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H. R. 3871 is a hapless effort to reverse the trend of the administrative process by turning back the clock to a bygone era.

The bill on its face is such a drastic departure from the judicially recognized philosophy underlying the present Federal Trade Commission Act that at first blush its opponents may feel it should not be dignified by taking it seriously. This cavalier attitude would in itself be both unfair to Mr. O'Hara and a disservice to the Congress.

Congressman O'Hara has stated the considerations in favor of his bill (93 Congressional Record, A-4277 to A-4278).

His basic proposition is that,

"The O'Hara bill gives both the Government and the individual a day in court—a fundamental which has been so encroached upon by bureaucratic practices that it threatens basic constitutional privileges and has an insidious destructive effect upon American concepts of government.”

There is nothing new in his charge that the Federal Trade Commission exercises a combination of prosecuting and adjudicating functions. Nor is there novelty in the criticism that the scope of judicial review of the Commission's orders has been sharply curtailed by the Federal Trade Commission Act and by judicial deference to the legislative mandate that the findings of fact of the Commission shall be conclusive if supported by evidence, interpreted by the courts to mean “substantial" rather than “preponderance” of evidence. Mr. O'Hara also complains about undue delays and expense in proceedings before the Commission. He further charges that the Commisisoners make their decisions without first-hand knowledge of the case.

Let it be said that under the American democratic system of free competition of ideas in the open market of debate, the public should always be grateful for such forthright criticism of, and even attacks upon, existing institutions such as the 34-year-old Federal Trade Commission. They perform a useful service even when the charges are exaggerated or perhaps unfounded. H. R. 3871 and Mr. O'Hara's supporting statement are no exception to this safety valve of freedom of expression.

What H. R. 3871 may have either overlooked or brushed aside is that that Congress has already made a basic choice in the Federal Administrative Procedure Act of 1946 by seeking to correct the defects to which H. R. 3871 are directed through improvement of administrative procedure rather than by a surgical removal of quasi-judicial powers from administrative agencies in the category of the Federal Trade Commission.

In dealing with the issues presented by H. R. 3871 it is useful to bear in mind Mr. Justice Frankfurter's admonition that in the ultimate analysis such issues are "referable to the attitude you take toward the necessity of the legal development that we call administrative law” ((1938) 24 Am. Bar J. 282, at p. 283).

He divided these attitudes into two main categories. One attitude he described in these words:

“If you think that administrative law is a denial of the common law, is hostile to it, betrays it, and should therefore be restricted as much as may be; if you believe not only that it should be, but that it will be; if you think that you and I or some political party can do something about it, then you will have one attitude toward these problems” (ibid, p. 283).

It is evident that proponents of H. R. 3871 entertain the attitude expressed above. However, sincere that attitude may be, it is likely to befog the real issues by resorting to such catchwords as “bureaucratic despotism” or “administrative absolutism” in espousing the idea that only in the traditional courts can there be adjudication of issues of fact under a "rule of law” or “a government of laws and not of men."

Congress has long ago decided against embodying at atitude in legislation such as H. R. 3871 proposes. On the contrary, it has adopted the second of the two attitudes which Justice Frankfurter epitomized in the following terms: If you take the attitude

that we are confronting not some alien movement or some movement that grew up because we were not attentive to our liberties, but that we are in the presence of a movement as legitimate, as real, as powerful, as pervasive as the movement which led to the establishment of courts of equity alongside courts of common law, then you will have a different attitude toward every one of these questions, which call for the most painstaking, I almost said painful—the most rigorous, and, may I add the most important adjective of all, the most humble attitude toward working out the adjustments that have to be worked out” (ibid, p. 283).

Opponents of the O'Hara bill will find themselves in good and respected company. The names of Elihu Root and Arthur T. Vanderbilt, both past presidents

of the American Bar Association, are in the forefront of eminent defenders of judicial supremacy. Yet both of them are on record in saying that there is no road back to the simply economic and social order when the courts alone were adequate to the immense task of adjudicating all types of justiciable issues of fact. In 1916 Elihu Root pointed out the futility of reversing the tide of quasijudicial determinations by administrative agencies subject to the fundamental safeguards of judicial review. In his presidential address before the American Bar Association he said (41 Am. Bar Ass'n Report, 335, at pp. 368–369 (1916)):

"There is one special field of law development which has manifestly become inevitable. We are entering upon the creation of a body of administrative law quite different in its machinery, its remedies, and its necessary safeguards from the old methods of regulation by specific statutes enforced by the courts. As any community passes from simple to complex conditions the only way in which government can deal with the increased burdens thrown upon it is by the delegation of power to be exercised in detail by subordinate agents, subject to the control of general directions prescribed by superior authority. The necessities of our situation have already led to an extensive employment of that method. The Interstate Commerce Commission, the State public-service commissions, the Federal Trade Commission, the powers of the Federal Reserve Board, the health departments of the States, and many other supervisory offices and agencies, are familiar illustrat ins Before th agencies the old doctrine prohibiting the delegation of legislative power has virtually retired from the field and given up the fight. 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 wrong doing which under our new social and industrial conditions cannot be practically accomplished by the old and simple procedure of legislatures and courts as in the last generation. Yet the powers that are committed to these regulating agencies, and which they must have to do their work, carry with them great and dangerous opportunities of oppression and wrong. If we are to continue a government of limited powers these agencies of regulation must themselves be regulated. The limits of their power over the citizen must be fixed and determined. The rights of the citizen against them must be made plain. A system of administrative law must be developed, and that with us is still in its infancy, crude and imperfect.”

Since 1916, Elihu Root's warnings have been heeded. The powers vested in Federal administrative agencies have been steadily circumscribed by limitations imposed both by Congress and by the reviewing courts. A system of administrative law has been developed which today is no longer in its infancy. The Administrative Procedure Act of 1946 is the latest systematic effort to build a framework of protective means whereby the rights of the citizen are made plainer than before and whereby the limits of the power of Federal administrative agencies are more definitely fixed and determined.

In 1938 Arthur T. Vanderbilt, writing as president of the American Bar Association on The Place of the Administrative Tribunal in Our Legal System ((1938) 24 Am. Bar Ass'n J., 267), also dealt with the inevitableness of the administrative process in modern American life and stressed the imperative need for certain safeguards against abuse of the exercise of quasi-judicial powers of administrators. He concluded :

“To what does this all lead? Clearly, to this simple conclusion—that the exercise of the judicial process requires certain safeguards in the twentieth century just as it did in the sixteenth under the Stuarts, and in the eighteenth under the Hanoverians. I am not suggesting that administrative agencies be abolished or that they be deprived of their powers of adjudication. Nor am I suggesting that administrative officials should always be lawyers. I do submit, however, that when our administrative agencies act as judges, they should have the attributes, the working conditions, and the professional environment of judges—the safeguards that centuries of experience have demonstrated to be essential to the maintenance and administration of what Blackstone calls common justice. This can either be accomplished within the administrative agency by a separate and distinct body of men acting as judges, or by permitting an appeal to a court on the same basis as an appeal in equity or in admiralty, or by both processes. Such a system has worked successfully in tax appeals and elsewhere. If this can be done in one field of administration, it can be done in another. There can be no question of its desirability on principle or in practice. The only persons who would object are those who have vested interests in the status quo" (ibid., p. 273).

The proposed bill, H. R. 3871, is a repudiation of the Root and Vanderbilt approach of dispensing administrative justice under the supremacy of law. Instead of seeking to improve the administrative process by correcting its shortcomings and strengthening the barriers to oppression of the citizen, it attempts to negative the underlying principles governing the administrative process and the compelling necessity for its use in contemporary American society.

The necessity under modern conditions of legislative delegation to administrative agencies of the authority to apply general standards through quasi-judicial processes to the multifarious complexities of economic and marketing practices is so well understood today that it would belabor the obvious to elaborate upon this indisputable fact. The O'Hara bill, however, is so diametrically opposed to such a basic approach that some reminders of this inescapable specialization by expert administrative bodies should be given.

Former Chief Justice Harlan F. Stone has succinctly stated this thesis as follows (50 Harvard Law Review, p. 16):

"To the common law the use of these administrative agencies came as an encroachment upon the established doctrine of the supremacy of the courts over official action. It was the substitution of new methods of control, often crude and imperfect in their beginnings, for the controls traditionally exercised by courts—a substitution made necessary, not by want of an applicable law, but because the ever-expanding activities of government in dealing with the complexities of modern life had made indispensable the adoption of procedures more expeditious and better guided by specialized experience than any which the courts had provided.

“Looking back over the 50 years which have passed since the establishment of the Interstate Commerce Commission, no one can now seriously doubt the possibility of establishing an administrative system which can be made to satisfy and harmonize the requirements of due process and the common-law ideal of supremacy of law, on the one hand, and the demand, on the other, that government be afforded a needed means to function, freed from the necessity of strict conformity to the traditional procedure of the courts."

Opinions of the courts abound with expressions of judicial recognition and approval of the principle that Congress would often be frustrated in the performance of its functions unless it delegated to an agency of its own creation and responsible to the Congress the task of fact finding and appraisal in the myriad situations arising under complicated conditions of present-day interstate trade and commerce. This is no doctrinaire philosophy. It is a recognition of hardheaded practicalities of Federal regulation of subject matter within the constitutional powers of Congress and without sacrifice of judicial protection of the rights of private persons.

The Supreme Court has judicially sanctioned this congressional approach. In Morgan v. United States (304 U. S. 1, at p. 14), Mr. Chief Justice Hughes said :

"The first question goes to the very foundation of the action of administrative agencies entrusted by the Congress with broad control over activities which in their detail cannot be dealt with directly by the legislature. The vast expansion of this field of administrative regulation in response to the pressure of social needs is made possible under our system by adherence to the basic principles that the legislature shall appropriately determine the standards of administrative action and that in administrative proceedings of a quasi-judicial character the liberty and property of the citizen shall be protected by the rudimentary requirements of fair play. These demand 'a fair and open hearingessential alike to the legal validity of the administrative regulation and to the maintenance of public confidence in the value and soundness of this important governmental process. Such a hearing has been described as an 'inexorable safeguard'.”

Further recognition of the inevitable differences between the origin and functions of administrative tribunals and the courts is found in these observations of Mr. Justice Frankfurter in Federal Communications Commission v. Pottsville Broadcasting Co. (309 U. S. 134 at pp. 142–143 (1910)):

“Courts, like other organisms, represent an interplay of form and function. The history of Anglo-American courts and the more or less narrowly defined range of their staple business have determined the basic characteristics of trial procedure, the rules of evidence, and the general principles of appellate review. Modern administrative tribunals are the outgrowth of conditions far different from those. To a large degree they have been a response to the felt need of governmental supervision over economic enterprise-a supervision which could effectively be exercised neither directly through self-executing legislation nor by the judicial process.

That this movement was natural and its extension inevitable, was a quarter century ago the opinion of eminent spokesmen of the law (quoting from Elihu Root's address, supra.). Perhaps the most striking characteristic of this movement has been the investiture of administrative agencies with power far exceeding and different from the conventional judicial modes for adjusting conflicting claims-modes whereby interested litigants define the scope of the inquiry and determine the data on which the judicial judgment is ultimately based. Administrative agencies have power themselves to initiate inquiry, or, when their authority is invoked, to control the range investigation in ascertaining what is to satisfy the requirements of the public interest in relation to the needs of vast regions and sometimes the whole Nation in the enjoyment of facilities for transportation, communication, and other essential public seryices. These differences in origin and function preclude wholesale transplantation of the rules of procedure, trial, and review which have evolved from the history and experience of courts.

To be sure, the laws under which these agencies operate prescribe the fundamentals of fair play. They require that interested parties be afforded an opportunity for hearing and that judginent must express a reasoned conclusion. But to assimilate the relation of these administrative bodies and the courts to the relationship between lower and upper courts is to disregard the origin and purposes of the movement for administrative regulation and at the same time to disregard the traditional scope, however far reaching, of the judicial process. Unless these vital differentiations between the functions of judicial and administrative tribunals are observed, courts will stray outside their province and read the laws of Congress through the distorting lenses of inapplicable legal doctrine.”

Applied specifically to the Federal Trade Commission there is a long line of Supreme Court opinions in which the Court has given no aid and comfort to the O'Hara bill theory that the courts are the only appropriate constitutional agencies for the adjudication of factual questions. In the Federal Trade Commission Act, Congress recognized that there was need for continuous expert attention by a specialized agency to prevent and correct unfair methods of competition and unfair or deceptive acts or practices as well as practices in restraint of trade and monopolistic practices. Congress realized that neither the legislative nor the traditional judicial processes was 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. It was felt that only specialized tribunals like the Federal Trade Commission could concentrate continuously on interstate trade practices and restraints of trade. The special knowledge and special skills of an administrative tribunal with quasi-judicial authority are needed for such intricate problems in a dynamic society.

Illustration of the Supreme Court's approval of this constitutional division of powers and the theory underlying the creation of the Federal Trade Commission may be found in the opinion of Mr. Justice Sutherland in Humphrey's Executor v. United States (295 U. S. 602 (1935)) in these words:

"Like the Interstate Commerce Commission, its members are called upon to exercise the trained judgment of a body of experts ‘appointed by law and informed by experience.'

The legislative reports in both Houses of Congress clearly reflect the view that a fixed term was necessary to the effective and fair administration of the law. In the report to the Senate (No. 597, 630 Cong., 2d sess., pp. 10–11) the Senate Committee on Interstate Commerce, in support of the bill which afterward became the act in question, after referring to the provision fixing the term of office at 7 years, so arranged that the membership would not be subject to complete change at any one time, said: “The work of this commission will be of a most exacting and difficult character, demanding persons who have experience in the problems to be met—that is, a proper knowledge of both the public requirements and the practical affairs of industry. It is manifestly desirable that the terms of the Commissioners shall be long enough to give them an opportunity to acquire the expertness in dealing with these special questions concerning industry that comes from experience.'

The Federal Trade Commission is an administrative body created by Congress to carry into effect legislative policies embodied in the statute in accordance with the legislative standard therein prescribed, and to perform other specified duties as a legislative or as a judicial aid. Such a body cannot in any proper sense be characterized as an arm or an eye of the executive. Its duties are performed without executive leave and, in the contemplation of the statute, must be free from executive control. In administering the provisions of the statute in respect of “unfair methods of competition?—that is to say in filling in and administering



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the details embodied by that general standard—the Commission acts in part quasi legislatively and in part quasi judicially. In making investigations and reports thereon for the information of Congress under section 6, in aid of the legislative power, it acts as a legislative agency. Under section 7, which authorizes the Commission to act as a master in chancery under rules prescribed by the court, it acts as an agency of the judiciary. To the extent that it exercises any executive function-as distinguished from executive function-as distinguished from executive power in the constitutional sense-it does so in the discharge and effectuation of its quasi legislative or quasi judicial powers, or as an agency of the legislative or judicial department of the Government."

In like vein, Mr. Justice Stone observes in Federal Trade Commission v. R. F. Keppel & Bro., Inc. (291 U. S. 304 (1934)), that the Federal Trade Commission

was created with the avowed purpose of lodging the administrative functions committed to it in ‘a body specially competent to deal with them by reason of information, experience, and careful study of the business and economic conditions of the industry affected,' and it was organized in such a manner, with respect to the length and expiration of the terms of office of its members, as would 'give to them an opportunity to acquire the expertness in dealing with these special quesitons concerning industry that comes from experience (Report of Senate Committee on Interstate Commerce, No. 597, June 13, 1914, 63d Cong., 2d sess., pp. 9, 11).".

Apart from the fundamental difference in approach toward administrative law between the theory of H. R. 3871 and the theory underlying the existing structure of quasi-judicial Federal administrative agencies, the bill throws into the lap of the House Committee on Interstate and Foreign Commerce problems of public policy relating to Federal regulatory agencies which can only be met intelligently by a review and reappraisal of a voluminous record of Federal legislation, congressional reports and hearings, Federal executive reports, American Bar Association committee reports and scolarly texts and law review articles. This veritable mountain of wood pulp and printers' ink has recorded for the archives of administrative law the history and development of quasiju icial agencies of the type which H. R. 3871 is designed to emasculate. Mr. O'Hara is asking the committee to take a nice spring day or two to traverse the same ground that has already been fully explored by the Congress in the Committee on the Judiciary of the House and Senate.

There is every reason to believe that the House Committee on Interstate and Foreign Commerce, which sponsored the original Federal Trade Commission Act and the 1938 amendments thereto, will not lose sight of the magnitude and farreaching effects of depriving the Commission of its adjudicatory powers in the face of the teachings of this vast literature on the nature and functioning of the administrative process in the present-day American Federal field. It is nevertheless important to point out the dangers that lurk behind H. R. 3871.

Congressman O'Hara's statement on the bill creates the impression that the shortcomings of the administrative process have peculiar application to the Federal Trade Commission. The bill singles out for attack the second oldest Federal administrative tribunal in which the Congress vested quasi-judicial functions. The objections to the present Federal Trade Commission Act implicit in H. R. 3871 raise issues that are relevant to other established agencies. If the Federal Trade Commission is reduced to a mere investigatory and prosecuting agency which would act only as an adjunct of the court, then the same reasons for such a change in status apply with equal force to the Interstate Commerce Commission, the Federal Communications Commission, and the Federal Power Commission, to mention only a few of the agencies with similar quasi-judicial powers.

It is astonishing that with such a thrust at the vitals of the entire administrative process the O'Hara bill ever got to the point of a hearing before the committee. Coming so soon after the enactment of the Federal Administrative Procedure Act of 1946, it is evident that H. R. 3871 does not present a task for a nice spring day or two. It was partly in response to such criticisms of administrative tribunals as are reflected in Congressman O'Hara's statement that Congress passed the Administrative Procedure Act, aptly described as “the most significant and far-reaching legislation in the realm of Federal judicial administration since the Judiciary Act of 1789.” Even prior to the Administrative Procedure Act, the Federal Trade Commission had followed procedures in conformity to many of the present requirements of the act. More important, however, is the fact that in its amended policy statements and rules of practice, the Commission has taken prompt measures to accommodate its procedures to the spirit as well as the letter of the Administrative Procedure Act.

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