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In the case of United States v. Morgan (370 U. S. 183, 191), the Supreme Court, speaking through Chief Justice Stone, referred to that controversy as follows:

Court and agency are the means adopted to obtain the prescribed end, through coordinated action. Neither b. dy should repeat in this day the mistake made by the courts of law when equity was struggling for recognition.

In the case of Federal Communications Commission v. Pittsville Broadcasting Company (309 U. S. 134), the Supreme Court, speaking through Justice Frankfurter, characterized

The enforcement of legislative policy through administrative controlas involving a quite different process than the judicial one. Answering the contention of possible delay and hardship if administrative agencies were permitted the freedom to act as the Communications Commission had acted, the Court said:

But courts are not charged with general guardianship against all potential mischief in the complicated tasks of government. The present case makes timely the reminder “legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a degree as the courts.”

Congress which creates and sustains these agencies must be trusted to correct whatever defects experience may reveal.

The enactment of the Administrative Procedure Act shows that Congress has undertaken to correct the defects which experience has revealed.

Section 5 (b) of the Administrative Procedure Act provides: The agency shall afford all interested parties opportunity for, one, the submission and consideration of facts, arguments, offers of settlement, or proposals of adjustment where time, the nature of the proceeding, and the public interest permit, and two, to the extent that the parties are unable so to determine any controversy by consent, hearing, and decision upon notice and in conformity with sections 7 and 7.

Prior to the enactment of the Administrative Procedure Act, the Commission's rule V provided :

Whenever the Commission shall have reason to believe that there is a violation of law over which the Commission has jurisdiction and, in case of violation of the Federal Trade Commission Act, if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, the Commission shall issue and serve upon the proper parties a complaint stating its charges and containing a notice of a hearing upon a day and at the place therein fixed, at least 30 days after the service of said complaint.

In order for this rule to conform with section 5 (b) of the Administrative Procedure Act, it was amended so as to provide that:

Upon request made within 15 days after service of the complaint, any party shall be afforded opportunity for the submission of facts, arguments, offers of settlement or proposals of adjustment where time, the nature of the proceeding and the public interest permit, and due consideration shall be given to the same. Such submission shall be in writing. The filing of such request shall not operate to delay the filing of the answer.

The reason for section 5 (b) of the Administrative Procedure Act and the amendment to the Commission's rule V is obviously to afford the parties in Commission proceedings the same opportunities which existed in trials of cases in United States district courts for pretrial conferences and settlements.

Section 5 (c) of the Administrative Procedure Act generally requires each agency in the adjudication of cases subject to section 5 of that act to establish an internal separation of functions between the officials who hear and decide and those who investigate or prosecute.

The second sentence of section 5 (c) provides that:

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 be responsible to or subject to the supervision or direction of any officer, employee, or agent engaged in the performance of investigative or prosecuting functions for any agency.

The next sentence in section 5 (c) relates to investigators and prosecutors and provides that,

No cfficer, employee, or agent engaged in the performance of investigative or prosecutor 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 a witness or counsel in public proceedings.

Under this section the Federal Trade Commission has separated the functions of its investigative and prosecuting officers from that of the trial examiners who preside at the reception of evidence and make the recommended decision.

Rule VIII of the Commission's rules of practice, relating to answers in adversary proceedings, was amended so as to give the trial examiner more complete control over the course of hearings in conformity with section 7 (b) (5) of the Administrative Procedure Act.

Rule X of the Commission's rules of practice, relating to motions in adversary proceedings, was changed to comply with section 7 (b) of the Administrative Procedure Act.

Rule XIV of the Commission's rules of practice, relating to trial examiners and their authority, was amended to comply with sections 7 (a) and 7 (b) of the Administrative Procedure Act.

It should be pointed out that trial examiners are not to be selected and appointed by the Federal Trade Commission but, under section 11 of the Administrative Procedure Act, trial examiners are selected by the Civil Service Commission and cannot be removed by the agency in which they are employed except for good cause established and determined by the Civil Service Commission after opportunity for hearing and upon the record thereof.

These examiners receive compensation prescribed by the Civil Service Commission independently of agency recommendations or ratings. In fact, there is a board of examiners selected by the Civil Service Commission that conducted oral examinations for trial examiners on April 28, 29, and 30, 1948. This board is composed of very outstanding attorneys who are serving without compensation. I wish to call to your attention their names :

Carl McFarland, a Democrat, chairman of the District of Columbia Bar, former Assistant Attorney General of the United States, noted authority on administrative law and procedure, member of the American Bar Association and first chairman of that association's general section on administrative law, member of the Attorney General's Committee on Administrative Procedure, and who is largely responsible for the enactment of the Administrative Procedure Act.

Douglas L. Edmonds, a Republican of California, member of the American Bar Association and associate justice of the Supreme Court of California, a State which has an examiner system and which separates the examiners completely from the agencies.

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Joseph W. Henderson, a Republican, member of the Philadelphia Bar and American Bar Association, former president of that association, a member of the advisory board of the American Bar Association Journal and noted authority on administrative procedure and the examiner system.

Laurence M. Hyde, a Republican of Missouri, member of the American Bar Association and a judge of the Supreme Court of Missouri, who has done notable work in the improvement of the administration of justice, including the administrative agencies.

Wilson M. Matthews, a Republican of the District of Columbia Bar, and examiner in charge of the hearing examiner program within the Examining and Placement Division of the Civil Service Commission.

Willis Smith, a Democrat of North Carolina, member of the American Bar Association and former president of that association, a leader in behalf of the Administrative Procedure Act which was enacted while he was president.

William Henry Harrison, of the District of Columbia, who was formerly on the staff of the Supreme Court of the United States, who serves as executive secretary of this board of examiners.

The creation and personnel of this board of examiners and its work in connection with its examination and selection of trial examiners are regarded as long steps forward, in the direction of independence, capacity, impartiality, and judicial mindedness on the part of the hearing examiners under the Administrative Procedure Act. In compliance with the provisions of that act, particularly section 7, the Federal Trade Commission has amended its rule XIV of its Rules of Practice in adversary proceedings to read as follows:

All hearings pursuant to formal complaints shall be presided over by the Commission, a member of the Commission, or by a trial examiner appointed by the Commission and duly qualified as an examiner or hearing officer within the meaning of the Administrative Procedure Act. So far as practicable trial examiners shall be assigned to cases in rotation.

Subject to the published rules of the Commission and within its authority, officers presiding at hearings shall have the following powers and duties in all cases to which they are assigned by the Commission, to wit:

(1) To administer oaths and affirmations. (2) To issue subpenas authorized by law. (3) To rule upon offers of proof and receive relevant evidence. (4) To take or cause depositions to be taken whenever the ends of justice would be served thereby.

(5) To regulate the course of the hearings.

(6) To hold conferences for the settlement or simplification of the issues by consent of the parties.

(7) To dispose of procedural requests or similar matters.

(8) To make and submit to the Commission a recommended decision as provided by rule XXII.

(9) To certify questions to the Commission for its determination.

(10) To take any other action authorized by Commission rule consistent with the Administrative Procedure Act.

Trial examiners shall perform no duties inconsistent with their duties and responsibilities as such. Save to the extent required for the disposition of ex parte matters as authorized by law, no trial examiner shall consult any person or party as to any fact in issue unless upon notice and opportunity for all parties to participate.

Trial examiners shall not be responsible to, or subject to the supervision or direction of, any officer, employee, or agent engaged in the performance of investigative or prosecuting functions for the Commission.

The trial examiner is charged with the duty of conducting a fair and impartial hearing and of maintaining order in form and manner consistent with the dignity of the Commission. He will note on the record any disregard by

counsel of his rulings on matters of order and procedure and where he deems it necessary shall make special written report thereof to the Commission. In the event that counsel supporting the complaint or counsel for any respondent shall be guilty of disrespectful, disorderly, or contumacious language or conduct in connection with any hearing, the trial examiner may suspend the proceeding and submit to the Commission his report thereon, together with his recommendations as to whether any rule should be issued to show cause why such counsel should not be suspended or disbarred pursuant to rule VII or subjected to other appropriate action in respect thereto.

A copy of such trial examiner's report shall be furnished to any counsel upon whose language or conduct such report is made, and the Commission will take disciplinary action only after an opportunity for hearing has been accorded such counsel.

Your attention is likewise directed to Commission's rule XV, relating to hearings in adversary proceedings; to rule XVI, relating to subpenas.

Your attention is especially directed to the changes in Commission's rule XX relating to appeals to the Commission from rulings of trial examiners; also to rule XXI, relating to proposed findings and conclusions before trial examiners, which were amended to conform to section 8 of the Administrative Procedure Act.

Rule XXII of the Commission's Rules of Practice was amended to conform to section 8 (b) of the Administrative Procedure Act and provides, among other things, that, all findings, conclusions, and orders recommended by the trial examiner shall be based upon the whole record and supported by reliable, probative, and substantial evidence (including facts of which he may take official notice). No findings shall be recommended except such as he deems supported by the greater weight of the evidence.

Rule XXV of the Commission's Rules of Practice were rewritten and now provides the following:

Upon submittal of a case to the Commission for final decision on the merits the Commission will consider the whole record, including the recommended decision of the trial examiner and the exceptions thereto, will resolve all questions of fact by what it deems to be the greater weight of the evidence thereon, will make its decision stating the reasons or basis therefor and enter an appropriate order, and wherever it decides that an order to cease and desist should be entered will also make, as provided by law, a report in writing stating its findings as to the facts. As authorized under the various statutes defining its powers and duties the Commission adjudicates all formal proceedings brought before it and as authorized under the Administrative Procedure Act reserves such adjudications exclusively to itself.

No officer, employee, or agent, engaged in the performance of investigative or prosecuting functions for the Commission, and no party respondent or his agent or counsel in any case shall, in that or a factually related case, participate or advise in the decision of the Commission, except as a witness or as counsel in public proceedings.

The proponents of the O'Hara bill have criticized the Commission because, prior to the enactment of the Administrative Procedure Act and the conformity of the Federal Trade Commission's Rules of Practice and Procedure to the Administrative Procedure Act, it is said that the Commission acted as investigator, prosecutor, judge, and jury. This criticism has no merit since the Commission has separated the investigative and prosecuting functions from the functions of the trial examiners.

The unsoundness of the criticism that the Commission acts as investigator, prosecutor, judge, and jury is that the principle which opposes such a combination of functions has to do with the combination of such functions in a single individual and not with a large and complex organization like the Federal Trade Commission.

It is obviously improper for an individual to serve as investigator, prosecutor, and judge in the same case, but on the other hand it is not improper, even in a criminal case, for the large organization of the Government itself to investigate and prosecute through one officer, that is, the district attorney, and to decide the case through another officer, that is, the district court judge, both of whom are employees of the same Government.

In an over-all sense, the Federal Trade Commission functions in the same manner as the Federal Government with a separation of functions under the provisions of the Administrative Procedure Act which was unanimously passed by Congress in order to meet, among others, this very criticism.

It has been argued that the issuance of the complaint by the Commission is a prejudgment of the case. The answer to this argument is that the action of the Commission in issuing a complaint is no more a prejudgment of the case than the action of a district court judge in issuing a temporary injunction or in overruling a demurrer. In any event, such action would be subject to judicial review.

In the case of Federal Trade Commission v. Klesner (280 U. S. 19 (1929)) the Supreme Court, speaking through Mr. Justice Brandeis, in part stated :

While the Federal Trade Commission exercises under section 5 the functions of both prosecutor and judge, the scope of its authority is strictly limited. A complaint may be filed only “if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public.”

But the Commission's action in authorizing the filing of a complaint, like its action in making an order thereon, is subject to judicial review. The specific facts established may show, as a matter of law, that the proceeding which it authorized is not in the public interest, within the meaning of the act. If this appears at any time during the course of the proceeding before it, the Commission should dismiss the complaint. If, instead, the Commission enters an order, and later brings suit to enforce it, the court should, without inquiry into the merits, dismiss the suit.

The criticism which has been made regarding the length of time to try Commission cases may likewise be made with respect to the length of time that it takes to try cases in the Federal courts. It is unfair to make a comparison of Commission proceedings with court proceedings, or examples could be cited of long-drawn-out proceedings in both.

Reference has been made to one proceeding before the Commission which was continued over a period of 22 years.

For
purposes

of comparison I wish to refer you to the antitrust proceeding brought by the Attorney General against the Aluminum Co. of America in the United States District Court for the Southern District of New York. Complaint was filed on April 23, 1937. Hearings were held and testimony was taken from June 1, 1938, to September 14, 1940, said testimony consisting of more than 40,000 pages. The case was dismissed on July 23, 1942.

An appeal was taken direct to the Supreme Court, bypassing the circuit court of appeals, on September 14, 1942. The Supreme Court referred the case to a special court of appeals on June 12, 1944, which decided the appeal on March 12, 1945, and refused to pass upon certain questions therein until after the termination of the war.

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