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"Whether on the record as a whole there is substantial evidence to support agency findings is a question which Congress has placed in the keeping of the courts of appeals. This court will intervene only in what ought to be the rare instance when the standard appears to have been misapprehended or grossly misapplied.”

IV It is to be noted further in respect of the provision of H. R. 3298 under present discussion that the requirement of an appeal after the making of a record and findings of fact and of a trial de novo seems to be aimed at accomplishing a due process hearing requisite for adjudicatory action, i. e., a hearing in which each party shall have opportunity to know of the claims of his opponent, to hear the evidence introduced against him, to cross-examine witnesses, to introduce evidence in his own behalf and to make argument. There is no doubt that the due process clause requirement of such a hearing is applicable to the quasi-judicial proceedings of administrative agencies. Londoner v. Denver, 210 U. S. 373 (1908); Radio Commission v. Nelson Bros Co., 289 U. S. 266 (1933); Morgan v. United States, 304 U. S. 1 (1938). But it is equally clear that the hearing requirement of the due process clause is not applicable to such actions of administrative boards or agencies as are taken in the exercise of their rule-making as distinguished from their adjudicatory power. Bowles v. Willingham, 321 U. S. 503, 519 (1944); Bi-Metallic Co. v. Colorado, 239 U. S. 441 (1915); Willa point Oysters v. Ewing, 174 F. 2d 676, 694 (9th Cir. 1949). The action of an administrative agency is adjudicatory in character if it is particular and immediate. It is of rule-making character when it is general and future in effect. Louisville & Nashville R. R. Co. v. Garrett, 231 U. S. 298, 305 (1913); Prentis v. Atlantic Coast Line, 211 U. S. 210. 226 (1908). The action of the Administrator made reviewable under H. R. 3298 is really rule-making rather than of adjudicatory character. It is action taken in addition to or deleting from a list of drugs promulgated by the Administrator under clause (2) of the act quoted at the outset of this statement. The promulgation of a list of drugs found by the Administrator to be unsafe or ineffective for use without the professional diagnosis or supervision of a licensed practitioner is in legal effect the promulgation of a rule or regulation and the addition to or deletion from that list by the Administrator is a modification of a rule or regulation and, therefore, of itself of rule

making character. The Congress can, of course, require rules to be made on a record after opportunity for an agency hearing, and where it has done so the requirements of sections 7 and 8 of the Administrative Procedure Act, which reflect the due process clause hearing requirement, are applicable. But in the absence of specific requirement for an agency hearing and a record in the promulgation of rules the Congress has provided, in the Administrative Procedure Act, that in the exercise of rule-making power an agency shall meiely “afford interested persons an opportunity to participate in the rule making through the submission of written data, views, or arguments with or without opportunity to present the same orally in any

If it is the desire of the Congress to require under H. R. 3298 that the Administrator shall make a record and hold a hearing of due process character in acting upon objections to proposals to add to or delete from a list of drugs promulgated under clause (2) above quoted, then this should be made clear in the act. If this is done, it should be made clear also that there should be no de novo hearing before a court of appeals--because to require this would be but a duplication of the due process hearing requirement.

V It is accordingly recommended that the provision of II. R. 3298 requiring a trial de novo in the United States courts of appeals be eliminated and this whether the bill is drawn so as to require a due process hearing by the Administrator or merely a hearing of rule-making character. Specifically it is recommended that in lines 11 to 14, inclusive, of page 4 of the bill the following words be eliminated: “except that an appeal from the Administrator's order issued hereunder shall be in the nature of a trial de novo, without presumptions in favor of either party to such appeal.”

The CHAIRMAN. Thank you for appearing, Judge.

Mr. WOLVERTON. Judge, in the first place I wish to express on behalf of my colleague, Mr. O'Hara, his very deep regret that an engagement made it necessary for him to leave this session sooner

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than he otherwise would have done. He left with me a question that he would like me to present to you. It relates to the statement that you have made with respect to de novo trials before Circuit Courts of Appeal. He would like to know your views with respect to United States district courts being designated instead of the circuit courts of appeals.

Judge STEPHENS. I will be glad to express myself on that. I thank you for the question, and I thank Mr. O'Hara.

Of course, it is within the power of Congress to put de novo hearings in the district courts. It has done so. There was one instance which I mentioned the other day. That was in the case of a ruling of the Patent Commissioner involving a refund to issue a patent on a patent application. Such rulings may, under the Revised Statutes, section 4915, be reviewed in a United States district court by the filing of a bill in equity. Then there is a so-called de novo hearing. It is a sort of a partial review on the record of the Commissioner, and a partial de novo hearing in this way: The Commissioner's record is introduced in evidence, but the parties are entitled to call witnesses. The Government, representing the Patent Office, ordinarily does not call witnesses.

It is within the power of Congress to put de novo hearings in the district courts. As to the advisability of such a measure that is a different thing. That is to say, it is possible where adjudicatory hearings are desired. There is always, of course, the unsolved constitutional question as to whether there is power in the circuit court of appeals or the district courts as constitutional courts to review pure rule-making decisions. That has never yet been determined. The Administrative Procedure Act apparently does contemplate some sort of a review in the circuit court of appeals as to rule-making action.

With respect to the advisability of putting the de novo review in the United States district courts, I think I ought to say a word, because that does affect the business of the courts. I suppose, looking back toward the beginning of the development of the administrative procedure in this country in the Workmen's Compensation Acts and the Interstate Commerce Act, the Congress could have made and the State legislatures could have made, perhaps, a choice of a different pathway than they have chosen in respect of adjudicatory action.

The earliest bills with which I became familiar with reference to administrative action were the workmen's compensation statutes. They arose out of the view on the part of the bar, the litigants, the courts, and the legislatures that the standards in negligence actions were too narrow in respect of industrial accidents. There must have been negligence established on the part of the defendant in a negligence suit, and there were the defenses of fellow servant neglect and contributory negligence and assumption of risk. Those defenses grew up in a stage of our social development when industry was not widespread and complex. It came to be felt by the legislatures, the courts, and ultimately the Congress, under the Employers' Liability Act, that these standards in negligence actions were too narrow and that the doctrine of liability without fault—which is the contrary of the old common-law doctrine of liability on fault which underlay the negligence rule—that the doctrine of liability without fault ought to be adopted and the cost of industrial accidents borne by industry and the public, through insurance, so that the burden of industrial accidents should not be borne by the individual but by the community at large.

When that new philosophy developed, legislatures and Congress in the Employers' Liability Act took away from the courts the power to determine whether or not an accident was of such nature as occurred within the scope of employment and the course of business. Under the Workmen's Compensation Acts, there was put in the hands of the commissions the decision of that issue, so that the commissions took over under the early legislation something in the nature of a judicial duty.

That determination could have been left in the courts.

The investigation of accidents generally, the application of tariffs to pay for such accidents, these could have been left to the commissions, but there could have been left in the courts the performance of the adjudicatory function.

The same could also have been done under the Interstate Commerce Act, as in reparations cases where the shipper is allowed to sue to get reparation for an overcharge. Such a suit is in the nature of a judicial proceeding. It could have been put in the first instance in the courts, rather than have the Commission act upon it in the first instance with review later in the courts.

But this was not the path which was chosen by the legislatures and by the Congress. Congress and the legislatures on the contrary chose to put the initial adjudicatory action in commissions on the theory in part, perhaps, that it would greatly overburden the courts, but on the theory also that the commissions would develop expertness with reference to the adjudicatory aspect of the administrative function. So, in the Federal Trade Commission Act and the Securities and Exchange Commission Act and the National Labor Relations Act and the Communications Act the initial hearing—whether it be with reference to the issuance of a license or the determination of an unfair labor practice question or a question of unfair competition in industry under the Federal Trade Commission Act, or of unfair advertising--the initial determination of those questions of a quasi judicial nature was left to the commissions themselves on the theory that to do otherwise would overburden the courts and also on the theory that the commissions in developing a body of expert knowledge and a group of expert officials would be better able to perform those functions than the courts. The task left to the courts was one of review and enforcement.

That has become the pattern. Whether one agrees with it or not one must conclude, I think, that it is too late to break it. With the great growth of administrative agencies and the great increase in the complexity of our society, industrially and socially, there is an immense need of adjudication of a quasi-judicial nature to deal with our interrelated and complex industrial and civic affairs, so that we have had to establish these great administrative agencies. We have built them up and we have given to them the primary duty of passing upon quasi judicial matters-issuing licenses, determining fair labor practices and fair practices under the Federal Trade Commission Act, and the proper issuance of securities under the Securities and Exchange Commission Act, and the like. That having become the pattern, to break it down and take all this quasi-judicial action and put it back in the trial courts, where it perhaps might have been put at the beginning, would seem to me to be practically an impossibility. At the present

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time it would mean quadrupling, perhaps far more, the personnel of the courts, if the courts were to take it over.

If the district courts were to take over the quasi-judicial administrative duties of the various administrative agencies, the courts would be so overwhelmed that they would have to be many times as large as they are now. The very large personnel rosters of the various agencies and the complexity of the matters with which those agencies are concerned clearly demonstrate, I think, that the courts could not handle the agency quasi-judicial functions without incurring a tremendous burden, practically impossible to bear without such an expansion of the courts as is not in my view even within the bounds of contemplation.

I am not sure such a step would be a wise thing. I am not sure: it would have been wise even in the beginning to place all adjudicative functions in the courts rather than the administrative agencies because it is true that the administrators do build up a body of expert knowl-' edge. At the beginning they are probably no more expert than the rest of us. They are lawyers, and some of them are laymen. They

. acquire their expertness as time goes on. However, they do eventually build up over the years a body of knowledge, and they do build up, it must be said with respect to most of them, a judicial attitude of mind in their hearings, so that they really desire to hold fair hearings and to reach a fair and judicial conclusion in their initial adjudicatory proceeding.

It seems to me on the whole that it is better that the initial adjudicatory action should not be put in either the United States district courts or in the circuit court of appeals. Certainly it should never be put in the latter, because they are courts of review and not trial courts.

Mr. WOLVERTON. Your views in that respect apply to whether it is the circuit court of appeals or the district court?

Judge STEPHENS. I am sorry, sir?

Mr. WOLVERTON. I say, your views then are that it would be equally inadvisable to place it in the district court or the circuit court of appeals?

Judge STEPHENS. Yes, sir; that is my view, and I feel sure that it would be the view of the entire Judicial Conference of the United States.

I wish to add, if I may, that I am in sympathy with the requirements of Congress in the Administrative Procedure Act, and I am sure that all judges in the district courts and circuit courts of appeal are fully in sympathy with the requirements of the Congress in the Administrative Procedure Act. Wherever we do review the actions of the commissions we do so upon the whole record in determining whether the administrative ruling is supported by substantial evidence.

While I had to obey the rule, because I am bound by the decisions of the Supreme Court as a circuit judge, I did not at all sympathize with-and I am sure I reflect the view of the whole circuit court of appeals when I say we did not at all sympathize with restricted powers of review accorded to us by the earlier decisions of the Supreme Court. But the Supreme Court has recanted and confessed its error in those respects in these two recent cases—the Universal Camera and the Pittsburgh cases. And the Congress has also corrected the rule governing our scope of review in the Administrative Procedure Act.

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I think that the litigants in court and the industries of the country under the supervision of the Administrators are sufficiently protected by the requirements of Congress under the Administrative Procedure Act and by these new decisions of the Supreme Court. I should add, in answer to Congressman O'Hara's question in respect of the advis ability of putting a review of the Administrator's orders under H. R. 3298 in the United States district courts, one further point, to wit: That to do so would be undesirable because of the extreme delay that this would cause in the administrative-judicial process. This process, if the review were put in the United States district courts, would include four steps: (1) The hearing before the Administrator; (2) review in a district court; (3) appeal to a United States court of appeals; and (4) possible review in the Supreme Court on certiorari.

I would answer your question, Congressman Wolverton, by saying I think it would be unwise from the standpoint of business of the country to put review of proceedings of the Administrators in the United States district courts, and it would be unthinkable to put it in the circuit court of appeals.

Mr. WOLVERTON. I am personally of the opinion that you have given very substantial reasons for the conclusions you have reached both with respect to the circuit court of appeals and the district courts. I am inclined to believe that the recent decisions of the Supreme Court, to which you have referred, the Universal Camera case and the Pittsburgh case, go a long way toward removing many of the arguments that I have heard presented before this committee many, many, many times in hearings on legislation that has been before us with respect to the necessity of a trial de novo. I am in full accord with the views you have expressed that with that expansion of review, as outlined by the Supreme Court. It will prove most helpful.

I am also impressed with the fact that the adjudicatory powers that have been assigned by State legislatures, as well as by the Congress, to these different regulatory commissions, has become so general and has become so great a part of our system that it would be difficult to justify in a particular instance why there should be a deviation from the general practice at the present time.

I think the importance of this has been recognized, if I may make a personal reference, by Chief Justice Vanderbilt of the New Jersey Supreme Court, whom you probably know as a former president of the American Bar Association, and of the work that he has done and the interest he has taken over a period of years in developing administrative procedure before the different commissions, both State and Federal.

That is all I have to say. We are glad to have your opinion, and I am certain that if Mr. O'Hara were here he would appreciate the importance of your statement. Judge STEPHENS. Thank you, sir. I would like to add just this,

. before I close: I can assure you that the circuit courts of appeals of this country, who are the courts of last resort in the Federal system except in the few cases that go to the Supreme Court, feel a very real responsibility in dealing with these Commission appeals. We feel the same responsibility we do in reviewing the decisions of the United States district courts, to see to it that the litigants have had a fair hearing and that the Administrator's findings are supported by substantial evidence and are not arbitrary.

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