I believe that there is no irreconcilable conflict between administrative justice and judicial justice. Both types of adjudication can exist in harmony with the fundamental concept of judicial supremacy of courts of law. Applied to the Federal Trade Commission, this means that we can have both adequate protection of the private rights of citizens and a safeguarding of the public interest in maintaining a private competitive enterprise system with essentially competitive conditions in open markets free from unfair trade practices and monopolistic practices.

H. R. 3871 proposes to take the heart out of the Federal Trade Commission by destroying its quasi-judicial adjudicatory functions. It should be clearly understood that all of the objections made by the proponents of the bill apply with equal force to other similar Federal regulatory agencies. The bill, therefore, attacks and seeks to nullify the principles underlying the administrative process as such. In my opinion, the objections of the supporters of the bill to the administrative process can be met and is being met by administrative procedural reform rather than by substituting de novo trials of issues of fact before courts of law for the existing hearings before administrative tribunals.

The recent enactment by the Congress of the Federal Administrative Procedure Act of 1946 itself demonstrates the untimeliness of H. R. 3871. This act has been described by Arthur T. Vanderbilt, now chief justice of the highest court of New Jersey, as

The most significant and far-reaching legislation in the realm of Federal judicial administration since the Judiciary Act of 1789.

He has also said that the act "marks the beginning of a new era in administrative law." It is ironical that H. R. 3871 should be proposed before the Administrative Procedure Act has had a reasonable chance to demonstrate its effectiveness or lack of effectiveness, as the case may be, in providing the essential safeguards for private rights.

Let it not be forgotten that the Administrative Procedure Act represents composite efforts of the American Bar and the Federal Government, extending over a period of many years of consideration and debate. Yet H. R. 3871 paradoxically proposes that this committee, and through it the Congress, should scrap all of the labors leading to the Administrative Procedure Act by passing legislation at complete variance with the objective of the act of curing abuses of administrative procedure rather than destroying the quasi-judicial powers of the administrative agencies.

I am confident that this committee will realize how unwise it is to traverse all of the ground, already covered in the vast literature on administrative law, which this bill calls upon the committee to do. For it must be remembered that in singling out for attack, the Federal Trade Commission, the second oldest quasi-judicial Federal administrative tribunal, the theory of the bill applies with equal force to such administrative agencies as the Interstate Commerce Commission, the Federal Communications Commission, the Federal Power Commission, and other similar regulatory agencies.

The fact that the Federal Trade Commission Act has served as a congressional pattern for other Federal regulatory agencies underscores the far-reaching consequences of depriving the Federal Trade

Commission of its adjudicatory authority. Why make a guinea pig out of the Federal Trade Commission unless the purpose is to start an erosive process which will eventually reduce all of our major Federal regulatory agencies to mere investigatory and prosecutorial bodies? If that is done, we would be burning down the house to roast the pig, or, as the saying goes, we would be throwing out the baby with the bathwater.

Nothing worth while in the public interest would be gained by such drastic measures. The Federal Trade Commission and other Federal agencies have already taken affirmative steps to conform their procedures to the requirements of the Administrative Procedure Act. In fact, the Federal Trade Commission took the initiative even before that act in assuring an internal separation of its prosecuting and adjudicatory functions. Since the act, the Commission has amended its rules of practice and its policy statements with even greater meticulousness to achieve a full and fair hearing and to cure a commingling of functions. Other Federal agencies have taken similar steps to comply with the basic procedural safeguards of the Administrative Procedure Act. One wonders, therefore, what all the shooting of H. R. 3871 is about.

In my detailed statement you will find that leading respected and conservative members of the American Bar, past and present, have recognized the inevitableness of the quasi-judicial administrative agency in modern economic society. In 1919 Elihu Root, a past president of the American Bar Association, wrote these words concerning that inevitable tide which H. R. 3871 seeks to reverse by turning the clock back to a bygone era:

There will be no withdrawal from these experiments, we shall go on; we shall expand them, whether we approve theoretically or not, because such agencies furnish protection to rights and obstacles to wrongdoing which under our new social and industrial conditions cannot be practically accomplished by the old and simple procedure of legislatures and courts in the last generation. Arthur T. Vanderbilt, whom I have already quoted, another past. president of the American Bar Association, also has said:

I am not suggesting that administrative agencies be abolished or that they be deprived of their powers of adjudication.

Both of these eminent layers have thus repudiated the theory upon which H. R. 3871 is based, both of them, however, pleaded for safeguards against the abuse of quasi-judicial power, safeguards such as are today found in the Administrative Procedure Act of 1946.

In my elaborated statement you will also find that an approach similar to that of Elihu Root and Arthur T. Vanderbilt has been taken by former Chief Justice Charles Evans Hughes and Harlan F. Stone. You will also find similar expressions from Justice Felix Frankfurter, one of the most profound scholars of administrative law of our time.

There is another fundamental objection to H. R. 3871. It repudiates the long-established congressional policy embodied in the Federal Trade Commission Act-and other Federal statutes based upon the Federal Trade Commission Act-whereby Congress has entrusted to a specialized expert regulatory tribunal the task of adjudicating fact questions. This policy of Congress has had the approval of the Supreme Court of the United States in a long line of decisions and

in opinions written by both liberal and conservative members of the Supreme Court. Among them I mention specifically Mr. Justice Sutherland, a former United States Senator.

The theory underlying the Federal Trade Commission Act that neither the legislative nor the traditional judicial process is adapted to the effectuation of a continuous and uniform national policy of constant investigation and fact finding with respect to problems of competition and monopoly is set forth in the opinions of the Supreme Court and of the lower Federal Courts. My longer statement sets forth the reasons why Congress adopted the approach through the administrative process and how the courts themselves have recognized its necessity.

I shall not take up the time of this committee in presenting specific objections to the O'Hara bill in detailed fashion. Since these objections are fully discussed in my statement, I shall confine myself to a checklisting of the points:

1. The transfer to the United States district courts of the power to decide questions of fact in the manner provided by the bill is unsound and unworkable for the following reasons:

(a) Federal Trade Commission proceedings should not be handled like traditional adversary lawsuits.

(b) The courts are not adapted to handling factual questions relating to the congressional national policy regarding unfair trade practices and restraint of trade practices. Courts do not have the specialized knowledge and skill arising from continuous attention to the specific types of cases which come before the Commission.

(c) By throwing into the judicial hopper the Commission cases, the courts would be swamped by an overwhelming burden of factfinding. I need only mention what common observation confirms, namely, that the Federal district courts are already greatly overburdened with crowded dockets.

This burden which H. R. 3871 would throw upon the courts would be greatly aggravated by the fact that under section 5 of the Federal Trade Commission Act, the Commission has jurisdiction over Sherman Act violations involving conspiracies or combinations in restraint of trade and monopoly questions. As shown in my statement, and as recognized by the Supreme Court in the Cement Institute case decided a few days ago, the specialized expert fact-finding adjudication of the Commission is especially needed by the courts in connection with the intricate questions that arise under the Sherman Act.

(d) There will be ineffective enforcement of the policy of Congress if the district courts become the triers of fact. It will take much longer, and involve greater expense to respondents than now is the case, to adjudicate factual issues before the courts. Moreover, there will be greater diversity in the decisions of the courts. What may be unfair competition in one Federal district will not be unfair competition in another district. We will have a checkerboard of varying decisions before the Circuit Court of Appeals and the Supreme Court perform their appellate functions of review. The Commission, on the other hand, can develop a consistent national policy.

(e) Trial of fact issues before the district courts will largely nullify the benefits now existing in saving of time and expense by use of the Federal Trade Commission's stipulation procedure in both informal

and formal cases. All such matters, and also consent orders, will have to be processed through the district courts. The bill would also render ineffective the Trade Practice Conference procedure of the Commission which permits industry-wide elimination of unfair trade practices by voluntary cooperative means.

(f) The Commission would become a mere initiatory body and a mere prosecuting agency. This will end its effectiveness as a regulatory agency. Without adjudicatory powers its work would be largely sterile.

(g) As to delays, it cannot be denied that delays occur in the administrative process. But a few instances of glaring delays should not be made a basis for overgeneralizing. Neither administrative justice nor judicial justice can be achieved in a summary manner. Indeed, delay is often inherent in the very procedural safeguards the Administrative Procedure Act seeks to secure. Without trying to pass upon questions of fact concerning comparative delays in the courts and before administrative agencies, this much can be said: the Federal Trade Commission internal procedures offer better prospect of cutting down on delays-as, for example, through stipulation proceduresthan is offered by court trial of fact questions. Certain technical procedures in the courts can also be avoided without impairment of the rights of respondents.

Notice also that H. R. 3871 is itself a piecemeal and tinkering bill. If its theory is sound-and I have already shown that it is not-why pick out section 5 of the Federal Trade Commission Act and leave untouched the Commission's jurisdiction under the Clayton Act, the Webb Export Trade Act, the Wool Products Labeling Act? I mention this to show how poorly thought out the bill is and how dangerous it might be because it has not been considered in all of its implications even by its proponents. Yet they ask Congress to deal with the bill as though it were a simple task for a nice spring day.

As to separation of the functions of prosecution and adjudication, no one would really quarrel with the validity of the principle that such functions should be separated. But, as already pointed out, the Commission and other Federal agencies are doing that very thing in their amended rules of practice and policy statements in compliance with the Administrative Procedure Act of 1946.

Judicial review under the present Federal Trade Commission Act has long satisfied constitutional requirements and has been approved by the Supreme Court. The courts have the final say as to what are unfair methods of competition. They review the Commission's orders as to their scope and the question of remedy. Jurisdictional questions, of course, are always reviewed.

In fairness to the proponents of H. R. 3871, it should be said that the present "substantial evidence" rule with respect to the Commission's findings of fact is a question on which opinions may well differ. I merely point out that the need for the "preponderance of evidence” rule in Commission cases, as ernoused in the hearings on the Reece bill in 1946, might not be as great today in view of the Administrative Procedure Act. The Commission conterds that it uses the "preponderance" test anyway. Be that as it may, there is no need for destroying the adjudicatory functions of the Commission to modify the present narrow scope of judicial review of findings of fact of the Commission.

Finally, let me say that I do not suggest that the Federal Trade Commission is an agency about which there is counsel of perfection. In my statement I refer to the silver-anniversary issue of the George Washington Law Review which reviews and appraises the first 25 years of the Commission's work. As editor of that issue, I am on record in pointing out the shortcomings of the Commission as of 1940 as analyzed by the authors of the symposium. But I believe that the volume shows that the Commission then had a black-ink balance of worthy accomplishments. I believe that statement is also true in 1948.

I am also on record in pointing out certain shortcomings in the Commission's administration of the Robinson-Patman Act. There are no doubt deficiencies in its administration of Section 5 of the Federal Trade Commission Act. But these criticisms of a constructive nature do not impair my belief in the faithful public service of the Commissioners and their legal and economic staffs. I have also found from close observation of the Commission's work that the Commission and its staff are free from personal bias or prejudice. Remember also that the Commission is a creature of the Congress and is much more responsive to the will of Congress than lifetime judges can be.

I urge this committee to reject H. R. 3871. It fosters the nostalgic delusion that there is an easy road back to the good old days when only courts of law adjudicated factual issues.

The CHAIRMAN. Do you have any additional statements that you wish to have made a part of the record?

Mr. OPPENHEIM. Sir?

The CHAIRMAN. Do you have any additional statement which you wish to be made a part of the record or did you give your statement in full?

Mr. OPPENHEIM. Well, sir, before you came in I requested permission to file with the clerk of the committee a more extended statement which I ask, if I may, be made a part of the statement.

The CHAIRMAN. That will be included as a part of your statement. Mr. OPPENHEIM. Thank you, sir.

(The statement referred to is as follows:)

STATEMENT SUBMITTED BY S. CHESTERFIELD OPPENHEIM, PROFESSOR OF LAW AND ACTING DEAN, THE GEORGE WASHINGTON UNIVERSITY LAW SCHOOL, WASHINGTON, D. C.

I am opposed to H. R. 3871, the O'Hara bill.

The bill savors of a nostalgic yearning for the "good old days" before the advent of the Interstate Commerce Commission (now in its sixty-first year) when "a day in court" in the Federal field generally meant an original adversary proceeding before a constitutional court of law or equity.

Judicial supremacy is the matrix of the Anglo-American legal system. If the O'Hara bill offered the only effective way of preserving that fundamental concept, it would deserve support. The contrary is true. H. R. 3871 rests on the fallacy that the Federal Trade Commission should be shorn of its existing quasi-judicial powers because the sole method of guaranteeing a fair and full hearing by an impartial tribunal is before the traditional courts.

This fallacious premise has been repudiated by leading conservative members of the American bar, by judges who have been uncomprising in their insistence upon fundamental constitutional safeguards essential to the preservation of private rights, by many scholars of administrative law representing all shades of viewpoints and, most important of all, by the majority of the Members of Congress when the Federal Administrative Procedure Act of 1946 was passed.

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