review if based
upon the formula of "questions of law" and "questions of fact."
6. The different enforcement procedures provided invite the treatment
that has been accorded the. tro Comrmissions. The orders of the Inter-
state Commerce Commission become effective in a specified time unless
set aside hy the courts upon application of parties affected. The
Trade Commission, on the other hand., must apply to the courts to secure
enforcement of its orders. 7. The sta,ndardls set up for the Interstate
Commerce Commission to follow, although couched in as broad language
as those as the Trade Comnission uses, refer to nore particular situa-
tions (109). The writer has s1v,-ested above in addition to this that a
greater amount of expert knowledge of a kind not readily digested by the
court, is required in the functioning of the Interstate Commerce
Commission (110).


9838


M





-26-


8. The more satisfactory the experiment in administration, the more
authority will flow from the legislature. And it might be added that
the more pleased the court, the greater the finality the legislation
will be given.

Much of the difficulty of the early Trade Commission mat be
attributed to the lax standards of the Act (111) which amounted to a
broad statutory grant to work out the law in a certain field, within
the limits of the term con-petition. It was the very laxity of the
delegation that must have made the courts feel that their careful
supervision was needed. (112). Confidence in the administrative
body's ability to meet the problems presented to it in a capable and
not too visionary manner, comes but slox7l' to the court (113). This
confidence is essenti,-.l to any real ae_-inistrative finality (114).

IlcFarland expressed the need for legislative and administrative
reforms if real good was to come fro7, the Trade Commission (115).
Without awaiting new legislation, almost as a, contradiction of
,cFarlandcs thesis cane a series of favorable decisions. But instead.
of being a contradiction, these cases furnished further evidence to
substantiate the thesis which had been advanced, for they represent
more careful treatment by the Coi.unission. The opinions were handed down
at a time when economic forces indicated a greater need for trade
regulation. The Royal Milling Co. Case (116) merely involved an unfair
advertising problem, a field in which the Conmission had been com-
paratively successful. The judicial note struck in the opinion was new.
Where the order of the ConL.iission is supported by evidence it will be
upheld. The Alagoma Lumber Company Case (117) used almost idential
language. The facts and the language of the Keppel Case (118) are most
revealing of the courts' new attitude. An order of the Commission had
been directed against the distribution of package candy by the "break
and take" method. This the Commission had found to be unfair com-
petition. The court denied that the Commission's jurisdiction was limited
to practices that have been found unfair byr the court (119). It frankly
recognized the gradual process of judicial inclusion and exclusion (120).
The language of the court best illustrates its more ready attitude to
give s6me finality to the Commission:

"While this Court has declared it is for the
Courts to determine what practices or methods of
competition are to be deemed unfair - -, in
passing on that question the determination of the
Commission is of weight. It was- created with the
avowed purpose to it in "a body specially competent
to deal with them byr reason of information, ex-
perience and careful study of the business and
economic conditions of the industr- affected,' and.
it was organized in such a manner, ,7ith respect to
the length and expiration of the terms of office of
its members, as would Give to them.an Qpportunity
to acquire the expertness in dealing with these
special questions concerning the industry that comes
from experience.1 Report on Senate Committee on
Interstate Commerce, ITo. 597, June 13, 1914, 63rd
Cong. 2 Sess., pp. 9, 11,. See Federal Trade


9838









Commission v. Beerh-Fut Pac-rin,.-: Co., s',pra, at 453;
compare Illinois Control R. Co. v. Interstate Comniicrce
Corr.iiszion, 206 U. S. 441, 454. If the point were
more doubtful th-n ,'e think it, ,e sl-oul.:! hesitate to
reject the conclusion of the commission, based as it
is upon clear, specific amO, corcn-eien;ive findings
suc-'ort o by evi(.e-.ice." (121)

This comr3arative survey has been extended to the length necessary
to show. 1. the reluctance of the courts to give finality at first and
2. how much finality may be -v.inod as the courts' confidence in the
administrative boCy increases. T-he cases also indicate that substantial
means of review are open to the co-rts, and that they rill be used '-ihen
the courts deoem then.i necessa:'-y.

Where property interests ai'e involved the courts are quite cau-
tious in extending administrative finality. Of course, property in-
terests are involved in taxation, but for many reasons, thought good
by the courts, the government s ne-Id, of narrow review is felt to far
outweigh the interests of the individ-ial taxpayer. Professor Dickinson
has suggested "that the rep- iness of the courts to review tends to
vary strongly with the size of the property interests at stake" (122).
The courts themselves have given weight to this view. Snmnary action
has been held proper as to items of little worth, such as fish nets
valued at fifteen dollars each. The court, recognizing the difficult
of drawing the line, consciously.r adopted the value test (123). Large sum
sums of i]oney involved in litigation will cause the court to give much
more comprehensive treatment to a legal point already res adjudicata
(124).

The regulation of radio communication is an apt illustration of
the forces &t work in such fields. If an C?._'*lication for new time or
increased power is made, the courts, tho-uh given a statutory review,
are reluctant to upset the admin-istrative findings,(125). The courts
have a wide charter of review; the hearing must be adequate and not mani-
festly unfair; the findings must not be contrary to the indisputable
character of the evidence; and the facts must, as a matter of law,
support the order (126). This charter will be resorted to where sub-
stantial money has been invested in good faith and the Commission is
jeopardizing this investment without compelling reasons (127).

The regulation of common callings or "business affected with a
public interest" because of the large property interests have received
particular treatment by the co-urts* (128). The function is regarded as
"delicate and dangerous, an',. ought to be exercised with a keen sense of
justice on the part of the regulating body, - - The Coorts ought not
to bear the whole burden of saving property from confiscation, th ugh
they will not be found wanting 'there the proof is clear (129). The
responsibility of the regulatory agency is even more great than that
of an agency operating a government owned business, fbr the question of
profits and the denial of property without due process of law are not
similarly presented (130).

The courtsI interest in social and economic facts has already been


9838


--29-






-30-
observed. In fields of disputed social policy the judicial technique
usually involves an extended analysis of the facts. The temptation is
strong for the court to substitute its own conclusions.

This judicial attitude has crystallized into the well-known concept
of "business affected with a public interest" (131). Other business,
it is hel., can not be subjected to certain toes of regulation, par-
ticularly price-fixing. The pi-blic interest concept sees the fixing
of prices as a guaranteed payment for the dedicatio:A of business to the
public, and the limitations u-on the free use of property thereby en-
genered. A number of the federal courts expressed this reluctance to
approve price reeulatian, in cases involving 1T7A codes (132). In a
case (133) involving the sane statute, concerning when the Nebbia case
(134) so liberallyr construed the concept of business affected with a
public interest, "the same court shoved a disposition to be apprised of
all the operative facts in the case before giving any relief. This
interest in previous profits and "spread", both before and since the
issuance of the order questioned, shows a constant interest, in
economic questions and possible injustices, properly presented to the
court (135). The conclusion must be had that private business not, in
the courtsT opinion, sufficiently affected by a public interest is pro-
tected by a broad review exercised by the courts. This protection
takes the form of forbidding certain regulations proposed by the
legislature, and a fortiori b0,T an ad-inistrative agency. This might
even be called "judicial legislation" to distinguiish it from the broad
review which will be seen to exist in cases of business affected with
a public interest. The point that this consideration has meant to
emphasize is the keen interest the courts evince in any positive reguu-
lation of business, and their disposition to fully review the basic
economic facts, and to substitute their own views for legislative (or
administrative) declarations of policy.

In cases of State regulation, the Supreme Court has long shown a
disposition to fully consider the facts involved. This does not mean
that the court has overruled the administrative decisions, but it does
show an early interest that some facts be present upon which a "fair-
minded board" could determine the conclusion reached (136). The in-
terest of the court, also, has long been extended to the confiscatory
nature of rates. Although the court will not make rates itself (137),
a judicial determination has been declared essential (138). The court
has not hesitated to declare its theories of valuation (139), nor to
make demands overruling the opinion of a "fair-minded board" (140).
All this control could be exercised by the court,while leaving the
primary fact-finding final and undisturbed in the administrative hands.
That is, a review by the courts to see if there were proper evidence
present could furnish a sufficient check. The really upsetting notion
is that injected by the Ben Avon case (141). The indications of this
case are that the courts will allow a trial de novo by the lower
federal courts, both of the facts and the law. (142). The Suipreme Court
of Pennsylvania referred to the review of the valuation order of the
Public Service Commission by the Superior Court as "merely the sub-
stitution of the courtsl) judgment for that of the Comamission" (143).
The Supreme Court of the United States sustained the action of the
lower Pennsylvania Court:


9838










"loo!.'!,, at the entire opinion we are compelled
to conclude that the Surreme Court intorpre,'tcd the
stat'.ite as Tritlhholli,- fro, i the courts power to
det'mViine the question of cbnfi.'.c tion accor'inr,
to their oan inde.,'--: i6reit jiLnt u .n h action
of the Comuission cones to be considered on appeal.----

"In all such c..ses, if the ovner claims confiscation
of his propcrt- A*ill result, the state must provide a
fair opportunity for submitting that issue to a
judicial tribunal for determination upon its ovm
indeOendent judgment as to both law v (n. facts; other-
wise the order is void because in conflict with the
due process clause." (144)

Broad review of regulation of business affected with a public
interest, eand judicial interference with regulation of private
business are established facts. The Ben Avon c,-se is still the law,
although not ever:,. allegation of "confiscation" rIerits such complete
review (145). The courts interest in the siibstantive nature of
social and economic* regulations vust be -.ccepteO, as an operative fact
in considering the scheme Luikrlying the .ITIlA.


9838


m


- 1-




-32-


III. JU-JRISDICTIONAL FACT

The courts' use of jurisdiction and jurisdictional fact question as
a method of review has been observed (1.46). The precise character of its
use in the cases demands some attention. The problem itself, is not new
but it has gained recent impoortance in administrative la-7 with such de-
cisions as Crowell v. Benson (147) and Ng 4ung Ho v. White (148). An
early English case (149) points out the problem. Did a charter giving a
college of physicians authority to punish malpractice give them jurisdic-
tion over all -oractice? Lord Holt, answering the question, held that the
authority was not limited to those unskilled in fact, but extended to
allow an inquiry into any administration of "Iohysick" to determine if it
were unskillful.

The question of jurisdiction over a defined subject matter, since it
clearly demands statutory interpretation, is a question of law (150).
Again, the baffling oroblem of trying to distinguish questions of law
from questions of fact arises. It is seemingly an unsolvable penumbra.
The difficult situation is where jurisdiction rests u-oon the determination
that the evidence is susceptible of more than on- conclusion as to what
are the "Facts"t (151). Another problem is the attempt to limit the ad-
ministrative body, not to a general subject or field such as the practice
of medicine or the injury of an employee, but to the precise question the
administrative body is called upon to decide, malpractice or accidental
injury (152). If the court so restricts the administrative body it does
away with much of its usefulness. The cases are simply twice adjudicated,
and the administrative board is placed in the position of master for the
taking of evidence for the court. "7hen the entire function of an admin-
strative body rests u-oon the determination of a fact, held by the court
to be coextensive with its jurisdiction, and so also determinable by the
court, it is no longer clothed with the independent 0ow'ers, which it
would seem should be its oroper s-ohere if its action is not judicial.
The courts have frequently taken over the determination of such questions
as whether a comoanv is insolvent (153), a horse has glanders (154), or
a railway has paid in ten oer cent of its capital stock (155). The court
frequently finds that its opinion -Egrees with that of the administrative
body. This attitude is found -,here the court carefully examines the
evidence, but concludes that the determination made was oroner (156).
These cases have not stirred uo the criticism, as have the cases where
the court disagrees with the administrative determination. Nevertheless,
the technique is identical.

In U.S. v. Ju Toy (157) the assertion that a claim of citizenship,
by a person of Chinese descent seeking to enter the United States, went
to the jurisdiction cf the administrative officer was denied. The Dis-
trict Court had entertained new evidence and found Ju Toy to be a citizen.
The court speaking through I1r. Justice Holmes was apparently apprehensive
of a flood of cases, whatever the justice of the particular case. Huch
criticism was directed at the court (158). lore as a matter of individ-
ual unfairness than as a problemm of orooer law. Iluch of this criticism
finds a basis in the fact that alien orocedure has been none too con-
siderate of individuals under its jurisdiction (159). Seventeen years
later, an almost identical question was presented to the court in
Ng Fungp Ho v. White (160). The court reversed its former position. The


9838





-33-


only important actual difference in the two cases lay in the fact that in
the latter case the -etitioners were within the territorial bounds of the
United States, when the immi'-:ration officers claimed jurisdiction over
them. These persons had once be:n seeoin- entry which had been allowed.
By this, they seemed to have > s; int') a f;ivored class. It is thought
that today, upon the auth-v>rity of this latter case the Ju Toy case might
be reversed, and in a hnbes cjr rocji.', after administrative
remedies are ixhaqsted, a trial de novo in a federal court might be se-
cured on the fact of citizenship. If it wore not, it could only be, be-
cause some special significance is att-,ch-d to presence within the country,
even though through illegal entr'-. The courts have long exercised a con-
trol over questions of law which often appear to be very close, to, if not,
of a jurisdictional nature (161).

In connection with "broad review," the Ben Avon case (162) has already
been fully treated (163). That case rested upon the proposition that the
orooer allegation of "confiscation" raises a constitutional question going
to the final jurisdiction of the administrative body. This is called
"Constitutional fact, H which means jurisdictional fact in those cases where
the Constitution furnishes the limitation (164). It means that the case
demands an independent judicial hearing to determine if the administrative
body had jurisdiction, or had jurisdiction to make the decision it did
(165). Before this case, the Supreme Court was content to accept conclu-
sions of the State administrative bodies, having some reasonable basis
(166). The broadest review, and an ability to substitute an independent
judgment, whenever the administrative action does not accord with the
courts' views are the real implications of the doctrine (167). The recent
case of Crowell v. Benson (168) takes the doctrine one step farther, and
applies it to findings of federal administrative boards (169). The Supreme
Court allowed the District Court to make independent findings on entirely
new evidence as to the jurisdictional questions, whether, 1. There was
injury upon the navigable waters of the United States, and 2. Whether the
"master and servant relation" existed. Said Mr. Chief Justice Hughes,
speaking for the court:
"In cases brought to enforce constitutional rights, the
judicial power of the United States necessarily extends to the
independent determination of all questions, both of fact and
law, necessary to the performance of that supreme function.
The case of confiscation is illustrative, the ultimate conclu-
sion almost invariably depending upon the decisions of questions
of fact. This court had held the owner to be entitled to 'a
fair opportunity for submitting that issue to a judicial tribunal
for determination upon its own independent judgment as to both
law and facts. "' (170)

Mr. Justice Brandeis, in a vigorous dissent, pointed out that this
view had not been adopted in cases involving the Federal Trade Commission,
the Interstate Commerce Commission, or the Packers and Stockyards Act
(171). The majority opinion does not specifically refer to the Fifth
Amendment, but that must have furnished a basis (172). It has been sug-
gested that the. case may be limited to the admiralty power of the court
and a holding that Congress mayr not cut this down by making the findings
of an administrative board final (173). It is probably true that Crowell
v. Benson was merely an outcropping of a somewhat obscured theory of
review which has long' e-xisted. The courts can not hope to review de novo
the facts in such cases. The task would be overwhelming. On the other
hand, administrative bodies cannot hope to always escape this potential
review, without the exercise of extreme care and fairness.





-34-


It is quite possible that the ec::ecisc of this theor; by the courts
.vy be gre'.tl:, reduced ob .a.rninistra:ivc .ction. Questions likely to be
c1l1ec. jurisdiction-l fct." should be- tre-ted -.s questions of fact
-lonie. A. overwhelming record to su--ort the r.'.ministr-.tive determination
should be oi'.ins tkingly built. It mitnt even be ,vell to throv, out some
douLtful cases, until sui icient judici-i sanction for .ecidin- such
problems h-d 3r-durll"y a.ccrcted. The St- :e courts .iavc been relucw-nt to
review qucst-onc of "jurisdcliction,.l frct" wlhere the a.dministrtive detcr-
min-tton v... su orted by subst-nti 1 evidence (174). The judicial technique
is such th t if the court ?-L:rc-.s vith the ejministrntivc inding, even
though -.ll the f-.cts re most c-.refu'a).- revie-icd, the decision mnay be put
in terr'.s o.f iivi:ijg fin-lit; to t o :'miistr-.tivc decision. (175). It would
seem thn-.t -y' t.In c: re, to .c ,r -11 eort-n.c--t evi..ence'n, -. taking
jurisdiction o.Il- in cle.-.r ca.ses, the -'-miniistr-.tive -gcncies co-. ld. dernd
a rcsj-.ect f--Gi-. the courts, reflected i-n an incre.sing freedom from review
by the "jurisdiction..,l fr,.ct" ,iea,ns.

IV. G- ETAL PROCE:- UPJ.L 2? QUI R-i -ZTTS

There is considera-.ble confusion s to -,"r'.t -,)rocedl-rr.l requirements
actually c-.n be sa.id to ex:ist (176), The .-rroLlei h'"s been said to present
"a wildernessof single inst-.nces, -I.ibij-ity .-nd inconsistency of principles"
with "1c wide difference in the scope of judici.-al. review in different fields
of -ndministr,.tive reEul-.tion" (177).

Procedural-. requirements v.re not ,ll-cdLefined. Host attorneys think
of adrainistrotive due process .s notice .nd hc..ri.g. Of course, it cajn not
be eXpectecc tha..t in Jcner 1l the requirements of judidiaol procedure must be
followed. Administration is .iore infor'ma:l. The procedure of the courts
is not the oroce.are of -.dministr-.tio.. F-.irness in the -,"rticul.r case -.nd
the p:'.rticul:.r field must be the touchstone nainil reliec-d. upon.

Proceduracl rc quircment? v.-.y v.'it'-h. the field. They -.re more Iax in
those fields studied in con .ectio-. vi ch .n-rro- review. Police power thi.nt
requires suj.ur'ry -ctlion c.-.n not be. hinde-cd by renuiremnerts such a.s notice
'nd he-.ring before action n (178). Professi:;.z-l r-.ctice ever -. period of
time, or the peculiar soci;-l historr- of an problem ma." ha-ve the deepest in-
fhLLence u-,on the requirements of -orocedur-c in hanc':ling such problems (179).
In the dcld of customs :.rmr-is..-.ls (183) the procen.,.r.l requirements r7re
light. The social history of this field, involvi:-ng .s it does our tariff
policies, ..nd. the csta.blishiicnt of this field when the courts were much less:
prone to inquire into executive nact.on, :'oes f.-r to exql..in the ic.x require-
ments. Here, it ha's been held th:.at proceedings m-y be secret without the
right to cross-ex-.mine wit-,e-sses bcing: -ff orded; that ill evidence need not
be disclosed, to the importer, if he h-.s right to st-.te r.is views 2%nd
suggest questions to be -sked vwitnesses (IS1). Li]:e"ise, in the field of
tax collections, srnur.ry .ctio-'i. involving distresF -nd seizure of property,
without notice, he-.ring or op ortunitv to confront and cross-exa.nine
opposing witnesses, is proper wherc '. l.ter judici-.I or P.dninistrmtive
hearing is -hiorded (IS:).

Alien procedure h,-.s many qucstioniable features (183). The hearings r
held before local immigration inspectors who -.ct -s justices and prosecutor
UsuAlly the Llicen hLs no counsel :n. the hePring is riv-.te. Evidence is


9838







. informal, The trial iL. the Dcn rtricnt is .a papor one, -nd th- st-tutcs
do not even ronequire that a Ic,-.1:, trained or e,.ric,'cC person p,-czie.
All this is done ,ui-.!.r the justificA.ti ,.. of sp-.cO, cxpcrtize, -co-.iornmy.
Of these, Dc.-,i Va.. Vieck sa,.ys: 1. S ',ccL is not neccstary; 2. ThI of,. icial
is not an ex:zpert; 3. Ec,,nor.-i .:'y r be %a juLtification (Il.,). In the early
ca.ses, the courts ,c.r.,.', quite content with such procclu-rc. Th-Lt an alien
did not underst nd ar proc,,:.; iL wvas being hel(? bcc use of ignor-i-ce- of the
English lan ua-ge, r- th.-. lack of asnistancc of counsel or friends was not
abhor.-c.-t to the courts, dc,.iite a high souncl. statencnt by it about Cue
process of law (185). Recently the court ihas evinced a more ?trict attitude.
The hc'-ri.ai must bhe more than a, mere semblance; the right to produce evidence
must not be denied (186). A lover federal c.jurt has held that W -hncc 'n
alien does not iLdcrstand tcstim-iony it must be -:.-plained to her; the re
must be aflordc'. th, privilege to cross-examine which the court referred
to as a "Constitutional right" (187). Counsel ma.y not be denied access to
the hco-ring; an- it is funrm]-icntal that procedure set up by the c-cncy's
ovn rules must be ,Qhcr:1 to (188).

In the government's postal oper tons, the .nost strict procedural
requirements Arise v, hcre the i. .ill"' privilege is involved. Even in such
cases a hearings need not be or.al, nor must the decidi.i:g oiJficial state
the reasons for his decision (189).

Procedur -.l requirementt; become more strict in fields designate,. s
reccivian broad review. The control by the "substa.ntia.l evidence"
renuirei-cnt of Intersta.te Coi.m'ercc Comnission determinations has been
observed. Frequently, Congress may by statute define certain require-
ments -.s in the case of the Fe'cral Comuni ic-ations Conrission (190) and
its predecessor the Federal hadio Cor"ission (191). There an order by
the latter Comnission changing a station's frequency w s to become effec-
tive Aoril 30, the hearing being called for June 17, this was such error
that the order was dCeclared void (192). The recent case, involving a
Virginia. statute empowering the State Highway Co;ninissioner to order the
elimination of grade crossings, and. failing to provide for noticc,.hearing,
or review of the officer's action was held bad despite decisions of the
highest Vir:i.nia court affording a review if the action was arbitrary (193).

In addition to varying with the fields, procedural requirements may
vary within a field. This does not mean merely that, chronologically,
they bEcCme less or more str-ict (as in the alien cases). It means that
-hey may vary with diffe:!ent jurisdictions or even in the sa.me court depend-
in.:: upon the particulars of each case. Particularly in tax cases involv-
ing valuation assessment, the cases vary as to notice and hearing
requirements. The only rationale, seemingly obvious, is that notice and
hearing are required unless the administrative body has such an extended
jurisdiction that it renders such requirements impractical (194).

Requirements )f notice varry. A notice may be given by statute (195).
If so given the meeting must be held in the place and at the time specified
by the statute (196). It has been held that where a party, v/ho complained
of failure to meet, showed no disposition to attend the meeting, he could
not successfully urge lack of notice (197), The predominant rule, however,
is to demand a strict statutory compliance (198). notice requirement in
tax cases, as alrc *.f.y pointed out, vary (199). If a subsequent notice


9838


~?-. 5-






-nd he-.rivg iu- to oc ii.d .1. t-W: r-.-e'v, -lnOUicc 3H th.C former proceec.in"-s
is not requL-ed (2',..). F..ihr-c to ,ivc .-,rice 'e-)c-dj.s uron the pr-.c';ic-lity
of hle siUur 5. In such c' t-x -oy ith x::tcn'e& jurisdiction
or ,,herc suni .,.:'/ r c.-: .rcc. a.-c.7e r to -protect publicc health is
dein:.n.c. -.. t, rcfulati-,s to be ibros'. Ui 1> to:o ) nerors notice
requiremne.ts .re !t.ht (,{.l).

Require cae-t.s nf -.-notice .r*- f cours,.-- io -vicst in fields of disputes.
s0oci-1 n, econor.:ic nol:io1cy.-.il ... cti... iivi .l -.roperty interests
(2T)

In Dr'ctic .li, 'n. c- se t.Y t .r'equires ,-otice, P. he.-.ring, is l.iso
reoiuir:d. Te former xittou the itLer vroJld s.-liy ,be a barren ro-
tection ("')../. .i'ne right t be r.:' 1If .e.rncde,, is generally considered
vit .1 to .l]. ':jiiinist:. ti-e -ctioan, with the exception of '. fev i.-st nces
where -Uhr, inLivi-a.1 r-.-I: -;I L
mere i-viu .1 *o-lC. in lit-lF L;, Chc requirer.,ent, or the public
vioul' oe t'oo )rc t;'. incorve: i_:'.cer2. (2204). F-: ris'.: howcvcr &oes not i.n1y,
in most iist- r.ce for:,.'.l ':.occ:'j-'e ( 05), :'o-" more th'.n Me he-i.rinig
-u1.- ; s LiC:er ry (<'06). T!.; ut st T_..'. n is, :h.at in e-.ch ca.se, the
I-e .rii ri, .,- t be t'.ir (F07). As :'. Ju'stic2 C-.r- ozo h-.s s iC:

"The 'hi ..:rie:I t- t . . co:' .is. -.:s 0rc to
jiv-e rrn-.st bE r'i, t., -e1 to t, c i seq' snc.: th t ,'e t.o
follow to tin rtt:'c' ':. ..,. revie v.tc Lch ncir
orders -,ii). L.. suL'jcct." (.2,.%)

The s.c-roc_'; *e. .0ac.v d i:nT.e.. L .re notice tond
he-.rin-', or, c-s it ,,-.s b- n otc-r.-,,rse tcrnieo., -n ororbuinity to defend
(209), -.hej"evcr f i sncs ,,.;,.- c . If Sie,-,o is ,'ny s t'.tutory su;gestion
indic'tini "n ifltoRtio, -."-.t sri.c- s'.ifc5uzuis bfe provided, or that evidence
be required, notic-....... ',r ?_-.-Cr --Usoluto essentic-ls (210). Other re-
quircmcnt .-'c i..rdc, .s apeciic ch :cies (relly .n -spect of notice),
cross-e-X-rti--, tio.n ( 1 0 ,Lti1 C' to c-Le dcO Cc-rucv of the her.ring), r.nc the
rijht to -.r.ue th: l.v -rnc'. css (, iso *'. -; ring -roblemn) (211). Just
vrwh.t tvne nc -,:tice -"c. -,' .ri.: "re s.-Jficicnt v".'ic; (',12). Where a full
judiciall revio-', or tri.-.l de novo ic -recent thc. -dministr-'tive requirements
-.re n. so ncv;:,- (..1-). T.CI i f. tco -,rob-bl, is thr- ..-cqu-.cy :c.nd fairness
of the ,roceedi.gs. Alt-hot._ --.tlco -nd .y- ri.- -.y .ve disacvn.taes
such -s 'cpnsc nnd d7l1.-..- (213i:,.) their dcsiranility should demand their full
utilization .s m,..ns of nrotoctitg the rn'ulic.

There :re nmir.oc of ".dmtLnistr-tive agencies which function .s
court cl .:,sely fol1 moving ju.'ici-.l ,roce'r.u-e (214). On the whole, the
bench -nid the b..r ._r.vu both hov,-i :r, diso.ositi.)n to a-ccor(. such court c a
hi ,he" pL..c, thn:; Liven to ,o, other -('cninistr-.tive adjudicatory cyencies
(215). The irn.lic--.tior. zis h t tnc m,:re juc.ici-l or more fa.ir in aP-3e;'.rPAnce
i.n .ncli.,nistr-tive r1d-judic-.tiou. se;-e s, the .."-enter the finaolity it willbe
extenc-rd, other f..cto-.s kbi c4u-'l.

A now ....7iis tr tivc .,:c:y '-.e .1i-g "- fiCeld o- disputed economic
a.nC soci-.l policy is unaier the closest -c-'"tiiiy of she courts. Its 2.ctions,
proce(.ur-.1 r-.-,C subbst-.ntive- muct o -.most circrnspect und its progress
most c-rcful, if it is 2-.-sired to 1-:eep judici-'. control -*t the minimum.6
Even T-hrisc )recrutions oiron""n-" .e, if the- courts -ire h:eenly enough
interested. It is, hov',evcr, stc;. 'ci t.v- ri-It direction, the direction
indicated by the c, es.


9838













PART II


P R L B L E !.' S O F AD D I .'I S T R A T I 0 N

AND AD I N I S T R A T IV E LAW

I Y NRA


9838










CHAPTER V


TiH SCHEI'T

Cne of the foremost advantages offered by the administrative
device is flexibility. It would be, indeed, unwise to attomot to
crystallize into formal and absolutely binlinj concerts administrative e
action as it stands today. It is a new technique, offering many varia
tions to meet the new and constantly arising: problems of society and
government. As the common law developed into a body of more or less
frozen concepts, and as equity has tended to do the same, so may P'l-,il-
istration. Any attempt to hasten this would be undesirable. The vev
value of administration lies in its empirical state, in its eoas"- pta-
bility to the demands made upon it. This is far from indicating L-.:t
every new administrative device should be welcomed, unquestione., as a
contribution to government. tn the contrary it should be car-fully
tested, not only by its apparent ability to meet the problem, but by
the precedents of other administrative forms and the circumstances
surrounding their use. Such a test is the first necessary s te-r when the
iR.1 is to be observed.

It was obvious with the passage of the TTPA that powers more vast
than those ever before delegated (except in war time) were delegated
to administration (1). It is probably that some of the persons respon-
siole in drafting the a.Act and in its first administration realized that
here was an agency sui generis. (2) Others, outside 'of NRA, later
ex-pressed such recognition (3). The Act itself was quite indefinite as
to wnat plan or plans if any it had sought to copy. It was equally
indefinite as to what actual form, as a matter of plan and procedure
the administration of the Act would take. It was most apparent that
the plan .,roviding for application by private members of industry for
approval by the President of a scheme of law orooosed by these individu-
als would be followed. As the Act was developed this proved to be the
case.

As shall be seen, there were few orecedents i- American government
for such a plan. The most analoguous system is o e found in England.
This method of administrative lqw-ma!ring has been called "procedure by
scheme" (4). As history is long qnd interesting nnd today it repre-
sents one of the major administrative devices used in English govern-
ment (5). The orocedare consists of a proposal by a group of interested
persons. An investigation by government inspectors follows; next a
local hearing is held. The hearing allows counsel to be heard and to
examine and cross-examine witnesses. The inspector (much like an WRA
Deouty Administrator, or an examiner for the Federal Communications
Commission) then submits a fill report, analyzing the facts and setting
fort nis recommendations to the appropriate Iinister (6). The pro-
cedure of proposal, inspection (the activities of Research and Planning
were analogous), hearing and recommendation to a superior for his an-
provil, is quite analogous to NRA procedure.

The subject matter of this administrative form was, in its early
history, almost always limited to local projects of little general
interest. This explains the reference to it as "private bill legisla-
tion oy a department" (7). It was used, for instance, in connection ith


9838


































































ii







slum clearance projects (8). After tie *iorld 7.7r the use wis broadened
to include wider r.easires of socialization. Such a need can be seen
in tngland not divided as is this country into territorial States
evcn with conrideraole local legislative power. Grouos reoresr-nting
special interests or areas miy apoly for aprov9l of schemes. An
example of the substantive problems now dealt with is the aalpamation
of mines in a district by aree:.ent of a majority of the owners and
approved by the oroper minister, although a minority of the owners re-
fuse to cooperate. (9) The development in England has been slow. It
has been subject to the Courts' test for ultra vires (10).

The iT.A as a procedural scheme was not the result of any such
gradual growth or general development. -Fev; examples can be found of
power delegated to administrative officers or agencies' to aporove pri-
vately proposed schemes. Upon application of groups the Federal Trade
Commission has an'.roved rules of unfair competition solely as a co-
operative program for group members. These nad no bindin, effect upon
members of the group or non-members (11) although they might serve as
the oasis for a cease and desist order. In the procedure under the
Flexible Tariff Act (12) there is an analogy. There, -interested
domestic producers-could acply to the President for a levelling out of
costs of production, by increasing: the tariff upon competing foreign
manufactured articles. There were precedents aplenty for governmental
regulation of business (13), but there were practically none suggesting
that the individual industries frame their own laws (other than the
fact t,,lat nearly any pressure group can secure introduction of a bill
embodying its own views. This, of course, does not involve administra-
tive approval).

As many have suggested (14) the Act was indefinite as to the form
of tne administrative agency (15). But since it was recognized by the
Act there would be an agency or agencies this created no legal diffi-
culty for the use by the President of such assistance was contemplated
in specific terms (16). It was agreed that the Act intended some mea-
sure of cooperatiwva action between government and members or groups of
industry (17). No provision can be found for the steps in code-making
that became established (18) or for the administrative set-up and in-
ternal plan of procedure that developed (19). The NRA as developed
creates a difficult problem in classification in terms of the estab-
lisned forms. Here was an agency giving awa:, its powers freely, often
lavishly. This presented a question of powers, but an unusual one
of how much power could be so delegated rather than the usual one of
how much the administrative agency could gather to itself under its
charter (20). Here too, was an agency exercising powers partaking of
the le-islative, the administrative, and tne judicial nature (21). The
most important power exercised was the approval of codes and the inci-
dents of that power. The problem of compliance had a separate charac-
ter and will be considered later (22).

The WRA Legal Division proceeded upon the basis that code-making
and approving was a legislative function governed -i',inly by the court's
attitude in the Norwegian Nitrogen Case (23). Procedure, the Legal
Division seemed to feel, might be lax (24). In the ease so strongly
relied upon the so-called Flexible Tarriff-Act was the basis of the


9838




-40-


procedure -there questioned (25). The Act was a "delegation - - of
the legislative process" (26) to the President, who could adjust the
tariff schedules to mept lower costs of irodaction abroad. The specific
points involved went to the adequacy of the hearing. The Tariff Commis-
sion, wnicn by the Act had oeen given power to conduct investigations
to assist the President (27), refused to give information to the inter-
ested importer as to the costs o'f oroduaction of a local factory (that
owned by the applicant). Counsel for the importer wrote a letter .de-
manding to see "every particle of evidence" gathered by the Commission
and that he be allowed to examine all -itnesses including the inspectors.
The data had been gathered with the understanding it would be held con-
fidential. The court, speaking through Yr. Justice Cardoza, denied that
counsel's demands must be net to afford due process of law. It based
its decision upon the following pointers inter alia: 1. The history of
tariff procedure, both legislatively and administratively (28); 2. The
Commission's activities being distinguished from limiting powers of
public service companies (29); 3. The Commission being merely an adviser
to the President, who was not bound by its advice. (It was not "an arbi-
ter between adverse parties" so its procedure might be built to fit the
problem in absence of more stringent statutory requirements (30); 4. It
being unreasonable here to force the Commission to disclose such infor-
mation, or treat each person affected as an individual litigant (31).

The next inquiry must be the value of this decision as authority
for i'RA practice.

The Norwegian Nitrogen Case proceeded upon a broad statutory
grant in the case of orocedure. This was positive recognition by Con-
gress that the Commission should, be free to develop its own procedure.
The NIRA, on the other hand, made no provision for procedure. It can
not be said with equal force that Congress positively felt that the pro-
cedure adopted would be the best when it did not even know what agen-
cies would be used or the exact character of the problems. That the
NIRA failed to provide procedure did not authorize arbitrary action.
The due process requirement demanded that orocedure be reasonable to the
end sought. There is some evidence indicating a reasonable comparison,
some indicating a reasonable distinction. The touchstone must be in
tne subject matter dealt with and the end sought.

Historically, the government has long exercised great nooers in
the tariff and taxation fields (32). Our political policy has favored
the imposition of tariff. On the other hand, government regulation of
or cooperation with business is relatively new and.far from being so
widely approved. It may be said that the policy behind the tariff is
fairly well settled while in the field of business the economic and
social policies are most hotly disputed.

Besides this historical difference, tariff collection and regula-
tion are closely related to taxation. Despite the economic significance
of tariffs, they are fundamentally taxes. The tax field is one accorded
narrow review, with slight procedural requirements. Business regulation
on the other hand is a field subject to the closest judicial control,
where procedural requirements have been relatively high (32a).


9838





-11-


The court in tne tariff field was infla',nced by a judicial
attitude that had grown uo when the coLirt: wv. re exercising much less
control of adminibtrative action. Although the court is not subject
to any strict res a5judicatq notion of beirn bound by its own decisions,
they have a strong influence upon the court nuless there is compelling
reason to abandon the established views. A mere reference to
Auffmordt v. Heddin (33) brings bacl- the vision of quite lax adminis-
trative orocedure in this field bearing the approval of the courts.
uf course, in this case the legislative asoects were practically miss-
ing, being outweighed by the adjudication given. This merely places
the legislative procedure in the norwegian Nlitrogen Case in a stronger
position for it is generally conceded that administrative adjudication
requires higher standards of procedure than administrative legislation.

The economic sanctions should be observed. A major portion of our
wealth is represented by our industries. Importers, however, are a
small class. Although large sums of money and substantial property
interests are often involved in the tariff questions the courts are much
more keenly aware of the interests of private business within the coun-
try. The voice of business booms; that.of the importers is seldom heard.
Mr. Justice Cardoza specifically stated that the case was not like lim-
iting public service comp-nies in the transaction of their business (34).

A most significant distinction lies in the fact that by the
statute the Tariff Commission was mnde an advisory agency purely, whose
recommendations, did not bind the President. The NI.A authorized the
delegation of any functions and powers given to the President (under
Title I) (35). This..meant that the President could make the agency
NRA more than advisory. This he did specifically in the case of indus-
tries employing less than fifty thousand employees (36). It would be
improperly technical to stop here. If the President in fact bound him-
self by the firndirngs of the agency he created, without exercising indepen-
dent action of his ,own, it would seem improper to say that the agency
was merely advisory. Especially is this true if it is argued that, when
such p fact is formally recognized by the President the agency is no
longer merely advisory. To say that NRA "las merely advisory would be a
fiction as absurd as those often found in the common law. The indica-
tions are that when a statute is silent (except to allow the agencies
used to exercise all power given by the Act) and final power is in fact
given to an agency the court will recognize this. Our courts are not
known to be hammered by such a Gordian.kiot of. legal reasoning as this one
suggesting the agency to be merely advisory.

The last and a dominant consideration suggested by this case must
be: wer=- the approach and problems of IIRA so predominantly legislative
as to exclude other considerations or were there sufficient adjudicatory
aspects present to demand the procedure required by such problems? The
courts nave recognized that the fixing of customs duties is more than
fact-finding (37). It involves "the kind of discretion to operate an
intelligent legislative plan" :(38. The problem presented to the admin-
istration is not in the nature of litigation (39). The policy stated;
the government is merely using this machinery to effectuate that policy
against one group the foreign competitors. Legislative action by an
administrative agency though required to hold a few formalities is,


9838




-^-2-.~


compensatingly, given much less .power procedurally. The Interstate
Commerce Commission anud the Federal Trade Commission are Freatly limited
in subpoenaing witnesses i.nd forcing them to testify (40). This feeling
toward administrative legislation may be colored by the fact that a hear-
ing is not a prerequisite to the validity of either public or private
bills in this country and the doubtful value of opinions usually at such
hearings when held (41). Even being able to call NRA hearings legisla-
tive would have provided no cure-all. The frequency with which courts
have refused to accept findings by legislatures is all too well known(42).

While some writers have thoudht- that the rate-making power is legis-
lative because of its enormous consequences on the future (43), others
more discerning have seen another problem (44). This other problem is
the conflict of interests between competitors and the adjudication of
this conflict based upon tne administration's interpretation of what the
law requires in the particular case. Fixing a rate may be legislative
as to a shipper, but when the hearing resolves itself into a contest be-
tween competing roads it assumes a judicial nature. We think of legis-
lation as involving a group rule for future conduct. But rate regula-
tion may involve the judicial determination that in the past one road's
rates were unfair or discriminatory and result in the administrative
action of declaring a future rate. So in IRA the problems presented often
had this judicial aspect in large quantities. Few hearings %.there were
that did hot become sharp contests between opposing competitors each ad-
vocating a standard of conduct as being proper or improper. To have
listened to one of these hearings would have been enough to suggest the
definite nature of the dual contests that so frequently arose. The dis-
tinction is not clear, but a general rule interpreting a statute so
drawn as to hit particularly at a small group or an individual, that is,
competing with the group advocating the interpretation, partakes more of
the nature of a judicial contest than legislation. This fact has been
recognized by one of the leading minds in the field of administrative
law (John Dickinson) (45). An order applying to an individual or a
few individuals, as against a regulation applying to a class is said to
require, constitutionally, notice and hearing (46).

The evidence most strongly indicating legislative character was the
product. These codes of fair competition were drawn up in form of
broad rules of prohibitions or positive action. On their faces they were
as legislative as any statute for a class. It is when this mask is torn
aside, and the creation of these codes is understood to include rulings
making the course of one competitor proper under the legal standard
given, and the course of another competitor unlawful by the same stand-
ard tnat the judicial character of the contest becomes apparent. Cer-
tainly, here there existed often a most bitter and personalized contest.
As the Act wRs framed, unless the courts had ruled these rules involve
questions: of law for our determination (47) (in which case NRA would
have been made equally impotent with the Trade Commission), the only
question upon which there would have been necessarily due process of
law procedurally, would have been whether there was a violation of a
code rule. Although legislatures need not give such guarantees, admin-
istrative agencies usually are not allowed such freedom of action.
Patterning iNRA after the Tariff Commission would have availed little,
if the Courts felt that its subject matter was more of the type handled
by other commissions and its contests more personalized, i


9838


m









One strong evidence (4:) lickinr" to support the contention that
NRA problems were so j-iicinil as; to require orccedurnl srfe-g-aards
existing in the Interstate Commerce commission cases is the fact that
the Act did not specifically r.:t tire heMrin:" in the section relied
uoon in NRA activity (49) with ce;rt.iin exceotions. However, failure of
a statute to require a heeril, does not meean th'.t one may be dispensed
with. The due process requirement is one of fairness. If fairness
demands a hearing, one must be Lad. And the hearing must be just as
complete .s needed to satisfy the tests of fairness.

Althur1h the Act made no general hearing requirement, it made a
limited one of most significance. Section 3 (a) affords the only sug-
pestions to be made a basis for the Code process. Congress placed two
definite limitations upon this process. The first one, directed against
monopoliess or monopolistic practices", is well known. Less publicized
wqs the Conr-ressional proviso reading,, "That where such code or codes
affect the services and welfare of persons engaged in other steps of the
economic process, nothing in this section shall deprive such persons of
trig right to be heard prior to approval by the President of such code
or codes." This requirement would appear to be of the utmost determi-
native value. Few codes were ever aoproved that did not affect"the
services and welfare" of other not immediately within the industry. At
least, the Congress contemplated a hearing in such situations. It might
De aruaed that Congress, failing to provide for hearings upon purely
internal problems while providing for hearings upon external matters,
did not contemplate a hearing in the former situations. If the courts
had accepted this argument, there remained the constitutional "due pro-
cess" argument that such matters require a hearing. Coupled with the
recently evinced attitude of the court's holding administrative bodies
to hiih standards of action (50) it is highly probable that the courts
would have said NRA procedure must embrace a full hearing. An attempt
was made to further meet this statutory requirement by an executive
order providing for hearing and automatic stay until determination of
the issues raised in the case of persons outside an industry showing
thavt they had not participated in establishing or consenting to a code
(50a).

Whether legislative (51) or judicial the problems of NRA in form
and substance were much more closely related to the rule and rate mak-
ing power of the Interstate Commerce Commission than to the duties of
the Tariff Commission under the Flexible Tariff Act (52). It must be
understood that the use of concepts of legislation and adjudication can,
at best, be only suggestive. All three of the usually classified powers
of government may be present in one administrative agency (53). They
may be so arranged that any attempt to classify them will be hopeless
(54). This was certainly true in NRA (55). It would be unwise to be
deluded by concepts. The "legislative," "judicial" classification is
often more text book than case book. There has been a recent disposition
by the Supreme Court to demand higher standards of administrative fair-
ness (56). Administration is not legislation by legislatures, which have
historically a position not ,o easily qu6st0ioned bby thrc6iurtsi rthe _-.
Chicqgo Junction Case (57) suggests that where a monopoly is given there
sufficient basis for a le-al interest in a competitor to challenge the


9838








order. This indicates a feeling on the part of the court that such
directly affected inter'psts ,re important and must be considered. It
has been suggested above that ,2A's position differed from that of the
Interstate Commerce Commission in the instant case (58) inasmuch as a
hearing was required by the statute taere involved while the NIRA re-
quired no such hearing. However, the President contemplated that hear-
ings be held (59). Just what weight would be put on this is difficult
to say. As ITRA purposed to afford a hearing the courts would probably
not approve a hearing which it deemed unfair or inadequate.

It must be admitted that tne evidence is contradictory. The
strongest and most abundant evidence suggests that the courts probably
would have held 1NRA to a rather high standard of procedure. In fhce of
the evidence it was impractical tc assume ot eiprwise. The higher the
standard adopted the better the chances that the courts would have ap-
proved the procedure.












































S83i
9838







Should it be :id Jtt-d thr-,t the code-a2i;;.. norocess wn nd,.rinistr-tive
leJislation what effect would .'iis "ve ".po'i its status in the Courts? That
the question of "due Tr1ocess" in co- cudcoe u can not c l
due iues in od, .'-i, cl-,uld coe un can not e.:,-ilv
be denied. True, the Presider.t it iot abject to extraordinary lcj-nl re-
medies as has been s'.iesa in thi chtr ( ). Tis creates local dif-
ficulties, but not for a mi:. ute s" uld. it be t',o.:4Jht th ,t thcy arc insur-
mountable. Legislation itself is arren until it is enforced. So too the
codes until they w.'ere enforced -&a little effect upon -oroncrty and indivi-
dual rights, except that bars of tl.' anti-trust laws were let down to cu.-
gest combinations which might be directed against these rights. A most
circu snect enforcement -rocess which would give every desirable procedural
safegu-.rd it is urL.ed, by those whio feel "due processs concepts should not
be ap,-licd to cod--TnaLinj., would pr6clude the due -rocess question being
raised (59b). This argument means thrt. no matter how arbitrary, capri-
cious or unreasonable the procedure of codc-ma2ing, since we dub it "legis-
lative" it escapes judicial control. By neat len_-uagc and classification
this view has produced a judicial miracle. It has extended to an admin-
istrative process dealin- substantially with private industry and busi-
.ess, more narrow review than can be found in the alien or land patent
cases. The proponents of this view have not gone so far as to argue that
code-ma:king would not be tested by substantive due process. Legislation
by Congress and State legislatures is subject to this control. A fortiori
administrative legislation must be subject to a review' on this basis.
The result of the argwine:t is this: the procedure .. be haphazard or
eminently unfair; the result, however, must meet tests of legal fairness.
Thus a complete divorce en-t between procedure and substance is had. The
patent difficulty and the one ignored is that unjust procedure is a great
persuasive force u'ion the courts to determine that results are unfair.
Fair procedure and fair results can not be so blandly divorced. To know
whether results are fair it must be determined whether all the pertinent
facts are likely to be before the a&dministrrative body and to be considered
by it in arriving at its decision.

Certain specific evidences indicate that the courts would not re-
li..-i~l control over administrative "legislation" merely because it is
analogous to action, by a coordinate division of government. As a matter
of loL.ic and analysis if the tripartite division of government is treated
as more than a helpful division it could be argued that the judiciary
should have no control over administrative application of the law. Admin-
istrative agencies -oerform functions delegated to them by the legislature.
Frequently t.ey are responsible to the exectuive branch of the government.
So it mi'-ht be arjied control of administration should rest either in the
legislative or executive or in both. No matter what the desirability or
the lo.ic of such a contention, the judiciary in our system plays a much
more vital role. The first part of this study has been devoted to point-
ing out that the judiciary having acquiesced in the delegation of power
to administration has nevertheless maintained a strong control over the
r.ianner in which power has been exercised through a variety of concepts.
(59c) It is well recognized that at the beginning of our government,
once judicial review had been established, the courts could have applied
the doctrine of delegate, notestas non protest delegari to many acts of
Congress. Whether from weakness of position or genuine desire to aid
in the orderly development of n-eeded governmental forms, delegation was
allowed. Later as administration became more vital the courts quietly
developed "broad review" doctrine (59d). It must be remembered that the


9838







first declaration upon this problem was one of "narrow review". (59e)
But let it not be forgotten that a review wa.s indicated.' That is important.

ITow what is administrativee legislation?"' T.hose. term is it and
what are the implications of it? Dr. F. F. blachly, co-author of a treat-
ise entitled "Administrative Le.islation and Adjudication," states that the
term administrativee legislati..n"1 is used both in France and Germany.
He believes, however, that the reel basis for the term's use in this
country is the frequent reference bv Enlish writers to ndii,,inistrative
rule.cs and regulations as "delegated legislation" and other related t-5.
(59f) If this be true, those wh-o believe the name legislationn works
such Airaculous changes in our cadministretive law have failed to consider
that as the tern is used in En :.-land it embraces ooth "legislation" in
the sense of class rules and "adjudication" in the "sense of orders directed
at particular individuals. (5c) Perhaps, legislation is being distorted
from its true meaning when it is looked up-on as a class rule. The great
mass of legislation has alway-s been private bills, and too, classification
can be easily extended to the -,'lace where a rule nay affect only one
individual. In fact, it is extremel'-e difficult to find any tenable dis-
tinction between "administrative legislation" and "administrative adjudi-
cation." Professor Dickinson offers the following:

"Wha.t distinguished legisliati:n from adjudication
is that the former affects the rights of individuals in
the abstract and must be ap-lied in a further proceeding
before the legal position of any p:aricular individual
will be definitely touched by it; while adjudication op-
erates concretely upon individuals in their individual
capacity." (59h)

Professor Dickinson does not contend for any hard and fast distinc-
tion with entirely different legal co-nsequences flowing from each class.
In fact he speaks of the futility of trying to classify a particular ex-
ercise of administrative power as either wholly legislative or wholly
judicial (59i). If pushed to its logical extre.-Le and to a use Professor
Dickinson never intended, it would. indicate that the "cease and desist"
procedure was not adjudicatory merely because enforcem-Ient against a stub-
born party could be secured only by rec'ure to the courts. (59j)

What the test Jiven amounts to is that: WT.erever the.enforcement
machinery lies in the control of the administration, its act in using
that machinery against any individual with the result that his property
or his person is affected is "'djudication." The instances where this
is true are not :iany. They exist, nrrticu.larly, in "broad review"
fields. Tax collectors i.y distrain -ro-.mrty or alien inspectors arrest
an alien. If the test. is not based upon the actual enforcement of rules
or orders Iade it must refer to classes as opposed to individuals. This
has already been considered.

The difficulty of creating any air-tight distinction within the
field of administration is abvious. It -presents an even greater problem
than creating such distinction in the general field of government. It
ignores any accepted classification of government If we treat admin-
istration as a fourth division of covernrent, this view says administra-
tion is not different from the legislative in certain segregable parts
nor from the courts in others. Thus, the raison di etre (a flexible
9838 new governmental fDrm) for a separate administrative division falls from








- 7-


tho wei *ht of cl.:. ificatioin. If :over.r .,nt is veiwed as police inal-ing
0..d )olic I tion is -o classified as to pa'rta>e of both. Here the difficulty pro-
bably lies in that dele,.tions ho.ve given "*li..istrption such policy
control in the past tha.t toe roi-1 fiucotio' of ad in.istorini: a stated
l&4_islative police ,'-. bcei ovc'"or '-r ,. Wien this is considered the
value of clrsifications such as "legislation" aid "'Ktjudication" to
bind the co'.rts and our minds must '.c s,.-ciously questioned.

"Legislation" and "adljudication" are merncely convenient analogies.
Merely because an administr-tive bode- is m 'circa general rule in con-
formity with a policy stated does not .iean that this action should be
outside the courts' control while the enforcement of that rule is care-
full.,l cecked as to -rocedure. If the courts adopted this view they
.i-idt well be "swallowing a camel" for questionable actions could be put
in legislative form while the enforcement gave the most elaborate proced-
ural (Lui r-.antees.

It is a well-establishe.d leg "1 principle that the legislative judg-
ment is not to be questioned as long as it o-)erates in the ambit of its
c-c'nstituti-,nal po'.ers. Yet *nim, public men and students of public law
ilave reoeatdily c.,argeI our ..lighest court with substituting its judgment
f.-r tAat of the legislature. A legislature does not need to hold hearings
u-,on a bill although it usually does. It is presumed to know the facts
upon which it bases its judgment. WTicnever a court steps in and says
those facts are inadequate, it also says in effect either the legislature
had an improDer factual basis or it did not follow a view which could
be reasonably sustainel by the facts. Either of these views amounts to
a higher procedural requirement being :lac.d upon the legislature.

That the courts do not step in;u place limits upon the parlia-
mentary conduct of either house of Congress as a deliberative body does
not mean that the magic of the word "legislative" covers any action taken
under its mantle with an invincible armor of propriety, or sanctifies all
procedure branded with its name. On the contrary, where the Congress
delegates the legislative function of investigation for the purpose of
legislation (59k), the courts have erected some rather stiff procedural
requirements and limitations (591). If the Federal Trade Commission in
its investigatory capacity be either an administrative body or a legis-
l.tive agency it would seem that the fact that limitations were imposed
by the courts stands as authority for the proposition that the courts will
under ;..:r-er circumstances limit the procedure of administrative bodies
acting legislatively.

It could hardly be expected that by terming administrative action
"legislati-'n" it eould be clothed with the same dignity in the eyes of the
court as the action of a coordinate branch of government. The courts have
not been orone to classify administration in any final form. They reco-
gnize that all administrative action'is not alike (59m). Mr. Justice
"olmes pointed out that tPese actions might be- "legislative, judicial and
executive in nature." (59n) Treatment does not depend so much upon the
types of administrative action but upon the articularr questions that
may come as to operation in relation to the individual. Much is made of
the Norwegian Nitrogen case, which has already been fully distinguished
from the N2A prrjblem in tilis chapter. That ce e must be limited to the





-45-


fact that the attorney Df those affected by the Tariff Commission's re-
commnendation demanded to see all the evidence before the Commission, even
that which it had accepted as c:nfidential. :.ere the term "legislation"
presented a convenient analogy to suggest as in the tax assessment field
not all the procedural guaraintees :f "a town meeting" or a judicial totall
need be afforded to protect the individual. Proper administration is a
balancing of administrative efficiency and fairness to the individual.
The Flexible Tariff Act sets uo certain -procedural requirements, partic-
ularly notice and hearing (59o). Althaigh the courts have enforced these,
other questions of this character hLave not arisen except the limited pro-
blem already suggested (59p). The status of the law upoon this act is so
indefinite that it can be safely said that there seems to be no really
strong authority existing for the "legislative view."

The Panama and Schechliter caies have been pointed to as lending
credence to the "legislative" approach. In the latter case tie court
used the term "legislation" to strike dr,,m the delegation, not as an an-
alogy upon wnich to limit its own -ocwers of judicial review. Legislative
rower except within certain limits can not be delegated, said the court.
This was no indication that U-'ere properly delegated th6 courts would ignore
their control exercised in the .ast over use cf delegated power. In the
Panama case much the same situation is true. Trere is, however, an addi-
tional and valuable evidence. Alternative grounds upon which to strike
down the governmmnAts case were 3ffere&. Cther than the impropriety of
the delegation the court said an executive :-rder must have associated with
it some possible factual basis upon which ai official may act. This is
significant. The order issued was just as broad and general as an NRA
code. Its character as legislative secms identical. Yet the court in-
dicated a willingness to cc.ntrol the technical procedural question indicat-
ed. Further, the court indicated, that it still conceives of administrative
action in terms of fact-finding as opm osed to the traditionally stated con-
cept of legislation.

The dissent of iMr. Justice Cardozo has been pointed to as setting
forth proper l egal theory as to the nature of tie President' s action. It
is suggested that the dissent says the President's order is "legislative"
and not subject to procedural requirements. It is to be expected that the
Justice who wrote the opinion in the ITorwejian Titrogen case would use
similar concepts A.ere. ITo matter .ow much one approves tie philosophy of
dissenters in desiring freedom from judicial review, it should not be for-
gotten that law is still to be found in majority opinions.

There is a recent case which gives Mr. Justice Brandeis an opportunity
to offer his views, writing for a unanimous court. (59q) Here he attaches
some of the c.Laracter of legislative action to administration. It is to be
carefully observed that this raises no conclusive presumption but merely
raises a prima facie presumption of validity (59r). Pains were taken to
point out that the fact tViat the action was called "legislative" did not
make it binding upon the court. This is in harmony with the language found
in the dissent by 1lr. Justice Cardozo in the Panama case.

The attempt in this study is to point out the state of the law
and possible judicial trends in this administrative law problem. Proper
weight must, of course, be given to all the pertinent facts and analogies


9838


m am I








in any particular situation. Th,' realities of judicial control can not
b.i i. ,red. It is t view 'f tf -"ritor that thi're is little hope to
avoid them in a field such a 7I1A b neoat di.finition and classification,
or by adding a stLp (l:2.,islation) to the -,*::inis trativc process which
by its nature indicitu'-. to' del-2.rtion r*f ,roator powers to administration
and can not hope to finK, inonUdia'itc favor in the judicial eye.

No one would dny that tlc del.*ition struck down in the Schechter
case was declared bad bec-u.e there v:.-.s *:mn atte.apt' to delegate great legis-
lative oower. As -.uch the whole cl',n procedure was illegal. The
only thing this study can ho1e to do is, considering the powers granted
existed constitutionally and that the delegation was curably by setting
narrower limits u-:on action and setting mere well-defined standards, treat
the or-)bljms as ....rdinary problems in administration. If the delegation
:i.d. b..,en cured it. is .iAhly improbably that the powers exercised by NBA
-w:ulrl -aave boeen df such a policy nature to have made the word "legislaticn"1
such a bogey. The probability is that hTRA would nave been such a fact-
finding a-cncy th,.t procedural requirements would i have unquestionably at-
tach'ec. Problem-n in 1A administration are treated (in the chapters that
follow) individually: as a ,iattcr of g',od administration and justice in
the particular circumstances surrounding it. Each problem is viewed in
relation to la"i -n. p)r-ctice in related administrative fields with a part-
icular consideration :-f ,v:het-er IRA problems demanded such procedure. It
is not intended to split hairs by attempting to point out the legal limits
';f undesirable aW,.-i.nistrative prc..ctice. fRath]er it is hoped to suggest, by
viewing the )recedents and']. the circumstances, ;il'at practice would have been
so eminetly fair and just tn.at i t i7ould esc-)e question upon grounds of
administrative law.

That the Pr.sident was iva'er, %ov'ir b;/ tLiU Act to approve proposed
Codes raises so:ie inte-retin co'riderati:ns. .7ould mandamus or injunction
lie against -im eit.-er to tfrce ti.c issuancer C.f c':.des or to prevent their
approval? Frc'm Il.is pDosition as I.i:id :if -nm nu. al branch of the Government,
the Presidcent unJer t- so'i.rat'-.n -f -,o.'er theory derives immunity from
judicial -process (60). Lnotzt'r ba.-.i] -t? in tihe- nalogy between the Pre-
sidant s .position. as head f t..e vornmrnt to sovereign authorities in
other -overnLents. StilL a- furt..er fund coi.imel.in- basis rests on expediency.
AltLou i his actions in a':r-'vvin, a OC:.de in"ay not be enjoined, the courts
could achieve the same result bi. decl,-arin thLe President lacking in power
(61), or tie ap:,rovcd Code arbitrary and unfair in substance or in procedure.
It would seem t'.at the President could have been arbitrary or capricious in
refusing to approved Codes w7itAi:ut affording aggrieved persons a judicial
remedy, n:. IRmaLtter -re- closely tieir p)ro)pcssal wer- in accord with the require-
ments cf tL-e Act. Since- the .drive was to aprc-ve codes it was not probable
th-.at tiis questi n viould arise. It ices indicate, however, a difficulty
that i.ay arise fr.n giving such po.,rer to thie President.

As to am Adiinistr-'tive Board Dr o-Lficer b-th mandamus and injunction
will lie in proper circ'wistances. .7Tiere any discretion involved has been
exercised s .all t .-.t remains is a minis-terial duty mandamus may lie (62)
-.r vhere jurLcdlicti.-n i2 1'efuued by an -iinistrative board mandamis will
lie (67). Sr miandrrnu's :aiit iave pr.,jerly laid vwere NSA refused to consid-
er the .rcpo-.al .f ai in custri, :r mnicre an official refused to forward cer-
tain p-ape.s -...ic:.e .1:',a.ld aave f",r.ward2d unler the procedure as set up


933.8





-50-


(64). If a showing were made that the mere approval cf a Code by the Pre-
sident would have caused irreparable injury, it mi'it have been urged that
t.ie forwarding of thie Code by tne 1IJA to tre President could be enjoined.
Such an argument would have been cf doubtful merit (65). The effect would
have been enjoined t-he President. It is not contended here that where the
courts might view ITRA as acting as an a&.nt cf the President in a narrow
sense that extraordinary legal remedy w7uld Issue. Thero has been too
little time to fully consider this problemL. Instances where injunction
might properly lie can be envisaged alth-ugh tnhe courts are extremely re-
luctant to issue extraordinary legal remedies. This is especially true
of mandamuis. Thus, a premium is placed upcn inaction (66). This may be
only an incident of the courts feeling, the attitude having arisen from
the reluctance of courts to give relief requiring positive action by those
it can not easily control. This discussion has been intended to show that
*the introduction of tae President as the final administrative authority
complicates thle situation as far as t.Le application of extraordinary legal
remedies because of the dignity of his position both analytically and his-
torically. Unless there was some ccompeolling reason it would seem desir-
able to have such final authority rest in some other person or body than
the President.

The N.I.R.A. makes specific provision for conditional orders of ap-
proval (*). There are a few cases involving the use of such orders making
requirements not specifically included in a statute (67). The few cases
seem to allow regulations reasonably consistent with the statute and its
purposes (68). Professor Freund has suggested that "in the absence of ex-
press statutory provision the power of administrative authorities to annex
conditions to licenses should be denied" (69). This seems correct where
the administrati-n tries to gain ends it could not reasonably reach under
its statutory power. It would not seem to be so compelling where the con-
ditional order was -armonious with the statute and made to remedy a defect
in a proposed scheme. Also c nsiderable merit can be seen in the use of
a conditional order as a protection to t-e public (70). The Act provided:

"Thle President may, as a condition of his approval of any such
code, impose such cz-nditicns (including requirements for the making
of reports and the keeping of accounts) for the protection of
consumers, competitors, employees, and others, and in furtherance
of the public interest,.............. as tie President in his dis-
cretin deems necessary to effectuate the policy herein declared.3

The reasonableness of the use that tie President's conditional orders
were put to would seem to have been the test.

The Act was couched in broad terms. The procedures to be used were
not specified. The dominant scheme of industry written codes, approved by
the President, was a new governmental form. Its main precedent, the English

(*) Secti:n 3(a)


9838






-bi-


procedure by scheme, had never been put to such large uses. The pro-
0.. "! +,r.c it3 i',.t 1,0jt "e l-ed by the courts are difficult
oif ascertaim,+-nt altuju t.-u -v!,l nce indicates that the Interstate
Commerce Commission supplied the clos,.ct analogy. T.ie subject matter,
although not the ..iannor of treatment, was -rL.,re closely related to that
dcelt with br the Fe"cr:' Tr' Coom is+ucln. TtIo making of Codes appears
to have been b.th le.islativo nid akjud-.Jcatory. Placing final power in
the President created a legal difficulty, in that there is no recoarse by
extraordinary legal process a-ainot his acti:,n or inaction, as did the
failure to specify the conditional order of ajpr',val as a proper device.
An additional problem lay in the administrative approach.


9838





-5.d-


C HA.PTER VI

TF-. ADE.INISTRATIVE APPROACH


The ,TIP-A vwas designed tc meet' not one -oroblein but a number of those
presented by the "Depression". For this very reason the so-called theories
of the Act were too numerous (1) to furnish any really useful guidance to
most .ersons interested in the Act (2). The rno(-u1.;r name of the statute
indicated that it 7,,s enacted. tc do a job start recovery. This is fur-
ther shcvmn by the self-devised name rf the Administration. In addition to
the li;Aitntion'of the Act in the creation of the scheme there were lirmi-
tations in the circumstances existing at the time of the Act's passage.
A state of near ranic "as becco.ing a.-noarent. Action was the essence
demanded. The advantages of srrift efficient administrative action were
needed if the inp)etus of recover? ',,ns to be felt at once. (3) It w.ns
this initial imnetus rThich it was thoiaght would be the momentum necessary
to bring recovery.

I!T7A started from scratch. There 17a9. little )olicy and no organization
The latter fact has caused sone adverse cornient (4). It is doubtful if
this cI ,.L-ent is well taken for the intention was everywhere apparent to
effect nn organization as sorn as possible, There w.as the suggestion that
the President could nullify the '-hole Act by doing nothing (5). There rre
many l-,,s vhich he could make inoperative by failure to act. The important
facts are what is done or can reasonably be expected, not the weird
possibilities. NRA had enough Jifficult nrroblems to face without conjuring;
up imprrbeble "straw men".

The situation was such that seed was -nreferred to slow painstaking
survey. This was the case because a consensus of action by industry vras
desired, and the latter method ',as not in -oarticular favor in arny, event
with the then NRA Administration (6). The demand for celerity of action
required a certain measure of industry crc-neration. It -oeuld have been
im.-cssible to have created the codes that were made without such aid. Of
course it ,ight have been -oossibl.e to have licensed some of the larger
industries but this procedure was not desired. It smacked too much of the
hated concept of "government in business".

General Johnson has described NTRA' s position:

"All other agencies had billions to loan or give away.
3iiA gave nothing. It took. It imposed sacrifices. Everybody
likes Santa Claus. ITobody favors Simon Legree. Consequently,
i1T.L made powerful enemies".

This could only mean that cooperation of industry could be secured by
offering concessions, sho-ing positive advantages to be gained or by
threatening to use the license power. The former two methods were chosen
althcmuh IRA was not sure hor successful they would be (8). A number of
industries offered codes because it was being done by other industries,
because it wns the popular thing to do. This was in part a result of a
trei.lend~us sales effort on the -,art of NRA 1vhich might be more unkindly
called "ballyhoo". A number of industries possibly more keen to their


9838









n intri'eots, possibly ,,il" i j t' stand .-) ninst the Adiministration lhvC
to be- offeredd uresitive incentives. (i). Aiion' the incentives offered
were freedcm from the Anti-r__urt lavs, ,iru] o'sitivo sanction in enforci,.g,
apprrved industry ngreerients u:,on recrlcitrint members of industry.

NUA x:as domi-^ntly interested in securi.r better conditions for labor,
hi .her wvoes and a spreading of the r:. This was done to raise the 'ur-
chpsi'.i.v- , or of the masses anoe erase unemployment (10). Industry '7as
see':i,-i-: ;csitive adcvant.:es through favcroble trade practices for its
sacrifices (ll). The result was usually a bargaining by industry with
,:overri.iei-t (11a). This was recognized by a number of NRA officials.
Goncr.-l Johnson described the situation as "-olain horse trading and bare-
f:ceC. yceler playing" (12). Other high officials less robustly called it
a "t-.1iic 1'.-ro.uo"(13) or "partial colnensation for increased labor costs"
(14), ihe n(rtion became so popular with adminiistrative officials that
the-" "-.:;. tested it to industries, oerhaeps thinking the industries were not
sufficiently aw-re of the possibilities (15). Codes grew up and were
an-roved, not because .1T2A thou:'ht there was evidence to support the pro-
visi--.s, but because they contained the best provisions NRA thought it
coul.5. obtain from industry (16). It must be remembered that NRA '"rs not
an ii-rortitil judg-e. It was a proponent of certain ends (17).

Aurther result of the code technique was to place agreement and
majority vote at a premium. Often this became the only guide to the
propriety rf code proposals. Whis was true both as a result of the
difficulty of securing necessary economic data to form a basis and the
viens of presidin,- officers. Even -,here a presiding officer preferred
to collect evidence he was handicapped by the pressure to get codes
ao-ircved. After the excitement of thcse hearings following the first
few. large ones presiding officers as a --hole tried to get some explanation
of thie purpose of code proposals. r-'o things probably prompted this:
1. A desire to avoid later interpretative difficulties and 2. The
insistence of the Legal Division on the need of "building a record"' (18).
Oftea there vwas a feeling that negotiation should take place in the con-
fere:ices, and that industry agreement was the only essential other than
the rfficerts own often naive view that the provisions be legal (19).
This latter view usually meant a' Clearance by the Legal Division, members
of 7.hich often v;ere swept along by the haste everywhere surrounding them
to cc-clusions none too carefully considered. Provisions for control of
substr-.-itial economic problems by majority vote was written into codes (20),
This discussion of majority vote as a substantive test is not offered
critically, although it is felt that such guidance is not always the most
wise in an economy so intricate as ours. It is offered to afford a back-
,'rcun(% for the procedure followed in NRA. Majority agreement procedurally
see-,s to be a poor substitute for careful explanation of means and ends
set L'crth in a record which may be preserved to offer to the courts as
"justification" for action ta':en or a-onroval given,

As a result of the serious administrative problems and the relatively
con .ndil-.: position of industry, the Administration's position offered
many difficulties. Haste in some matters, delay in others, and confusion
in nearly all existed. There was -pressure from all sides (21), by industry,
by political forces, and special labor and consumer groups (22).


9838








Business came to YRA more quickly than w.s anticipated. IRA had no suf-
ficient organization to handle the -,roblerMs -nresented (23). Coupled with
the pressure to iet codes "thirou'h the mill" it can be easily seen how
errors wculd creep in, provisions iculd not be fully understood and rell-
reasoned judgments net always given. Of this, ell ]\RA directing officials
must have been fully conscious (24). In the balancing of disadvantages
they probably, consciously chose the course follo-ed haste in approving
codes.

Haste in securing personnel was easily auparent (25). No systematic
scheme or necessary qualifications for an; responsible positions were even
announced.

One of 1RA's most important functions should have been fact-finding.
1RA v-a-s meant to deal more replisticlly 7ith business problems, than could
the courts or the legislature (36). In this there was such haste that it
was alsaost impossible for IRA t- -iroperl-perform this function. The con-
fusion (27) and pressure Were so great that responsible officials could
not stand the pace physically (28). W.ith nerves unstrung and body tired
careful fact finding became a distant dream (if it were even remembered).
NRA's own procedure demanded such iiste that a busy presiding officer or
adviser could not hope to even learn, let alone analyze, the basic facts
of an important industry in the tine allotted (2r).

In the drive to get codes approved specific policy was ignored at
first (30). When policy was issued it often proved so broad and sweeping
that numerous exceptions were requiired (31).

Haste had a powerful effect u-)on procedure. Hearings were necessary
evils to be dispensed with as readily as p-ossible whenever there was a
demand to put a code or a pr-vision through (32). The work could be more
quickly, done in the conferences. That the record failed to contain
these cften valuable evidentiary discussions mattered little. The quickest
most covenient administrative means are hot always the best, especially
if there is possible judicial review (,3). The difficulties that might
result from questionable proced-.ue seems not to have been recognized.
There was no planning that a search vill disclose other than the goldu
fish bowl "'and "controversy" ideas (34). The responsibility of the Legal
Division should have been of a most grve character. Recognizing that
many presiding officers had no legal training the legal adviser should
have had considerable hand in shaping the course of hearings. Even here
the presiding officer may have had legal training there was no assurance
that he had a proper appreciation of the -irocedural requirements of ad-
ministrative law. The same holds good for legal advisers. The Legal
Division as p unit seems to have paid little attention to the problem of
procedure. A careful check of instructions given to legal advisers dis-
closes only fifteen memoranda with any bearing on the problems of this
study, (35). Of these only a very few touched on procedure (36). Their
dates indicate that they came in the form of a rationalization of existing
procedure rather than a careful recoi,,iendation upon vThich procedure should
have been built. In a resume of cases upon the NIRA published by the
Legal Division there is no division dedicated to urccedure des-oite the
fact that some of the cases suggested the problem (37).


9838









It in 1iffimilt to i ', t oc re, )onsibility of the lack of thr-ujht
.,iv ii jrut.J i : i ,is Trere *iven orally. The Legnl
Division r-.s arngare of the ,orblA- ns indic'-ted by its memorandn even if
the aworealesn crme as -.n 7fter-thn.,'ht. TV resT onsibility probably varies
frri, crse to case. t'-r-e ro j',ibe t'm *y\7r ,rscna] filinrs must h've
beci-i. thie 2irive tr Lrdtc c ,.. jic: rJuction does not mean per-
manence or stability. Froi,-u r )cc uare could have gone far to hqve in-
suredi this had the Act been held constitutional.,

.TWc- the need fcr policy wr7s reco- :iised there was s tendency tower.c
tot- grent rigidity. Government has devised no sounmder method of dealing
with -rabler.is of economic and. social import thn the case method. The
difl'icultT found in the Anti-tru-ast lwrs, it was clai,.ied, lay in their
idclic- cf trying to fit All industries to one mould. M2A in its latter
darys dove.loped in this direction (38). There were situations where policy
:s acnet a sUfficient answer to the economic facts. A poliCy that might
Flcv; cue industry, because of its organization unusual liberties :night
be disti'ictly unfair to another. The form of such trouble lay in allow-
ing too great freedom to an industry because policy requirements had been
net cr in the desire of Deputies to adhere to policy desr.ite industry's
--ell-,-rou-ded request. Periips the difficulty lay not so much in the
polic- sz-eicunced. bat in its forms. Standards of action, standards of
maens ?nd end, coupled with intelli.:ent administration may be far more
orcductive thn absolute rigidity of detail. Of course, the latter is
desira''.e as a matter of uniformity where no other outeighing considera-
tions exist.

It m-.y have been that such policy grew up because of apprehension of
higher d.ainistrative officials toward the administration of those
officials nost closely in contact 'ith individual industries.(38a) .I'x'itlr
tc the haste with '-hich personnel was selected there were other pressing
orobleins presented by personnel, -oarticularly from Division Administratrrs
dolin tc nqd. including Assistant Dep.uty Ad-inistrators. NRAI s personnel
prr b] ers can not be assigned to political patronage fot it is common
knc' ledje that the vast maejcrity of those in responsible positions
(nci- inany not in such positions) '7ere brought into the organization
through personal connections with those already in 1E. The immediate
nucleus of officials were trusted friends of General Johnson or business
assrcirtes. There Were some labor leaders. On the whole they or their
friends se? dom furnished the important presiding officers. People there
/e-'e 'aplenty desiring to work for HRA. There may have been a sufficient
nuTbo-r Cf cal)able admi-nistrptors with a public viewpoint, but this is
do'ubtfu.. One thing is certain. Many presiding officials had no con-
cetion of the rcoper character of an administrative hearing or its 1ur-
*}Gse. 7ven worse is the suggestion that presiding officers may have
rfte; hIad cr at the time had substantial interests in the industries
co;miu under them although this was probably contrary to NRA policy (39).
There were a number of cases where NRA officials were graduated into
the ran':s cf industry t comparatively princely salaries (40), This
does not nean that there was dishonesty upon the part of such persons.
It i.:,.ic,-tes, however, such an akiness of spirit that the public interest
as -rt from industry's interest or personal interests might have been
sc ieti-.es slighted (41). The principle is well stated in the judicial


9838







field that no man shall be a judge in his o-m- cause (42). There is little
reason '-hy it. should not avsply in the administrative field. It is so
recognized in England (43). The rule is a protection to all interested
persons an&. to the judte. No matter the honesty of the presiding officer,
it is w7ise to avoid the a ,-'pearance of -ocssible evil. The cry often
raised wUs the need for trained men. A man '-ho knows the problems cf an
industry toe intimately because he has once lpbored with it may be so
biased Ds not to be an impartial judge. It Ls possible to understand the
problems rf an industry, without having workedd for it.

Perhoaps in light of the circumstances MRA could have done no better.
It wvculd hnve bean impossible to have call-ed upon the Civil Service. The
job was too large for it (44). The Brockings study well states the
situation:

"A problem in public xeruo:rnel administration more
difficult than that of securing industrial specialists
for ccde drafting and code enforce ernt can scarcely be
imagined. To secure at once persons well versed in the
intricacies of the industry and yet free from bias and
questionable interests was a (lifi."iculty of the first
magnitude. Many persons would have bad more confidence
in the selections if eligibility for appointment had been
determined more in the open by an inde-oendent personnel
agency using a system in which the facts of education,
experience, and interests were massed 1upon by a special
coMIAittee of ccnmoetent examiners of high standing, and one
which left a reasonably complete record". (45)

This element of bias so:.ietines showed itself as insufficient aware-
ness cf any public interest. He! oonsible officials made premises which
could not always reasonably be kept. For example, a responsible official
made a -rrnise that an aooproved code provision could d not be touched until
the industry agreed to the changes (46) yet the Act indicates a desire
that the President modify or cancel any ao-nprcved code provision where he
deemed such action necessary (47).

zA additional difficulty lay in the fact that presiding officers
did n-iot alrx-ys get along well with their advisers. Advisers like hearings
were someti.ies looked upon as-a needless nuisance (48). IMuch of this
feeling resulted from the idea that hearings were to be forums of contro-
versy opposed by orders to rush the code-making process. Controversy
delayed hearings. Long hearings delayed cuttingg codes through".

The theory of industry self-government provided a strong limitnticn
upon pdj.ii-.-.istration. Many felt that 'ith adequate industrial inforMption
much of the solution of the depression would come from industry (49).
Many industrial leaders and some OBA officials followed the theory that
whatever a representative group in any industry thought best for that
industr-" should be accepted as prima facie in the public interest (50).
After crdes were approved this ras extended tc the place that ITRA officials
often discouraged the sending of pertinent infrrma-tion to the Acbdministra-
tion (51). Indifference tr the public interest as such further colors

9858





I -.1


some cf the difficulties tr be foumd in thl .9drmiinistrative qr..-,romch.

Any consideration of ;e i roceC)rl problems must be msde onlr Pfter
an understanding is hrl cf tbe inherent limit, tions cf the scheme and the
ad-Tinistrative Fn-.,'roch. Ind.ustr ,'s !bi7itr to bnrgfiin, the trust placed
by NRA in industry self rcver.riient acnd. te value of majority vote, the
haste and corfusion surrou-Jin'- the -hole aimdertntkinP., the failure to
reccg.nize the ir,,ortance mnd difficulty cf procedure, and the li.-iitpticns
of the oersrrnnel nll had important influences upon due process of lin,
both procedu-'-L;l. pnd substantively, and the Tack of it in NRA.


9838







CHAPTER VII


JUISDI'TIC IT ID JU.ISDICITIAL FACT


ITBA assumes a ride range of jurisdiction. Whether this was always
properly assumed is a prelimins.ry consid.e. rtion to the propriety of pro-
cedure. The review exercised by the courts over administrative action
through questions of jurisdiction and jurisdictional fact has already
been observed(l) as hcs the recent importance of the latter question in
the field of administrative lan (2). Jurisdiction has a close relations
to qucstionL of la, and it is cuitc -ossiblL that a number of the broad
terms in ihe Act mifht have been subjected to judicial definition. This
it has been observed hsqx-cencd to man:r of the problems of the Federal Trade
Com-.ission (). A more tel.in- review -'ould have been for the courts to
have d.etennined whether the actual f;-.cts supporting jurisdiction existed.

A number of questions that --ould hnve furnished both problems in
jurisdiction and jurisdictional fr.ct ap-pear in the Act. The codes were
to be E..plicable to an industry or trade or subdivision thereof (4).
That is r-,o.-jerly an industry or trade? Did the Fibricated Metals Code
(5) cove---:: liore th-n mne industry? The code for the C-rephic Arts Indust-
ries (6) purpoted to cover anyone who might perform the "act or process
of -orintin',, impressing, stamoing, or transferring upon paper or paper-
like subst.-,nces, of any ink, cnlor, pignent, including any and all par-
tial processes and services used in printingg. The code by its title
covered more than one industry e'1thou-h the Act did not specifically
authorize such coverar-e (7). It se-ms, of course, that subdivisions of
an inC.ustr-- might be split up. Even this might be carried to such extreme
eno.s thr.t courts rTould interfere (8) if they felt that such actions had
been carried unreasonably fvr. The problems mentioned are illustrated
by the titles of such codes es the Lumber and Timber Products Code (9)
an.d The '4op Stick Code (10). Could a verticle code be said to properly
cover o n industry? The resale p-.rice- iraintenance -lan of the Tobacco Codes
were in effect a verticle code (11). It wFs often possible to "freeze"
a distributive system with such a code. It is quite possible rith the
courts' 1knon antipathy to this tyne of action that the courts might
have saic. an industry was net neent to refer to such separable activities
as manufa.cture and sale not zener.l-.y carried on by the same persons or
firms. Imnurop.r:r classification of firms as belonging to an industry
where there ras good evidence to sho'" they did n-t is another possibility
(12). The suggestion is that the court might have tried its hand at
classification. Overlapping codes furnish still a further problem. It
coul6. be ei.ily thought that it is unreasonable to require a firm to pay
tribute to more than one Code Authority vhile performing only one opera-
tion (13) or to be in the dark 'ns to -hich set of fair trade practices
it must operate under. The Bak-ing and Resta.ur.:.nt Codes illustrate the
situation (14). Large restaurant chains operating bakeries for use in
connection with their restaurants or separately, were covered by the
Bal:in:,, Code (15). Overlapn-,ing codes mi;ht mean that a small group would
be conrpelled to abide by a particular obnoxious provision (16). It is
quite possible that then code structures became unreasonable the Court
would have said there was no jurisdiction under the NIRBA to approve such


9838








a codeLLo or that the *:rou,., codified '"as nyt in f.cf :a inc(ustry in the
metuii.L, of .the Act.

Other problems E%-bie.. frown code structure r,.:ise the question whether
codes were within the purposes of the Act. Could a code prop. rly ccv.I-
pe-',;ons ,mr: oyin:- no l.-,bor? It ;L.s been thought not. Yet, this is Tprc-
ci.el;;- v,.at the Fur Tri.riin.- Contractors Code did (17). 'he Act s'z
"t rrde or ine- try", not on, ]o.yers of lbor. foreverr, the entire structure
of 'h:. Ac% ir.dicates that the latter wa, intended (18). In the instant
Cocie the proponents were Louisiana tr',ppt rs of ":u.k-r't vho leased the
tr!-..-,oinG privilc fts on lar.'e bodies of s!-, np w-yin. n -)erccntr-e of the
catch. Sozi t:-',i-Tjers were actual employs of lnnd-owners or intermeo.-
i;cLte -r,.n(.-lessors. Both the trappers and the lanc.-o'-ners and middle-men
who lc.se' i'roMn the 1-.nj-o-'ners and to the tr'--,pcrs desired large percent-
ages of tl'e catch. Colonel Conkllnc0, the Deputy Ad.ministrptor, felt that
the lcnd-o.ners hliE the upper hr-n, and that the tr.i:qit-:rs were in need of
relief. This he deterrmine' -to -ive them through the medium of a code.
At first all the -..3visers including the legal adviser (19), expressed
the o ,inion that this .-rou,- could not -,roperly be given a Code. Finally
Colonel Cor-:lin.- prevailed and the Code was n-.med Fur Tra:pring Contract-
ors Code instead of Fur 2r--.-uers Code. The Ic vord contractors
with a group of dummy labor provisions camouflaged the situation so that
a coide w.s issued (20). In such n situation ., court -iijht be expected
to say there is no reasonable relation here pith codes contemplated in
the Act and the Administration ho.s no j.riFdiction to approve such a code.

,hen definitions -'ere hastily and. looFely dravn serious -questions
of jurisdiction often arose. Probably the best tEeans of settling these
contests vould have been to review the representative character of 'pro-
ponents and ssenters. This method ras frequently ignored. In its place
interpretation wa,; resorted to. An interpretation upon the basis of v'orf
used in the definition mi ht extend the code's jurisdiction far beyond
that which it could claim as a matter of representation (21). If a group
were brought under a coc'e as a result of such a procedure it wouldd have
an excellent case on '-hich to challn-nge the code's jurisdiction.

Jurisdictional -problems bet' een governments and between their agencies
frequ.- tl-y aPrise (22). A number of jurisdiction.-1 problems lay in the
wide reference of the Act to trades or industries, while other agencies
existed rith a mecsui'e of industrial control. The Federal Trade Commis-
sion and the Department of Justice had long been active in the field of
industrial relations. Consent decrees and injunctions secured by
these agencies provide the largest problem. There was an effort made to
clear with the Department of Justice, and many codes were delayed because
of this (23). Although some decrees were for-sllv modified many were
not, --et coc.e provisions permitted actions in violation of court orders
(240). An unusu 1 situation would have arisen hc-d the courts punished as
contempt such actions. Io such action by the courts has been brought
to t.ie writer' s attention.

A number of proposed and approved codes involved or interested
other federal r--encies. The A-ricultural Adjustment Administration, the
Petroleum Administration and the Federal Alcohol Control Administration


9S39


- I-






-c -


each exercising power delegated under the Act rere interested in a number
of codes (?5). In the codes interestin.- the latter the Treasury Depart-
ment had a gravw interest as tl-e licensing agency (26). Then too, the
relationship with the various labor agencies was not clearly defined (27).
The Jublic utilities- proposed codes each involved a relationship -ith
other gov-rnmental- agencies. The Telegraphic Communications Industry
was substantially related to the powers of the Federal Communications
Commission (28). The Natural C-as Industry vas of interest to the Petro-
leum Board (29). Of more interest and qauting considerable dissention
was the Electric Light and Po-er Industry (60). Although NPA's relations
were mainly of the most cordial nature in a case like that last referred
to haId NRA p-ersisted in codifying the industry there might probably have
been p-ore:ented a jurisdictional problem for the c'nirt,.

An ii:.portant problem of ultr-. vires is presented by code legislation
-hich undertook to govern pvcrsons outride of the industry making the code
(31). There were many refinements of this problem. Some codes accomplishE
the desired result by providin, members could not sell to or deal with
firms engaged in certain practices (32). The effect was usually suostan-
tial. To remove a source of supply or a market may be as substantial in
results as legislation in -ords. The Legal Division recognized the serious
nature of this problem (33). Despite this, examples ,ere frequent.

It was generally conceded that as to the desire to have a code pro-
ponents ;iust have been representative. The exact tests which should have
been applied were in dispute. Of course, a representation of as high a
percentage by each test, and of over fifty percent by all tests rould
have been desirable. Economic data was so scarce that-it was possible
to misrepresent representation in many inst-nces e-ither through ignorance
or design (54). The problem of actual representative character is cer-
tainly one of jurisdictional fact. There was a possibility that the
courts would undertake to determine this question themselves if they felt
that 1TRA h.d found incorrectly. lIBA's drive to approve codes may have
often caused responsible officials to accept less evidence than would be
desirable upon this problem. Upon the r'hole, however, this was one of
the p-oints most scrupulously checked by the Acdmninistration, particularly
the Legal Division.
S

Aside from the code as a r'hole another' question presents itself.
Was it necessary that there be a majority of assenters to each code pro-
vision? Certainly, a majority of the industry by some test must be as-
senters. Did it matter that their e-sent ',as gained, despite strong and
even violent objections to certain code provisions?. Cases can be imagined
where this might have been important. Of course, many of the more e:.-er-
ienced industry members refused to assent until assured of their desires
(35).

This brief survey shows that N?A's jurisdiction was open to many
questions. The facts upon '-rhich jurisdiction was thought to rest were
not albar: reduced to absolute certainties. In both these questions of
re-oresentative character there existed a pregnant possibility of judicial
check. 1TRA often avoided possible difficulty by refusing to act. :iany
questions could not be avoided. The rise course and the one usually fol-
lowed 'as a strict requirement that industry groups be as representative
as possible.
9838







Ci[PTL-R VIII


-n,. PROCXDT'AL SCHZ::.:[EATD T'HE H-RA:GI!.GS


Ad. ii:.istrative ")roccure is not the for.:,oT roccd'u-c of the courts
(1). If it rere auch of t:e value of the a,.i2inistrative technique woulk`
be 7estro 'e. :o general rules or forms can be ernectec. Froce'r're is
us.v .I-"- built to neet the eer-.s of the particular field (2).

Statutes establish': ac.ninistr;.tive a-encies vary as to the detail
with '.ich they .set forth the -rocedure to be followedC. Somre statutes
ifn. .-. t'e m-roble.2 (5); others say little; still others outline thie )ro-
ce- .:7 -. _-ther Cefinitely (,). There has been a. recent teno.n:cy to in-
cli'e P. requirement for a heari. in statutes (5). If n.o -rocedure is
s-oeci'ies the ae"ic.y .zi.j use r-:, reasonable -oceure it oeins; resite'ed
tht. .-'e "irocesE of lnvw is intended. (6).

The Act contained fer" references to -rcce:ure (7). There was a ta-
riff .'..just..lert -orocec1.'.re (9). .'otice an ear.in. were s-)ecifie', in the
lice.s...;:. -rovision (9) and in special instances in .the code oroce'ure
(13. O-ther than that the Act was silent.

The Schechter' s brief (11) ,,ent at 're.t !en-.th to oint out this
feature of the statute. Secificlily it --oiniter' out t'e-'e r'ere no -ro-
visions for notice, the talin^ of evidence, .nd the scarcity of the find-
in7 re-_- .ire.ients. It also sw:-'- -estef that the President's a-ooroval ", .
be utt -1" arbitre:'ay anc ca-ricioas. As .ado already. been sqtv-sted,
ther-e is judicial chec': t-rouh ultra vir:1- upon the President in all
case, exce-ot a refusal to act (which 'ou!. not be involve- in the brief's
su-"estion r. .., (12)

T'- fact tViat io -)rocerure -r-s state". in tie Act is not uncor.nion.
an-. octs ueleatinj a,:-iinistrative .io-rer !o not state .a rocedure, but
allo- the ad.inistrtive bod- to set uro its ov-rn "-ocolv:.-re. Of course,
'e'-eer this nrocee'ure provides d'ue proci.s of la. for inividuals af-
feet.c' is ulti v tely to be deter._iined.by the Court. > t e Court's own
,ecisio--.s it is certain tha,-t .n Act by nrovidein -oroce'ure s-iecific-.ly
does not esca-Oe the roceural reouirezimets of the FJ-ifth A .end :ient. The
Sc'.e.ter Cormoration's brief continued its attack : u-on the Act by say-
in] t t Federal ?:'-d'e Co.imission procedure procidCed due -rocess of la-,
.h'-,ile the -rocedure of the ecovcr.r-,- Act c'id not (IJ). federal Trade -ro-
ce"''.e 1Wad never be, sevel-, "uestione,. There was little need to as
jud-ici.l review rras so readily 7.vilable. Still the federal 7,-a.e Co.-
:iss-on Act (14) was far froi, establishin: iny full irode- are. Counsel's
ar:-:L ,F..t procec.ed u.'on tie fallacy that a@Zministrative '.e -orocess aust
be e7t.lis,.ed by the statute. It transcends the sta.tute. The renuire-
.ient is ',e by the Constitution. It :ay be suo7lied a-crt from statu-
tory direction or in accordance with it. It must in any event be afforded
by .e AC .inistration- or t':.e courts ,-ill offer it when a nro-oer crse co ies
befo-.- tre:., Co-J.mel elabor.ated u-ooni this ar--.ent (15). nether the ar-
.e.it referred to the enforcement procedure or the code- 7mAi ne procedure
is -ot clear, 7orwever, it is only in enforce. -nt that there is a close






- c2-


analo .. 1- L' e -,:o')lC... oaf :--oc,'c.r e to t 'e 7"er l Tr? e Co'U.i'ssicn.
Cou:,sel ued t:r t1 e ct .. . 1 ;;.'ce It nTesc.:ibe" no con:stitutionr.l
met o.'. or -iroce r.re for -sce: t;.i .-.i .._.t -.e u.- iL .,ie ,.:o s of Cornn-eti-
tion, ?:.: i.' t'dc ,-Ies ect tot"U'. if:'rs f:-'o.. t-_;e ..Fede al Tr.de Co. iiis-
sion Act. It is ,:ene:-.i-]. .o-i:e.r.,- t.-p.t tLe 'T-r' e Cc.ainssion Act ,oes
not establis' :.'oc-'s-e -,it '."..-: : e.r-ice o0 cr:.?ctit;ure, su.c.i as the I:;te.--
state Co..L.ierce Co ois1io Act 'oes. c-,o-jer,, counsel finr.s ver.'y ela-.ornate
orocc" ur1-c este)!lis _e"' '."' t'e T-pade Co. :sso". Act i.- t.Lw- fF..ct that five
i1n)artial Co,.L.'.;issic.ne--s -ere to j- a- -ointe-C r" t':-.e Presie,-nt r'itj1 t-.e
advice of thie Senate, and t'., t 'e DO..'. -ics io.- :f it -jelicve& any -ersoni
wVas usi"._, F-1 cL'f'ir iethe' of cor-cetitio-: i. co,'.,rcrce or, t:.Pt a -)roceed.-
in. '-ro '. Je i-n t.'e -.'ol.c int restz, ccju..' se."'ve fcr..:-a.l co..ril int on t-ie
person .acLu.sec setting, fort> t-.e c-iPL.'--es. T'-:.e co. -;lpint ..2ust contain a.
notice of the '_erri.r-: .-ivin .'a.t.e r.- stpti-n- tV'ie -).lace. The -nerson
serve,.'. c.'. "tLe i-it:t to an~e.r .n," s.'.o" cu.use '.- theP Com.mission shoul'.
not eL.-,e'- a ce.?se P-,. ,esist er e:. 'estui. ,on ',s recuirer -'-ic'h nust be
re:.ucec Co '-ritijng. T'-e Co..Fio-.i ..' ren-ui:'er_ to .ia':e findin.js of frct.
:.:u.t iL is to be re e'.fboerc& ''int1' tei ".A _ro-uteQ all this -oroce.ure sneci-
fic l.... 'itiin its on 3o,-'. Ps tF il-'.--' c t lteif or tLie Plte-"nma.te nroce-
C'ure of i:juinction 'rocee,'i"p's befc--c t.--e Courts. l.ere is force to t'.ihe
suggestion t'-iat t"ie Tr-f'e Cor..issi., :roce(ur0 -Ilace'" ro coan-ulsi-on to
force o:3eience to its orders umtil t_-e'e -p '.s licatio to ti.e Courts
to enforce its ori'n-s. In 7A, on the other 'n-o-::, novel h'arssment in
the forn of cor-nli .-nce ".)2oceec'.in-:s ',:.s -:. vo='ac- (16). 'ven if this latter
-roce'iure -,,-s ], it could _.-P e u '],-=, 3(
.roce ..re '-. it coc' e jeeni ecl..r'- a still leaving as :ooc
thie cof'e-:":in, ni-oce'.Lre, .r.ssm:'In._ t-.-t it .ot-.er-rise .,et due n-rocess of
law reoui:-e..ients.

TI e ...Pin iroce'ural idea to ")e fr-n' in crl" '-V was to hear all in-
terestcC'. --',rties (1?). 'IPA -s ",- fouan 'of controvers.:" it wvas thlou-iht
,vou'.lc. fu.-ish a -erns "to ,et the tr-u.th'" (IC). T:.e intention of the Pre-
sirc.ent "rs to afford. a herin;_ (19). This .'as reflected in t'-he attitude
of t'ie Ac,-'.inistrator (2?). Desnite t:-is -,e 'have Cee'n-i t'at hiigh IJRA offi-
cials fid not feel a.-at the usual i.mnlication?, of F. statutory hearing re-
quire.nlnt need be folloeC (71). Statutes -rrovi'.ing for hearings are
constr-uer1. to mean thIL there is n ?rivi.]ee to i.itrZc'uce evidence and.. a
dCaty to 'eciC.e in hccord.anrce "'it th'e evi ence (-.U). The "ise course if
the e:xi-encies allowed it was to -nro'ide t."-. fullest n-ossible heari-iz.
Court, -)refer such aP. hearain" (?S) r nd it is the 'tale ..,ut of juC.icial
revievr that a.dminirtrative action ..iust f-ce.

Controvers:- not fact-fin'ir- ,.- the first st:tepd touchstone to wi-at
an ."?A heerin-' ras Cesine,- to oe (.:) In order that one nifit be heard
nroce,:ure orovider', for e'. reouest to b'e .r'.-e -rior to t-re heari; '-ith a
statement as to oersorn's desires i.r testif--'.n. that is, the deletion,
amend..ient, addition to or sv'.'-'ort of a nrc.posed n-orovision (25).. In fair-
ness o .:-A it should be stated, th.pt there was al iost .10 adt-erence to tle
requirement that one desiring to be .a witness as': i.l advance to a-.near.
I.RA -oresiding officers freely extendeC the '-.rivile.-e of testifyin-; to an-/r
person requesting to an-.eer either i: .nediately before or c'uring, a herxrin:.

Ot~i:r t'- n t -_. 'Tlic state.nentT u-ion controversy little guide is
offered" '-" PA as to the character its hearings ,,ere to tale. hearingss
',ere a-)--arently not even considered -.',s i..nortant as "a .ood niublicity
story" (?6). Later, '"IRA ex-oresse? el Ot.ihtly -.ore detailed statement of







t."'. "-:ce're to be uise.' 1.irinri; -ubolic e. r-.i;s, ( l7). T'is 't','- '-:it 'e-
u.:-i ... rsi"in- officers to srek "to elicit fcts fro.:a t.i o- one.ts .
"ro i','*. ts of .-necific oro-icions .'- tFe ooo'" cd code for the T r o,'- of
&etrio nnt of such-,ovs1s"(
bri.' :* or.t tVe necessity, benefit or etrient of suc ov ()
Thiiv Z :. tCe-nt iniicats that controvc .s'.% alone .ia^ rove, ni,,'r ".t,.
"'-:, r feel::.: ,ar. manifest that crcii'inj; officers r.Ist to '. r-e act
as .' e"a.:iner cone dct in t, n 1"e 12fl>CT RiiCbjct to
revi'"". >?-s ''ener' iJo"on tio:; of controverry co-*'-, '.c,''eo.
t-.-.t i;ing officer 'c c... core riF; -lorifi,. 'efere . Ce"t'tin-
v,, c general Vhe:i o-ctin, rs a orc.i',:. officer "'," n c' kn "tn
-)VI-ri r ;.'cn fiiiestioner np) Mp y -nor!"pi''-^ txi cr fi .\o '*r'0 0"
P. o: !io. An i --ortrnt .27A official :s 1es'rieJ n h', .rp.,, s.s "J series
of st 1 e.,' ,ts y)7 intoreste' partiess so'.neti.'o baclc: "'it> co... ie'.r'.le 1.e-
gal '" stetis ical ,.Xatr, (,.so: ti .(. s ns. ..o rteC b:/ r'nvt: n:i e.'ce--t senti-
.ne'lt L" -e If-e'v dent ?t.'ite.:'ents," (3').

I. 'rt P i, in ,',"'' te .C":.rin-. c )e e frev'u t., fomnc'. ':'e;i t.xe 0 re-
si. "; officer `r,,'e 10 atte.nt to ellcit facts, it -,s vaite -7os'ib !e t-.at
tlip -rec orc '-'o0.lc )Ce c ''rc" i'.s to -'ticn '.'l, ii.ort':nt --ro'.- sion. :.is
..i -'t .c true :'ie to a. v"-riet:7 of re';so,' even Kienr advisers -icre "-iven full
rein '. .-.stion. T/'e 'Av-ser .nay I:Lve ". :io infom,.rrtion to-tb 1-
.t'_tr- 's -ast -tractices or t-.e ''o'-< ] of t" e -rovisions i;: cve n-,-eared
i.i:o;:t.,. S'1. 1 c7'>metitors fren-.7c0t.; ,-'e-e too 'ooor to co". to '". in_
to.I, 'x t-'e.r ,2,; hve receive, no :r twice. -Co:..... o>' "orvi 'ic.ns, nvive
a.s t." '..e:y. rv.!es, so.tetines ".'reeo .c- to voice objections i ."'..:n ,
un"'.r '.e assurF,.ce tht their objections ".c1 boe consi-, e:e. :nattors
JirOL.. o'.t" in tie cnf-e:'.ce, T-e iDress-Are tro -eat coc es rov s
:'r.ent irdce .ent, to 00so.e es-'iin, off'ice-s, to ,es'i'r not contro-
v"rs-" -uit 1..r,. .ent. 7'len t.ere -*as (.. ent ..r' ere ortenec.
trr: e '.t 7 ,inoe'.1,ei's of :n in'_ .stw:'y "Soes not .epa tl,-.t tVe -Wclic inter-
,est ov even the in'.ustr-,7's i tere+ e,-oul -be ..l. serve.. T',scse fq.cto:s
co;.--I1c 1 t'-tii ne.ctiot o. t,_e vrt T e'7es i -in11 officer.', serveC to 7o)'..oe
.m. --. 'e'-a.te recrr,-::'s (31). S-oort e,'in s alone '7,erPe not tlie only re-
co-.s t-:at courts CO 'taveconsir' ere: inn-'".e--'ite. T.-t .'O s.erve to il-
las r: -t 1 ,-.': t pom.ieti nes .:-m-ep.e An- entire transcript of one :eari:r
exc.. .c.i.e of tVie re rocJ.ction of t.'e co e cr-n be rn .,cec' less tn.
onc .'te' e (2). T-eer' ares IU.ler of oth-er e:-.-n.l"o]es (:.). In
t.e c o I- an.' ore i-'ror.-t inccutries 'R.earin';s 'Orrc often r.iSte
"lo.n cr o raratively (14).

7A ,ex-esse eire to nia've no ar 11.e:nt or o-inion at :e'ri-k
(',) T-.e .;I:a.Ifeot iJ:-oossib.i.it".t of ?cc.irately ,isti-ui"in. t'een
fict ," opinion o :r.:ient n exl".tio or intn rretation- of" fact
nrev-'.t'.' t-te fua!.file.,t of t !. desire. T-,e best :]no., n means of c;s-
tin -i.s .- fact from o-:inion lies in the rnles of evi ence ('.a). It
is ;oJTtec if t"is -neans was -ver resort. to in ?. So ra.le tat
there e ..oi,10 be no o--inion tes ti.iorn- ,eca-e oof no .ei!O to the A-:einistr.a-
tic.i. >:ste'', it '-!as subJject to ;ab -o.se -:)-resii ', officers. The us"asal
.Dr- j, '-as to al.lov,! a witnesss to r-ble *oa.r'rrc. as he -ishsr eniressin<
a'n" t.: ,-'t tha.t ce.re in his h' 'o. -. rn .-'-..n the r'.c a-,ainst ormi--
ment or o.-inion was invorec, aw-ins;t a. oartic .c rly ist'stefuiil Abit of
tsti v (6). .

7'ere eare other arixnents for a different' rule in addition to the
nossi.),Uty' of abu-se by resi-'ino officer;. -oinion testi.ionr-y is often






-64-


necescrr" to C'ecie issues i: '.-suts. in is ever: .ire tr-,.e in the fiel."
of tr- e fr. ivi'ust.. "r '' f.,,.ts .*' ofte '.sel_-s or nion-e:.-istent in r.-
sence of o->i.nion t.o :ive 0I1..1."; 'olo.). or E, cstn.ice. IDf o-i.-icn evife.ce is
ad .1iS i ._Jr i-. courts it '-T .Jc, c. ? -. t"`. t it l .!. .e a:' .is i".)le fortiori
in a. lini-trc tive *v ocese".i ic .e .'. 'ose to je .mic. .ore la: ii
their ,-enuire.,e: ,ts as to t'le "," is !ii.i t::, of evi' c-ice. It ":as ,oeeSi su-
geste' t'"t it is ",neron s to ,"onsi.e, o L,."- o. evni"e-ce (-7). >..t -"er.
oni.-ion fu.--ishes ti'e o-l cl-.-.e to ti. t-v.e sitir.tion iJr :n in,'ustry it
must ie Occe-.te: if t.ie-.e is to '" a7:.'y ei. entjir "sis for p.ction.

Ar:-,iwleit as to inter-;rnttion to ".e a.o.t ,non ti-e f:'cts .anc the con-,
CluLSiOns Cc .,e I rar'n ''ol-O.'. -,eei to : n "i" to .- e s i cin officers. Sel-
0o.n "'eC'e --resi-c.,m.: officers so intii"", el :onnectre- "iti nrn iniLustry t"-t
P. x.re str te...ent of s.tetistic-l i- uo".ir tieC. -i." si.-)le facts would, suffice
to a.ffcrC a )ro-Der bn.sis for. t.eir fi'i .. .'. Aru uent of t'-e fccts te.-i's
to -)oi..t ho the critical iE., '" "O'L.I:' ?e:.. 'o 7e z.-'i en r".lly A'el-)-
ful a' itic'-1. to bare 1i.:tro7..ctio_' cf frcts. e-.e too, tie co.-non --r.,c-
tice -T"s to n.llo'- .rgUitent t .o..-. :.i t_.xor it -c-'" -r.nel'. Th.e :'istinc-
tion 'oet','eE st.tin: facts .-.', i.tc-'.,-et .r: si -,le ftcts i-nto conclusions
of fact is so subtle tllct ic, 7.R, lost t- _-,.rt i -re-.idLing officers. A hear-
in, i- t--c "r'ue process" sense is usu..:ly ti]_,,p.it to include such rea.son-
.,ble arL.Lv.ent of te'-e facts as is 'esire'.' a n i ;,,-reste(. -ap.rt:, to -Doint
out -iis nositio: (:o) T-his is t-.-ue e-en i.. I_-.c -_.stricte'' nrnce,:ure of
custo is 'eter.."iinati.~ns (J9). ..ere svust. .-ti 1 ro te'',t interests or' .e'-
ouestiorns of econo..3 c si.nifica.-ce re i-volveI it see..es 'iihly .,r esir'.')le
to allow a full -.:-u...ient of tie f"'ts. Tt o..-jlet.es th'e inte-.-este '-.rties'
privile,_e of )einm 'erdr. It also .f-tor 's .elf.'l direction to t-le n0r.-
siuin of icer.

A'L-.ient as to tlie I a.- -.rese_-its .Jo-c ,iffic.lt ciestion. Al'.inis-
trative 2.,encies i:n a1"-in,1 'ecisions '-.st keen ri2 eye to tie -"ecisions of
courts in T:-,e fielJ of its activities. "c;--e a statute uses such terms
.s "fair practice," "uizf ir co ietitive -r=.ctices," in' "interstate or
forei.rn co,..ierce" it c'.n 'i e e::.ctc.' t--,t "*reve nucstionr of law noulr' a-
rise. Ar'-r.ient of co,-nsel xu-non sc.:' n.r.estio.ss io_'.l' -)e :'.el'oful to the
Ac.,iinist..-tion. It ,'-oild further i-i 'ic-tr t- t".e courts that the AcJ.ninis-
tra.tion ,'rs '"..re of the le,,"l i. :-rolic:tins r-"' ir full"- c6nsidere-. the.-.i
esneciclly "-'-ere thie AM.niriistrc.tive ,licision -involver' changes in the e:is-
tiu,n st-.te of the law. '"-A or- 'e le7'rl r-f.i.t.ent (.-2). It adhered nuite
closely tc its rule. or rI-s evir'ence --'con such leral -)ocints sought or
relco .ie' (41).

Little disaCvantr.-ae c-in be sec-. .allov'i:-: v-urime.nt exce-nt the tine
consn.1ec Positive nee. for r a-Lr-ne-t of tnre facts is evident. Argx.nent
of t'e la- .' oul inC"ic..te to t cc'.-.ts a .>sire to be al)solutely fair
nJd to --roceeC i.non a fully ren.,one@I course. -'A ello'-'e" -.r.unient union
the fccts ')ut refuse2, to recognize t'.is in its stated rocerure. It 17ould
see..i aCvantageous to have -i.:e state, 'roco'ure en." nr-.icticed. nrocee.ure
accor'".. Fers.usivc reasons e:.:isted- ,'.'r e.r., p'net of ti.e lrx and introduc-
tion of -ertinent evif.en-ce shoul.1 h".ve been encouraec6,

Should the '.rivile-e of cross-exr,~.iin.tion '.-:ve -.)een afforded by UJA?
The stateC" '.-RA -nroce'ure refuse,' --srties such -rivile.re (4.). All neces-
sary questions it *':7..s tho-uht coLIC be 'it oy the nresi'in officer or his
advise-'-s. Crosr-e.-r.:ination is frenuentl-' s.id to be an essential of a
fair -," linistrative hearin;1 (4). This is -'roba')ly more true ,r'here a stp.a-


933'








tti1- P ,' i\ r' P r ,.e"ri"." ": .'- in .. .broa '' cvic" .i'icl .. I. I' :e ..ei'-':;^ t^.ces
o.a .:-ct of a contert "t'7,een v"-ties, c"*.:.-s-ex,'., i. ction -s Oc liable.
... eari:'" "e-e of cue n'ture. I' these ocr "-' coo- natio
ni.-'"'-! ,:';ie oft.,., been heil.;'. ] Tt c'" i I o co'ourse, be ..c -wr2' a to ".. c
*"i ' *'-*'" ,e ;.,e...ns of Fel :1 'e-"i is ere i.. "):RsiZ.''i;, officer
nuist t .:rcise diIcretion li: 1itn it -,e i t serves no re'l TI" 'ose. I
r J-' i !itrative 'r-oce'vhre cros-ex,. ,i tion iit be li nitec to u1se
re l contest of i.terrsts e:"istec. Croi-;r .r'.inptio 0 p iu -
tr'. : :en.l wv.lue in co-Ai .. t''. teere',,1: evidence (i:.). Its .so ii
suc *..o.'iate "Places "(s "''"eTe a rii' r c b'F co.e i'; f:'ct contest
jet"-1,, li.ite n v. uer of .,ics .rticlr i 'e 'o
..i .i" "esiroble.

".l&1ted -roble. s -e ,o., i C reJ'utt l test a .oi;t (-, &) an confi-Cen-
tipal 'eorts. '.L,' offici-i ,"'te> st-'tcc' t-'.'.t r-3"uttr.l ',s not to oe 0 l-
lo0-u. 'e,'t i ty in ,i'orc' .c rule eistcx. Al..iost i:'v:zria")ly
aite- ..'.:in:- st,.te:icnt mo,, -' -ro-oso.' co. e "rovision t -e ,rc-'onents
eere 1-ro ve"'' to .r'.e n1 n ern., st.1'te ent to 0 ", criticism. v irecte' "r
o'yo. -. "ts fro:i, thel- floor o:: ; .via.e-'s. ei:tt,,'l -&.s not li.:ite' *o -)ro-
"o-ieI's .So-eti:nes a -rcsiai.: office- so lost control o:? v .e.ring tiat
Scros-fire of stcter.Ients n ar v.-:ents b -,,ol-)oi'ents n."' o)oonents en-
se'. "*en flexioility of ",*roceh're t'rs, in c. o C. cl:o' ao certain i'ri''p.'it
0o r,"'roch "mo\lt su 'est itself s-)rrfer")_le. "-e orde:: of -roc'v're
of t. il ":i.'ht not 'ixve bec( e:-itirel-r :.t of -,'.ce. ?ro1o:1- ti-st (aito
-L ii. ;',iff) coui' hlave -- se t':ei:r c .'.e; t'" the o`-'one:t ; e ". .' 0en
Sc o. '-, .-' t'-ie -)rbo-ooncnts. 0 .is cou.1.' .o've oe-.-. I i iteC' to i ivi(' i )l
- 'o --s or to t.7 co1e "roioscl as -. o ".l. A:, T-A -)roce''re -re'7 it
. -, acoi-U.ion for t.is very er to vi"' -os.. to e '..se .
..ie -,-'orients were givenn t'ie -.rivil_, e to s'oen:'. -,tfter .ieir o'yone:l'ts
t',e7 -pre in fact ..iven ? r'eb ttal o-,.ort'U-Ait o.. .o'n- tt'. c.a.nce to stte
t:ie q J-st,,rntive c. -r.racte-- of t''eir c. se. It sot l be wflir ot to allo1
-ov..t,. --re.nttn- .l o ''it:yi. :. fuAte. iicte b t. ev-
oI-* iti.. of -)r-oco' I -aito t0. ci? 20-se. A I ran: reco -ni tion in 'A's st.'Utee
-)roc .-e -'oy,1ir -<"ve ebeen ,e'esioa'b.]. o

T-A never nr.:e :,. for.y, ot, rt.-i e:At t -.t it ever ,acte" in re,--.rd to
cor' c '-,:. T'os.'ls aroon evi,'ence :.ot iint-o.uce t a _.eeri-:. It is auite
m-'o-.le thnt reliance ",," --l.-'.ce" i5 ore t.rn o'e case u.n-on siob. evidence.
'"e y_'ble"n resente, b:y n. f:ri!'re to -.-ve r asis i. t".e record for ?.c-
tio:, -c te subject of treat'.e.t at .notli-. -loace (.G)'. ''..en reliance is
I:. *.. -o t. "confi.'cntial re-o rt" by ,n a-:ent or infor-i.tion fro'n secret
Titn-.-. to-2ere is r-isec the craestion -'ethor c, airooer i..aring l'.,.s been
aczo:- e interest'" -rt.ifesc. t,' CO "eonfi.ential report" vrole: vas --,re-
sente' 1,o tl'e n:lishli courts in t1'-, I'>ou-s 'cse of L--, oy ... -sit "oo''
v. A-'. e (47:). Alt':.o--, tn; on.se of TLors ceci"ec t'.-rt t*ei ."as no
rij.t to see tl:e inspector's "-o "rt, it createC., a stor.-n center in nn.!lish.
-*iiit-ative la'? (K-). ?ie :--ecent 7.e 'ort of toe Co.nittee on -inister's
Po-e-.-s (<.9) S reco:.ie'.'iedn t-a't ,,ne nactices of ,, :i:.j confic.enti.1 rc-
port- )o EvoifeC. T'..is -olo certsl see. thle fairer rule !n, te one
to b followed "unless -r;.:ve consi .e:bAions of oublic --olicy.- intervened.
T k e~ ~~ ~~ I:. ,e ,tt s c .s .
T.> -.itec" States cases indicate t:t t-,e r'-l e of tne ArliC -e case is not
!a7 i-. '-is co-ontroy (3D). It can be reac-il seen that fail-le to intro-
6iuce -re-ort into t'.e evidence "ay kceema n- rt" in. i2nor-nce of ",hat ev-
idence is desired by the aC"r-i.istrative b.. It may be t hat, the re-oort
hap.F :ot been carefully rran and thlt evidence by te parties it uicl-
ly est-')isI., tAhis fact (51). 'uch the sae:.e line of arjoi.ient holds for t:e







fail-are to -)lace all tes'-i o..' of tsse. -, t' e record' of the ea-i-.-
(53). There is iot o:--o't'.nit to c -cific a.s--ers (57) --hen notice
of the evidence to b)e relic --.--: n-s !3 & :i1-. :'A coLi.d :'ave )laced. it-
'self in te clear i- :.'c. "- o -ec-.t i .e7Firc v.,. confi-'e:ntial reports
if it :iu- stated t,.t ;t 'o.. ot -re1- soi suich evidence eCcent, of
course, -hen jrm.v'e )uJlic--,o.iCc e -...: ,-- .e .e 'ec:'-ee.

T0o -oo-er of s'.ib,)oen'. ,-:.:, ;ven b t.:e Act. T'?.is .-ne t that .RA .-i-mst
content itself -t'it" t.Le -,it.ies-e .esirini to testify. T-e Fe-er- rr?-'e
Co:muissiorz (54_) an tVie Tc--ff Cc .,.s ion ( .i) '--ave th-e -o'-er of sub--)oenp..
As t1i'e President ...ii.-it cll -,.n-on t.cs.-- oj...iiEsions to L.sc their nroceduiues
(56) tlie su-ooenp r"c',e '7,r. p)-OVF.r "" t/.e Act 1--tO..,u.-7li not riven to :-3A.
The courts have )een. rclLu.ct7.-.t to "iv i,1in:istla.tive bo. ies too great
o-,Trer of this c..r.cte. 0:ie ."roe 9" oc.'-.ure i-Lvolves an issu.--nce of
a su.o-ooeln,. ".)Y t ,e '. Tinistra.tive iO-7-. If 2'"e -. .'arty tovird i,-ich it is
directed tp:es no -hee'. tLe ,.:..;st'.tive o.y can a-o-ly to the courts to
co':n-el co-:.-liance .-ithi t_-. su-. oe' .. (-. 7). T.'e theory is th;-t the adl.iinis-
trative boc'y can not itself -oi'.is":. L.- ,-n-co.r-linvnce '7ibh its process as
this .m-y de-rive an in,'ividuF.l of '-is li-..rt% "it'.out a trial. 7o nore
trial is had, hor-:evcr, ,".ic:.e co'.:'t -,--nishes .a person ior refusal to o-
boey its access. The Teder.l Trc,'Ce Co.;. ?-io-. (57E:) ."._st a-nly, and u'-
tit necessary facts, to the Atto?.: ey--e.%er.ai to institute -roceedinzs to
cor-oel F-e-earance an.' testi.iony. .' e Attorney-%eneral :-.s the discretion
to refuse to act (3").

There were nuierou-.s occc-sions in 'i-?A ?'-.ere the ,)o'.7er to sub-roenr
witnesses an2 records -ouldC have becn of conside-rable value. Persons a--
oearinj ; before i-A -ere fra:_ to a". unus'iE.l ,'eTree. `,ere repre times
when such frankness 7oul,. have been fT.tal. rThen in -)reference to testi-
fyin2 it often -r-s tL.o.--ht best to Fa,', nothinT, or to fail to p--ear (50).
In such cases, es-eci.lI.:/ *'iere 7_-'. ,7.s ir- .Liri, into the manner in whicI
code provisions had beeO a -'inistered, the subp-oena oulO :hn.ve been a
useful divice.

As an alternative .ie-ns to th'e '.b-.oen-i-n"- of -,itnesses the investi-
Cation of books :in"' records :..y be resorted to in a.n attemrot to build a
factual basis fo--' .cti-Nn. This nzo-er of investigation is considered le-
gislative vh-ere t"he facts are re-)orteC to Congress, but ,.:-ere the facts
furnish a, basis for adC.ninistr.tive Ection :iit not be so treated.

7"eneral fishin e::-erc'itionE into t".c affairs of a stranger for the
chance that something i "iscrec'.itable .ii.-it sho07 un are imiformly condemned
(60). As Conr.ress can not nmunishi con'eRn)t if its investigation is not
legislative (61) likewise erenercal innuisitorial powers in the hands of
an Cc.-..inistrative body .Pre severely fro'-n:.C nUon (62). The courts h--.ve
expressed rave doubts .-heter (Dom-.'ess) could dele..ate the nower (to
einbark on Leneral inouiries) if it nosses,,es it - -" (3). Thile .-A
had no power to conir.el oral testi.iony in e'bsence of" express statutory
.oo.er (,;-) it exercised an analogous oo'e', in recouirin: L-.t certain
books and records be ke_-nt and. re-norts iad.e to it (65). Such information
could b)e required as a condition to a-n-'roval, o.nd the necessity to period.
ic-illy supply information vras e::-ressi:, zenctioneO by the statutory lan'.-
uae (66), This dli.". not mean such information need not be judiciouslyr
la,.les. hany codes reco.nizinL' tiis required that information be .- ent.
confidentia-1l (67). ,



9. '3 I








NRA did not require witnesses to take *"n on'th. ITelthor did the
Agricultural Adjustnent Act although in the administration of thLct Act
an oath -'as required (68). The oath is not thou!iht to now have the
dissuasive power it once did to prevent perjury. Df site this, it hl'.
been su. ested th:Lt the courts may require it in administrative proceed-
ings if one n-irtr demands it ('"). Ad0Lnistering an oath no -,'.,cr to
punish perjury is quite barren. Most witnesses -or,r usually fr.n1: in
testifying. Their candor often an-.roachcd the roint of self-incrimination.
Occasicnally if a ooint could 'be gained a witness might try to lcave an
impression not in accordance with the facts. For these situations.a
statutory requirement that witnresPes testify ur,..r oath and astatutory
provision for -punishing perjury should :-avc been welcon.. devices. It
might be said that such -revisions would have defeat,'. the cooperative
spirit ITIRA sought to create. Most honest witncs.,s might, however, have
preferred this protection fro:n those less scrupulous that they.


Another question raised in connection with hearings is t'it of the
use of iv.ritten briefs. Does due process of la'r require oral hearings?
When the -problem has been discussed the answer has usually bcen,no (70).
The problem arnse in two ways i4 1.PA. A presiding1 officer desirin- to
save time, keep the record free from controversy or for other reasons,
might ask a witness to put his test-ionr_ in the form of a brief (71).
Just 'ihat consideration "as given these briefs ca.n not be said. It
probably varied considerably. Where no consideration was given, it was
likely that little more was accorded to the hoaning itself. To nany
presiding officers the record -as not important. The (.orninaiit consider-
ation was What provisions certain persons would agree to. The problem
of oral hEaring could arise where it 'as sought to anend a code by
"notice of opportunity to be hoard.1" T1A here set up a test of
"likelihood that a substantial minority or group. will object - -" (72).
Another test that is suggested from our survey of broad review is the
substantial effect upon property that the proposed regulation might 4ave
had. A more comprehensive test was stated by the Legal Division for the
guidance of its steff (73). It seems to more nearly approximate the
attitude the courts wo.ld probably adopt. The use of the device of
opportunityy to be heard" rested upon the feeling that it is an admin-
istrative impossibility to give a: separate hearinr upon every proposal
or to do all acts in "town meeting" (74). Despite these sound consider-
ations full oral prt.se.itation is usually felt to be more clearly a
guarantee of due process of law,. If the subject matter is im,?ortant
a hearing 'will be held" If the subject matter is not so iTnoortant.it
.would seen. that the matter could wait until the next hearing would be
held. This dilem-a su. --?sts that the device probably should have been
more limited in its ap-olication, that is to such natters without consid-
erations of policy involved to which all interested parties could
readily qgree.

Certain shortcomings have bc*:.rn discovered in the hearings afforded.
Possible improvements have been discussed. Such a view of hearings as
has been had is designed to show the formal guarantees that should have
been extended to interested parties to have insured that they would be
fully i4eard.


-,->7-





-6?-


" CHAPTER IX

Fn"DIi:--',3 ? .T I-. TT '.C33.D


The basis for the adLriini.strative determination is of the uti.inst
importance. It involves primarily qr.c:stii:.' .s of ?dmnissioility of
eviLence, weight to be givenn evidence, tfc. record: made, snd the
determinations which may properly be :n.-e.

Students of administrative lpvr hr-ve lon- contented themselves
with the Tenerality-ttL.,t administrative bodie' ere not l:-.eld to the
technical rules of evidence of the ccurts, thPt one of the prime
functions of administration is to be freO.d of such nipndicaps (i).
Recently Judge Stephens has made a care-'vl ntu-dy of this problem
(2). He conducted a survey of just how r ,. to -.inlt extent adminis-
trative bodies apply the rales of evic.ence (3). Although the answers
did not show any careful attcv.vt `;enei." '3y to follow the rules of
evidence it showed that they were often Ur .i-.l (4). Acmjiiniztrr-tive
bodies like courts take judicial niotrice of fr cts. The courts will
not always uphold findings made on s"..Ch n besis (n).

Rules restricting admissibility of 6v0.ence r".ich is deserving
of some consideration often come in for r:-uch criticism, (6). The
remedy lies not in abandonment, but in a fully considered relaxation
(?). There is certainly the v3lue of -, :)r'-eble test beinr available
when evidence is conf, sin.;ly conflicting. The c;,ief use in such cases
could be in the weight givenn .evidence. o' Ever, there is nn advantage
in having the rules .convenient as a r:enns to restrict evidence of a
highly inferior sort.'-
Administrative bod.ies hv
Ad-inistrative bodies hove prosb].ay ziven little thou.\ht to the
use to be made of rules of evidence (S). 1 -I. ...y quite a measure of
informality prevails -s to the admissibility, of ev/icence (9). Little
help is given by the statutes or rui.lesc of 'r-ctice of such bodies as
the Interstate Coirnerce Commission or ti.e ec.eral Trade Co-imii-ion
(10). The latter Comimsiih ,n.sunlly -doiits evit.ence but will listen
to objections 6uLrin- final ar-umIent on the rmeri.ts of the c.se (ll).
In fields -,r'iere problems of eco/:o,.iic effect arise, it is 'esirEble to
allow a considerable .ie;,sure of freed,.om to 1'ityiesses, it bein;,- so
difficult to determine what &re facts (j). Such testi..,ony probably
can be considered as exert. The aIini.st i'ative bodies &re not free,
however, to follow whatever rules t}-*y eoire. Decisions of the courts
refusing to uphold e-dnini'str-tive d.eter.-:inations hrva the effect of
establis'.iing evidentiary requirements (13).

Hearsay evidence is ,generf.lly admissible (1-1.). In John Bene
& Sons, Inc. v. Fedlerl1 Trade Comnission (5) a. person whose usual
occupation was running; a "beauty parlor" testified as to the use of
"Daxol" and peroxide. Though not ,'ith t pe cosLany at the time to
which her testiriony referred she wrs .llo',ed to testify. As she
stated, her lmov'leri:.e canie from the; f-ct tha t "at'.the time they
incorporated, the whole case was erpl-,ined, and I have all the
papers concerning the case." Other exi.,les of lie-rsey appeared in
the course of the oroceetin.;s. Te-tii.iony is admissible said the Court,


9838








"if oi th, k'inc, tht ust.olly tffectv fair-:int cm'en in +'. conuct
,l t 'i' r -ilvy 'i',. .ore imortrnt 1fi irs. It "sho 'h be recCiv. ,t
-. ,' i :ercd; but it o c be fI Irly Cone" (16). In ..i'T; c. .'. the
C't itU r. *f e tC s (17). If if i In ri *;'..es e., i L Al.
.. '- i. rIle to 0 'ec1 ive l ..'-.s t 1.v. ast k; i ; v1 ,
zu ),.cL iL to t',- test ;n. of cross- yP:.ifnation (18) if the _..ilt c,'c
.,.c -t .it ]; -. %-A never refused tcstimo.,. of;er ." ;t t *" 'n- on the
r,: ..a .s. L Uron sbst:.-itiAl uontc-stet orohlern there
'.L..,i,' *C .-.i t":Cit in )rocercing cautiously in acce. )tn! s-ch testinmony
'l" "a-o s~ t
t'.,. sa a .( .er.l matter it could proou;biL oe acceotef. ZrL',yV.

Tie "best evidence" rule, likewise, r'o:io not !;e.r. to eC a rule
to b, strictly/ yp)lied. 'n..oUbte.1y, wit wa not followed by I-,".
TA.erc sce'-ns little iepun v'hy it o !old be unless SUb,,tmntia]. nterc.ts
. er. iivolv,- .ncd it colia by sbo'i that failure to adl.ere to the rvle
m.i:,ht ,rc.j dice the r',:'sition of -n interested party. Affidavits and
letters could also be freely rcceptea subject to the eame limitations.
NIRA mnde fr-e use of such eviCLence. The ':ir'.ctice in absence of objection
(19) see:.ws perfectly y proper.

Interested o)rties sometimes rise inii courts the frct that evidence
was improperly admitted. One course to ll.y the possibility of such
action chllen:.'-i.: _TRA Lehrin:s mi ;it hove been to hove allo,:'ed the
tc-kinj- of exceptions to the ou. issibility of evidence. The nr01ent on
these except ions could have been heprd lster by a special board of
quialified. perscrns. T.is woulC. h]-ve indicated to the courts that T-71A
vwas acut-ely avwre of the problcei of cvicence enk' had no, desire to
!crcj'.2&ice -nryone by occeotin. evidence to whicA proper objection had
ueen ta&en. Objection, probably, was not tEcen in 17RA proceedings
becnusc of the greet informality th)t prevailed.

As we shall see YRA often actec without -ny )-pprent factual
basis (2(.). 2eliprnce was freueintl h7C u')on briefs never incor-oorated
in t.,:e -ecord, informal conferences, and conversations. Ass1,.:in;" that
ti.ere -'ere few cases of bad faith action by responsible officials there
waq often little evi( ence -vailable for a coart to (-eternine the
c ecquacy of the fact,..l? basis or the reasonableness of the action.
PreliL2.i-:;ry conferences (21) pond poet-herin conferences (2:.) were a
reo-i."r p_:rt of YRA procef.tre. It is r,..,:"r.:able how .:.n/ ill-reasoned
anc. i.,. .. li tic !.rooospis were cut out by these con:erences. Often,
tioui.h, these conferences serve& as a basis of corndroeiise (23) or
justificr.tion for provisions which on their face :d.'iht not a.p),ear to
be fully in the public interest. In such instances where subs.tapntial
action rested upon conference a reord' should have been kept. Another
anplogous practice was the "off the record" discussions. Thece discus-
sions often contained extrei2el3 frank and valuable evidence which :mi.ht
have -one far to sustain or even condem-n NTTA detE.rmi5.-.tions. By failing
to include this mnateri,:l in the record it probably lost its evidentiary value,
no matter how persossive it riht have been upon the individual administrator.
There have been statements that administrative action need not rest upon
the evi,.'ence in tie record (24). And an occasional case may be food in
fields other than those demanding siumary action in the exercise of the
police :o':.-er (25). In fields related to 27RA (as interstate commerce
re.alation) as well as others (26) it has been -enerall-' held thct
administrative action must have a basis in the record (27). The require-
ment is simple. It is intended to give notice to the parties end afford


9838


I "'N








a basis u-on v]hich a cov.rt revie"'in, the case may oct (2?.) The case
of i i S. v. Abile.e <7 So-,.thern .,- Co. (29) sC-ovs7 the court's attitude.
Thc- question .nvolvec ',,'. r.sie :,ro riety of uosin-> certain annual reports
in the hrLn's of the Interztrtc Co:....erce Col...qiision referred to by the
examiner -t the heorins as follo'vs, "no dc,..bt it will be necessary to
refer to the .nn,.ul reports of all the carriers" (-0). The Coiniission
contenc.ed that tnis was notice to t.e _is&rtics un.er its Rules of
Practice t;,en in force priorr to Lecember 10, 1i923). These rules
provi.edL that co)ies of all material other t.._-mn tht;t on file with the
Comnis-sion must be offereC. into the record. .Isteripl on file could
be used if specific-jlly referred t-:. After referring to the fact-that
these were adverser/ orocee.din-s in slbl tnce ;,r. Justice Brandeis
speaking' for the Couart said:

"The oh.jectionr to the use of the Cate contained
in the annual reports is not 1 ck: of [.,.thenticity or
untr.ustworthiness. It is t.rt thie carriers wver:e left
without notice of thie evidence v.ith f"'oib t',ey were,
in fact, confronted, 's later cAr-closed by the finding
made. The requirement t.-it in an adversery proceec.ing
specific reference be made, ic :'sC-enLi, -l to the sub-
stantial rivhtz of the parties" (Jl).

A legislature is not held to nny. sLuch requirements This has caused
many- to think that an adnin-istrr-tive boc..y, in fact lezislEting, should
not be. Thi? mii-'-ht not be the vie-:,.' vhich 'il. oe follo'"ed by the 'courts.
Courts, et rrc.sent, have a stron. feeling that certain defined limits to
administrative action sinould be established and enforced (32). To insure
against jucicisl revievi scriux.lous care should be had to bu.ild a careful
record substantiati.i- ,-l actions trl!:en. VTA fell far s"iort of the
desirable standard. TIn thc-t l.ter dc-s of its '.niinistretion, however,
more thou.t was iveii, to t',is orobIe...

Fin(.ins by ?c,:iinistra.tive bo,.ies renLt.ire a factual basis. The
courts have made thiLs ,ore imioorta-nt by their requirements of some
evi.'ence ant. substsntiql evidence (.3). Altiou.- -. Lere was ano hearing
requirement in the strt.te to co;.-!e1 c.c.ci..ielnl in ?ccorcamnce '-Aith the
evio.ence (34-) th].ere are stron-, consider, tions indic:tin.?z that .'NA would
have probably been held to such a recu,.irement (:3). The courts manifest
an intense interest in the evic.entisr, bnsis of regulations l
administrative bo( ies affecting iro;,leris of industry (36). A recent
illustration a.,pears in '93 U. S. (A,)'; An Drder nf the Interstate
Commerce Comrnission u-nider the Bo.iler Ins-,ection Act required that
certain equipment be used. In disc-sin, this order the court said:

"The primary nuestionr of f.-ct present( for determination
vwas, as the report .of the Cominission states, whether the use
of locomotives equipped ".'ith hand reverse sear, 9s" compared
with oo'-er reverse jear, causes unneoess,,ry peril to life and
limb. The re.)ort discusses at so!ie length the alleged ad-
vantages and disadvantaes of the two clrs-es of reverse gear
srid the expense which the proposed chanie would entail, and
concludes, with 'findin-s' that to a certain extent the change
should be made. But whether the use of any or all types of


9838






-71-


c .:-i i- eoco1 noti s er *, 'j \ r i '. 11. Lj1C Cer e 17y:1'
c,..appred with wover reverse *e r c :v'ce i i,.iccenm.ry
ril I to ife -n li .b' is lft 4ntii, T' to ine rn .
his -, !. etc o,:cencc of the 'e ic or ,',em t i i:l-
i .-, rq.ireC,. to sup c t the Oo ,fi ..-.ion's order'
1i?1n c .;, it void. ( .)

2t is not i -tendeC. to sa.'est tlh.t there must be t. reliance
,*ire *i-;:nii evi ..:rce offtr,." 'by irtere,-ted parties. T:,ere i; no
re a-7o. ',hy the governmentt sl ould v.o1 iovZCntv i e ate, tno find evidence
(6'.) .. It 'hoCuld, of course, be introe.:ce into tie record to re-
Ctive treatment as evieY..ce (4LO). To escape bro-c review there
,..', t je re -,FJo. 1:1-e evi ence in the record to Th.st? i- tdh .(fciniR-
trr tive fiin,' i,'vs. For instance t),)icol. evio.e.,c u consiceredc
Src-: er basis for actio-n (41), ,ihile -iere tre *?te results "as
a substitute for typical, evidence i,:; :i,,eqor-te. (42).

-RA freq', ently treated the roo em. of. securing a full factual
basis cavalierly. (42s) 7'.e 3roorins'' stuLy ha:s c-nrnEentecL u';on
t'i;,s. T,'', tiiings., it sa;, 7, weere outst 'lt .;, 1. "the rarity of
or.er]y .rnQ. convincing -resentr:tion .of fhctval evidence," fnd 2.
"the casual way i w'.ich iiitricate coue. previsions were oa-sed over
rit fOu t nplysis or clarification. (..3). 3oth Administretion
c'-iployees and applicant. groups v'ere responsible for this. Contro-
versy could always roc.duce a fi.ll record of f:cts, Th.is was
especi.ll- tirae where greatt inity -eared on the )art of the members
of the applicant industry. This seems to have been the situation
yith the lumber inCustry end its coee '(44). A 'shfilor *cokness was
the sl objectt of reference in the brief, for the Sc-lechter Corp. (4.F).
The '-Iovern.:ernt called a. witness in the trial in. the lower court who
testified as to the evil of "selective hillin:". The witness in the
testirrmony referred to certainly "vance6 no COLI *ellii, reasons or
1',cts a 3.iinst the practice. When a -ubstanItial trade practicee
requirc-nent is bpsed on such fl"...: or iTll-expressed testimony it
mTa^, .E, rfa-dily Cc'.el1uC ed tIth thete cartss would ,be hesitant to accept
it as a sufficient basin. Thin inu not referred to because exmunles
are -iot available in 1IA, but to -h,,ow owv astute conoel c.-nr bring such
Weaknesses to the Attention of E court,

This problem' is of such ihniortcnce that a few examples ol' fact-
finc..: -aend the factual basis for determinations should be ob.erved.
(45 a) The r'. r Drcssin- and Fur F yain Co&e (46) provided for the
establis,.-iiient of minimum service c.har,^es (Z7?). Various divisions
of the industry aojplied for e, .ro'rl of uiniifiam service ciarxe
sched.':.les. These were all approved. with some ch.ang:es. The case
of the Do- and Long Tiair Division is illustrative. This division
probably presented the best cost &ta, and asked for service charges
closer to the cost indicated, by. the ,eta than any other division (48).
Figures from ten firms of an i,-d'.-try havin;; from twenty to thirty
firinns were offered. Of course the character of the industry with
its small firms jumping in and out of business made for this. It was
these small firms th-t probable could have furnished the lowest
costs had figures been kept, (49). So' it is seen not even typicala"
evidence was offered. Six items on the schedule approved (50) had
no basis at all. Fi.lres were not even offered as to the cost of
9838





-72-


processing these items. At least six other items probably had little
basis in the figures s9 b di ttea (I). A further co!.olic.jtion was the
fact that processes differ (5-2) and ty jes of work vary widely (53).
This schedule, like those of the othiEr divisions, became the subject
of frequent violation anu:. ocon iell. into d.isuse.

The story of uniform cost pccountin- syte-,s is also interesting.
At hearings there was usually,' a brief r.efrence mace to the desira-
bility of such systems, thou-h it is '.oubTed if this was always done.
Plans were submitted to the Administration. Sormetimes hearings were
held upon these plans. An ill t.iinrtin.,- instance is the hearing (54)
for the plan of the Fire Extinguisner inuacturin=: Industry (55).
The plan was si..bmitted (56), but no te.tiiion,- :as offered to justify
it. No questions ,ere askced by. the representatives of the Division
of Research and Plannin.g, vwhic] divisionn was usua elly charged with the
responsibility of approving -uc, plans. 'Lhe plaxi w7as later approved
upon this evidentiary basis (5?).

Fact-findind- was not always relief' u.on. -he Administration
sometimes olainly ar7iitted tht F. rovaFl of im-ortait -provisions was
bosed upon aireer.ent wvitl-iin the rnkcs of industry (58). The basis of
agreement beta/een labor sarn inciastry was, probably, the one most
commonly rtzorte& to in -ll labor questions (59). Congress made some
statements that ;i- ht be construed as .ts.nd.ards for the labor problems
(60). Perhaps, Con:ress thoL'v,ht that the agreement of labor and in-
dustry would oe adequate. The writer has found no evic.ence on this
point. It remains tha-t a,-rese-,.ent was the primary basis. The Research
and Plai-nin,: Diivision did study labor conditions in the various in-
dustries. These studies ,were sometimes ,the basis for Edministrative
action. Often thie facts merely served 9.s an aid1 to the Labor Advisory
Board and labor in cc.rryin" ':r th-eir borai-nn.";.

A most unusual case is that of machine limitation in the Cotton
Carded Yarn Industry. An adminiztrstive order was issued, peculiarly
enoug-h, signed auth-ioritativel, by the oz.e A:ut.hority and concurred in
by .Tovern:ncnt officials (Cl). There is jio testimony in the transcript
of hearin-: for the Cotton Textile In,'".:try (62), nor has any record of
any inCependent hoarins: been found.. UTndovbtecly, strong evidence was
submitted to the Administration. Still an order of such important economic
effect upnoon business enteroriqes should have been fully justified by a
hearing at which a full record was made, while affording any opposition
an opportunity to com-,letely sct forth its case. Perhaps, emergency
action may require a tectporary restrai:tin order. Certainly, a hearing
should have been held at the first o ;ortunity.

Happily, NRA was not given to such action in its 1r ter days. Much
damage had been done by then, however. Once the impression is afield
that administrative action is hurried, not fully reasoned and- grounded
in the facts before the Administration, the public as well as courts
start viewing the action most critically. Especially should this have
been remembered in dealin- with the field that comprised NiRA's prOvince
(63). Too often NRA seemed ti accent indv-stries' judgment that anything
was "unfair" which was annoying or disruptive of established methods.


9838




-,'7, "-


At the public heari.. ; for the Llectric Light and Power Induistry,
the -enerel coLn..el of ',-A, Mr. Donald i-ichberg, static 0:

"It has never been re rcrded as an ippro riate
objection to the .resentrtioi. of coe by those
truly re',,rcscntative of r'iy industry to pr,. sent
evi(,e',ce concerning actual, or ali" ce decrelictions
in the .-rivate or public c *nL.-,ct of the sponsors of
a cod - The moral _r':.& ts of those onsorin,
or opposing. a code .iia" be a, blnc' as, mini ,,:ht or
as vhite as sno-,. But the process of co6e i,':in
is not to oe confused r.ith the operation of a clean-
ing, and dyeing establishment." (64)

Courts in cri-..iann] prosecution do not llowv evidence o to the past
c!,aracter of the defen,;'it, unless he puts his cL.aract r into evidence.
1PRA hearings were not criminal prosecutions, but rather hearings to rain facts
uupon which an economic policyy could be devised for an industry. To be
legally sustaina.ile the a(neral policy and stendarc-s for frar-in: the de-
tails should have existed. Had they existed the wor.-: of filling in de-
tails mi'ht have been so obvic,.:1.--,- a l'-ninistr:tive ,'is to avoid the use of
the Lifficult analogy to legislation. In perforraing this function of
policyy ms:ing for industry the past history or present attitude of an
inu:atry, a trade association, or an industr,: ,roui)miYnht be quite
pertinent to the issue of ho-v much ,o"er or what type trade r.ctice
provisions should be oiven an industry. Such evidence appears to have
been valuable in the c.-se of the )ro0osed Cottonseed Oil Refinini Code.
Pest abuse of an open-nrice filin system indicated the disposition of
the industry tov7ard reported iliformoption ,:nd the use to which it might
be put (65). No one woull hrve v/ished to clo-e his e,, es to such
obvious facts as the sposorshi of the )re o-sed Corn Dry 1illingi
I-.dustry by the 7heat .-lour Uil.in 'Code Au.t'.ority to come under the
code of the latter (66). Without oi-aen.tin. upon the character of
that code authority or its direction it is 7pparent that its ad6min-
istration was apropos to this problem.

The Fur .:;n.;acturin; Industry Code contained a number of
restrictive trade practice provisions (67). The attitude of ledii-jv
spokesmen for the industry as stated at a public hearing (68) indicated
little syxnpathy for the consumer (69). &u.ch evidence of attitude should
have been quite relevant to what powers of self-government should have been
extended.

TNRA did itt.mpt to establish a factul basis in many instances.
Le.?pl Advisers seemed most avare of the desirability of such_ action.
Advisers of other boards or divisions en::-, -ed in the effort only when
they opposed a proposal or knew nothing about it. These advisers were
often able to develop mr-i an;.les which had little concern to the
presiding officer or had not been brought to his attention. In this
advisers were early handicapped by a rule that all questions had to
be directed through the presiding officer (70). Presiding officers
'.;ho desired to limit controversy often refused to re,.,est the questions
or so charn-'ed them as to nullify their effect (71). In later practice
questioning by advisers -;r.s freely allowed and did much to develop
more complete transcripts. The adequacy of the questioning depended
:reatly upon the individual adviser. Many advisers preferred to remain
silent at the hearing. Others, ho-ever, made very substantial contributions
9838





-74-

toward developing; a record. The 3.A. r.le despite the contrary practice
wi',s never cL3n,,ed

Another .n.ic;p lay in the theory of t.cit e jroval relied upon
by many industry groups, A 'code provisionn ni nht -rovide for study of a
subject or a proposal to be made in accor.--nce v'ith cert-ain principle
or certain problems (72). These provisions were usually in the form
of an expressed right to pe-tition. It is Col.btec. if this conferred
anything not already had. ;I'n(.vstry frenuentl2y ur-;ed thnt NRA had
tacitly approved a provision of the character set forth in the charter
of study. If lRA has not done this ,'hat was the uir-oose of the orovi-
sion industry might ask. Frequently !TA would ucce .,t the argument
and approve, the proposal without further hea.rin:. The factual basis in
such cases was usually grossly inc'.ecuite for at the hearing the provi-
sion would be passed off as merel- allox'!iv. a. study to be madc. Many
persons in 1TRA were aware of this subtle :-rieans of obtPining provisions
without subjecting them to such a justification es mi.-ht be necessary
if presented without .this ireliLin.ri step (73).

Burden of proof is usually thought ta lie on t'lose persons applying
for action to be taken to show vihy wh't ti-ey desire should be clone (74).
In NRA procedure the burden of proof si.oul(' h.?ve rested upon the
proponents groups as far as there v'as to be such a burden. Almost
without realizing it the burden was somretiies liifted to o:.oonents of
the proposed rovision (75). The attitude of -?resic.in.< officers toward
advisers ,,vas frequently similar. "The in..'.str: wants the orovi-ion.
.;Jhy shouldn't it have it", th-e a(viser v'oulr. be rslkedC in effect? The
propr procedure would have been to h-Pve .)lcccd the burden squarely
upon the proponents or realizin, that t.Le burden could not be met
provide for a.temrporary "period of expe'i-i.mto.l o.)eration" (76).

Proposals by the Administration brin. u.- the sane .,roblem. Should
there have been a duty upon the A"niinistration to prove that its pro-
posal was desirable? Certainly, i-here the effect was to nullify provi-
sions granted industry this would secrn to 'azve been the Roperr procedure.
iiere details would needC no such tre.,tiieit, but jrovi!ions of a suostantive
chaaracter should be established- as in hrr-nonj vwitr the requirements of
the Act.

Until the opinion in the cse of Pc-,noria Refinin.- Company v. Ryan
(77) was written there had never been a cicar st.teinent in our law
concerning the nature of an aui'inicitr'tive fincin,.T from the standpoint
of publishing the basis for action. Caees exi-ted in6.icating that there
need be no such statement (78). Such c-x sessionss ,.'ere mide in cases where
an evidentiary basis was not bein, too Ztro': ly required. The courts in
their early history were reluctant to interfere 'vith executive action (79)..
Cases then decided -fall into what has been called the field of narrow
review. Where there have been stotutorj reuire.nents (80) or where an !
administrative a.peal On the record is to be had (81) the cases have re-
quired a statement of the basis of action. But in situations where the
finding was the last administrative one -nd %,ias not enjoined by statute
to express its basis there had never been -ny requirement for such ex-
pression until Jnnuary 7, 1935. In -n:;lpnC. it is considered to be a
principle of natural justice thar.t a .)Prty be informed of the basis for
an aCministrative action (81a). I


9838




-;'5-


Tce o-!', h cn :3se crentcd : -,''" v .',i of ],.J (];.). One of the
It( I rr- ti 'c roun,.. n-'f t'.' J ci i....i 'x:.s that the y.c Y,-tive Order
S' t t c the 0 ". i t b.-..s b.. d, S-id "r. Chief
.........-. ; ". t ", CA e vvhe .i.i- "( i t-" r
J ; ,'. .7 sr i:i,: .at i.v'(c rt : *

"21 .* : i' "- :'., t ''.tr ''.,i, ct-, t :, the vali ity
o_ t"..x r.'.tib'ti : i.. t ".'*n ',;, tO i. xecdtive Ord.cr
-t. ".-.ti n ( c'. T.. c ti.c- Order contr ins
n:, i., i ;, n s t t .1 .'.t ,l: L. .: *" n' o 01 O tlhe
Brt :iCi crt'. I cti.y :. c.,C 1i% t c .,ro ioi 'io.on.
- - If it ct .,' Be '-'i- t L-t fI the four
e: :cn:r^- ns r:..*' i-: t' .t'- a i- i: ''L 2.22 ere.i~:
C. it C. I. r:.'"' ;'. tic'.i.r -i -'.. t 'es or con-
aition, '; "'. '..ic . ." to ':,:,v:r t' ,- C:t rcise of the
v t'-.ixitx,' c.-.fc .s... .r:1.-. t -o.l.0 not :Ict
..n;].. "it: v,.t i';. u t- t' ;ie circu-. ttrces
1.nd c i, i ti,-J, i. .i: '.i,. , i as to the
e.:iste:ce ni .ic re i e ... .. e ; .ctiofn would
bL. nflie s'- i''r t t U, ':. t .:cli'.t, for otherwise
t.'e C.i.-,c ".'o - i tI .e .. ,.'. f tor. dis-
cretirn r-s tln-iL q, '- i r" t '. ,'t ..rity' ''oul.d be
irefc' ctuil. - -


ri'ot'lT, Ce., ',,. 1 t : I.: Lt I, ,'t;. e C movince, is
-lot t".I c-..-,ict ci i'i; t'.:iE or "'ith the ore-
s'.:r.-ti jnr tt-c'.. : 3 : "-c ve "c Zcion. Tio reoo t,
V;e ar- cm.ce -c: 'it:;, tv. r ,.- t'.Cmn of the dele;-tion
of ic "i'lativ,. nn"-Lr. I t.: c'. ti'in is to be ,unished
fnr the crime of ;i:1-ti_- ". Li.! .tive orler of an
exec'..tive ff -,'pr, *:,r of [. of co missionon, due
nvoccs; of I- re-1' ,tiies t'. L it '-.l a)car th'-..,t the
nrdci is -ith.inr. tl'-e Futorit, :f ti, officer, board or
comn7T1isi cn, -'d, if t".-1-t ....t I'i .6. )ein S 0 on deter-
:Iin:.-tions of 1 .ct, ttho0.- 1' r..i.:-..tion. must be shown.
(,3)

...r. J-.ustice C, r ,-.z, .ir ,.,tir;, took: exception to this portion
of t Ci-, J.sticc'., inion (..- .:'is zncr, rcle is not necessarily
universal. It sc., oc twi.-t it 'ii ,- 1ii.it.ib. to broad review fields
req..irin; (",,-,ic bet-t.en i .,,.ort"*t 'A _lii-ies, or where criminal penalties
ar,- i.ivolvt (t).

In a o .in, .wm (:,) anjc.i '- n 1,, .r. Jua.-.tice r,"nc.eis the
i'hvnt -, ri t.,i ".it'i (T'ov/'..i,':., 3- ') there is an indication
th-t the cozrt '.:-, q:itctl.z q. Ji iit, t "it. second paint of the Panaa
Case (cT). 7.-L c-.e invol-;t -, c.' :-;-d crer ef the Dcpartn.ent
of Aric] tre of th Sr)tof :.- *:.n uruscribinr- certain fruit and
ve-.,Et_-bles contFiners -s t-n. ;t .n.i r ")e to be used. It ''as urged
upon t2e court th'.t no :'re2-l.U ti".:. -- :i ..t: ts.at facts were properly
present to ..tif' the Pa":ini' tr' tivc action. SaiL the cou-rt:








"The contention is viul'out support in authority
or reason, nnd rests upon ,-iscc.e.tion.-------
The question of lawv; may, of course, lw -vycs be raised
whether the leisltture IL". pov..er to dele-ate the
authority e.-ercised." (8)

For this proposition t-ihe cor.i.t cited tOe Pani'rna a.nd Schechter cases
(89). The court continued in laiig.tage th-t .'.o -nmucnri to put the law
upon this subject back to its state in 194:

"Where the relation is 'ithin the scooe of
authority def sy deletter, t,.e ,re,.,ntin of the
existence of facts j..istiiy-n.r-" its specific exercise
attaches alike to statutes, to m-A.icipal orc i.iances,
and to orders of -i.nitrtiv: ho, is. - - --
Here there is added reea.rn fr- '. p,.l,'inr the ore-
sumption of v.lidity; for t.it. r- *i.ltion no.' chal-
lenged was adopted after notice r.mn nlbl.ic lie.rin.
as the statute required. It is c iitende, tlipt the
order is void because tne ..:r iirtr~tive bo".y :-.Lde no
special findings of fct. 3:-.t the st.tL'.te d.i. not re-
quire special fin.in.s - -. Co.inp.re WVichita Rail-
road and Li.Pt Co:npasn-' v. Public utilities Coi.-Aissicn,
260 U. S. 41.), 5i8-3 ; i:ailer v. by, .5-4 U. S. S3, 44;
Southern Ry. Co. v. VirSi:i, 2-0 Tj. 3. 1Th', 193, 134"11
(90).

Mr. Justice 'rordeis either i'inores the second Point of the
Panama case or elke he Cei'inltely overri&J.r, it, citing as he does
the Wichita Railroad C Li'lit Cn,.mn: v. Public '"ilities Corrumnission
(91), and M1:h]er v. Eb-T, (-'2) fc.r th. pro ,o'.'ition t'iey ri.htfully
stand for that a statutory requirement of fin6in"-s must be complied
with. Mr. Chief Justice liu.ies had cited these c? a;s as authority
for the second point in the Panama case despite the fact that they were
based upon statutory requirements not present in the Par.a:ia case. The
citing of Southern Ry. Co. v. Vir-"iri) (9S) clouds the veifht to be
4iven to Ir. Justice B,-- ndeis' stPten-.,ot "apc;i the point, as this case
does not stand for the same )ro.po2ition that the others do. In 'spirit
it is much iior-c rigid then thm others requiring F-s it does certain
proce,!ural safectards in absence of eny statutory provision.

It seems too early now to try to evP,'fuate the Pa-cific States Box
and Basket CoarLpn., v. 'White case (9.). The fields see.', to be properly
analogous. In the ?anr.na case there was no attempt to state a factual
basis for the executive order x:'-ile in the Prcific 2oe- case a hepring
had been held. When there htr been a hi::-rin.-; a court may presume that
the administrative action is predicated upon the hear in'. Thle situation
becomes more difficult for the court where it is not eviderit whether the
administrative action is based upon any facts. Of course, Pll such
administrative action does not require a hearing, but if none is held
the requirement that the basis of the action taken be set forth seems
reasonable. Certainly, the safest practice would be to fully state a
basis in findinr.s for any adiiistrative action taken in a field of


9838





-77-


-ioci 3l or c &c'.Jic oolicy. aot i' is it a te- .:,rC at;iint judcici;Al
att ck it is Cood aeiiniLtr-3tive t.e biVe to V ti t the a0 ) irch
h:,s oeenr. well-consi ered. If not l..j-I]' rece spry Ds a matter of
ii t-.tvf1 iJ-J twice This j _'-ctic woul Eee:;i c ': i 2

AvA statement of inin s usu'lly .mar, c by tieir for. i:.'lity
(''5)'1,. ji,,C in;j mere often miac.e in the In,1. -' of the statute or in
cert-in stocks phrases (96). This practice lis not becn favoredC by
tile courts (:".'). It would s-eemi a better .ir.:--'tice not to u';e "stilted
1e... 'hraseolo ," bvt rather to tell the !7tory of the economic
:itL,.ntion involved (.8). .-LA practice V7.e not -ied by -n,'.' .t.?tea:ent
0 Thicy in this reard. type of fi .;i-s to be Lin.de was never
irn.icate6. The only strteLaent was that there woulC be a finding
st..ted. in E:c'i letter of transmittnl (99).

i-ny of the early codes were based uoon more full findings than
those approved later vhen the pressure be<'.,.e much greeter. These
early codes usually contained a statement from the "RA and one by the
President. Later practice varied. In codes not reqxjirin.- the
President's approval only a state ent by the -RA will be found.
The first ccde, that of the Cotton Textile I.i.-u:;try, was accompanied
by a twelve e statement b,, the Ak .initrr-tor (100). The L. niber and
Timber Products Industry Coce .,- suO:-orte: by a sixteen page
memorandum of transmittal (101). This letter vas one of the best
of the tyoe written; but vhen the m-:" iitu..e of tJe industry 'nd the
great i)r:blems with which the code dealt are considered thifs
memnor.nduelin seems ,-rossly iwrdeut e (102. 3y the time the ei.hth
code was reached the findings h? droned. to little over a pe
(10K). Code 1o. 1.3 did not even include a fi,.cinY: of fact except
for a brief and hasty reference to Ir -rinii and fincin.s in the
executive order (104). Tn thV st- teoent of fin'-in s for the Leather
IndCstry Code not one vord is said about the trade practice pro-
visions (105). This is quite typical of vzh&t frequently happened.
These in ''euate fl' ">{.is were s .'.zted to the court in the brief
for the Schechter Cor;,oration (106). It probablyy would have been
e:!ir!ble for the President to have stated the basis for his finding
in something more than a ritualistic .na.iner. The ar7,jrcnt of the
brief that neither the order of the President nor the letters of the
Secretary of Agriculture or the Administrator contains any reason-
abl.e showi tition is entitled to carefr.l consideration. It must be remembered
tr'ft records were made which in many instances would have substan-
tiated the action token- or in effect, the finding made though
not stated.

Tin,.si.-it in this problem is better than foresight. ITZEA
had little Tuidance in the cases jnhen its first findings were made.
Prudence and an attentiveness miiJIt have 7i4ecsted that along with
a fll1 record, a full statement of the basis for action should have
been mpde. Such- care could hardly h::ve been expected from early :IRA.
A future administrative body with a similar task will be wise to
frame its findings along the style of a judicial opinion, and to
be careful to have ready for the courts a fully re.a:,3cned and com-
plete statement of its findiniws properly grounded on recorded
evi dence.


9338





*-78-


Another problem of fincir n:s rested in the acceptance by
iNBA of fin'Li-n:'s ,nce by other -,.encies. As t is also involved the
question of the oro iriety of the ceie.letion it 'will be discussed in
a chapter K.ealin... wit? !ele Ttion (1M7).


9838






C'!AFTZI X


P2OBLEI.:S I:T FPTDLICATIOII, IC.-E, AID cT:JR ADCII..STATIVE
ACTIC'iS BY ITRA

I. PIUBLICATIOl, OF ADI`I:ISTRATIVE RZGGULATI0cTS AID DRAFTS;LALS:IP

Thern the famnnus legal fiction that every man is prersumed to Iknow
the lI.v (1) ripened there was no msss of administrative legislation
with which to cope. Every.man ma- be present in Parliament by his
representative, but one would 1-ardly say he is present at the proceed-
ings (or the case may be action without proceedings) of every adminis-
trative board. The mass of LA.linistrative rules (2) only more acutely
present the same problems that the rnlish scholar Bentham so clearly
saw: 1. It is contrary to our morals .to punish a man for disobedi-
ence..to a law of which he had. no notice (3) and 2. Publication alone
is not enough. Publication may.only tend to bewailder (4) if the orders
are not easily accessible and. clearly draVn."

The .problem has been most acute in the United States. Often only
a small percentage of the rulings of an important bureau will be pub-
lished (5). Executive orders (since 1905) may be found in the Depart-
ment of State and the Library of Congress. This makes them far from
accessible to the public (6). The state of publication is one of
absolute confusion (7) in a field where ten times as much law as
Congress makes exists (8).

-IPA only served to complicate the problem (9). The great mass of
industrial legislation resulting from it was brought to the court's
attention in the Schechter case (10)'. lIRA's code record section does
not. even have a record of all the purported administrative action (11).

The most publicized example was not the responsibility of IRA but
the Petroleum Administration. In connection with the argument before
the Supreme Court in the Panama case (12) it was found that there had
been an indictment for the violation of a non-existent provision.

SAnother interesting example lay in the National Labor Board
created Aujast 5, 1933 apparently by a press release (13). A formal
order by the President was not issued until more than four months
later (14).

The same difficulty was faced in England (15), until the passage
of the Rules Publication Act in 1893 (16). This act solved the diffi-
culties of the sit-cuation there. The more important rules are fully
published while only a reference is made to the local and less im-
portant rules (17). Certain it is, that some such legislation has
long been sadly needed in the United States (18).

The problem demanded lMAts best consideration. Code Record was
an offered solution. Code Record failed only where Deputies and others
were negligent or wilfully failed to cooperate. Confusion was such
that 1MA regulations and codes could not have been expected to have


9838







always been clear. Explicit instructions should have been given and
emphasized that only those documents filed with Code Record had any
force. Efforts ..should have been- mada to discourage the numerous
drafts of "codes" which circulate o6fton as genuine.

Almost as confusing as the mass of delegated legislation and the
difficulty of securing access to it was the variety of administrative
forms and the differing uses to which each were put. One dplving into
the mysteries of ERA sub-legislation must -,restle with executive
orders, administrative orders', office orders, office memoranda, an
office manual, and NRA bulletins. The use to which th'-se forms were
put varies. It would serve little purpose to point out the. precise
history of each. It must'he borne in mind that these are forms of ad-
ministrative action. If it said that executive and administrative
orders were generally legislative this merely means they affected in-
dividuals through a class, or group. Likewise as affecting individuals
as a matter of direct intention under some legislative power such 4r-
ders might be adjudicatory. S66 it is best to say where a direct effect
was had upon the interests of individuals or classes executive and ad-
ministrative orders were employed. They were also employed to del,-
gate power and set up administrative organization and procedure under
thn Act. :

The other frrms enumerated were in the most part for internal use
within ITRA. Approved by the Administratr or his delegate they carried
the force of an administrative order. Sometimes, their effect upmn
code provisions or their requirements upon members of industry wore
such that it might be said that the interests of individuals or classes
were affected. Individualized action wasI taken by the various labor
agencies set up under "theI N.I.R.A.:,' the Industrial Appeals Brard, and
by the Compliance Division in Bile Eagle removals. Thp latter were
sent out by telegram. 'It would seem that they should have had at least
the dignity of an administrative order, since the effect on property
might be so vital. General instructions as to' procedure may be found in
compliance field letters. : :.. ....

It is obvious that to one not experienced in thp intricacies of
NRA administrative forms the mass of orders and the variety of forms
in which they might appear could well present a hopeless labyrinth.
No precise procedure can be outlined. As in England all orders of
general character and importance should be neIr-lly published. In-
dividual orders would not require the same distribution, but copies
should be sent to all interested parties and kept available in speci-
fied well-kIown public depositories. An effort should bep. made to
classify administrative action in such categories as would indicate
clearly prccodure, powers,' responsibility, poli-cy, general rules or
requirements upon industry, .and special or individual rules and re-
quirements. It is not hoped to solve the problem here, but merely to
suggest the vital necossi-ty of giving full thought to it. A recent
fndnral statute has taken a step toward the solution of this problem.
It provides for a Fndepal Register which will- be analogous to the
English rules publication system (18a). '



9838





Dra'ftsmanship was likewis.e' an irnprt-tnt problem. Cloudy lan,-ua[L"
was sn,.eti:'.rs sought by industries horinj to bett-r their position by
inter-retation later. The Legal Division gyve its staff warning of
the vital nature of draft:nminship (19). In tne latter dazys of IT;U_ a
study c-f the problem was mrnido by a mor.iber of the L.."al Divicion. It
is difficult t- lay a fing-r u'-n any of the ills arising frr-m this
source. Ambiguity was the chief difficulty and this war reflected
when ouestions of interpre-tation arose (20). If NRA could have done
more it would have been onrly to have increased and rrrmphasizcd its
warning. It mic.ht also have charr'-d the Review Division or some other
agency with the supervisicn of draftsmanship.

II. NOTICE AND FARTICIPATICN IN THE INDUSTRIES' ACTIVITIES

The givi:,g of reasonable notice is on: of the first requirements
of administrative due process (21). Thi problem is often viewed as a
technical onn since ,it seldom is brought up in & case (22). Require-
ments vary. In some field, there need be no notice or only the barest
kind (23). In the field that iTRA dealt with a full and reasonable
notice must be given as to the matters to be considered. The form of a
notice must reasonably relate to the action to be taken (24). The time
given should allow a -?erson to be present and to make some reasonable
efforts to ,rrpoare-a case and secure evidence (25). WniZat persons are
entitled tc notice? Mr. Justice Holme.s has pointeJ o.ut that it is im-
possible tr rive the full protection of a "town meeting" (26). Yet,
when cibstantial property rights are affected every reasonable pre-
cautioci should have been taken that any person affected should have re-
ceived adequate notice. If ea pcrs-n is entitled to an individual
notice he is allowed to makle a positive showing in the courts that he
received none (27).

Official statements never fully set forth the degree of notice
necessary. Statements were mad.- upon the form and procedure to be
followed and establishing an official bulletin board (28). Full notice
could hardly b1 found in publication upon a bulletin board. NRA was
concerned with the manner of giving notice, that is how to get out
wide notice. It did not concern itself with the problem of just what
persons had t, be given notice. This is no criticism of what was dane,
but rather a pointing out of the approach taken as distinguished from
the one courts would probably use. Actually, NIRA made serious efforts
to widely distribute notice. The rng-.il1r course was.ta send notices to
labor unions, the labir press, gEnvrnraent officials, the press, trade
asscci.tion -ulications, State ITRA offices, Resident Adjusters and
Regional Director, Fir-t Class Post Offices, a special list, plus any
additional persons whom the Deputy Administrator suggested (29). The
Deputy Administrators, usually, tried to secure from the industry mem-
bers with v.whorr they were negotiating as full a list as possible of all
known mcjiber: r:f the industry. Still, in som iLidustries it is obvious
that it would be impcscible to ever make a complete list of all members
(30). In such cases if every reasonable ff 'rt were made to notify all
interested oartics, if the industry croun was properly representative,
and if a t:-pical viewpoint and evidence were fully presented for each
economic interest the courts might consider that sufficient notice and
hearing (31) had been given. This is only speculation as to what might
be called reasonable,
9838


- I ,*