ADMINISTRATIVE PROCEDURE ACT COMMITTEE ON THE

Calendar No. 758

79TH

CONGRESS

SENATE

REPORT

1st

Session

No.

752

ADMINISTRATIVE PROCEDURE

ACT

REPORT

THE

COMMITTEE

THE JUDICIARY

A BILL TO IMPROVE THE ADMINISTRATION

OF JUSTICE BY PRESCRIBING FAIR

ADMINISTRATIVE PROCEDURE

NOVEMBER

19 (legislative day,

OCTOBER

29), 1945.—Ordered to be printed

185

COMMITTEE ON THE JUDICIARY

PAT McCARRAN, Nevada, Chairman

CARL A. HATCH, New Mexico

JOSEPH C. O'MAHONEY, Wyoming

HARLEY M. KILGORE, West Virginia

ABE MURDOCK, Utah

ERNEST W, McFARLAND, Arizona

BURTON K. WHEELER, Montana

CHARLES O. ANDREWS, Florida

JAMES O. EASTLAND, Mississippi

JAMES W. HUFFMAN, Ohio

(vacancy)

ALEXANDER WILEY, Wisconsin

WILLIAM LANGER, North Dakota

HOMER FERGUSON, Michigan

CHAPMAN REVERCOMB, West Virginia

KENNETH S. WHERRY, Nebraska

E. H. MOORE, Oklahoma

H. ALEXANDER SMITH, New Jersey

CALVIN M. CORY,

Clerk

J. G.

SOURWINE,

Counsel

186

Calendar

No.

75 8

79TH CONGRESS SENATE

REPORT

1st Session No. 752

ADMINISTRATIVE PROCEDURE ACT

NOVEMBER

19 (legislative day,

OCTOBER

29), 1945.—Ordered to be printed

Mr. MCCARRAN, from the Committee on the Judiciary,

submitted the following

REPORT

[To accompany S. 7]

The Committee on the Judiciary, to whom was referred the bill

(S.

7), to improve the administration of justice by prescribing fair

administrative procedure, having considered the same, reports favor-

ably thereon, with an amendment, and recommend that the bill do

pass,

as amended.

There is a widespread demand for legislation to settle and regulate

the field of Federal administrative law and procedure. The subject is

not expressly mentioned in the Constitution, and there is no recogniz-

able body of such law, as there is for the courts in the Judicial Code.

There are no clearly recognized legal guides for either the public or

the administrators. Even the ordinary operations of administrative

agencies are often difficult to know. The Committee on the Judiciary

is convinced that, at least in essentials, there should be some simple

and standard plan of administrative procedure.

I. LEGISLATIVE HISTORY

For more than 10 years Congress has considered proposals for

general statutes respecting administrative law and procedure. Figure

1 on page 2 presents a convenient chronological chart of the main

bills introduced. Each of them has received widespread notice and

intense consideration.

The growth of the Government, particularly of the executive

branch, has added to the problem. The situation had become such

by the middle of the 1930's that the President appointed a committee

90600—46 13 187

188

ADMINISTRATIVE PROCEDURE

FIGURE

ADMINISTRATIVE

COURT

S. 1835

(Norris)

73d Congress,

1st

Session

3787 (Logan)—H.

12297

(Celler)

74th Congress,

Session

3676 (Logan)

75th Congress,

Session

R. 234

(Celler)

76th Congress,

1st

Session

S. 916

(Logan)—H.

4235

(Celler)

76th Congress,

1st

Session

Report

President's Committee

on Administrative Management

January 8,1937

Twenty-seven Monographs

of the

Attorney General's Committee

Administrative Procedure

Sen.

Doc.

186—76th Congress,

3d Session

Sen.

Doc.

10—77th Congress,

1st Session

Report

Attorney General's

Committee

Administrative

Procedure

Sen.

Doc.

8—77th

Congress,

1st

Session

LAW BILLS

ADMINISTRATIVE

PROCEDURE

915

(Logan)—H.

4238

(Celler)—H.

6324 (Walter)

76th Congress,

1st

Session

S. 674—H.

4238

(Attorney General's Committee,

Minority)

77th Congress,

1st

Session

S. 675—H.

4782

(Attorney General's Committee,

Majority)

77th Congress,

1st

Session

918

(Logan)—H.

3464

(Walter)

77th Congress,

1st

Session

R. 4814

(Gwynne)

78th Congress,

Session

2030 (McCarran)—H.

R. 5081

(Sumners)

78th Congress,

Session

5237 (Smith)

78th Congress,

Session

(McCarran)—H.

R. 1208

(Sumners)

79th Congress,

1st

Session

ADMINISTRATIVE PROCEDURE 189

make a comprehensive survey of and suggestions concerning

administrative

methods, overlapping functions, and diverse organiza-

tion.

While that committee was not primarily concerned with the

detailed questions of administrative law and procedure as the

term

is now understood, it was inevitably brought face to face with

the

fundamental problem of the inconsistent union of prosecuting and

deciding

functions exercised by many executive agencies.

REPORT

OF PRESIDENT'S COMMITTEE.—In 1937 the President's

Committee

on Administrative Management issued its report, in

which

it said (pp.

32-33,

39-40):

The executive branch of the Government of the United States has * * *

grown up without plan or design * * *. To look at it now, no one would

ever recognize the structure which the founding fathers erected a century and a

half ago. * * * Commissions have been the result of legislative groping

rather than the pursuit of a consistent policy. * * * They are in reality

miniature independent governments set up to deal with the railroad problem, the

banking problem, or the radio problem. They constitute a headless "fourth

branch" of the Government, a haphazard deposit of irresponsible agencies and

uncoordinated powers. * * * There is a conflict of principle involved in

their make-up and functions. * * * They are vested with duties of adminis-

tration * * * and at the same time they are given important judicial work.

* * The evils resulting from this confusion of principles are insidious and

far reaching. * * * Pressures and influences properly enough directed toward

officers responsible for formulating and administering policy constitute an un-

wholesome atmosphere in which to adjudicate private rights. But the mixed

duties of the commissions render escape from these subversive influences im-

possible. Furthermore, the same men are obliged to serve both as prosecutors

and as judges. This not only undermines judicial fairness; it weakens public

confidence in that fairness. Commission decisions affecting private rights and

conduct lie under the suspicion of being rationalizations of the preliminary findings

which the Commission, in the role of prosecutor, presented to

itself.

which, in transmitting it to Congress, the President added

(pp.

iii-v):

I have examined this report carefully and thoughtfully, and am convinced

that it is a great document of permanent importance. * * * The practice

of creating independent regulatory commissions, who perform administrative

work in addition to judicial work, threatens to develop a "fourth branch" of the

Government for which there is no sanction in the Constitution.

See

also pages 41-42, 207-210, 215-219, 222-223, 230-239 for addi-

tional

comments and the very drastic remedy proposed in that report.

That

Committee recommended the complete separation of investiga-

tive-prosecuting

functions and personnel from deciding functions and

personnel.

EARLIER

HEARINGS

AND

BILLS.—In

1938 the Senate Committee on

the

Judiciary held hearings on a proposal for the creation of an

administrative

court and, in that connection, issued a committee

elaborately analyzing

administrative powers

conferred by statute

(S.

3676, 75th Cong., 3d sess.). In 1939 the Walter-Logan adminis-

trative

procedure bill was favorably reported to the Senate (S. Rept.

442,

76th Cong., 1st sess., on S. 915). In the third session of the

same

Congress the Walter-Logan bill (S. 915 and H. R. 6324) was

reported

to the House of Representatives with amendments (sec

Rept. 1149, 76th Cong., 1st sess.; for an annotated draft, see S.

Doc.

145,

76th

Cong.,

sess.).

The Walter-Logan bill was passed by

the Congress

but vetoed by the President in 1940 in part on the ground

19 0

ADMINISTRATIVE PROCEDURE

that action should await the then imminent final report by a commit-

tee appointed in the executive branch to study the entire situation

(H.

Doc. 986, 76th Cong., 3d sess.).

ATTORNEY

GENERAL'S COMMITTEE.—In December 1938 the

Attorney General, renewing the suggestion which he had previously

made respecting the need for procedural reform in the wide and grow-

ing field of administrative law, recommended the appointment of a

commission to make a thorough survey of existing practices and pro-

cedure and point the way to improvements (S. Doc. 8, 77th Cong.,

1st sess., p. 251). The President concurred and authorized the

Attorney General to appoint a committee for that purpose (id., p.

252).

This Committee was composed of Government officials,

teachers, judges, and private practitioners. It made an interim

report in January 1940 (id., 254-258). Its staff prepared, and in

1940-41 issued, a series of studies of the procedures of the principal

administrative agencies and bureaus in the Federal Government (S.

Doc.

186, 76th Cong., 3d sess., pts. 1-13; and S. Doc. 10, 77th Cong.,

1st sess., pts.

1-14).

The Committee held executive sessions over a

long period, at which the representatives of Federal agencies were

heard. It also held public hearings. It then prepared and issued

a voluminous final report. See Administrative Procedure in Govern-

ment Agencies—Report of the Committee on Administrative Procedure,

Appointed by the Attorney General, at the Request of the President, to

Investigate the Need for Procedural Reform in Various Administrative

Tribunals and to Suggest Improvements Therein (S. Doc. 8, 77th Cong.,

1st sess.). That Committee is popularly known as the Attorney

General's Committee on Administrative Procedure and will be so

designated in this report. In the framing of the bill herewith re-

ported, (S. 7), your committee has had the benefit of the factual

studies and analyses prepared by the Attorney General's Committee.

SUBSEQUENT

BILLS AND

HEARINGS.—Growing

out of the work of

the Attorney General's Committee on Administrative Procedure,

several bills were introduced in 1941 (S. 674, 675, and 918, 77th

Cong., 1st sess.). Hearings were held on these bills during April,

May, June, and July of that year. (See Administrative Procedure,

hearings, 77th Cong., 1st sess., pts. 1-3, plus appendix.) However,

the then emergent international situation prompted a postponement

of further consideration of the matter. But all interested adminis-

trative agencies were heard at length at that time and the proposals

then pending involved the same basic issues as the present bill.

PRESENT

BILL.—Based

upon the studies and hearings in connection

with prior bills on the subject, and after several years of consultation

with interested parties in and out of official positions, S. 2030 (78th

Cong., 2d sess.) was introduced on June 21, 1944, the companion bill

in the House of Representatives being H. R. 5081. The introduction

of these bills brought forth a volume of further suggestions from every

quarter. As a result, with the opening of the present Congress,

a revised and simplified bill was introduced (S. 7, January 6, 1945;

H. R. 1203, January 8, 1945).

CONSIDERATION

AND

REVISION.—Much

informal discussion followed

the introduction of S. 7 and H. R. 1203. The House of Representa-

tives'

Committee on the Judiciary held hearings in the latter part of

June 1945.

ADMINISTRATIVE PROCEDURE 191

Previously, that committee and the Senate Committee on the

Judiciary had requested administrative agencies to submit their

views in writing. These were carefully analyzed and, with the aid

of representatives of the Attorney General and interested private

organizations, in May 1945 there was issued a Senate committee print

setting forth in parallel columns the bill as introduced and a tentatively

revised text.

Again interested parties in and out of Government submitted com-

ments orally or in writing on the revised text. These were analyzed

by the committee's staff and a further committee print was issued in

June 1945. In four parallel columns it set forth (1) the text of the

bill as introduced, (2) the text of the tentatively revised bill previously

published, (3) a general explanation of provisions with references to

the report of the Attorney General's Committee on Administrative

Procedure and other authorities, and (4) a summary of views and sug-

gestions received.

Thereafter the Attorney General again designated representatives to

hold further discussions with interested agencies and to screen and

correlate further agency views, some of which were submitted in writ-

ing and some orally. Private parties and representatives of private

organizations also participated.

Following these discussions the committee drafted the bill as re-

ported, which is set forth in full in appendix A. The Attorney Gen-

eral's favorable report on the bill, as revised, is set forth in appendix B.

II.

APPROACH OF THE COMMITTEE

In undertaking the foregoing very lengthy process of consideration,

the committee has attempted to make sure that no operation of the

Government is unduly restricted. The committee has also taken the

position that the bill must reasonably protect private parties even at

the risk of some incidental or possible inconvenience to or change in

present administrative operations. The committee is convinced, how-

ever, that no administrative function is improperly affected by the

present bill.

TH E

PRINCIPAL

PROBLEMS.—The principal problems of the com-

mittee have been: First, to distinguish between different types of ad-

ministrative operations.

Second,

to frame general requirements appli-

cable to each such type of operation.

Third,

to set forth those require-

ments in clear and simple terms. Fourth, to make sure that the bill

is complete enough to cover the whole field.

The committee feels that it has avoided the mistake of attempting

to oversimplify the measure. It has therefore not hesitated to state

functional classifications and exceptions where those could be rested

upon firm grounds. In so doing, it has been the undeviating policy

to deal with types of functions as such and in no case with adminis-

trative agencies by name. Thus certain war and defense functions are

exempted, but not the War or Navy Departments in the performance

of their other functions. Manifestly, it would be folly to assume to

distinguish between "good" agencies and others, and no such distinc-

tion is made in the bill. The legitimate needs of the Interstate Com-

merce Commission, for example, have been fully considered but it has

not been placed in a favored position by exemption from the bill.

192

ADMINISTRATIVE

PROCEDURE

The committee feels that administrative operations should be treated

as a whole lest the neglect of some link defeat the purposes of the bill.

The chart set forth as figure 2 on page 9 emphasizes this approach

of the committee.

COMPARISON

WITH WALTER-LOGAN BILL.—The Walter-Logan bill,

which was vetoed by the President, differed materially from S. 7 as

reported. While it distinguished between regulations and adjudica-

tions,

the Walter-Logan bill simply required administrative hearings

for each and provided special methods of judicial review.

More particularly, in the matter of general regulations, the Walter-

Logan bill failed to distinguish between the different classes of rules.

It stated that rules should be issued within

year after the enactment

of the statutory authority. It required a mandatory administrative

review upon notice and hearing within a year (sec. 2), and set up a

system of judicial review through declaratory judgments by the

Court of Appeals for the District of Columbia within a limited time

after the adoption of any rule (H. R. 6324, 76th Cong., 3d sess.,

sec.

3).

In the adjudication of particular cases, the Walter-Logan bill also

provided for administrative hearings of any "controversy" before a

board of any three employees of any agency. Decisions of such

boards were to be made within 30 days and were subject to the ap-

parently summary approval or modification of the head of the agency

or his deputy. But independent commissions (not less than three

members sitting) were required to hold a further hearing after any

hearing by an examiner (sec. 4). A special form of judicial review

was provided for any administrative adjudication (sec. 5). A long

list of exemptions of agencies by name concluded that bill (sec. 7).

The present bill must be distinguished from the Walter-Logan bill

in several essential respects. It differentiates the several types of

rules. It requires no agency hearings in connection with either

regulations or adjudications unless statutes already do so in par-

ticular cases, thereby preserving rights of judicial trials de novo.

Where statutory hearings are otherwise provided, it fills in some of

the essential requirements; and it provides for a special class of

semi-independent subordinate hearing officers. It includes several

types of incidental procedures. It confers numerous procedural

rights.

It limits administrative penalties. It contains more com-

prehensive provisions for judicial review for the redress of any legal

wrong. And, since it is drawn entirely upon a functional basis, it

contains no exemptions of agencies as such.

COMPARISON

WITH ATTORNEY GENERAL'S COMMITTEE REPORT.—

The present bill is more complete than the solution favored by the

majority of the Attorney General's Committee, but less prolix and

more definite than the minority proposed. While it follows generally

the views of good administrative practice as expressed by the whole

of that Committee, it differs in several important

respects.

It provides

that agencies may choose whether their examiners shall make the

initial decision or merely recommend a decision, whereas the At-

torney General's Committee made a decision by examiners manda-

tory. It provides some general limitations upon administrative

powers and sanctions, particularly in the rigorous field of licensing,

while the Attorney General's Committee did not touch upon the sub-

ADMINISTRATIVE PROCEDURE

193

ject. It relies upon independence, salary security, and tenure during

good behavior of examiners within the framework of the civil service,

whereas the Attorney General's Committee favored short-term ap-

pointments approved by a special "Office of Administrative Pro-

cedure."

A more detailed comparison of the present bill, with full references

to the report of the Attorney General's Committee, is to be found in

the third parallel column of the print issued by this committee in

June 1945.

III.

STRUCTURE OF THE BILL

The bill, as reported, is not a specification of the details of admin-

istrative procedure, nor is it a codification of administrative law.

Instead, out of long consideration and in the light of the studies here-

tofore mentioned, there has been framed an outline of minimum basic

essentials. Figure 2 on page 9 diagrams the bill.

The bill is designed to afford parties affected by administrative

powers a means of knowing what their rights are and how they may be

protected. By the same token, administrators are provided with a

simple course to follow in making administrative determinations.

The jurisdiction of the courts is clearly stated. The bill thus pro-

vides for public information, administrative operation, and judicial

review.

SUBSTANCE

OF THE BILL.—What the bill does in substance may be

summarized under four headings:

It provides that agencies must issue as rules certain specified

information as to their organization and procedure, and also

make available other materials of administrative law

(sec.

3).

It states the essentials of the several forms of administrative

proceedings (secs. 4, 5, and 6) and the limitations on ad-

ministrative powers (sec. 9).

It provides in more detail the requirements for administrative

hearings and decisions in cases in which statutes require

such hearings (secs. 7 and 8).

It sets forth a simplified statement of judicial review designed

to afford a remedy for every legal wrong (sec. 10).

The first of these is basic, because it requires agencies to take the

initiative in informing the public. In stating the essentials of the

different forms of administrative proceedings, it carefully distinguishes

between the so-called legislative functions of administrative agencies

(where they issue general regulations) and their judicial functions

(in which they determine rights or liabilities in particular cases).

The bill provides quite different procedures for the "legislative"

and "judicial" functions of administrative agencies. In the "rule

making" (that is, "legislative") function it provides that, with certain

exceptions, agencies must publish notice and at least permit interested

parties to submit their views in writing for agency consideration

before issuing general regulations (sec. 4). No hearings are required

by the bill unless statutes already do so in a particular case. Similarly,

in "adjudications" (that is, the "judicial" function) no agency hear-

ings are required unless statutes already do so, but in the latter case

194 ADMINISTRATIVE PROCEDURE

the mode of hearing and decision is prescribed (sec. 5). Where

existing statutes require that either general regulations (called "rules"

in the bill) or particularized adjudications (called "orders" in the bill)

be made after agency hearing or opportunity for such hearing, then

section 7 spells out the minimum requirements for such hearings,

section 8 states how decisions shall be made thereafter, and section 11

provides for examiners to preside at healings and make or participate

in decisions.

While the administrative power and procedure provisions of sec-

tions 4 through 9 are law apart from court review, the provisions for

judicial review provide parties with a method of enforcing their rights

in a proper case (sec. 10). However, it is expressly provided that the

judicial review provisions are not operative where statutes otherwise

preclude judicial review or where agency action is by law committed

to agency discretion.

KINDS

OF PROVISIONS.—The bill may be said to be composed of

five typos of provisions:

Those which are largely formal such as the sections setting

forth the title (sec. 1), definitions (sec. 2), and rules of con-

struction (sec. 12).

Those which require agencies to publish or make available

information on administrative law and procedure (sec. 3).

Those which provide for different kinds of procedures such as

rule making (sec. 4), adjudications (sec. 5), and miscellane-

ous matters (sec. 6) as well as for limitations upon sanctions

and powers (sec. 9).

Those which provide more of the detail for hearings (sec. 7)

and decisions (sec. 8) as well as for examiners (sec. 11).

Those which provide for judicial review (sec. 10).

The bill is so drafted that its several sections and subordinate pro-

visions are closely knit. The substantive provisions of the bill should

be read apart from the purely formal provisions and minor functional

distinctions. The definitions in section 2 are important, but they do

not indicate the scope of the bill since the subsequent provisions make

many functional distinctions and exceptions. The public informa-

tion provisions of section 3 are of the broadest application because,

while some functions and some operations may not lend themselves

to formal procedure, all administrative operations should as a matter

of policy be disclosed to the public except as secrecy may obviously

be required or only internal agency "housekeeping" arrangements

may be involved. Sections 4 and 5 prescribe the basic requirements

for the making of rules and the adjudication of particular cases. In

each case, where other statutes require opportunity for an agency

hearing, sections 7 and 8 set forth the minimum requirements for

such hearings and the agency decisions thereafter while section 11

provides for the appointment and tenure of examiners who may

participate. Section 6 prescribes the rights of private parties in a

number of miscellaneous respects which may be incidental to rule

making, adjudication, or the exercise of any other agency authority.

Section 9 limits sanctions, and section 10 provides for judicial review.

ADMINISTRATIVE PROCEDURE

195

FIGURE

2.—Diagram of principal sections of bill

Sec.

PUBLIC

INFORMATION

(a) Rules

(b) Opinions

and orders

rec-

ords

Sec.

RULE MAKING

(a) Notice

(b) Procedures

dates

(d) Petitions

Sec.

ADJUDICATION

(a) Notice

(b) Procedure

of func-

tions

(d) Declara-

tory orders

Sec. 8

DECISIONS

Sec.

ANCILLARY

MATTERS

(a) Appear-

ance

(b) Investiga-

tions

(d) Denials

See.

POWERS

AND

SANCTIONS

(a)

general

(b) Licenses

—

grants,

re-

vocations,

renewals

Sec. 7

HEARINGS

(a) Presiding offi-

cers

(b) Hearing powers

(d) Record

(a) Action

by sub-

ordinates

(b) Submittals

and

decisions

Sec.

JUDICIAL REVIEW

(a) Right

review

(b) Form

and

venue

(d)

Interim relief

(e) Scope

review

Sec.

EXAMINERS

Civil-service selec-

tion, compensa-

tion,

and

tenure

Section

prescribes

the

title, section

2 the

definitions,

and

section

3 the

effective dates

and rules

construction.

In the

above diagram,

the

first

row of

sections sets forth

the

several kinds

requirements, procedures, find limitations;

and the

second

row

includes

bearing

and

decision requirements where other statutes require

hearing. Section

10 on

judicial review relates

not

only

decisions made after agency hearing

but, in

appropriate

cases,

to the

exercise

of any

other administrative power

authority.

IV. ANALYSIS

PROVISIONS

The following statements respecting each provision

of the

bill

are

designed

answer specific questions relating

language

and

objec-

tives.

Under each section

subsection heading there appears

italicized synopsis

of the

provision, followed

by one or

more para-

graphs

analysis

special comment.

reading

of all the

italicized

paragraphs will, therefore, afford

synopsis

of the

whole bill, which

reproduced

length

appendix

A at

page

32.

SEC.

1. TITLE.—It is

provided that the measure

may

be cited

as the

Administrative Procedure

Act.

While

short title

has

been deemed preferable,

it may be

noted

that

the

bill actually provides

for

both administrative procedure and

judicial review.

SEC.

DEFINITIONS.—The

definitions apply

the remainder

the

bill.

196 ADMINISTRATIVE PROCEDURE

For the purpose of both simplifying the language of later provisions

and achieving greater precision, general terms of administrative law

and procedure are defined.

(a)

AGENCY.—The

word "agency" is defined by excluding legislative,

judicial, and territorial authorities and by including any

other

"author-

ity" whether or not within or subject to review by another agency. The

bill is not to be construed to repeal

delegations

of authority provided by

law. Expressly exempted from the term "agency",

except

for the public

information

requirements

section

3, are (1)

agencies composed

repre-

sentatives of parties or of organizations of parties and (2) defined war

authorities including civilian authorities functioning under temporary

or named statutes

operative

during "present hostilities."

The word "authority" is advisedly used as meaning whatever

persons are vested with powers to act (rather than the mere form

of agency organization such as department, commission, board, or

bureau) because the real authorities may be some subordinate or

semidependent person or persons within such form of organization.

In conferring administrative powers, statutes customarily do not

refer to formal agencies (such as the Department of Agriculture)

but to specified persons (such as the Secretary of Agriculture).

Boards or commissions usually possess authority which does not

extend to individual members or to their subordinates.

The bill does not repeal delegations of authority which are duly

authorized by existing law. This does not mean, however, that

delegations are effective where other provisions of the bill require

otherwise. For example, the requirement that examiners in certain

instances hear cases would supersede any existing delegations to

prosecuting officers to hear such cases.

Agencies composed of representatives of the parties or of organi-

zations of the parties to the disputes determined by them are exempted

because such agencies as presently operated do not lend themselves

to the adjudicative procedures set out in the remaining sections of the

bill. They tend to be arbitral or mediating agencies rather than

tribunals.

The exclusion of war functions and agencies, whether exercised

by civil or military personnel, affords all necessary freedom of action

for the exercise of such functions in the period of reconversion. It

has been deemed wise to exempt such functions in view of the fact

that they are rarely required to be exercised upon statutory hearing,

with which much of the bill is concerned, and the fact that they are

rapidly liquidating. It should be noted, however, that even war

functions are not exempted from the public information requirement

of section 3. "Present hostilities" means those connected with the

war brought on at Pearl Harbor in December 1941.

(b)

PERSON

AND

PARTY.—"Person''

is defined to include specified

forms of

organizations other

than

agencies.

"Party" is

defined

to include

anyone

named,

or admitted or seeking and entitled to be admitted, as a

party in any agency proceeding except that nothing in the subsection is

to be construed to prevent an agency from admitting anyone as a party

for limited purposes.

The definition of person includes both individuals and any form of

organization but advisedly excludes Federal agencies. The practice

of agencies to admit persons as parties in proceedings "for limited

purposes" is expressly preserved, but that exception does not authorize

ADMINISTRATIVE

PROCEDURE

197

any agency to ignore or prejudice the rights

the true or full parties

any proceeding.

(c)

RULE

AND

RULE

MAKING.—"Rule"

defined

as any

agency

statement

general applicability designed

implement, interpret,

prescribe law, policy, organization, procedure, or practice requirements.

"Rule making" means

agency process

for

the formulation, amendment, or

repeal

of a

rule

and

includes

any

prescription

for the

future

rates,

wages, financial structures,

etc., etc.

The definition

"rule"

important because

prescribes

the

kind

of operation that

subject

section

rather than section

5. The

specification

of the

activities that

are

involved

rule making

included

order

comprehend them beyond

any

possible question.

They

are

defined

rules

to the

extent that, whether

general

particular applicability, they formally prescribe

course

conduct

for

the

future rather than merely pronounce existing rights

or lia-

bilities.

should

noted that rule making

exempted from some

the

general requirements

sections

7 and 8

relating

to the

details

of hearings and decisions.

(d)

ORDER AND

ADJUDICATION.—"Order" means the final disposition

any

matter,

other

than rule making but including licensing, whether or

not affirmative, negative,

declaratory

form. "Adjudication"

means

the

agency process

for

theformulation of an

order.

The term "order"

defined

exclude rules. "Licensing"

specifically included

remove

any

possible question

at the

outset.

Licenses involve

pronouncement

present rights

named parties

although they

may

also prescribe terms

and

conditions

for

future

observance.

should

noted, however, that licensing

exempted

from some

of the

provisions

sections

5, 7, and 8

relating

hearings

and decisions.

(e)

LICENSE

AND LICENSING.—"License"

defined

include

any

form

required official permission such

certificate, charter,

etc.

"Licensing"

defined

include agency process respecting

the

grant,

renewal, modification, denial,

revocation,

etc.,

license.

This definition supplements subsection

(d).

Later provisions

of the

bill distinguish between initial licenses

and

renewals

other licensing

proceedings.

further distinction might have been drawn between

licenses

for a

term, such

radio licenses,

and

those

indefinite

duration, such

certificates

convenience

and

necessity.

(f)

SANCTION

AND

RELIEF.—"Sanction"

defined

include

any

agency prohibition, withholding

relief,

penalty, seizure, assessment,

requirement, restriction, etc.

"Relief" is

defined

include

any

agency

grant,

recognition,

other beneficial

action.

These definitions

are

mainly relevant

section

9 on

sanctions

and

powers

and to

section

10 on

judicial review.

The

purpose

of the

subsection

is to

define exhaustively every possible form

legitimate

administrative power

authority.

(g)

AGENCY PROCEEDING

AND

ACTION.—"Agency proceeding"

defined

mean

any

agency process defined

the foregoing subsections

(c),

(d),

or (e). For

the

purpose of

section

judicial

review,

"agency

action"

defined

include

agency rule, order, license, sanction,

relief,

the equivalent

denial

thereof,

and failure

to act.

The term "agency proceeding"

specially defined

order

simplify

the

language

subsequent provisions

and to

assure that

all

forms

administrative procedure

authority

are

included.

The

198

ADMINISTRATIVE PROCEDURE

term "agency action" brings together previously defined terms

order

simplify

the

language

of the

judicial review provisions

section 10

and to

assure

the

complete coverage

every form

agency

power, proceeding, action,

inaction.

SEC.

PUBLIC

INFORMATION.—From

the

public information

pro-

visions

section

there

are exempted

matters

(1)

requiring

secrecy

in the

public interest

or (2)

relating solely

to the

internal management

of an

agency.

The public information requirements

section

3 are in

many ways

among

the

most important, far-reaching,

and

useful provisions

of the

bill.

For the

information

and

protection

of the

public wherever

lo-

cated, these provisions require agencies

take

the

mystery

out of

administrative procedure

stating

it. The

section

has

been drawn

upon

the

theory that administrative operations

and

procedures

are

public property which

the

general public, rather than

a few

specialists

or lobbyists,

entitled

know

or to

have

the

ready means

knowing

with definiteness

and

assurance.

The introductory clause states

the

only general exceptions.

The

first, which excepts matters requiring secrecy

in the

public interest,

necessary

but

not

be construed

defeat the purpose

the remain-

ing provisions.

would include confidential operations

any agency,

such

some

of the

aspects

of the

investigating

prosecuting func-

tions

of the

Secret Service

Federal Bureau

Investigation,

but no

other functions

operations

those

other agencies. Closely

re-

lated

is the

second exception,

matters relating solely

internal

agency management, which

may not be

construed

defeat other

provisions

of the

bill

or to

permit withholding

information

as to

operations which remaining provisions

of the

section

or of the

whole

bill require

to be

public

publicly available.

(a)

RULES.—Every

agency

required

publish

the

Federal Register

its

(1)

organization,

(2)

places

doing business with

the

public,

(3)

methods

rule making

and

adjudication including

the

rules

practice

relating

thereto,

and (4)

such substantive rules

as it

may frame

for the

guidance

the public.

person

is in any

manner

to be

required

resort

organization or

procedure

not

so published.

Since

the

bill leaves wide latitude

for

each agency

frame

its own

procedures, this subsection requiring agencies

state their organi-

zation

and

procedures

in the

form

rules

essential

for the

informa-

tion

of the

public.

The

publication must

kept

up to

date.

The

enumerated classes

informational rules must also

separately

stated

that,

for

example, rules

procedure will

separate from

rules

substance, interpretation,

policy.

The

effect

of any

one of

the first three classifications

required rule making

that agencies

must also publish their internal delegations

authority.

The sub-

section forbids secrecy

rules binding

applicable

to the

public,

of delegations

authority.

The

requirement that

no one

shall

"in

any manner"

required

resort

unpublished organization

procedure protects

the

public from being required

pursue remedies

that

are not

generally known.

(b)

OPINIONS

AND ORDERS.—Agencies are

required

publish

or,

pursuant to rule, make

available

to public inspection

all

final opinions

orders

the adjudication

cases except those

held confidential for

good

cause

and

not cited as precedents.

ADMINISTRATIVE PROCEDURE 199

Rule making results in published material in the Federal Register

as set forth in subsection (a), but in the case of adjudication there is

no standard, general, and official medium of publication. Some

agencies publish sets of some of their decisions, but otherwise the

public is not informed as to how and where they may see decisions

or consult precedents. Requiring each agency to formulate and

publish a rule respecting access to their final opinions and orders will

give the general public notice as to how such information may be

secured. While the subsection does not mention "rulings"—which

are neither rules nor orders but are general interpretations, such as

the opinions of agency counsel—if authoritative, they would be

covered by the fourth category in subsection (a) of this section.

(c)

PUBLIC

RECORDS.—Except as statutes may require otherwise or

information may be held

confidential

for good cause, matters of

official

record

are to

made

available

to persons properly and directly

concerned

accordance

with rules to

issued by the agency.

This provision supplements subsections (a) and (b). The require-

ment of an agency rule on the availability of official records is inserted

for the same purpose as in subsection (b). In many cases, the interest

of the person seeking access to the record will be determinative.

Agencies should classify data in order to specify what may be disclosed

and what may not; and they must in any case provide how and where

applications for information may be made, how they will be deter-

mined, and who will do so. Refusals of information would be subject

to the requirements of section 6 (d).

SEC.

RULE

MAKING.—

The

introductory

clause exempts

from all

the requirements of

section

4 any rule making

far as

there

are

involved

(1) military, naval,

foreign affairs functions or (2) matters relating

to agency management or personnel or to public property, loans, grants,

benefits, or

contracts.

These exceptions would not, of course, relieve any agency from

requirements imposed by other statutes. The phrase "foreign affairs

functions," used here and in some other provisions of the bill, is not

to be loosely interpreted to mean any function extending beyond the

borders of the United States but only those "affairs" which so affect

relations with other governments that, for example, public rule

malting provisions would clearly provoke definitely undesirable inter-

national consequences. The exception of matters of management or

personnel would operate only so far as not inconsistent with other

provisions of the bill relating to internal management or personnel.

The exception of proprietary matters is included because the prin-

cipal considerations in most such cases relate to mechanics and inter-

pretations or policy, and it is deemed wise to encourage and facilitate

the issuance of rules by dispensing with all mandatory procedural

requirements. None of these exceptions, however, is to be taken as

encouraging agencies not to adopt voluntary public rule making pro-

cedures where useful to the agency or beneficial to the public. The

exceptions merely confer a complete discretion upon agencies to decide

what, if any, public rule making procedures they will adopt in a given

situation within their terms. It should be noted, moreover, that the

exceptions apply only "to the extent" that the excepted subjects are

directly involved.

(a)

NOTICE.—General

notice of proposed rule making must be pub-

lished in the Federal Register and must include (1) time, place, and

200

ADMINISTRATIVE PROCEDURE

nature of

proceedings,

(2) reference to authority under which

held,

and

(3) terms, substance, or issues involved. However, except where notice

and hearing is required by some other statute, the subsection does not

apply to rules other than those of

substance

where

the

agency

for

good

cause finds (and incorporates the finding and reasons therefor in the

published rule) that notice and public procedure are impracticable,

unnecessary, or contrary to the public interest.

Agency notice must be sufficient to fairly apprise interested parties

of the issues involved, so that they may present responsive data or

argument relating thereto. The subsection governs the application

of the public procedures required by the next subsection, since those

procedures only apply where notice is required by this subsection.

Agencies are given discretion to dispense with notice (and conse-

quently with public proceedings) in the case of interpretative rules,

general statements of policy, or rules of agency organization, pro-

cedure, or practice. This does not mean, however, that agencies

should not—where useful to them or helpful to the public—undertake

public procedures in connection with such rule making. The exemp-

tion of situations of emergency or necessity is not an "escape clause"

in the sense that any agency has discretion to disregard its terms or

the facts. A true and supported or supportable finding of necessity

or emergency must be made and published. "Impracticable" means

a situation in which the due and required execution of the agency

functions would be unavoidably prevented by its undertaking public

rule-making proceedings. "Unnecessary" means unnecessary so far

as the public is concerned, as would be the case if a minor or merely

technical amendment in which the public is not particularly interested

were involved. "Public interest" supplements the terms "imprac-

ticable" or "unnecessary"; it requires that public rule-making pro-

cedures shall not prevent an agency from operating and that, on the

other hand, lack of public interest in rule making warrants an agency

to dispense with public procedure. It should be noted that where

authority beneficial to the public does not become operative until a

rule is issued, the agency may promulgate the necessary rule immedi-

ately and rely upon supplemental procedures in the nature of a public

reconsideration of the issued rule to satisfy the requirements of this

section. Where public rule-making procedures are dispensed with,

the provisions of subsections (c) and (d) of this section would never-

theless apply.

(b)

PROCEDURES.—After

such notice, the agency must afford

interested

persons an opportunity to participate in the rule making at least to the

extent of submitting written data, views, or argument; and, after consider-

ation of such presentations, the agency must incorporate in any rules

adopted

concise general

statement of

their

basis and purpose. However,

where other statutes require rules to be made after hearing, the require-

ments of sections 7 and 8 (relating to public hearings and decisions

thereon)

apply in place of

the

provisions of this subsection.

This subsection states, in its first sentence, the minimum require-

ments of public rule making procedure short of statutory hearing.

Under it agencies might in addition confer with industry advisory

committees, consult organizations, hold informal "hearings," and the

like.

Considerations of practicality, necessity, and public interest as

discussed in connection with subsection (a) will naturally govern the

agency's determination of the extent to which public proceedings

ADMINISTRATIVE PROCEDURE 20 1

should go. Matters of great import, or those where the public sub-

mission of facts will be either useful to the agency or a protection to

the public, should naturally be accorded more elaborate public pro-

cedures. The agency must analyze and consider all relevant matter

presented. The required statement of the basis and purpose of rules

issued should not only relate to the data so presented but with reason-

able fullness explain the actual basis and objectives of the rule.

(c)

EFFECTIVE

DATES.—The required publication or service of any

substantive rule must be made not less than 30 days prior to its

effective

date except (1) as

otherwise

provided by the

agency

for

good

cause found

and published

(2) in the

case

of rules

recognizing

exemption

relieving

restriction, interpretative rules, and statements of policy.

This subsection does not provide procedures alternative to notice

and other public proceedings required by the prior subsections of this

section. Nor does it supersede the provisions of subsection (d) of this

section. Where public procedures are omitted as authorized in cer-

tain cases, subsection (c) does not thereby become inoperative. It

will afford persons affected a reasonable time to prepare for the effective

date of a rule or rules or to take any other action which the issuance of

rules may prompt. While certain named kinds of rules are not neces-

sarily subject to the deferred effective date provided, it does not

thereby follow that agencies are required to make such excepted types

of rules operative with less notice or no notice but, instead, agencies

are given discretion in those cases to fix such future effective date as

they may find advisable. The other exception, upon good cause found

and published, is not an "escape clause" which may be arbitrarily

exercised but requires legitimate grounds supported in law and fact by

the required finding. Moreover, the specification of a 30-day deferred

effective date is not to be taken as a maximum, since there may be

cases in which good administration or the convenience and necessity

of the persons subject to the rule reasonably requires a longer period.

(d)

PETITIONS.—Every

agency is required to accord any interested

person

the

right

petitionfor

the

issuance, amendment,

repeal

rule.

This subsection applies not merely to effective rules existing at any

time but to proposed or tentative rules. Where the latter are pub-

lished, agencies should receive petitions for modification because that

is one of the purposes of publishing proposed or tentative rules.

Where such petitions are made, the agency must fully and promptly

consider them, take such action as may be required, and pursuant to

section 6 (d) notify the petitioner in case the request is denied. The

agency may either grant the petition, undertake public rule making

proceedings as provided by subsections (a) and (b) of this section, or

deny the petition. The taking or denial of action would have the

same effect and consequences as the taking or denial of action where,

under presently existing legislation, the equivalent of a right of

petition is recognized in interested persons. The mere filing of a

petition does not require an agency to grant it, or to hold a hearing,

or engage in any other public rule making proceedings. The refusal

of an agency to grant the petition or to hold rule making proceedings,

therefore, would not per se be subject to judicial reversal. However,

the facts or considerations brought to the attention of an agency by

such a petition might be such as to require the agency to act to

prevent the rule from continuing or becoming vulnerable upon

20 2

ADMINISTRATIVE PROCEDURE

judicial review, through declaratory judgment or other procedures

pursuant to section 10.

SEC.

ADJUDICATIONS.—The

various subsequent provisions of sec-

tion 5 relating to adjudications apply only where the case is otherwise

required by statute to be determined upon an agency hearing except that,

even in that case, the following classes of operations are expressly not

affected: (1) Cases subject to trial de novo in court, (2)

selection

or tenure

of public

officers

other than examiners, (3) decisions resting on inspec-

tions, tests, or

elections,

(4) military, naval, and foreign affairs functions

(5)

cases

in which an

agency

is acting for a court,

and

(6)

the

certification

employee

representatives.

The general limitation of this section to cases in which other statutes

require the agency to act upon or after a hearing is important. All

cases are nevertheless subject to sections 2, 3, 6, 9, 10, and 12 so far as

those are otherwise relevant.

The numbered exceptions remove from the operation of the

section even adjudications otherwise required by statute to be made

after hearing. The first, where the adjudication is subject to a judicial

trial de novo, is included because whatever judgment the agency makes

is effective only in a prima facie sense at most and the party aggrieved

is entitled to complete judicial retrial and decision. The second,

respecting the selection and tenure of officers other than examiners, is

included because the selection and control of public personnel has been

traditionally regarded as a discretionary function which, if to be over-

turned, should be done by separate legislation. The third exempts

proceedings resting on inspections, tests, or elections because those

methods of determination do not lend themselves to the hearing

process. The fourth exempts military, naval, and foreign affairs func-

tions for the same reasons that they are exempted from section 4; and,

in any event, rarely if ever do statutes require such functions to be

exercised upon hearing. The fifth, exempting cases in which an agency

is acting as the agent for a court, is included because the administrative

operation is subject to judicial revision in toto. The sixth, exempting

the certification of employee representatives such as the Labor Board

operations under section 9 (c) of the National Labor Relations Act,

is included because these determinations rest so largely upon an election

or the availability of an election. It should be noted that these excep-

tions apply only "to the extent" that the excepted subject is involved

and, it may be added, only to the extent that such subjects are directly

involved.

(a)

NOTICE.—Persons

entitled to notice of an agency hearing are to

be duly and timely informed of (1) the time, place, and nature of the

hearing, (2) the legal authority and jurisdiction under which it is to be

held,

and (3) the matters of fact and law

asserted.

Where private per-

sons are the, moving parties, respondents must give prompt notice of

issues

controverted

in law or fact; and in other cases the agency may

require,

responsive

pleading. In fixing the times and places for hearings

the agency must give due regard to the convenience and necessity of

the parties.

The specification of the content of notice, so far as legal authority

and the issues are concerned, does not mean that prior to the com-

mencement of the proceedings an agency must anticipate all develop-

ments and all possible issues. But it does mean that, either by the

formal notice or otherwise in the record, it must appear that the party

ADMINISTRATIVE PROCEDURE 203

affected has had ample notice of the legal and factual issues with due

time to examine, consider, and prepare for them. The second

sentence of the subsection applies in those cases where the agency

does not control the matter of notice because private persons are the

moving parties; and in such cases the respondent parties must give

notice of the issues of law or fact which they controvert so that the

moving party will be apprised of the issues he must sustain. The

purpose of the provision is to simplify the issues for the benefit of

both the parties and the deciding authority. The last sentence,

requiring the convenience and necessity of the parties to be consulted

in fixing the times and places for hearings, includes an agency party

as well as a private party; but the agency's convenience is not to out-

weigh that of the private parties and, while the due and required

execution of agency functions may be said to be paramount, that con-

sideration would be controlling only where a lack of time has been

unavoidable or a particular place of hearing is indispensable and does

not deprive the private parties of their full opportunity for a hearing.

(6)

PROCEDURE.—The

agency is required first to afford parties an

opportunity for the settlement or adjustment of issues (where time, the

nature of

the,

proceeding, and the public interest permit) followed, to the

extent that issues are not so

settled,

by hearing and decision under sections

7 and 8.

The preliminary settlement-by-consent provision of this subsection

is of the greatest importance. Such adjustments may go to the

whole or any part of any case. The limitation of the requirement to

cases in which "time, the nature of the proceeding, and the public

interest permit" does not mean that formal proceedings, to the

exclusion of prior opportunity for informal settlement, lie in the

discretion of any agency irrespective of the facts, legal situation

presented, or practical aspects of the case. It does not mean that

agencies have an arbitrary choice, or that they may consult their

mere preference or convenience. It is intended to exempt only

situations in which, for example, (1) time is unavoidably lacking, (2)

the nature of the proceeding is such that for example (as in some forms

of rule making) the great number of parties or possible parties makes

it unlikely that any adjustment could be reached, and (3) the ad-

ministrative function requires immediate ex petition in order to protect

the tangible and demonstrable requirements of public interest.

(c)

SEPARATION

OF FUNCTIONS.—Officers who preside at the taking

of evidence must make the decision or recommended decision in the case.

They may not consult with any person or party except openly and upon

notice, save in the disposition of customary ex parte matters, and they

may not be made subject to the supervision of prosecuting officers. The

latter may not participate, in the decisions except as witness or counsel in

public proceedings. However, the subsection is not to apply in deter-

mining applications for initial licenses or the past reasonableness of

rates; nor does it apply to the top agency or members

thereof.

The gist of the subsection is that no investigating or prosecuting

officer shall directly or indirectly in any manner influence or control

the operations of hearing and deciding officers, except as a participant

in public proceedings, and even then in no different fashion than the

private parties or their representatives. "Ex parte matters author-

ized by law" means passing on requests for adjournments, continu-

ances,

filing of papers, and so forth. The exemption of applications

90600—46

20 4 ADMINISTRATIVE PROCEDURE

for initial licenses frees from the requirements of the subsection such

matters as the granting of certificates of convenience and necessity

which are of indefinite duration, upon the theory that in most

licensing cases the original application may be much like rule making.

The latter, of course, is not subject to any provision of section 5. The

exemption of cases involving "the past reasonableness of rates" (if

triable de novo on judicial review they would be exempted in any

event) is made for the same reason. There are, however, some

instances of either kind of case which tend to be accusatory in form

and involve sharply controverted factual issues. Agencies should

not apply the exceptions to such eases, because they are not to be

interpreted as precluding fair procedure where it is required.

A further word may be said as to the last exemption—of the agency

itself or the members of the board who comprise it. Such a provision

is required by the very nature of administrative agencies, where the

same authority is responsible for both the investigation-prosecution

and the hearing and decision of cases. There, too, the exemption is

not to be taken as meaning that the top authority must reserve to

itself both prosecuting and deciding functions. To be sure it is

ultimately responsible for all functions committed to it, but it may

and should confine itself to determining policy and should delegate

the actual supervision of investigations and initiation of cases to

responsible subordinate officers.

(d)

DECLARATORY

ORDERS.—Every

agency

is authorized in its sound

discretion to issue

declaratory

orders with the same effect as other orders.

This subsection does not mean that any agency empowered to issue

orders may issue declaratory orders, because it is limited by the intro-

ductory clauses of section 5. Thus, such orders may be issued only

where the agency is empowered by statute to hold hearings and the

subject is not expressly exempted by the introductory clauses of this

section.

Agencies are not required to issue declaratory orders merely because

request is made therefor. Such applications have no greater effect

than they now have under existing comparable legislation. "Sound

discretion," moreover, would preclude the issuance of improvident

orders. The administrative issuance of declaratory orders would be

governed by the same basic principles that govern declaratory judg-

ments in the courts.

SEC.

ANCILLARY

MATTERS.—The provisions of

section

relating

incidental or

miscellaneous

rights, powers, and

procedures

not

override

contrary provisions in

other

parts of

the

bill.

The purpose of this introductory exception, which reads "except as

otherwise provided in this act," is to limit, for example, the right of

appearance provided in subsection (a) so as not to authorize improper

ex parte conferences during formal hearings and pending formal deci-

sions under sections 7 and 8.

(a)

APPEARANCE.—Any

person compelled to appear in person

before

any agency or its representative is entitled to counsel. In other cases,

every

party may appear in person or by

counsel.

Sofar as

the

responsible

conduct of public business permits, any interested person may appear

before

any

agency

its

responsible officers

at any time for

the

presentation

or adjustment of any matter. Agencies are to proceed with

reasonable

dispatch to conclude any matter so presented, with due

regard

for the

convenience

and necessity of

the

parties. Nothing in the

subsection

is to

ADMINISTRATIVE PROCEDURE

205

taken as

recognizing

denying

the

propriety of

nonlawyers representing

parties.

This subsection is designed to confirm and make effective the right

of interested persons to appear themselves or through or with counsel

before any agency. The word "party" in the second sentence is to be

understood as meaning any person showing the requisite interest in

the matter, since the subsection applies in connection with the exercise

of any agency authority whether or not formal proceedings are avail-

able.

The phrase ''responsible officers", as used here and in some other

provisions, both includes all officers or employees who really determine

matters or exercise substantial advisory functions and excludes those

whose duties are merely formal or mechanical. The third sentence

does not require agencies to give notice to all who may be affected,

but merely to receive the presentations of those who seek to make

them. The qualifying words in the third sentence—which read

"so far as the responsible conduct of public business permits"—

preclude the undue harassment of agencies by numerous petty appear-

ances by or for the same party in the same case; but they do not confer

upon agencies a discretion to emasculate the subsection or preclude

interested persons from presenting fully and before any responsible

officer or employee their cases or proposals in full. The reference to

"stop-order or other summary actions" emphasizes the necessity for

an opportunity for full informal appearance where normal and formal

hearing and decision requirements are not applicable or are inadequate.

The requirement that agencies proceed "with reasonable dispatch to

conclude any matter presented" is a statement of legal requirement

that no agency shall in effect deny relief or fail to conclude a case by

mere inaction.

The final sentence provides that the subsection shall not be taken

to recognize or deny the right of nonlawyers to be admitted to prac-

tice before any agency, such as the practitioners before the Interstate

Commerce Commission. The use of the word "counsel" means

lawyers. While the subsection does not deal with the matter ex-

pressly, the committee does not believe that agencies are justified in

laying burdensome admission requirements upon members of the bar

in good standing before the courts. The right of agencies to pass

upon the qualifications of nonlawyers, however, is expressly recog-

nized and preserved in the subsection.

(6)

INVESTIGATIONS.—Investigative

process is not to be issued or

enforced

except

as authorized by law. Persons

compelled

to submit data

or evidence are entitled to retain or, on payment of costs, to procure

copies

except

that in nonpublic

proceedings

a witness may for

good

cause

be limited to inspection of the official transcript.

This section is designed to preclude "fishing expeditions" and

investigations beyond the jurisdiction or authority of an agency.

It applies to any demand, whether or not a formal subpena is actually

issued. "Nonpublic investigatory proceeding" means those of the

grand jury kind in which evidence is taken behind closed doors.

The limitation, for good cause, to inspection of the official transcript

is deemed necessary where evidence is taken in a case in which prose-

cutions may be brought later and it is obviously detrimental to the

due execution of the laws to permit copies to be circulated. In those

cases the witness or his counsel may be limited to inspection of the

relevant portions of the transcript. Parties should in any case have

20 6

ADMINISTRATIVE PROCEDURE

copies or an opportunity for inspection in order to assure that their

evidence is correctly set forth, to refresh their memories in the case

of stale proceedings, and to enable them to be advised by counsel.

They should also have such copies whenever needed in legal or ad-

ministrative proceedings.

(c)

SUBPENAS.—Where

agencies are by law authorized to issue sub-

penas, parties may secure them upon request and upon a statement or

showing of

general relevance

and

reasonable

scope if the agency rules so

require. Where a party contests a subpena, the court is to inquire into

the situation and,

far as the subpena is found in

accordance

with law,

issue an order requiring the production of the

evidence

under penalty of

contempt for failure then to do so.

This provision will assure private parties the same access to sub-

penas as that available to the representatives of agencies. It will

also prevent the issuance of improvident subpenas or action by an

agency requiring a detailed, unnecessary, and burdensome showing of

evidence which might fall into the hands of the party's adversaries or

investigators and prosecutors (who in any event should not have

access to such papers directly or indirectly). The subsection con-

stitutes a statutory limitation upon the issuance or enforcement of

subpenas in excess of agency authority or jurisdiction. This does

not mean, however, that courts should enter into a detailed examina-

tion of facts and issues which are committed to agency authority in

the first instance, but should, instead, inquire generally into the legal

and factual situation and be satisfied that the agency could possibly

find that it has jurisdiction. The subsection expressly recognizes the

right of parties subject to administrative subpenas to contest their

validity in the courts prior to subjection to any form of penalty for

noncompliance.

(d)

DENIALS.—Prompt

notice is to be given of denials of

requests

any agency

proceeding,

accompanied by a simple statement of grounds.

This subsection affords the parties in any agency proceeding, whether

or not formal or upon hearing, the right to prompt action upon their

requests, immediate notice of such action, and a statement of the

actual grounds therefor. The latter should in any case be sufficient

to apprise the party of the basis of the denial and any other or further

administrative remedies or recourse he may have. A statement of

the actual grounds need not be made "in affirming a prior denial or

where the denial is self-explanatory." However, prior denial would

satisfy the subsection requirement only where the grounds previously

stated remain the actual grounds and sufficiently notify the party as

set forth above. A self-explanatory denial must meet the same test;

that is, the request must be in such form that its mere denial fully

informs the party of all he would otherwise be entitled to have

stated.

SEC.

HEARINGS.—Section

7 relating to agency hearings applies

only

where

hearings are required by sections 4 or 5.

As heretofore stated in connection with sections 4 and 5, the bill

requires no hearings unless other statutes contain such a requirement

in particular cases of either rule making or adjudication. This

section 7, therefore, is merely supplementary to sections 4 or 5 in

the relevant cases.

(a)

PRESIDING OFFICERS.— The

hearing must be held either by the

agency, a member or members of the board which comprises it, one or

ADMINISTRATIVE PROCEDURE 20 7

more examiners, or other

officers

specially provided for in or designated

by other statutes. All presiding and deciding officers are to operate

impartially. They may at any time withdraw if they deem themselves

disqualified and, upon the filing of a proper affidavit of personal bias or

disqualification against them, the agency is required to determine the

matter as a part of

the

record

and decision in the case.

This subsection provides two mutually exclusive methods of hear-

ing—by the agency itself (or one or more of its members) or by sub-

ordinate officers. A third kind of hearing officer recognized in this

subsection is one specially provided for or named in other statutes.

Whoever presides is subject to the remaining provisions of the bill.

They must conduct the hearing in a strictly impartial manner, rather

than as the representative of an investigative or prosecuting authority,

but this does not mean that they do not have the authority and duty—

as a court does—to make sure that all necessary evidence is adduced

and to keep the hearing orderly and efficient. The provision for affi-

davits of bias or personal disqualification requires a decision thereon

by the agency in, and as a part of, the case; it thereby becomes sub-

ject to administrative and judicial review. That decision might be

made upon the affidavit alone, as for example, the protest might be

dismissed as insufficient on its face. The agency itself may hear any

relevant argument or facts, or it may designate an examiner to do so.

The effect which bias or disqualification shown upon the record might

have would be determined by the ordinary rules of law and the other

provisions of this bill. If it appeared or were discovered late, it would

have the effect—where issues of fact or discretion were important and

the conduct and demeanor of witnesses relevant in determining them—

of rendering the recommended decisions or initial decisions of such

officers invalid. This consequence will require agencies and examiners

themselves to take care that they do not sit where subject to dis-

qualification or conduct themselves in a manner which will invalidate

the proceedings.

(6)

HEARING

POWERS.—Presiding

officers, subject to the rules of

procedure adopted by the agency and within its powers, have authority

to (1) administer oaths, (2) issue suck subpenas as are authorized by

law, (3)

receive evidence

and rule upon

offers

proof,

(4) take depositions

of cause depositions to be taken, (6) regulate the hearing, (6) hold con-

ferences

for the settlement or simplification of the issues, (7) dispose of

procedural

requests,

(8) make decisions or

recommended

decisions under

section 8 of

the

bill, and (9)

exercise other

authority as

provided

by agency

rule consistent with the remainder of

the

bill.

This subsection does not expand the powers of agencies. It is

designed to assure that the presiding officer will perform a real func-

tion rather than serve merely as a notary or policeman. He would

have and should independently exercise all the powers numbered in

the subsection. The agency itself—which must ultimately either

decide the case, or consider reviewing it, or hear appeals from the

examiner's decision—should not in effect conduct hearings from behind

the scenes where it cannot know the detailed happenings in the hearing

room and does not hear or see the private parties.

(c)

EVIDENCE.—Except

as statutes otherwise provide, the proponent

of a rule or order has the burden of

proof.

While any

evidence,

may be

received, as a matter of policy agencies are required to provide for the

exclusion of irrelevant and unduly repetitious

evidence

and no sanction

208

ADMINISTRATIVE PROCEDURE

may

imposed or rule or order

issued

except

as supported by

relevant,

reliable, and probative evidence. Any party may present his case or

defense by oral or documentary evidence, submit rebuttal

evidence,

and

conduct reasonable cross-examination. However, in the case of rule

making or determining applications for initial licenses, the agency may

adopt

procedures

for the submission of

evidence

in written form

far as

the interest of any party will not be prejudiced thereby.

That the proponent of a rule or order has the burden of proof means

not only that the party initiating the proceeding has the general

burden of coming forward with a prima facie case but that other

parties, who are proponents of some different result, also for that

purpose have a burden to maintain. Similarly the requirement that

no sanction be imposed or rule or order be issued except upon evidence

of the kind specified means that the proponents of a denial of relief

must sustain such denial by that kind of evidence. For example,

credible and credited evidence submitted by the applicant for a

license may not be ignored except upon the requisite kind and quality

of contrary evidence. No agency is authorized to stand mute and

arbitrarily disbelieve credible evidence. Except as applicants for a

license or other privilege may be required to come forward with a

prima facie showing, no agency is entitled to presume that the conduct

of any person or status of any enterprise is unlawful or improper.

The second and primary sentence of the subsection is framed on the

theory that an administrative hearing is to be compared with an

equity proceeding in the courts. The mere admission of evidence is

not to be taken as prejudicial error (there being no lay jury to be

protected from improper influence) although irrelevant and unduly

repetitious evidence is to be excluded as a matter of efficiency and

good practice; and no finding or conclusion may be entered except

upon evidence which is plainly of the requisite materiality and

competence; that is, "relevant, reliable, and probative evidence."

Thus while the exclusionary "rules of evidence" do not apply except

as the agency may as a matter of good practice simplify the hearing

and record by excluding obviously improper or unnecessary evidence,

the standards and principles of probity and reliability of evidence

must be the same as those prevailing in courts of law or equity in

nonadministrative cases. There are no real rules of probity and

reliability even in courts of law, but there are certain standards and

principles—usually applied tacitly and resting mainly upon common

sense—which people engaged in the conduct of responsible affairs

instinctively understand and act upon. They may vary with the

circumstances and kind of case, but they exist and must be rationally

applied. These principles, under this subsection, are to govern in

administrative proceedings.

The right of cross-examination extends, in a proper case, to written

evidence submitted pursuant to the last sentence of the subsection as

well as to cases in which oral or documentary evidence is received in

open hearing. Even in the latter case, subject to the appropriate

safeguards, technical data may as a matter of convenience be reduced

to writing and introduced as in courts. The written evidence pro-

vision of the last sentence of the subsection is designed to cover situa-

tions in which, as a matter of general rule or practice, the submission

of the whole or substantial portions of the evidence in a case is done

in written form. In those situations, however, the provision limits

ADMINISTRATIVE PROCEDURE 20 9

the practice to specified classes of cases and, even then, only where

and to the extent that "the interest of any party will not be prejudiced

thereby." To the extent that cross-examination, is necessary to

bring out the truth, the party should have it. Also, an adequate

opportunity must be provided for a party to prepare and submit

appropriate rebuttal evidence.

(d)

RECORD.—The

record

evidence

taken and papers filed is exclu-

sive

for decision and, upon payment of

costs,

available

to the parties.

Where decision rests on

official

notice of a material fact not appearing in

the

evidence

record,

any party may on timely

requestshow

the

contrary.

The "official notice" mentioned relates to the administrative

practice of taking facts as shown and true though not in the record.

This is done by analogy to judicial notice familiar in court procedure.

Where agencies take such notice they must so state on the record or

in their decisions and then afford the parties an opportunity to show

the contrary.

SEC.

DECISIONS.—Section

8 applies to

cases

in which a hearing is

required to be

conducted

pursuant to section 7.

Like section 7, upon which section 8 depends, this section is sup-

plementary to sections 4 and 5 in cases in which agency action is

required to be taken after hearing provided by statute and not

otherwise excepted from the operation of sections 4 or 5.

(a)

ACTION

BY SUBORDINATES.—Where the agency has not presided

at the reception of the

evidence,

the presiding

officer

(or any other

officer

qualified to preside, in cases

exempted

from subsec. (c) of

sec.

5) must

make the initial decision unless the agency—by general rule or in a

particular case—undertakes to make the initial decision. If the pre-

siding officer makes the initial decision, it

becomes

the decision of the

agency in the

absence

of an appeal to the agency or review by the agency

on its own motion. On such appeal or review, the agency has all the

powers it would have had in making the initial decision. If

the

agency

makes the initial decision without having presided at the taking of the

evidence,

whatever officer

took the

evidence

must first make a

recommended

decision except that, in rule making or determining applications for

initial licenses, (1) the agency may instead issue a tentative decision or

any of its responsible

officers

may recommend a decision or (2) such

intermediate procedure may be wholly omitted in any case in which

the

agency finds on the

record

that the execution of its functions imperatively

and unavoidably so requires.

This subsection requires in effect that the officer who presided shall

make the initial decision in the case, or the agency may do so, but in

the latter event the officer who presided must make a recommended

decision. However, the recommended derision may be supplied by

a tentative agency decision or a proposed decision by its responsible

officers in certain cases or, where the due and timely execution of

agency functions will not permit such intermediate action, it may be

omitted entirely. The parties might agree to waive such intermediate

procedure in any case. The reference to an appeal or review by the

agency does not cut off any further appeals to or review by any exist-

ing superior agency authorized to hear appeals or review decisions of

the first agency. The agency for which the examiner or other pre-

siding officer functions may not dispense with the recommended de-

cision except as provided by the subsection.

21 0

ADMINISTRATIVE

PROCEDURE

The provision that on agency review of initial examiners' decisions

the agency shall have all the powers it would have had in making the

initial decision does not mean that the initial examiners' decisions (or

their recommended decisions) are without effect. They become a

part of the record in the case. They would be of consequence, for

example, to the extent that material facts in any case depend on the

determination of credibility of witnesses as shown by their demeanor

or conduct at the hearing. Since the examiner system is made neces-

sary because agencies themselves cannot hear cases, some device must

be used to bridge the gap between the officials who hear and those who

decide cases.

The alternative intermediate procedure which an agency may adopt

in rule making or determining applications for initial licenses lies in the

discretion of the agency. In order to simplify the bill, the exception

which confers this discretion is broadly drawn. However, it may be

noted that even in those cases, if issues of fact are sharply controverted

or the case or class of cases tends to become accusatory in nature, sound

practice would require the agency to adopt the intermediate recom-

mended decision procedure

(b)

SUBMITTALS

AND

DECISIONS.—Prior

to each recommended or other

decision or review the parties must be given an opportunity to submit for

the full consideration of deciding officers (1) proposed findings and con-

clusions or (2) exceptions to recommended decisions or other decisions

being appealed or reviewed, and (3) supporting reasons for such findings,

conclusions, or exceptions. All recommended or other decisions become a

part of the record and must include (1) findings and conclusions, as well

as the basis therefor, upon all the material issues offact, law, or discretion

presented by the record and (2) the appropriate agency action or denial.

Ordinarily proposed findings and conclusions are submitted only to

the officers making the initial decision, and the parties present excep-

tions thereafter if they contest the result. However, such exceptions

may in form or effect include proposed findings or conclusions for the

reviewing authority to consider as a part of the exceptions. "Sup-

porting reasons" means that briefs on the law and facts must be re-

ceived and fully considered by every recommending, deciding, or

reviewing officer. They must also hear such oral argument as may be

required by law. Where the issues of fact are serious and the case

becomes one adversary in character, the agency should provide for oral

argument before all recommending, deciding, or reviewing officers at

least as a matter of good practice.

The requirement that the agency must state the basis for its findings

and conclusions means that such findings and conclusions must be

sufficiently related to the record as to advise the parties of their

record basis. Most agencies will do so by opinions which reason and

relate the issues of fact, law, and discretion. Statements of reasons,

however, may be long or short as the nature of the case and the novelty

or complexity of the issues may require.

Findings and conclusions must include all the relevant issues pre-

sented by the record in the light of the law involved. They may be

few or many. A particular conclusion of law may render certain

issues and findings immaterial, or vice versa. Where oral testimony

is conflicting or subject to doubt of its credibility, the credibility of

witnesses would be a necessary finding if the facts are material. It

should also be noted that the relevant issues extend to matters of

ADMINISTRATIVE PROCEDURE

211

administrative discretion as well as of law and fact. This is important

because agencies often determine whether they have power to act

rather than whether their discretion should be exercised or how it

should be exercised. Furthermore, without a disclosure of the basis

for the exercise of, or failure to exercise, discretion, the parties are

unable to determine what other or additional facts they might offer

by way of rehearing or reconsideration of decisions.

SEC.

SANCTIONS

AND POWERS.—Section 9 relating to powers and

sanctions refers to the

exercise

of any power or authority by an agency.

Unlike sections 7 and 8, this section applies in all relevant cases,

whether or not the agency is required by statute to proceed upon hear-

ing or in any special manner. It also applies to any power or authority

that an agency may assume to exercise.

(a) I N

GENERAL.—No

sanction may be imposed

substantive

rule or

order be issued except within

the

jurisdiction

delegated

to the agency and

as authorized by law.

This subsection embraces both substantive and procedural require-

ments of law. It means that agencies may not undertake anything

which statutes or other appropriate sources of authority (such as

treaties) do not authorize them to do. Where these sources are

specific in the authority granted, no additional authority may be

assumed. Where these sources are general, no authority beyond the

generality granted may be exercised. In particular, agencies may

not impose sanctions which have not been specifically or generally

provided for them to impose. Thus, an agency which is authorized

only to issue cease-and-desist orders may not set up a licensing system;

and conversely a licensing authority may not assume to issue desist

orders. A rule-making authority may not undertake to adjudicate

cases,

and vice versa. Of course some statutes confer upon the same

agency authority to exercise more than one of these forms of regula-

tion. An agency authorized to regulate trade practices may not

regulate banking, and so on. Similarly, no agency may undertake

directly or indirectly to exercise the functions of some other agency.

The subsection confines each agency to the jurisdiction delegated to

it by law.

(b)

LICENSES.—Agencies

are required, with due

regard

for the rights

or privileges of all the interested parties or persons adversely affected,

to proceed with

reasonable

dispatch to conclude and decide proceedings

on applications for licenses. They are not to withdraw a

license

without

first giving the licensee notice in writing and an opportunity to demon-

strate or achieve compliance with all lawful requirements, except in

cases of wilfulness or those in which public health, interest, or safety

requires otherwise. In businesses of a continuing nature, no license

expires until timely applications for new licenses or renewals are deter-

mined by the agency.

This section operates in all cases whether or not hearing is required.

The requirement of dispatch means that agencies must proceed as

rapidly as is feasible and practicable, rather than at their own con-

venience. Undue delays are subject to correction by mandatory

injunction pursuant to section 10. The exceptions to the second

sentence, regarding revocations, apply only where the demonstrable

facts fully and fairly warrant the application of the exceptions.

Willfulness must be manifest. The same is true of "public health,

interest, or safety." The standard of "public * * * interest"

212

ADMINISTRATIVE PROCEDURE

means a situation requiring immediate action irrespective of the

equities or injuries to the licensee, but the term does not confer upon

agencies an arbitrary discretion to ignore the requirement of notice

and an opportunity to demonstrate compliance. However, this

limitation does not apply to temporary permits or temporary licenses.

SEC.

10.

JUDICIAL

REVIEW.—Section

10 on judicial review does not

apply in any situation so far as

there

are

involved

matters with

respect

which statutes preclude judicial review or agency action is by law com-

mitted

agency

discretion.

Very rarely do statutes withhold judicial review. It has never

been the policy of Congress to prevent the administration of its own

statutes from being judicially confined to the scope of authority

granted or to the objectives specified. Its policy could not be other-

wise,

for in such a case statutes would in effect be blank checks drawn

to the credit of some administrative officer or board.

The basic exception of matters committed to agency discretion

would apply even if not stated at the outset. If, for example, statutes

are drawn in such broad terms that in a given case there is no law

to apply, courts of course have no statutory question to review.

That situation cannot be remedied by an administrative procedure

act but must be treated by the revision of statutes conferring admin-

istrative powers. However, where statutory standards, definitions,

or other grants of power deny or require action in given situations or

confine an agency within limits as required by the Constitution, then

the determination of the facts does not lie in agency discretion but

must be supported by either the administrative or judicial record.

(a) RIGHT OF REVIEW.—Any person suffering legal wrong because of

any

agency

action,

adversely

affected within the meaning of any statute,

is entitled

judicial review.

This subsection confers a right of review upon any person adversely

affected in fact by agency action or aggrieved within the meaning of

any statute The phrase "legal wrong" means such a wrong as is

specified in subsection (e) of this section. It means that something

more than mere adverse personal effect must be shown—that is, that

the adverse effect must be an illegal effect. The law so made relevant

is not just constitutional law but any and all applicable law.

(b)

FORM

AND

VENUE

OF ACTION.—The technical form of

proceeding

for judicial review is any special proceeding provided by statute or, in

the

absence

or inadequacy

thereof,

any relevant form of

legal

action (such

as those for

declaratory

judgments or injunctions) in any

court

compe-

tent jurisdiction.

Moreover,

agency action is

also

made

subject

to judicial

review in any civil or criminal

proceeding

for enforcement except to the

extent that prior, adequate, and exclusive opportunity for such review is

provided by law.

The first sentence of this subsection is an express statutory recog-

nition of the so-called common-law actions as being appropriate and

authorized means of judicial review, operative whenever special forms

of judicial review are lacking or insufficient. The declaratory judg-

ment procedure, for example, may be operative before statutory

forms of review are available; and in a proper case it may be utilized

to determine the validity or application of agency action. The ex-

pression "special statutory review" means not only special review

proceedings wholly created by statute, but so-called common-law

forms referred to and adopted by statute as the appropriate mode of

ADMINISTRATIVE

PROCEDURE

21 3

review. The exception from "prior, adequate, and exclusive * * *

review" in the second sentence is operative only where statutes,

either expressly or as they are interpreted, require parties to resort to

some special statutory form of judicial review which is prior in time

and adequate to the case.

by statute or final agency action for which there is no other adequate

judicial remedy is subject to judicial review. In addition, preliminary

or procedural matters not directly subject to review are

reviewable

upon

the review of final actions. Except as statutes may expressly require

otherwise, agency action is final whether or not there has been presented

or determined any application for a declaratory

order,

for any form of

reconsideration, or (unless the agency otherwise requires by rule) for an

appeal to superior agency authority.

"Final" action includes any effective agency action for which

there is no other adequate remedy in any court. "Reconsideration"

includes reopening, rehearing, etc.

The last clause, permitting agencies to require by rule that an

appeal be taken to superior agency authority before judicial review

may be sought, is designed to implement the provisions of section

8 (a). Pursuant to that subsection an agency may permit an exam-

iner to make the initial decision in a case, which becomes the agency's

decision in the absence of an appeal to or review by the agency. If

there is such review or appeal, the examiner's initial decision becomes

inoperative until the agency determines the matter. For that reason

this subsection permits an agency also to require by rule that, if any

party is not satisfied with the initial decision of a subordinate hearing

officer, the party must first appeal to the agency (the decision mean-

while being inoperative) before resorting to the courts. In no case;

may appeal to "superior agency authority" be required by rule unless

the administrative decision meanwhile is inoperative, because other-

wise the effect of such a requirement would be to subject the party to

the agency action and to repetitious administrative process without

recourse. There is a fundamental inconsistency in requiring a person

to continue "exhausting" administrative processes after administra-

tive action has become, and while it remains, effective.

(d) INTERIM RELIEF.—Pending judicial

review

any

agency

may post-

pone the effective date of its action. Upon conditions and as may be

necessary to prevent irreparable injury, any reviewing court may post-

pone the effective date of any agency action or preserve the status quo

pending conclusion of

review

proceedings.

This section permits either agencies or courts, if the proper showing

be made, to maintain the status quo. While it would not permit a

court to grant an initial license, it provides intermediate judicial

relief for every other situation in order to make judicial review effec-

tive.

The authority granted is equitable and should be used by both

agencies and courts to prevent irreparable injury or afford parties an

adequate judicial remedy.

(e) SCOPE OF REVIEW.—Reviewing courts are required to decide all

relevant questions

oflaw, interpret constitutional and statutory provisions,

and determine the meaning or applicability of any agency action. They

must (A)

compel

action unlawfully withheld or unreasonably

delayed

and

(B) hold unlawful any action, findings, or

conclusions

found to be (1)

arbitrary, (2) contrary to the Constitution, (3)

contrary

to statutes or short

of statutory right, (4) without

observance

procedure required

by law, (5)

21 4 ADMINISTRATIVE PROCEDURE

unsupported by substantial

evidence

upon

the

administrative

record where

the agency is authorized by statute to hold hearings subject to sections 7

and 8, or (6) unwarranted by the facts

far as the latter are subject to

trial de novo. In making these determinations the court is

consider

the

whole

record

or such parts as the parties may

cite,

and

due

account must

be taken of

the

rule of prejudicial error.

This subsection provides that questions of law are for courts rather

than agencies to decide in the last analysis and it also lists the several

categories of questions of law. It expressly recognizes the right of

properly interested parties to compel agencies to act where they im-

providently refuse to act. "Finding" and "conclusion" also mean

failure to find or conclude as the law and the record may require.

"Short of statutory right" means that agencies are not authorized to

give partial relief where a party demonstrates his right to the whole.

"Without observance of procedure required by law" means not only

the procedures required by this bill but any other procedures the law

may require. "Substantial evidence" means evidence which on the

whole record is clearly substantial, sufficient to support a finding or

conclusion under section 7 (c), and material to the issues.

The sixth category, respecting the establishment of facts upon trial

do novo, would require the reviewing court to determine the facts

in any case of adjudication not subject to sections 7 and 8. It would

also require the judicial determination of facts in connection with

rule making or any other conceivable form of agency action to the

extent that the facts were relevant to any pertinent issues of law

presented. For example, statutes providing for "reparation orders",

in which agencies determine damages and award money judgments,

usually state that the money orders issued are merely prima facie

evidence in the courts and the parties subject to them are permitted

to introduce evidence in the court in which the enforcement action

is pending. In other cases, the test is whether there has been a

statutory administrative hearing of the facts which is adequate and

exclusive for purposes of review. Thus, where adjudications such

as tax assessments are not made upon an administrative hearing and

record, contests may involve a trial of the facts in the Tax Court or

the United States district courts. Where administrative agencies

deny parties money to which they are entitled by statute or rule, the

claimants may sue as for any other claim and in so doing try out the

facts in the Court of Claims or United States district courts as the

case may be. Where a court enforces or applies an administrative

rule,

the party to whom it is applied may offer evidence and show

the facts upon which he bases a contention that he is not subject

to the terms of the rule. Where for example an affected party claims

in a judicial proceeding that a rule issued without an administrative

hearing (and not required to be issued after such hearing) is invalid,

he may show the facts upon which he predicates such invalidity.

The requirement of review upon "the whole record" means that

courts may not look only to the case presented by one party, since

other evidence may weaken or even indisputably destroy that case.

The requirement that account shall be taken "of the rule of prejudicial

error" means that a procedural omission which has been cured by

affording the party the procedure to which he was originally entitled

is not a reversible error.

SEC.

11.

EXAMINERS.—Subject

to the

civil-service

and other laws not

inconsistent with this bill,

agencies

are

required

appoint

such

examiners

ADMINISTRATIVE

PROCEDURE

21 5

may

be necessary for

proceedings

under sections

and 8,

who are

assigned to

cases

rotation

far

as practicable

and

perform no incon-

sistent duties. They are

removable

only for

good cause

determined

the

Civil Service Commission after opportunity

for

hearing

and

upon the rec-

ord

thereof.

They are

receive

compensation

prescribed

the

Commis-

sion independently

agency recommendations

ratings.

One

agency

may, with the consent

another

and

upon

selection

the

Commission,

borrow

examiners from

another.

The

Commission

given the necessary

powers

operate

under this section.

That examiners

"qualified

and

competent" requires

the

Civil

Service Commission

to fix

appropriate qualifications

and the

agencies

to seek

fit

persons.

view

of the

tenure

and

compensation require-

ments

of the

section, designed

make examiners largely independent,

self-interest

and due

concern

for the

proper performance

public

functions will inevitably move agencies

secure

the

highest type

examiners.

The purpose

this section

is to

render examiners independent

and

secure

their tenure

and

compensation.

The

section thus takes

different ground than

the

present situation,

which examiners

are

mere employees

of an

agency,

and

other proposals

for a

completely

separate" examiners' pool" from which agencies might draw

for

hearing

officers. Recognizing that

the

entire tradition

of the

Civil Service

Commission

directed toward security

tenure,

seems wise

put that tradition

to use in the

present case. However, additional

powers

are

conferred upon

the

Commission.

must afford

any ex-

aminer

opportunity

for a

hearing before acceding

to an

agency

request

for

removal,

and

even then

its

action would

subject

judicial review.

The

hearing

and

decision would

made under

sections

7 and 8 of

this bill.

The

requirement

assignment

of ex-

aminers

"in

rotation" prevents

agency from disfavoring

an ex-

aminer

rendering

him

inactive.

the

matter

examiners' compensation

the

section adds greatly

the

Commission's powers

and

function.

must prescribe

and

adjust examiners' salaries, independently

agency ratings

and

recom-

mendations.

The

stated inapplicability

specified sections

of the

Classification

Act

carries into effect that authority.

The

Commission

would exercise

its

powers

classifying examiners' positions

and,

upon

customary examination through

its

agents, shift examiners

superior

classifications

higher grades

their experience

and

duties

may

require.

The

Commission might consult

the

agency,

as it now

does

in setting

positions

reclassifying positions,

but it

would

act

upon

its

own

responsibility

and

with

the

objects

of the

bill

mind.

SEC. 12. CONSTRUCTION AND EFFECT.—Nothing in the bill is to

diminish constitutional rights

limit

repeal additional requirements

of law. Requirements

evidence

and

procedure

are

apply equally

agencies

and

private persons except

otherwise

provided

by law. The

unconstitutionality

of any

portion or application

the

bill

not to

affect

other portions

applications. Agencies

are

granted

all

authority

necessary

to comply with

the

bill. Subsequent

legislation

not to modify

the bill except

as it may do so

expressly.

The

bill would

become

law

three months after

its

approval

except

that sections

7 and 8

take

effect

six

months after approval,

the

requirements

section

become effective

year after approval,

and no

requirement

mandatory

as to any

agency

proceeding

initiated prior

to the effective date

such

requirement.

216

ADMINISTRATIVE PROCEDURE

The word "initiated" in the final clause of the section means a pro-

ceeding formally begun as by the issuance of a complaint by the

agency (irrespective of prior charges or investigations) or of notice of

a rule-making hearing. As to new cases, the effective dates provided

in section 12 are deferred longer so far as sections 7 and 8 are con-

cerned in order to afford agencies ample time to prepare and mate any

adjustments required in their procedures. The selection of examiners

under section 11 is deferred for a year in order to permit present mili-

tary service personnel an opportunity to qualify for these positions.

V. GENERAL COMMENTS

The bill is designed to operate as a whole and, as previously stated,

its provisions are interrelated. At the same time, however, there are

certain provisions which touch on subjects long regarded as of the

highest importance. On those subjects, such as the separation of

examiners from the agencies they serve, there has been a wide diver-

gence of views. The committee has in such cases taken the course

which it believes will suffice without being excessive. Moreover,

amendatory or supplementary legislation can supply any deficiency

which experience discloses in those cases. The committee believes that

special note should be made of the following situations:

The exemption of rule making and determining initial applications

for licenses from provisions of sections 5 (c), 7 (c), and 8 (a) may

require change if, in practice, it develops that they are too broad.

Earlier in this report, in commenting upon some of those provisions,

the committee has expressed its reasons for the language used and

has stated that, where cases present sharply contested issues of fact,

agencies should not as a matter of good practice take advantage of

the exemptions.

Should the preservation in section 7 (a) of the "conduct of specified

classes of proceedings in whole or part by or before boards or other

officers specially provided for by or designated pursuant to statute"

prove to be a loophole for avoidance of the examiner system in any

real sense, corrective legislation would be necessary. That provision

is not intended to permit agencies to avoid the use of examiners but

to preserve special statutory types of hearing officers who contribute

something more than examiners could contribute and at the same time

assure the parties fair and impartial procedure.

The basic provision respecting evidence in section 7 (c)—requiring

that any agency action must be supported by plainly "relevant,

reliable, and probative evidence"—will require full compliance by

agencies and diligent enforcement by reviewing courts. Should

that language prove insufficient to fix and maintain the standards of

proof,

supplemental legislation will become necessary.

The "substantial evidence" rule set forth in section 10 (e) is exceed-

ingly important. As a matter of language, substantial evidence

would seem to be an adequate expression of law. The difficulty

comes about in the practice of agencies to rely upon (and of courts to

tacitly approve) something less—to rely upon suspicion, surmise,

implications, or plainly incredible evidence. It will be the duty of

the courts to determine in the final analysis and in the exercise of

their independent judgment, whether on the whole record the evi-

dence is a given instance is sufficiently substantial to support a

finding, conclusion, or other agency action as a matter of law. In

ADMINISTRATIVE PROCEDURE 21 7

the first instance, however, it will be the function of the agency to

determine the sufficiency of the evidence upon which it acts—and the

proper performance of its public duties will require it to undertake

this inquiry in a careful and dispassionate manner. Should these

objectives of the bill as worded fail, supplemental legislation will be

required.

The foregoing are by no means all the provisions which will require

vigilant attention to assure their proper operation. Almost any pro-

vision of the bill, if wrongly interpreted or minimized, may present

occasion for supplemental legislation. On the other hand, should it

appear at any time that the requirements result in some undue

impairment of a particular administrative function, appropriate

amendments or exceptions may be in order.

INTERPRETATION

AND ENFORCEMENT.—Except in a few respects,

this is not a measure conferring administrative powers but is one

laying down definitions and stating limitations. These definitions

and limitations must, to be sure, be interpreted and applied by agencies

affected by them in the first instance. But the enforcement of the

bill, by the independent judicial interpretation and application of its

terms,

is a function which is clearly conferred upon the courts in the

final analysis.

It will thus be the duty of reviewing courts to prevent avoidance

of the requirements of the bill by any manner or form of indirection,

and to determine the meaning of the words and phrases used. For

example, in several provisions the expression "good cause" is used.

The cause so specified must be interpreted by the context of the pro-

vision in which it is found and the purpose of the entire section and

bill. Cause found must be real and demonstrable. If the agency is

proceeding upon a statutory hearing and record, the cause will appear

there; otherwise it must be such that the agency may show the facts

and considerations warranting the finding in any proceeding in which

the finding is challenged. The same would be true in the case of

findings other than of good cause, required in the bill. As has been

said, these findings must in the first instance be made by the agency

concerned but, in the final analysis, their propriety in law and on the

facts must be sustainable upon inquiry by a reviewing court.

Nevertheless, in the nature of things, for most practical purposes

it is to the agencies that the Congress and the people must look for

fair administration of the laws and compliance with this bill. Judicial

review is of utmost importance, but it can be operative in relatively

few cases because of the cost and general hazards of litigation. It is

indispensable since its mere existence generally precludes the arbi-

trary exercise of powers or assumption of powers not granted. Yet,

in the vast majority of cases the agency concerned usually speaks the

first and last word. For that reason the agencies must make the

first, primary, and most far-reaching effort to comply with the terms

and the spirit of this bill.

It is the view of the committee that this bill is not an indictment

of administrative agencies or administrative processes. The com-

mittee takes no position one way or the other on these questions.

By enacting this bill, the Congress—expressing the will of the

people—will be laying down for the guidance of all branches of the

Government and all private interests in the country a policy respecting

the minimum requirements of fair administrative procedure.

The committee recommends that the bill as reported be enacted.

APPENDIXES

APPENDIX A

That this

Act may be

cited

as the

"Administrative Procedure

Act".

DEFINITIONS

SEC.

2. AS

used

this Act—

(a) AGENCY.—"Agency" means each authority (whether or not within or subject

to review

another agency)

of the

Government

the United States other than

Con-

gress,

the

courts,

or the

governments

of the

possessions, Territories,

or the

District of

Columbia. Nothing

this

Act

shall be construed to repeal delegations

authority

provided

by law.

Except

as to the

requirements

section

there shall

excluded

from

the

operation

this

Act (1)

agencies composed

representatives

the parties

representatives

organizations

the parties to

the

disputes determined

them,

(2) courts martial

and

military commissions,

(3)

military

naval authority

exercised

the

field

time

war or

occupied territory,

(4) functions which

by law

expire

the

termination

present hostilities, within

any

fixed period thereafter,

before

July

1947,

and

the functions conferred

the

following statutes: Selective Training

and Service

Act of

1940; Contract Settlement

Act of 1944;

Surplus Properly

Act of

1944.

(b) PERSON AND PARTY.—"Person" includes individuals, partnerships, corpo-

rations, associations,

public

private organizations

of any

character other than

agencies. "Party" includes

any

person

agency named

admitted

as a

party,

or properly seeking

and

entitled

as of

right

be admitted

as a

party,

in any

agency

proceeding;

but

nothing herein shall

construed to prevent

agency

from admitting

any person

agency

as a

party

for

limited purposes.

statement

general applicability designed

implement, interpret,

prescribe

law

or policy

or to

describe

the

organization, procedure,

practice requirements

of any

agency. "Rule making" means agency process

for the

formulation, amendment,

repeal

of a

rule

and

includes

the

approval

prescription

for the

future

rates,

wages, corporate

financial structures

reorganizations

thereof,

prices, facilities,

appliances, services,

allowances, therefor,

or of

valuations, costs,

accounting,

or practices bearing upon

any of

the foregoing.

(d) ORDER AND ADJUDICATION.—"Order means the whole or any part of the

final disposition (whether affirmative, negative,

declaratory

form)

of any

agency

any

matter other than rule making

but

including licensing. "Adjudication"

means agency

process

for

the formulation

of an

order.

(e) LICENSE AND LICENSING.—"License" includes the whole or part of any

agency permit, certificate, approval, registration, charter, membership, statutory

exemption, or

other

form

permission. "Licensing" includes agency

process

respect-

ing the grant, renewal, denial, revocation, suspension, annulment, withdrawal, limita-

tion,

amendment, modification,

conditioning

of a

license.

(f) SANCTION AND RELIEF.—"Sanction" includes the whole or part of any agency

(1) prohibition, requirement, limitation,

other

condition affecting

the

freedom

of any

person;

(2)

withholding

of relief; (3)

imposition

of any

form

penalty

fine;

(4) destruction, taking, seizure,

withholding

property;

(5)

assessment

damages,

reimbursement, restitution, compensation, costs, charges,

fees;

(6)

requirement,

revocation,

suspension

of a

license;

or (7)

taking

other compulsory

restrictive

action. "Relief includes the whole

part

of any

agency

(1)

grant

money, assist-

ance, license, authority, exemption, exception, privilege,

remedy;

(2)

recognition

any

claim, right, immunity, privilege, exemption,

exception;

or (3)

taking

of any

other action beneficial

to any

person.

(g)

AGENCY PROCEEDING

AND

ACTION.—"Agency

proceeding'' means any agency

process

defined

subsections

(c), (d), and (e) of

this section.

For the

purposes

section

10,

agency action" includes

the

whole

part

every agency rule, order,

license, sanction,

relief,

or the equivalent or denial

thereof,

failure to

act.

218

ADMINISTRATIVE PROCEDURE 21 9

PUBLIC

INFORMATION

SEC.

3. Except to the extent that there is involved (1) any function of the United

States requiring secrecy in the public interest or (2) any matter relating solely to the

internal management of an agency—

(a)

RULES.—Every

agency shall separately state and currently publish in the

Federal Register (1) descriptions of its central and field organization; (2) the estab-

lished places and methods whereby the public may secure information or make sub-

mittals or requests; (3) statements of the general course and method by which its

rule making and adjudicating functions are channeled and determined, including the

nature and requirements of all formal or informal procedures available as well as

forms and instructions as to the scope and contents of all papers, reports, or examina-

tions; and (4) substantive rules adopted as authorized by law and statements of

general

policy or interpretations formulated and adopted by the agency for the guidance of

the public. No person shall in any manner be required to resort to organization or

procedure not so published.

(6)

OPINIONS

AND

ORDERS.—Every

agency shall publish or, in accordance with

published rule, make available to public inspection all final opinions or orders in the

adjudication of cases except those required for good cause to be held confidential and

not cited as precedents.

(c)

PUBLIC

RECORDS.—Save as otherwise required by statute, matters of official

record shall in accordance with published rule be made available to persons properly

and directly concerned except information held confidential for

good

cause

found.

RULE

MAKING

SEC.

4. Except to the extent that there is involved (1) any military, naval,

foreign

affairs function of the United States or (2) any matter relating to agency management

or personnel or to public property, loans, grants, benefits, or

contracts—

(a)

NOTICE.—General

notice of proposed rule making shall be published in the

Federal Register and shall include (1) a statement of the time, place, and nature of

public rule making proceedings; (2) reference to the authority under which

the,

rule is

proposed; and (S) either the terms or substance of the proposed rule or a description

the subjects and issues involved. Except where notice or hearing is required by

statute, this subsection shall not apply to interpretative rules, general statements of

policy, rules of agency organization, procedure, or practice, or in any situation in

which the

agency

for good cause finds (and incorporates the finding and a brief state-

ment of the reasons therefor in the rules issued) that notice and public procedure

thereon are impracticable, unnecessary, or contrary to the public interest.

(b)

PROCEDURES.—After

notice required by this section, the agency shall afford

interested persons an opportunity to participate in the rule making through submission

of written data, views, or argument with or without opportunity to present the same

orally in any manner; and, after consideration of all relevant matter presented, the

agency shall incorporate in any rules adopted a concise general statement of their

basis and purpose. Where rules are required by law to be made upon the record after

opportunity for or upon an agency hearing, the requirements of sections 7 and 8 shall

apply in place of the provisions of this subsection.

(c)

EFFECTIVE

DATES.—

The required publication or service of any substantive

rule (other than one granting or recognizing exemption or relieving restriction or inter-

pretative rules and statements of policy) shall be made not less than thirty days prior

to the effective date thereof except as otherwise provided by the agency upon

good

cause

found and published with the rule.

(d)

PETITIONS.—Every

agency

shall

accord

any interested

person

the right to petition

for the issuance, amendment, or repeal of a rule.

ADJUDICATION

SEC.

5. In every case of adjudication required by statute to be determined on the

record after opportunity for an agency hearing, except to the extent that there is in-

volved (1) any matter subject to a subsequent trial of the law and the facts de novo in

any court; (2) the selection or tenure of an officer or employee of the United States

other than examiners appointed pursuant to section 11; (3) proceedings in which

decisions rest solely on inspections, tests, or elections, (4) the conduct of military,

naval,

foreign affairs functions: (5) cases in which an agency is acting as an agent

for a court; and (6) the certification of employee representatives—

(a)

NOTICE.—Persons

entitled to notice of an agency hearing shall be timely in-

formed of (1) the time, place, and nature

thereof;

(2) the

legal

authority and jurisdic-

tion under which the hearing is to be

held;

and (3) the matters of fact and law asserted.

90600—46—15

220 ADMINISTRATIVE PROCEDURE

In instances in which private persona are the moving parties,

other

parties

to the

pro-

ceeding shall give prompt notice of issues

controverted

in fact or law; and in other

instances agencies may by rule require responsive pleading. In fixing the times and

places for hearings, due regard shall be had for the convenience and necessity of the

parties or their representatives.

(b)

PROCEDURE.—

The agency shall afford all interested parties opportunity for

(1) the submission and consideration of facts, argument, offers of settlement, or

proposals of adjustment

where

time, the nature of

the

proceeding, and the public inter-

est permit, and (2) to the extent that the parties are unable so to determine any contro-

versy by consent, hearing and decision upon notice and in conformity with sections 7

and 8.

officers

who preside at the reception

evidence pursuant to section 7 shall make the recommended decision or initial decision

required by section 8 except where such officers become unavailable to the agency.

Save to the extent required for the disposition of ex parte matters as authorized by law,

no such officer shall consult any person or party on any fact in issue unless upon

notice and opportunity for all parties to participate; nor shall such

officer

responsible

to or subject to the supervision or direction of any

officer,

employee, or agent

engaged

the

performance

of investigative or prosecuting functions for any

agency.

officer,

employee, or

agent

engaged in

the,

performance of

investigative

prosecuting

functions

for any agency in any case shall, in that or a factually related case, participate or

advise in the decision, recommended decision, or agency review pursuant to section 8

except as witness or counsel in public proceedings. This subsection shall not apply

in determining applications for initial licenses or the past reasonableness of rates;

nor shall it

applicable in any manner to the

agency

or any member or

members

the

body comprising the agency.

(d) DECLARATORY

ORDERS.—

The agency is authorized in its sound discretion, with

like effect as in the case of other orders, to issue a declaratory order to terminate a

controversy

remove

uncertainty.

ANCILLARY MATTERS

SEC.

Except

otherwise

provided in this Act—

(a) APPEARANCE.—Any person compelled to appear in person before any agency

or representative thereof shall be accorded the right to be accompanied, represented,

and advised by counsel, or if permitted by the agency, by other qualified representative.

Every party shall be accorded the right to appear in person or by or with counsel or

other duly qualified representative in any agency proceeding. So far as the respon-

sible conduct of public business permits, any interested person may appear before

any agency or its responsible officers or employees for the presentation, adjustment,

or determination of any issue, request, or controversy in any proceeding or in con-

nection with any agency function, including stop-order or other summary actions.

Every agency shall proceed with reasonable dispatch to conclude any matter presented

to it

except

that due regard shall be had for the

convenience

and necessity of the parties

or their representatives. Nothing herein shall be construed either to grant or to deny

to any person who is not a lawyer the right to

appear

for or represent others

before

any

agency or in any agency proceeding.

(b) INVESTIGATIONS.—No process, requirement of a report, inspection, or other

investigative act or demand shall be

issued,

made, or enforced in any manner or for

any purpose except as authorized by law. Every person compelled to submit data

or evidence shall be entitled to retain or, on payment of lawfully prescribed costs,

procure a copy or transcript

thereof,

except that in a nonpublic investigatory

proceeding

the witness may for good cause be limited to inspection of the official transcript of his

testimony.

(c)

SUBPENAS.—Agency

subpenas authorized by law shall be issued to any party

upon request and, as may be required by rules of procedure, upon a statement or

snowing of general relevance and reasonable scope of the evidence sought. Upon

contest the court shall sustain any such subpena or similar process or demand to the

extent that it is found to

accordance

with law and, in any

proceeding

for enforce-

ment, shall issue an order requiring the appearance of the witness or the production

of the

evidence

or data under penalty of punishment for contempt in case of contuma-

cious failure to do so.

(d) DENIALS.—Prompt notice shall be given of the denial in whole or in part of

any written application, petition, or other request of any interested person made in

connection with any agency proceeding. Except in affirming a prior denial or where

the denial is self-explanatory, such notice shall

accompanied by a simple statement

of grounds.

ADMINISTRATIVE PROCEDURE

22 1

HEARINGS

SEC.

7. In

hearings which section

requires to be conducted pursuant

this

section—

(a)

PRESIDING

OFFICERS.—There

shall preside

the taking

evidence

(1) the

agency,

(2)

one or more members of

the

body which comprises the agency, or (3) one or

more examiners appointed

provided

this

Act; but

nothing

this

Act

shall

deemed

supersede the conduct

specified classes

proceedings

whole

part

before boards

other

officers

specially provided

for by or

designated pursuant

to statute. The functions

all presiding officers

and of

officers

participating

decisions

conformity with section

shall be conducted

in an

impartial manner.

Any such officer

may at any

time withdraw

he deems himself disqualified;

and,

upon

the

filing

good

faith

of a

timely

and

sufficient affidavit

personal bias

disqualification

of any

such officer,

the

agency shall determine the matter

as a

part

of the record and decision

the case.

(b)

HEARING

POWERS.—Officers

presiding at hearings shall

have

authority, subject

the

published rules

the agency

and

within

its

powers,

to (1)

administer oaths

and affirmations,

(2)

issue subpenas authorized

law, (3) rule upon offers

proof

and receive relevant evidence,

(4)

take

cause depositions

be taken whenever the

ends of justice would be

served

thereby, (6) regulate the course

the

hearing,

(6)

hold

conferences for the settlement or simplification

the issues

consent

the parties,

(7) dispose

procedural requests

similar matters,

(8)

make decisions

recom-

mend decisions

conformity with section 8, and (9) take any other action authorized

by agency rule consistent with this

Act.

(c)

EVIDENCE.—Except

statutes otherwise provide,

the

proponent

of a

rule

order shall have

the

burden

proof.

Any

evidence, oral

documentary,

may be

received,

but

every agency shall

as a

matter

policy provide

for the

exclusion of

immaterial

and

unduly repetitious evidence

and no

sanction shall

imposed

rule or order

issued except as supported by

relevant,

reliable, and

probative

evidence.

Every party shall have the right to present

his

case or defense by oral or documentary

evidence,

submit rebuttal evidence,

and to

conduct such cross-examination

as may

be required for a full and true disclosure of

the

facts.

rule making or determining

claims for money or benefits or applications for initial licenses any agency may, where

the interest

of any

party will

not be

prejudiced thereby, adopt procedures

for the

submission

all or part

the

evidence

written form.

(d)

RECORD.—The

transcript

testimony

and

exhibits, together with

all

papers

and requests filed

the proceeding, shall constitute the exclusive

record

for decision

in accordance with section

8 and

upon payment of lawfully

prescribed

costs,

shall

made available

to the

parties. Where

any

agency decision rests

official notice

of a material fact not appearing

the evidence

the

record,

any party shall on timely

request be afforded

opportunity to show the contrary.

DECISIONS

SEC.

8. In

cases

which

hearing

required to be conducted

conformity with

section 7—

(a) ACTION BY SUBORDINATES.—In cases in which the agency has not presided

the

reception

the evidence,

the

officer who presided (or,

cases

not

subject

subsection (c)

section

6, any

other officer or

officers

qualified to preside

hearings

pursuant

section

shall initially decide the case

the agency shall require

(in

specific cases or by general rule) the entire

record

certified

to it for initial decision.

Whenever such

officers

make the initial decision and

the

absence

either

appeal

to the agency or review upon motion

the agency within lime provided by rule, such

decision shall without further proceedings then

become

the decision of the agency.

appeal from or review of the initial decisions

such

officers

the agency shall, except as

it may limit the issues upon notice or

rule, have all the powers which

would have

in making the initial decision. Whenever the agency makes the initial decision with-

out having presided

the reception

the

evidence,

such

officers

shall first recommend

a decision except that

rule making

determining applications

for

initial licenses

(1)

lieu thereof the agency may issue

tentative decision or

any of its

responsible

officers

may

recommend

decision

or (2) any

such procedure

may be

omitted

any case

which the agency finds upon the

record

that due and timely execution of its

function imperatively and unavoidably so requires.

(b)

SUBMITTALS

AND

DECISIONS.—Prior

to each recommeded, initial, or tentative

decision,

decision upon agency review

of the

decision

subordinate officers the

parties shall be afforded

reasonable opportunity

submit

for

the consideration of

the officers participating

such decisions

(1)

proposed findings

and

conclusions, or

22 2

ADMINISTRATIVE PROCEDURE

(2) exceptions to the decisions or recommended decisions of subordinate

officers

or to

tentative agency decisions, and (3) supporting

reasons

for such exceptions or proposed

findings or conclusions. All decisions (including initial, recommended, or tentative

decisions) shall

become

a part of the

record

and include a statement of (1) findings and

conclusions, as well as the basis therefor, upon all the material issues of fact, law, or

discretion presented; and (2) the appropriate rule, order, sanction,

relief,

or denial

thereof.

SANCTIONS

AND

POWERS

SEC.

9. In the exercise of any power or authority—

(a) IN

GENERAL. — N o

sanction shall be imposed or substantive rule or order be

issued except within jurisdiction delegated to the agency and as authorized by law.

(b)

LICENSES.—In

any case in which application is made for a license required

by law the

agency,

with due

regard

to the rights or privileges of all

the

interested parties

or adversely affected persons and with reasonable dispatch, shall set and complete any

proceedings required to be conducted pursuant to sections 7 and 8 of this Act or other

proceedings required by law and shall make its decision. Except in cases of wilful-

ness or those in which public health, interest, or safety requires otherwise, no with-

drawal, suspension, revocation, or annulment of any license shall be lawful unless,

prior to the institution of agency proceedings therefor, facts or conduct which may

warrant such action shall

have

been called to the attention of the

licensee

by the agency

in writing and the licensee shall have been accorded opportunity to demonstrate or

achieve compliance with all lawful requirements. In any case in which the licensee

has,

in accordance with agency rules, made timely and sufficient application for a

renewal or a new license, no license with reference

any activity of a continuing nature

shall expire until such application shall have been finally determined by the agency.

JUDICIAL REVIEW

SEC.

10. Except so far as (1) statutes preclude judicial review or (2) agency

action is by law committed to agency discretion—

(a)

RIGHT

REVIEW.—An y

person suffering

legal

wrong

because

of any agency

action, or adversely affected or aggrieved by such action within the meaning of any

relevant statute, shall be entitled to judicial review

thereof.

(b) FORM AND VENUE OF ACTION.—The form of proceeding for judicial review

shall be any special statutory review proceeding

relevant

to the subject matter in any

court specified by statute or, in the absence or inadequacy

thereof,

any applicable

form of

legal

action (including actions for

declaratory

judgments or writs of prohibi-

tory or mandatory injunction or habeas corpus) in any court of competent jurisdic-

tion.

Agency action shall be subject to judicial review in civil or criminal proceed-

ings for judicial enforcement except to the extent that prior, adequate, and exclusive

opportunity for such review is provided by law.

every final agency action for which there is no other adequate remedy in any court

shall be subject to judicial review. Any preliminary, procedural, or intermediate

agency action or ruling not directly reviewable shall be subject to review upon

the review of the final agency action. Except as otherwise expressly required by

statute, agency action shall be final whether or not there has been presented or deter-

mined any application for a declaratory order, for any form of reconsideration, or

(unless the agency otherwise requires by rule) for an appeal to superior agency

authority.

(d)

INTERIM

RELIEF.—Pending

judicial review any agency is authorized, where

it finds that justice so requires, to postpone the effective date of any action taken by

it. Upon such conditions as may be required and to the extent necessary to prevent

irreparable injury, every reviewing court (including every court to which a case may

be taken on appeal from or upon application for certiorari

other writ to a reviewing

court) is authorized to issue all necessary and appropriate process to postpone the

effective dale of any agency action or to preserve status or rights pending conclusion

of the review proceedings.

(e)

SCOPE

REVIEW. — So

far as necessary to decision and

where

presented the

reviewing court shall decide all relevant questions of law, interpret constitutional and

statutory provisions, and determine the meaning or applicability of the terms of any

agency action. It shall (A) compel agency action unlawfully withheld or unreason-

ably delayed; and (B) hold unlawful and set aside agency action, findings, and con-

clusions found to be (1) arbitrary, capricious, or otherwise not in accordance with

law; (2) contrary to constitutional right, power, privilege, or immunity; (3) in excess

of statutory jurisdiction, authority, or limitations, or short of statutory right; (4)

without observance of procedure required by law; (5) unsupported by substantial

ADMINISTRATIVE PROCEDURE 22 3

evidence

in any

case

subject

the

requirements of sections

7 and 8

other trite renewed

the

record

of an

agency hearing provided

statute: or (6) unwarranted

the

facts

the

extent that

the

facts are subject

trial de

novo

by the

reviewing

court.

making

the foregoing determinations

the

court shall review

the

whole record

such portions

thereof

as may

be cited

by the

parties,

and due

account shall

taken

of the

rule

prejudicial error.

EXAMINERS

SEC.

11.

Subject

to the

civil-service

and

other laws

to the

extent

not

inconsistent

with this

Act,

there shall

appointed

by and for

each agency

many qualified

and

competent examiners

as may be

necessary

for

proceedings pursuant

sections

and

8, who

shall

assigned

cases

rotation

so far as

practicable

and

shall

per-

form

duties inconsistent with their duties

and

responsibilities

examiners.

Examiners shall be

removable

by the

agency

which they

are

employed only

for

good

cause established

and

determined

by the

Civil Service Commission (hereinafter

called

the Commission) after opportunity

for

hearing

and

upon

the

record

thereof.

Exam-

iners shall receive compensation prescribed

by the

Commission independently

agency recommendations

ratings

and in

accordance with

the

Classification

Act

1923, as

amended, except that

the

provisions

paragraphs

(2) and (3) of sub-

section

(b) of

section

7 of

said

Act, as

amended,

and the

provisions

section

9 of

mid

Act, as

amended, shall

not be

applicable. Agencies occasionally

temporarily

insufficiently staffed

may

utilize examiners selected

by the

Commission from

and

with

the

consent

other agencies.

For the

purposes

this section,

the

Commission

is authorized

make investigations, require reports

agencies, issue reports,

including

annual report

to the

Congress, promulgate rules, appoint such advisory

committees

as may be

deemed necessary, recommend legislation, subpena witnesses

or records,

and pay

witness fees

established

for the

United States courts.

CONSTRUCTION AND EFFECT

SEC.

12.

Nothing

this

Act

shall

held

diminish

the

constitutional rights

any person

or to

limit

repeal additional requirements imposed

statute

other-

wise recognized

by law.

Except

otherwise required

by law, all

requirements

privileges relating

evidence

or procedure shall apply equally to agencies

and

persons.

any

provision

this

Act or the

application thereof

held invalid,

the

remainder

of this

Act

or other applications

such provision shall

not

affected. Every agency

is granted

all

authority necessary

comply with

the

requirements

this

Act

through

the issuance

rules

otherwise.

subsequent legislation shall

held

super-

sede

modify

the

provisions

this

Act

except

to the

extent that such legislation shall

expressly. This

Act

shall take effect three months after

its

approval except

that sections

7 and 8

shall take effect

six

months after such approval,

the

requirement

the

selection

examiners pursuant

section

shall

not

become,

effective until

one year after such approval,

and no

procedural requirement shall

mandatory

any

agency proceeding initiated prior

to the

effective dale

such requirement.

APPENDIX

OCTOBER

19, 1945.

Hon. PAT MCCARRAN,

Chairman, Senate Judiciary Committee,

United States Senate, Washington, D. C.

MY DEAR SENATOR:

You

have asked me to comment on S. 7, a bill to improve

the administration of justice by prescribing fair administrative procedure, in the

form in which it appears in the revised committee print issued October 5, 1945.

I appreciate the opportunity to comment on this proposed legislation.

For more than a decade there has been pending in the Congress legislation in

one form or another designed to deal horizontally with the subject of administra-

tive procedure, so as to overcome the confusion which inevitably has resulted from

leaving to basic agency statutes the prescription of the procedures to be followed

or, in many instances, the delegation of authority to agencies to prescribe their

own procedures. Previous attempts to enact general procedural legislation have

been unsuccessful generally because they failed to recognize the significant and

inherent differences between the tasks of courts and those of administrative

agencies or because, in their zeal for simplicity and uniformity, they proposed too

narrow and rigid a mold.

Nevertheless, the goal toward which these efforts have been directed is, in my

opinion, worth

while.

Despite difficulties of draftsmanship, I believe that over-

all procedural legislation is possible and desirable. The administrative process is

224 ADMINISTRATIVE PROCEDURE

now well developed.

has been subject in recent years to the most intensive and

informed study—by various congressional committees, by the Attorney General's

Committee on Administrative Procedure, by organizations such as the American

Bar Association,

and by

many individual practitioners and legal scholars.

have in general—as

did not have until fairly recently—the materials and facts at

hand.

think the time

ripe

for

some measure

control and prescription

legislation.

cannot agree that there

anything inherent

in the

subject

Administrative procedure, however complex

it may be,

which defies workable

codification.

Since the original introduction

S. 7,

understand that opportunity has been

afforded

public

and

private interests

study

its

provisions and

suggest

amendments. The agencies

the Government primarily concerned have been

consulted

and

their views considered.

particular,

I am

happy

note that

your committee

and the

House Committee

on the

Judiciary,

in an

effort

reconcile the views of the interested parties, have consulted officers of this Depart-

ment and experts in administrative law made available by this Department.

The revised committee print issued October 5, 1945, seems to me

achieve

considerable degree

reconciliation between the views expressed by the various

Government agencies and the views of the proponents of the legislation. The bill

in its present form requires administrative agencies to publish

make available

to the public an increased measure

information concerning their organization,

functions, and procedures.

gives

that portion

the public which is

to be

affected by administrative regulations

opportunity

express its views before

the regulations become effective.

prescribes,

instances

which existing

statutes afford opportunity

for

hearing

connection with the formulation and

issuance

administrative rules

and

orders,

the

procedures which shall govern

such hearings.

provides for the selection of hearing officers on

basis designed

to obtain highly qualified and impartial personnel and

insure their security of

tenure.

also restates

the law

governing judicial review

administrative

action.

The bill appears

offer

hopeful prospect

achieving reasonable uniformity

and fairness

administrative procedures without

at the

same time interfering

unduly with the efficient and economical operation

the Government. Insofar

as possible,

the

bill recognizes

the

needs

individual agencies

appropriate

exemption

certain

their functions.

After reviewing

the

committee print, therefore,

have concluded that this

Department should recommend its enactment.

My conclusion

as to the

workability

of the

proposed legislation rests

on my

belief that the provisions

the bill can and should be construed reasonably and

sense which will fairly balance

the

requirements

and

interests

private

persons and governmental agencies.

think

may be advisable for me to attach

to this report

appendix discussing

the

principal provisions

of the

bill. This

may serve to clarify some

the essential issues and may assist the committee in

evaluating the impact of the bill on public and private interests.

advised

by the

Acting Director

the Bureau

the Budget that while

there would

be no

objection

to the

submission

this report,

questions

the

appropriateness

of the

inclusion

of the

words "independently

agency recom-

mendations or ratings," appearing after the words "Examiners shall receive com-

pensation prescribed by the [Civil Service] Commission,"

section 11

the bill.

inasmuch

as he

deems

highly desirable that agency recommendations

and

ratings be fully considered by the Commission.

With kind personal regards,

Sincerely yours,

TOM

CLARK,

Attorney General.

APPENDIX

ATTORNEY

GENERAL'S

STATEMENT REGARDING

REVISED

COMMITTEE

OCTOBER

5, 1945

Section 2: The definitions given

section

are

very broad character.

is believed, however, that this scope

definition will not

found

have any

unexpected

unfortunate consequences

particular cases, inasmuch

as the

operative sections

the act are themselves carefully limited.

"Courts" includes The Tax Court, Court

Customs and Patent Appeals,

the

Court

Claims, and similar courts. This act does not apply to their procedure

nor affect the requirement of resort thereto.

In section

(a) the words "agencies composed

representatives of the parties

representatives

organizations

the parties to the disputes determined by

ADMINISTRATIVE PROCEDURE 225

them" are intended to refer to the following, among others: National War Labor

Board and the National Railroad Adjustment Board.

In section 2 (c) the phrase "the approval or prescription for the future of rates,

wages, corporate or financial structures or reorganizations

thereof,

prices, facili-

ties,

appliances," etc., is not, of course, intended to be an exhaustive enumeration

of the types of subject matter of rule making. Specification of these particular

subjects is deemed desirable, however, because there is no unanimity of recognition

that they are, in fact, rule making. The phrase "for the future is designed to

differentiate, for example, between the process of prescribing rates for the future

and the process of determining the lawfulness of rates charged in the past. The

latter, of course, is "adjudication" and not "rule making." (Arizona

Grocery

Co.

v. Atchison,

Topeka

and Santa

Railway

Co.,

284 U. S. 370.)

The definitions of "rule making" and "adjudication," set forth in subsections

this legislation is to classify all administrative proceedings into these two cate-

gories. The pattern is familiar to those who have examined the various proposals

for administrative procedure legislation which have been introduced during the

past few years; it appears also in the recommendations of the Attorney General's

Committee on Administrative Procedure. Proceedings are classed as rule making

under this act not merely because, like the legislative process, they result in regu-

lations of general applicability but also because they involve subject matter

demanding judgments based on technical knowledge and experience. As defined

in subsection (c), for example, rule making includes not only the formulation of

rules of general applicability but also the formulation of agency action whether

of general or particular applicability, relating to the types of subject matter

enumerated in subsection (c). In many instances of adjudication, on the other

hand, the accusatory element is strong, and individual compliance or behavior

is challenged; in such cases, special procedural safeguards should be provided to

insure fair judgments on the facts as they may properly appear of record. The

statute carefully differentiates between these two basically different classes of

proceedings so as to avoid, on the one hand, too cumbersonme a procedure and

to require, on the other hand, an adequate procedure.

Section 3: This section applies to all agencies covered by the act, including war

agencies and war functions. The exception of any function of the United States

requiring secrecy in the public interest is intended to cover (in addition to mili-

tary, naval, and foreign affairs functions) the confidential operations of the Secret

Service, the Federal Bureau of Investigation, United States attorneys, and other

prosecuting agencies, as well as the confidential functions of any other agency.

Section 3 (a), by requiring publication of certain classes of information in the

Federal Register, is not intended to repeal the Federal Register Act (44 U. S. C.

301 et seq.) but simply to require the publication of certain additional material.

Section 3 (a) (4) is intended to include (in addition to substantive rules) only

such statements of general policy or interpretations as the agency believes may be

formulated with a sufficient degree of definiteness and completeness to warrant

their publication for the guidance of the public.

Section 3 (b) is designed to make available all final opinions or orders in the

adjudication of cases. Even here material may be held confidential if the agency

finds good cause. This confidential material, however, should not be cited as a

precedent. If it is desired to rely upon the citation of confidential material, the

agency should first make available some abstract of the confidential material in

such form as will show the principles relied upon without revealing the con-

fidential

facts.

Section 3 (c) is not intended to open up Government files for general inspection.

What is intended is that the agencies, to the degree of specificity practicable, shall

classify its material in terms of whether or not it is confidential in character and

shall set forth in published rules the information or type of material which is

confidential and that which is not.

Section 4. The term "naval" in the first exception clause is intended to include

the defense functions of the Coast Guard and the Bureau of Marine Inspection

and Navigation.

Section 4 (b), in requiring the publication of a concise general statement of the

basis and purpose of rules made without formal hearing, is not intended to require

an elaborate analysis of rules or of the detailed considerations upon which they are

based but is designed to enable the public to obtain a general idea of the purpose

of, and a statement of the basic justification for, the rules. The requirement

would also serve much the same function as the whereas clauses which are now

customarily found in the preambles of Executive orders.

226 ADMINISTRATIVE PROCEDURE

Section 4 (c): This subsection is not intended to hamper the agencies in cases

in which there is good cause for putting a rule into effect immediately, or at some

time earlier than 30 days. The section requires, however, that where an earlier

effective date is desired the agency should make a finding of good cause therefor

and publish its finding along with the rule.

Section 4 (d) simply permits any interested person to petition an agency for

the issuance, amendment, or repeal of a rule. It requires the reception and con-

sideration of petitions but does not compel an agency to undertake any rule-

making procedure merely because a petition is filed.

Section 5: Subject to the six exceptions set forth at the commencement of the

section, section 5 applies to administrative adjudications "required by statute

to be determined on the record after opportunity for an agency hearing." It is

thus limited to cases in which the Congress has specifically required a certain

type of hearing. The section has no application to rule making, as defined in

section 2 (c). The section does apply, however, to licensing, with the exception

that section 5 (c), relating to the separation of functions, does not apply in deter-

mining applications for initial license, i. e., original licenses as contradistinguished

from renewals or amendments of existing licenses.

If a case falls within one of the six exceptions listed at the opening of section 5,

no provision of section 5 has any application to that case; such a case would be

governed by the requirements of other existing statutes.

The first exception is intended to exempt, among other matters, certain types

of reparation orders assessing damages, such as are issued by the Interstate

Commerce Commission and the Secretary of Agriculture, since such orders are

admissible only as prima facie evidence in court upon attempted enforcement

proceedings or (at least in the case of reparation orders issued by the Secretary

of Agriculture under the Perishable Agricultural Commodities Act) on the appeal

of the losing party. Reparation orders involving in part an administrative deter-

mination of the reasonableness of rates in the past so far as they are not subject

to trial de novo would be subject to the provisions of section 5 generally, but

they have been specifically exempted from the segregation provisions of section

5 (c). In the fourth exception, the term "naval" is intended to include adjudica-

tive defense functions of the Coast Guard and the Bureau of Marine Inspection

and Navigation, where such functions pertain to national defense.

Section 5 (a) is intended to state minimum requirements for the giving of notice

to persons who under existing law are entitled to notice of an agency hearing in

a statutory adjudication. While in most types of proceedings all of the informa-

tion required to be given in clauses (1), (2), and (3) may be included in the "notice

of hearing" or other moving paper, in many instances the agency or other moving

party may not be in position to set forth all of such information in the moving

paper, or perhaps not even in advance of the hearing, especially the "matters of

fact and law asserted." The first sentence of this subsection merely requires

that the information specified should be given as soon as it can be set forth and,

in any event, in a sufficiently timely manner as to afford those entitled to the

information an adequate opportunity to meet it. The second sentence comple-

ments the first and requires agencies and other parties promptly to reply to

moving papers of private persons or permits agencies to require responsive plead-

ing in any proceedings.

Section 5 (c) applies only to the class of adjudicatory proceedings included

within the scope of section 5, i. e., cases of adjudication required by statute to

be determined after opportunity for an agency hearing, and then not falling

within one of the six excepted situations listed at the opening of section 5. As

explained in the comments with respect to section 5 generally, this subsection

does not apply either in proceedings to determine applications for initial licenses

or in those to determine the reasonableness of rates in the past.

In the cases to which this subsection is applicable, if the informal procedures

described in section 5 (b) (1) are not appropriate or have failed, a hearing is to

be held as provided in sections 7 and 8. At such hearing the same officers who

preside at the reception of evidence pursuant to section 7 shall make the recom-

mended decision or initial decision "required by section 8" except where such

officers become unavailable to the agency. The reference to section 8 is signifi-

cant. Section 8 (a) provides that, in cases in which the agency has not presided

at the reception of the evidence, the officer who presided (or, in cases not subject

to subsection (c) of section 5, an officer or officers qualified to preside at hearings

pursuant to section 7) shall make the initial or recommended decision, as the

case may be. It is plain, therefore, that in cases subject to section 5 (c), only

the officer who presided at the hearing (unless he is unavailable for reasons beyond

ADMINISTRATIVE PROCEDURE 227

the agency's control) is eligible to make the initial or recommended decision, as

the case may be.

This subsection further provides that in the adjudicatory hearings covered by

it no presiding officer shall consult any person or party on any fact in issue unless

upon notice and opportunity for all parties to participate (except to the extent

required for the disposition of ex parte matters as authorized by law). The

term "fact in issue" is used in its technical, litigious sense.

In most of the agencies which conduct adjudicative proceedings of the types

subject to this subsection, the examiners are placed in organizational units apart

from those to which the investigative or prosecuting personnel are assigned.

Under this subsection such an arrangement will become operative in all such

agencies. Further, in the adjudicatory cases covered by section 5 (c), no officer,

employee, or agent engaged in the performance of investigative or prosecuting

functions for any agency in any case shall, in that or a factually related case,

participate or advise in the decision, recommended decision, or agency review

pursuant to section 8 except as witness or counsel in public proceedings. How-

ever, section 5 (c) does not apply to the agency itself or, in the case of a multi-

headed agency, any member

thereof.

It would not preclude, for example, a

member of the Interstate Commerce Commission personally conducting or super-

vising an investigation and subsequently participating in the determination of

the agency action arising out of such investigation.

Section 5 (c), applying as it does only to cases of adjudication (except deter-

mining applications for initial licenses or determining reasonableness of rates in

the past) within the scope of section 5 generally, has no application whatever to

rule making, as defined in section 2 (c). As explained in the comment on section

2 (c), rule making includes a wide variety of subject matters, and within the scope

of those matters it is not limited to the formulation of rules of general applicability

but includes also the formulation of agency action whether of general or par-

ticular application, for example, the reorganization of a particular company.

Section

(d):

Within the

scope

of section

(i.

e., in cases of adjudication required

by statute to be determined on the record after opportunity for an agency hearing,

subject to certain exceptions) the agency is authorized to issue a declaratory

order to terminate a controversy or remove uncertainty. Where declaratory

orders are found inappropriate to the subject matter, no agency is required to

issue them.

Section 6: Subsection (a), in stating a right of appearance for the purpose of

settling or informally determining the matter in controversy, would not obtain

if the agency properly determines that the responsible conduct of public business

does not permit. It may be necessary, for example, to set the matter down for

public hearing without preliminary discussion because a statute or the subject

matter or the special circumstances so require.

It is not intended by this provision to require the agency to give notice to all

interested persons, unless such notice is otherwise required by law.

This subsection does not deal with, or in any way qualify, the present power

an agency to regulate practice at its bar. It expressly provides moreover, that

nothing in the act shall be construed either to grant or to deny the right of non-

lawyers to appear before agencies in a representative capacity. Control over this

matter remains in the respective agencies.

Section 6 (b): The first sentence states existing law. The second sentence is

new.

Section 6 (c): The first sentence entitles a party to a subpena upon a statement

or showing of general relevance and reasonable scope of the evidence sought.

The second sentence is intended to state the existing law with respect to the judi-

cial enforcement of subpenas.

Section 6 (d): The statement of grounds required herein will be very simple, as

contrasted with the more elaborate findings which are customarily issued to sup-

port an order.

Section 7: This section applies in those cases of statutory hearing which are

required by sections 4 and 5 to be conducted pursuant to section 7. Subject to

the numerous exceptions contained in sections 4 and 5, they are cases in which

an order or rule is to be made upon the basis of the record in a statutory hearing.

Section 7 (a): The subsection is not intended to disturb presently existing

statutory provisions which explicitly provide for certain types of hearing officers.

Among such are (1) joint hearings before officers of the Federal agencies and per-

sons designated by one or more States, (2) where officers of more than one agency

sit, (3) quota allotment cases under the Agricultural Adjustment Act of 1938,

(4) marine casualty investigation boards, (5) registers of the General Land Office,

228 ADMINISTRATIVE PROCEDURE

6) special boards set up to review the rights of disconnected servicemen (38

U. S. C. 693h) and the rights of veterans to special unemployment compensation

(38 U. 8. C. 696h), and (7) boards of employees authorized under the Interstate

Commerce Act (49 U. S. C. 17 (2)).

Subject to this qualification, section 7 (a) requires that there shall preside at

the taking of evidence one or more examiners appointed as provided in this act,

unless the agency itself or one or more of its members presides. This provision

is one of the most important provisions in the act. In many agencies of the

Government this provision may mean the appointment of a substantial number

of hearing officers having no other duties. The resulting expense to the Govern-

ment may be increased, particularly in agencies where hearings are now conducted

by employees of a subordinate status or by employees having duties in addition

to presiding at hearings. On the other hand, it is contemplated that the Civil

Service Commission, which is empowered under the provisions of section 11 to

prescribe salaries for hearing officers, will establish various salary grades in accord-

ance with the nature and importance of the duties performed and will assign those

in the lower grades to duties now performed by employees in the lower brackets.

It may also be possible for the agencies to reorganize their staffs so as to permit

the appointment of full-time hearing officers by reducing the number of employees

engaged on other duties.

This subsection further provides for withdrawal or removal of examiners dis-

qualified in a particular proceeding. Some of the agencies have voiced concern

that this provision would permit undue delay in the conduct of their proceedings

because of unnecessary hearings or other procedure to determine whether affidavits

of bias are well founded. The provision does not require hearings in every instance

but simply requires such procedure, formal or otherwise, as would be necessary to

establish the merits of the allegations of bias. If it is manifest that the charge is

groundless, there may be prompt disposition of the matter. On the other hand,

if the affidavit appears to have substance, it should be inquired into. In any

event, whatever procedure the agency deems appropriate must be made a part of

the record in the proceeding in which the affidavit is filed.

Section 7 (b): The agency may delegate to a hearing officer any of the enumer-

ated powers with which it is vested. The enumeration of the powers of hearing

officers is not intended to be exclusive.

Section 7 (c): The first sentence states the customary rule that the proponent

of a rule or order shall have the burden of

proof.

Statutory exceptions to the

rule are preserved. Parties shall have the right to conduct such cross-examination

as may be required for a full and true disclosure of the facts. This is not intended

to disturb the existing practice of submitting technical written reports, sum-

maries, and analyses of material gathered in field surveys, and other devices

appropriately adapted to the particular issues involved in specialized proceedings.

Whether the agency must in such cases produce the maker of the report depends,

as it does under the present law, on what is reasonable in all the circumstances.

It may be noted that agencies are empowered, in this subsection, to dispense

with oral evidence only in the types of proceedings enumerated; i. e., in instances

in which normally it

not necessary to

see

and hear the witnesses in order properly

to appraise the evidence. While there may be types of proceedings other than

those enumerated in which the oral testimony of the witnesses is not essential, in

such instances the parties generally consent to submission of the evidence in

written form so that the inability of the agency to compel submission of written

evidence would not be burdensome.

The provision regarding "evidence in written form" does not limit the generality

of the prevailing principle that "any evidence may be received"; i. e., that the

rules of evidence as such are not applicable in administrative proceedings and

that all types of pertinent evidentiary material may be considered. It is assumed,

of course, that agencies will, in the words of the Attorney General's Committee

on Administrative Procedure, rely only on such evidence (whether written or

oral) as is "relevant, reliable, and probative." This is meant as a guide, but the

courts in reviewing an order are governed by the provisions of section 10 (e),

which states the "substantial evidence" rule.

Section 7 (d): The transcript of testimony and exhibits, together with all

papers and requests filed in the proceeding, shall constitute the exclusive record

for decision, in the cases covered by section 7. This follows from the proposition

that sections 7 and 8 deal only with cases where by statute the decision is to be

based on the record of hearing. Further, section 7 is limited by the exceptions

contained in the opening sentences of sections 4 and 5; accordingly, certain special

classes of cases, such as those where decisions rest solely on inspections, tests, or

ADMINISTRATIVE PROCEDURE 229

elections, are not covered. The second sentence of the subsection enables the

agency to take official notice of material facts which do not appear in the record,

provided the taking of such notice is stated in the record or decision, but in such

cases any party affected shall on timely request be afforded an opportunity to

show the contrary.

Section 8: This section applies to all hearings held under section 7.

Section 8 (a): Under this subsection either the agency or a subordinate hearing

officer may make the initial decision. As previously observed with respect to

subsection (c) of section 5, in cases to which that subsection is applicable the same

officer who personally presided over the hearing shall make such decision if it is

to be made by a subordinate hearing officer. The agency may provide that in all

cases the agency itself is to make the initial decision, or after the hearing it may

remove a particular case from a subordinate hearing officer and thereupon make

the initial decision. The initial decision of the hearing officer, in the absence of

appeal to or review by the agency, is (or becomes) the decision of the agency,

upon review the agency may restrict its decision to questions of law, or to the

question of whether the findings are supported by substantial evidence or the

weight of evidence, as the nature of the case may be. On the other band, it may

make entirely new findings either upon the record or upon new evidence which it

takes.

It may remand the matter to the hearing officer for any appropriate fur-

ther proceedings.

The intention underlying the last sentence of this subsection is to require the

adoption of a procedure which will give the parties an opportunity to make their

contensions to the agency before the issuance of a final agency decision. This

sentence states as a general requirement that whenever the agency makes the

initial decision without having presided at the reception of the evidence, a recom-

mended decision shall be filed by the officer who presided at the hearing (or, in

cases not subject to section 5 (c), by any other officer qualified to preside at sec-

tion 7 hearings). However, this procedure need not be followed in rule making

or in determining applications for initial licenses (1) if, in lieu of a recommended

decision by such hearing officer, the agency issues a tentative decision; (2) if, in

lieu of a recommended decision by such hearing officer, a recommended decision

is submitted by any of the agency's responsible officers; or (3) if, in any event, the

agency makes a record finding that "due and timely execution of its function

imperatively and unavoidably so requires."

Subsection (c) of section 5, as explained in the comments on that subsection,

does not apply to rule making. The broad scope of rule making is explained in

the notes to subsection (c) of section 2.

The second exception permits, in proceedings to make rules and to determine

applications for initial licenses, the continuation of the widespread agency practice

of serving upon the parties, as a substitute for either an examiner's report or a

tentative agency report, a report prepared by the staff of specialists and techni-

cians normally engaged in that portion of the agency's operations to which the

proceeding in question relates. The third exception permits, in lieu of any sort

of preliminary report, the agency to issue forthwith its final rule or its order

granting or denying an initial license in the emergent instances indicated. The

subsection, however, requires that an examiner issue either an initial or a recom-

mended decision, as the case may be, in all cases subject to section 7 except rule

making and determining applications for initial licenses. The act permits no

deviation from this requirement, unless, of course, the parties waive such

procedure.

Section 8 (b): Prior to each recommended, initial, or tenative decision, parties

shall have a timely opportunity to submit proposed findings and conclusions, and,

prior to each decision upon agency review of either the decision of subordinate

officers or of the agency's tentative decision, to submit exceptions to the initial,

recommended, or tentative decision, as the case may be. Subject to the agency's

rules,

either the proposed findings or the exceptions may be oral in form where

such mode of presentation is adequate.

Section 9: Subsection (a) is intended to declare the existing law. Subsection

(b) is intended to codify the best existing law and practice. The second sentence

of subsection (b) is not intended to apply to temporary licenses which may be

issued pending the determination of applications for licenses.

Section 10: This section, in general, declares the existing law concerning judi-

cial review. It provides for judicial review except insofar as statutes preclude it,

or insofar as agency action is by law committed to agency discretion. A statute

230 ADMINISTRATIVE PROCEDURE

may in terms preclude judicial review or be interpreted as manifesting a congres-

sional intention to preclude judicial review. Examples of such interpretation are:

Switchmen's Union of North America v. National Mediation Board (320 U. S. 297);

American

Federation

of Labor v. National Labor Relations Board (308 U. S. 401);

Butte, Anaconda and Pacific Railway Co. v. United Stales (290 U. S. 127). Many

matters are committed partly or wholly to agency discretion. Thus, the courts

have held that the refusal by the National Labor Relations Board to issue a com-

plaint is an exercise of discretion unreviewable by the courts (Jacobsen v. National

Labor Relations

Board,

120 F. (2d) 96 (C. C. A. 3d); Marine Engineers' Beneficial

Assn.

v. National Labor Relations

Board,

decided April 8, 1943 (C. C. A. 2d),

certiorari denied, 320 U. S. 777). In this act, for example, the failure to grant a

petition filed under section 4 (d) would be similarly unreviewable.

Section 10 (a): Any person suffering legal wrong because of any agency action,

or adversely affected or aggrieved by such action within the meaning of any

relevant statute, shall be entitled to judicial review of such action. This reflects

existing law. In Alabama Power Co. y. Ickes (302 U. S. 464), the Supreme Court

stated the rule concerning persons entitled to judicial review. Other cases having

an important bearing on this subject are:

Massachusetts

v. Mellon (262 U. S. 447),

The

Chicago

Junction Case (264 U. S. 258), Sprunt & Son v. United States (281

U. S. 249), and Perkins v. Lukens Steel Co. (310 U. S. 113). An important

decision interpreting the meaning of the terms "aggrieved" and "adversely

affected" is Federal Communications Commission v. Sanders Bros. Radio Station

(309 U. S. 470).

Section 10 (b): This subsection requires that where a specific statutory method

is provided for reviewing a given type of case in the courts, that procedure shall

be used. If there is no such procedure, or if the procedure is inadequate (i. e.,

where under existing law a court would regard the special statutory procedure as

inadequate and would grant another form of relief), then any applicable procedure,

such as prohibitory or mandatory injunction, declaratory judgment, or habeas

corpus, is available. The final sentence of the subsection indicates that the ques-

tion of the validity of an agency action may arise in a court proceeding to enforce

the agency action. The statutes presently provide various procedures for

judicial enforcement of agency action, and nothing in this act is intended to

disturb those procedures. In such a proceeding the defendant may contest the

validity of the agency action unless a prior, adequate, and exclusive opportunity

to contest or review validity has been provided by law.

Section 10 (c): This subsection states (subject to the provisions of section 10 (a))

the acts which are reviewable under section 10. It is intended to state existing

law. The last sentence makes it clear that the doctrine of exhaustion of adminis-

trative remedies with respect to finality of agency action is intended to be appli-

cable only (1) where expressly required by statute (as, for example, is provided in

49 U. S. C. 17 (9)), or (2) where the agency's rules require that decisons by sub-

ordinate officers must be appealed to superior agency authority before the decision

may be regarded as final for purposes of judicial review.

Section 10 (d): The first sentence states existing law. The second sentence

may be said to change existing law only to the extent that the language of the

opinion in Scripps-Howard Radio, Inc. v. Federal Communications Commission

(316 U. S. 4, 14) may be interpreted to deny to reviewing courts the power to

permit an applicant for a renewal of a license to continue to operate as if the

original license had not expired, pending conclusion of the judicial review pro-

ceedings. In any event, the court must find, of course, that granting of interim

relief is necessary to prevent irreparable injury.

Section 10 (e): This declares the existing law concerning the scope of judicial

review. The power of the court to direct or compel agency action unlawfully

withheld or unreasonably delayed is not intended to confer any nonjudicial func-

tions or to narrow the principle of continuous administrative control enunciated

by the Supreme Court in

Federal

Communications Commission v. Pottsville

Broad-

casting

Co.

(309 U. S. 134). Clause (5) is intended to embody the law as declared,

for example, in Consolidated Edison Co. v. National Labor Relations Board (305

U. S. 197). There the Chief Justice said: "Substantial evidence is more than a

more scintilla. It means such relevant evidence as a reasonable mind might ac-

cept as adequate to support a conclusion (p. 229) * * * assurance of a de-

sirable flexibility in administrative procedure does not go so far as to justify orders

without a basis in evidence having rational probative force" (p. 230).

The last sentence of this section makes it clear that not every failure to observe

the requirements of this statute or of the law is ipso facto fatal to the validity of

ADMINISTRATIVE PROCEDURE

23 1

an order. The statute adopts the rule now well established as a matter of com-

mon law in all jurisdictions that error is not fatal unless prejudicial.

Section 11: This section provides for the appointment, compensation, and

tenure of examiners who will preside over hearings and render derisions pursuant

to sections 7 and 8. The section provides that appointments shall be made

"subject to the civil service and other laws to the extent not inconsistent with

this act." Appointments are to be made by the respective employing agencies

of personnel determined by the Civil Service Commission to be qualified and

competent examiners. The examiners appointed are to serve only as examiners,

except that, in particular instances (especially where the volume of hearings under

a given statute or in a given agency is not very great), examiners may be assigned

additional duties which are not inconsistent with or which do not, interfere with

their duties as examiners. To insure equality of participation among examiners

in the hearing and decision of cases, the agencies are required to use them in

rotation so far as may be practicable.

Examiners are subject to removal only for good cause "established and deter-

mined" by the Commission. The Commission must afford the examiner a hear-

ing, if requested, and must rest its decision solely upon the basis of the record

of such hearing. It should be noted that the hearing and the decision are to be

conducted and made pursuant to the provisions of sections 7 and 8.

Section 11 provides further that the Commission shall prescribe the compensa-

tion of examiners, in accordance with the compensation schedules provided in

the Classification Act, except that the efficiency rating system set forth in that

act shall not be applicable to examiners.

Section 12: The first sentence of section 12 is intended simply to indicate that,

the act will be interpreted as supplementing constitutional and legal requirements

imposed by existing law.

The section further provides that "no subsequent legislation shall be held to

supersede or modify the provisions of this act except, to the extent that such

legislation shall do so expressly." It is recognized that no

congressional

legisla-

tion can bind subsequent sessions of the Congress. The present act can be

repealed in whole or in part at any time after its passage. However, the act is

intended to express general standards of wide applicability. It is believed that

the courts should as a rule of construction interpret the act as applicable on a

broad basis, unless some subsequent act clearly

provides

to the contrary.