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APPENDIXES

HEARING EXAMINERS' ROLE IN THE ADMINISTRATIVE PROCESS

Remarks of Henry S. Sahm, vice president of the Federal Trial
Examiners Conference

From the earliest days of our Federal Government, Congress has increasingly relied upon the administrative process to apply, to implement, and to secure the enforcement of general statutory provisions in accordance with its determinations of public interest and policy. In employing this method, Congress has framed broad statutory standards and policies designed to attain generally expressed objectives, and has left to a particular executive department or independent agency, the fair and reasonable application and the detailed development of these general standards and policies.

Whether the powers thus entrusted to an administrative agency by Congress be those of applying the broad congressional mandates by rulemaking, by licensing, by enforcing, or by adjudicating, the agency, in the performance of these duties, is ordinarly required to make decisions and to take action affecting the rights or interests of individuals outside the Government. In recognition of this, the statutes conferring such powers and responsibilities upon an agency have usually required an opportunity for a hearing and a decision by the agency based upon the record of that hearing. And even though a given statute may contain no express provisions, these requirements may be reasonably implied as a matter of procedural due process. Furthermore, the statutes relating to the adjudicatory powers of the various administrative agencies, have usually assured persons affected by an administrative decision or order, an opportunity to secure review by the courts either on petitions for review or on the agency's petition for enforcement.

The fundamental theory upon which the administrative process has been built is that, for the practical, intelligent, and fair formulation and application of a desirable system of legal principles or regulations in any broad, important field of our national activity, Congress may rely upon administrative agencies to apply the declared policies in the public interest, and to fulfill from day to day the purpose of the statutory plan. Upon this theory and in practice, it is the responsibilty of the agencies and their members, appointed in a manner acceptable to Congress, to execute the law and congressional policies as declared by statute. As the administrative function has been developed at the intermediate level, the hearing examiners have become the instruments of the law and their respective agencies (1) for the holding of fair hearings with responsibility for intelligible records which will enable their agencies to make the ultimate, necessary determinations of fact in the light of all the contentions and the relevant evidence produced by parties who will be affected by the agency's action; (2) for initial findings of fact upon this evidence based not only upon such factors as the relative plausibility, the internal consistency, and the shadings of statement of conflicting witnesses, all of which are apparent from the cold record or transcript presented to the agency, but also upon the comparative demeanor of the witnesses whom the examiners, but not the agency members, have seen and heard; (3) for an orderly and clear development of the case both during the hearing and in the initial or recommended decision, in accordance with those principles of law and policy which have been established and followed by their respective agencies, or, only in the absence of an agency enunciation of applicable policy in accordance with the policy which he believes the agency should adopt; and (4) subject to the same guidance and limitation, to draw and apply conclusions of law to the facts as he has found them, and to recommend an appropriate order or other disposition of the case. Before the passage of the Administrative Procedure Act of 1946, however, there was no uniform requirement or practice on the part of the agencies that

the persons designated by them as hearing examiners, trial examiners, hearing officers, or hearing commissioners perform only hearing examiner functions. For example, upon the case-by-case method of assignment in use by some agencies, attorneys spent a portion of their time as trial attorneys and the remainder of their time as hearing examiners. There was, moreover, no uniformity in the hearing or decisional powers of the examiners employed by the various agencies. Generally speaking, the agencies required their examiners to preside and take evidence at the hearing, to control its course by dealing with the usual trial motions and by ruling on the relevancy or admissibility of the evidence, and to prepare and file reports with the agency. But the extent of these powers which the examiners were permitted to exercise in their hearings varied considerably from agency to agency, as did the importance attached to their reports, even when they were directed to include recommended conclusions.

In the Administrative Procedure Act of 1946, Congress made provision for the use by administrative agencies of examiners who, according to section 11, “shall perform no duties inconsistent with their duties and responsibilities as examiners." With certain specifically stated exceptions, sections 4(b), 5(b), and 7(a), provide by their combined substance that, when not conducted by the agency or by one or more of its members, or by a board specially provided by statute, all administrative hearings and rule making or adjudicatory cases, which are required by statute to be determined on the record after opportunity for an agency hearing, shall be conducted by these examiners. Section 7(b) provides that officers presiding at hearings shall have authority, subject to agency rules to:

"(1) administer oaths and affirmations, (2) issue subpenas authorized by law, (3) rule upon offers of proof and receive relevant evidence, (4) take or cause depositions to be taken whenever the ends of justice would be served thereby, (5) regulate the course of the hearing, (6) hold conferences for the settlement or simplification of the issues by consent of the parties, (7) dispose of procedural requests or similar matters, (8) make decisions or recommend decisions in conformity with section 8, and (9) take any other action authorized by agency rule consistent with this act."

Finally, section 5(c), and sections 8 (a) and (b) provide, insubstance, that, if available, the examiner who conducted a hearing shall issue either an initial decision (which in the absence of exception shall become the decision of the agency) or a recommended decision, and that such decisions (whether initial or recommended) "shall become a part of the record and include a statement of (1) findings and conclusions, as well as the reasons or basis therefore, upon all the material issues of fact, law, or discretion presented on the record; and (2) the appropriate rule, order, sanction, relief, or denial thereof."

In addition to setting forth the hearing examiners' powers, the exercise of which obviously contemplated and required an able corps of examiners, Congress also made provision in the Administrative Procedure Act that, subject only to the control of published agency precedent and the ultimate agency and judicial review of their acts, the hearing examiners be given such independence of agency influence and direction as would assure to litigants the benefit of the hearing examiners' fresh and unbiased approach to, and their independent and unprejudiced appraisal of, the cases which came before them. This it did in part through the provision of section 5(c) that "no such [hearing examiner] 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 be responsible to or subject to the supervision or direction of any officer, employee, or agent engaged in the performance of investigative or prosecutiong functions for any agency." And, for the same purposes, section 11 not only generally circumscribed the agencies' freedom in assigning cases by requiring that their examiners "shall be assigned to cases in rotation so far as practicable," but, to render them free from the agencies' possible influence, also vested control of their compensation, promotion and tenure in the Civil Service Commission to a much greater extent than in the case of other Federal employees. In sum, as stated by the Senate Committee on the Judiciary in reporting the bill which became the Administrative Procedure Act, it was the intention of Congress to provide "for a special class of semi-independent subordinate hearing officers. Legislative History, Senate Document No. 248, 79th Congress, 2d session, page 192.

In the organizational scheme prescribed by Congress, it is therefore plain, and must constantly be borne in mind, that the agencies, and not their hearing examiners, have the responsibility for the end product of their administrative proceedings. They, and not the hearing examiners, are entrusted with the

ultimate responsibility of determining the basic relevant facts in all cases coming before them. And, for the same reason, the agencies, and not the examiners, are the interpreters of the law and the policymakers whose decisions in these respects are binding upon the examiners. Accordingly, the agencies must, and do, possess the power to affirm or reverse any or all of their hearing examiners' rulings, findings, and conclusions, and to accept or reject their recommendations.

Although the hearing examiner thus occupies a subordinate, though semiindependent, position in relation to his agency, this does not lessen the difficulty nor the exacting requirements of his independent performance of his functions prior to his submission of his cases to the agency for final action. Nor does it detract from the independent stature and importance which Congress intended for the hearing examiner and the hearing-examiner function at the threshold of the administrative decisional process, particularly with respect to factfinding. This, in essence, is the opinion expressed by the Supreme Court in the course of its holding in the Universal Camera case (340 U.S. 474), that the factual findings of an examiner, though rejected by the National Labor Relations Board, should have been considered by the circuit court of appeals in determining whether the order and findings of the Board were supported by "substantial evidence in the record considered as a whole," as required by section 10(f) of the Labor-Management Relations Act of 1947 (61 Stat. 149). In reaching this conclusion upon a consideration of the provisions of this statute and of the Administrative Procedure Act, the Court referred to "the indications in the legislative history that enhancement of the status and function of the trial examiner was one of the important purposes of the movement for administrative reform." Continuing in its opinion, the Court noted that "both statutes * * * evince a purpose to increase the importance of the role of examiners in the administrative process." And, in remanding the case to the circuit court for a consideration of the examiner's factual findings as they might possibly bear on the question of the substantiality of the evidence supporting the Board's contrary findings, the Court relied upon section 8(b) of the Administrative Procedure Act which makes examiners' decisions a part of the record, and recognized the weight logically to be accorded by both the agency and the reviewing court to the views of "an impartial, experienced examiner who has observed the witnesses and lived with the case.'

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For the proper performance of his important and difficult functions, a hearing examiner obviously must possess high professional and personal qualifications. He must be able to deal with all of the substantive questions which are presented through him to the agency and, in addition, to handle quickly and with a minimum of error all of the procedural matters that arise during the proceedings. Certainly, a firm grasp of the substantive law in his field and of trial practices and techniques is absolutely essential. In addition, the examiner must have the faculty of using these tools fairly, firmly, and with a minimum possibility of friction in dealing with the witnesses and counsel who appear before him. Finally, for the benefit of the litigants, his agency, and the reviewing court, he must have the ability to analyze and evaluate the evidence and contentions brought before him, and to present his analysis and valuation in a lucid and concise decision. In order to discharge these duties, however, there must be no encroachment upon the examiner's independence. Mr. Justice Black of the U.S. Supreme Court has stated: "

"The Administrative Procedure Act was designed to give trial examiners in the various administrative agencies a new status of freedom from agency control. Henceforth they were to be very nearly the equivalent to judges even though operating within the Federal system of administrative justice."

And in Universal Camera Corporation v. N.L.R.B. (340 U.S. 474, 494, 495), the Supreme Court relied upon :

"*** the indications in the legislative history that enhancement of the status and function of the trial examiner was one of the important purposes of the movement for administrative reform. ***The Administrative Procedure Act contains detailed provisions designed to maintain high standards of independence and competence in examiners." [Emphasis supplied.]

1 The above material is quoted from the report dated Sept. 3, 1954, to the President's Conference on Administrative Procedure on the appointment and status of Federal hearing officers submitted by the Committee on Hearing Officers.

2 Federal Trial Eraminers Conference, et al. v. Ramspeck, et al., 345 U.S. 128, 144 (1935), decisions below at 105 F. Supp. 734 (D.C. Dist. Ct.) and 202 F. 2d 312 (C.A.D.C.).

Judge Kauffman in Borg-Johnson Electronics Inc. v. Christenberry (27 LW 2360, N.Y. District Court), decided January 19, 1959, which involved the Post Office Department's trial examiner corps, said:

"The provisions for the appointment of impartial, independent hearing examiners are the very heart and soul of the Administrative Procedure Act * One of the primary purposes of the act was to establish qualified, impartial hearing examiners who would not be mere "rubber stamps" *** Thus it was provided in the act that hearing examiners would be under the Civil Service Commission ***"

One of the principal evils which the Congress intended the Administrative Procedure Act to remedy was the mixed and subservient status of hearing examiners. However, the Administrative Procedure Act, though a gigantic and momentous step, evidently did not go far enough in the judgment of Congress in adequately safeguarding trial examiners from agency control. The congressional concern in this respect was evidenced by its passage in 1947 of the TaftHartley Act, particularly section 4 (a),3 which provides that "no trial examiner's report shall be reviewed either before or after its publication *** and no trial examiner shall consult or advise with the Board with respect to exceptions taken to his findings, rulings, or recommendations." [Emphasis added.] This language made clear the manifest intent of Congress in 1947 that trial examiners at the Labor Board were thenceforth to be free of that supervision which had been characteristic of the era prior to enactment of the Administrative Procedure Act, when Labor Board trial examiners were not only subject to supervision by the Chief Trial Examiner but also a review division, both of whom went over their cases with a view to ordering revisions in drafts of examiners' intermediate reports.*

Later in 1954, 7 years after enactment of the Taft-Hartley Act, the congressional concern and apprehension over agencies' attempts to impinge upon examiners' independence was evidenced and amplified by an amendment to the Federal Communications Act (FCC) which provides, inter alia, in section 409 that "no examiner shall consult with any person *** on any fact or question of law, unless upon notice and opportunity for all parties to participate. In the performance of his duties, no such examiner shall be responsible to or subject to the supervision or direction of any person engaged in the performance of the investigative, prosecutory, or other functions for the Commission or any other agency of the Government. No examiner conducting or participating in the conduct of any such hearing shall advise or consult with the Commission or any member or employee of the Commission *** with respect to the initial decision in the case or with respect to exceptions taken to the findings, rulings, or recommendations made in such case." [Emphasis supplied.]

That the Administrative Procedure Act, section 409 of the FCC Act and section 4(a) of the Taft-Hartley are not the final answer to the insulation of hearing examiners from agency influence has been recognized also by the reports of two important governmental instrumentalities, i.e., the President's Conference on Administrative Procedure in 1954, and the Commission on Organization of the Executive Branch of the Government, popularly known as the Hoover Commission, which issued its report in 1955. In the 85th Congress, H.R. 3350 and S. 932 were introduced (1957), and in the 86th Congress, H.R. 7092 and S. 600, bills identical with H.R. 3350 and S. 932, have been introduced in the current Congress which would among other things, transfer administration of the hearing examiner program from the Civil Service Commission to an independent Office of Federal Administrative Procedure, and give greater independence to hearing

329 U.S.C. 154, passed June 23, effective Aug. 22, 1947.

Vol. 1, "Legislative History of Labor Management Relations Act," pp. 415 416 (Government Printing Office), quotes the Senate committee's report as follows: "A corollary of this reform [abolition of the review section for Board members] relates to the Trial Examining Division. Tremendous responsibility rests upon the judgment of the individual trial examiner who is sent by the Board to the field to hear contested cases. appraise the credibility of the witnesses, resolve conflicts in testimony, make findings of fact and recommendations for Board decision. Under current practice, before a trial examiner issues his report to the parties, its contents are reviewed and frequently changed or influenced by the supervisory employees in the Trial Examining Division. Yet since the report is signed only by the trial examiner, the Board holds him out as the sole person who made a judgment on the evidence developed at the hearing. In the first Morgan case (298 U.S. 468, at 580-581), one of the leading decisions on administrative law, the Supreme Court enunciated the following principle:

"If the one who determines the facts which underlie the order has not considered argument or evidence, it is manifest the hearing has not been given. The one who decides must hear.'"

examiners. This proposed legislation has the support of the Federal Trial Examiners Conference, the Federal Bar Association, and the American Bar Association.

ROBERT W. LISHMAN,

HENRY S. SAHM.

CIVIL AERONAUTICS BOARD,
Washington, June 25, 1959.

Chief Counsel, House Legislative Oversight Subcommittee, Washington, D.C. DEAR MR. LISHMAN: Thank you again for the opportunity of having appeared before the Legislative Oversight Subcommittee. Speaking for myself, I was extremely gratified at the full and complete hearing accorded our presentation.

I

In accordance with your request, the citation of the C.A.B. v. State Airlines case mentioned by me in the course of the hearing before the committee yesterday, is 338 U.S. 572 (1950). In that case the Supreme Court affirmed an award of a route to an airline which had not specifically filed an application therefor although the application did contain a so-called "catchall clause" or general prayer "for such other and further relief general and specific as the Board may deem appropriate." The significant quotation from the Court's opinion follows: "We are convinced that the Board, in awarding routes varying from those specifically detailed in Piedmont's application, has not departed from the congressional policy hinging certification generally on application procedures. While the routes sought by Piedmont did differ markedly from those awarded, they were all in the general area covered by the consolidated hearings. All 25 applicants had asked for routes somewhere in the area, and many of these routes overlapped. In such an area proceeding it would exalt imaginary procedural rights above the public interest to hold that the Board is hamstrung by the lack of foresight or skill of a draftsman in describing routes. The flexible requirements set by the Board were reasonable. They accorded with the policies of the act. The Board in well-considered opinions held that Piedmont's application met these requirements. That application also met the congressional requirements of writing and verification. So far as section 401 (d) (1) and (2) are concerned, the Board acted within its power in entering the orders" (pp. 577-578). In a recent decision (Pacific Northwest Local Air Service case, docket No. 5463, et al., decided May 28, 1959, order No. E-13945, at pp. 6-7, copy enclosed herewith) the Board interpreted the State Airlines' ruling as permitting it to grant air service to a city (Newport-Toledo, Oregon) which had not filed an application for service and similarly for which no airline had filed an application. An oral request for air service was made by witnesses at the hearing and the request was denied by the examiner because, inter alia, there was no issue of air service in these cities involved in the proceeding. The Board reversed on the theory that all parties had notice of the issue of service through the testimony given at the hearing, no objection was made to the introduction of this testimony, the witnesses were subjected to thorough cross-examination, and the carrier involved did not indicate an unwillingness to serve the point.

It follows from these two decisions that an examiner would not be warranted in excluding evidence relating to a proposed new service even though an application were not on file for the same either by an airline or the city concerned. While the Board has left open the question whether the evidence was excludable if an objection had been made by another party, in view of the general liberal interpretation given to the State Airlines case, it is extremely doubtful that it would be proper to exclude such evidence even if an objection were made. effect of these decisions on the size of records in CAB proceedings is obvious.

The

II

With respect to the analogy between the weight given an examiner's initial decision on review by an agency and that accorded the findings of an agency by a reviewing court discussed by me during the hearing on Tuesday afternoon, most of the cases (i.e. Universal Camera case, etc.) relate to NLRB findings which are adjudication-type hearings where credibility of the witnesses is an important issue and thus may be considered sui generis. However, in American Airlines v. C.A.B. (178 Fed. 2nd 903) involving the review of a combination licensing and rulemaking proceeding, the court of appeals held the Board's

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