administrative remedies. This is not to say, however, that litigation served no useful function in the enforcement of the Stabilization Program. Indeed, the use of litigation and the mere threat of its use performed several useful purposes. It must be stressed, though, that seldom was litigation employed as part of a reasoned strategy for enforcement of the Program. LITIGATION TARGETS DURING THE PROGRAM During Phase I, the first freeze, the Government pursued litigation in a number of cases in order to achieve two particular ends. First, obtaining injunctions against violators would establish that the freeze was legally enforceable, and that the Government was serious about enforcing it. Moreover, it was felt that if injunctions could be obtained in a few cases, it would serve as a warning to other potential violators and thus make a voluntary compliance easier to obtain. This latter point, of course, continued to be of critical importance throughout the life of the Stabilization Program. At the outset of Phase II, the decision was made to pursue litigation to the fullest to obtain compliance with the rent and retail priceposting regulations. This decision was largely based on public relations considerations. The Government felt it was essential to move quickly, decisively and publicly in enforcement of the regulations so as to maintain the good will of the public and its support of the Economic Stabilization Program. Rent and price-posting were two areas where fast action was possible because the violations were relatively easy to uncover and to prove in a court of law. Further, these were two areas where it was very easy for the public to spot violations, and it was felt that these perceived violations could not go unprosecuted for fear of weakening the credibility of the entire Program. However, with the exception of the rent and price-posting litigation drives of Phase II, which accounted for the vast majority of all litigation brought by the Government during the Economic Stabilization Program, the Government never succeeded in mounting any other organized litigation efforts. Rather, litigation was pursued on a more or less random basis. Indeed, most often the decision as to whether a certain case was appropriate for litigation or for some type of administrative sanction was based on the genesis of the case. If a case was developed in-house at the Price Commission through the analysis of quarterly reports, the violator would be subject to administrative sanctions imposed by the Price Commission. Only if the violator failed to comply with those sanctions would the matter be referred to the Department of Justice for litigation. If, on the other hand, another company committed the exact same violation, but the violation was discovered and investigated by the IRS rather than the Price Commission, the violator would be subject to litigation rather than administrative proceedings. This dichotomy existed because of the feeling that it would somehow be unfair for the Price Commission to "co-opt" an IRS investigation by stepping in and imposing its (the Commission's) administrative remedies. This difference in treatment led a number of companies who were the subject of lawsuits to complain that they were being unfairly treated vis-a-vis other firms that committed the same violations but were subject instead to administrative sanctions. The basis of this argument was that litigation brought more publicity to a company, not that litigation subjected a firm to greater penalties; indeed, the sanctions imposed by the Price Commission were often more onerous than those imposed by the courts. 4 6 In any event, it thus developed that litigation was used in a random manner. Suits were filed involving transportation fare increases,3 price increases for alcoholic beverages, increases in diesel fuel and oil prices, price increases for aircraft parts and services, textile price increases, increases in the price of ski lift tickets, and price increases for model airplane glue. There was no successful attempt to focus litigation on particularly inflationary sectors of the economy, nor to sue supposed market leaders in various sectors in order to set an example for the smaller firms. In all fairness, this rather inefficient use of litigation did not arise solely from the neglect of the Program's administrators. It was recognized that litigation, with the attendant publicity, could be a very useful tool in cracking down on particular industries that seemed to be displaying widespread non-compliance with the Program. It was thought that the successful litigation against a couple of major firms in such industries would encourage other companies to correct their behavior. However, in the three industries where such efforts were attempted-meat-packing, supermarkets, and lumber-the efforts were largely doomed to failure because of imperfections in the pertinent regulations. Other than these three sectors, there were no attempts made at "deterrent" litigation. As mentioned earlier, successful litigation can also serve a precedential function and was so used during Phase I. However, unlike during Phase I when the regulations were quite simple and the violations therefore similar, during the succeeding Phases, the regulations were so complicated that there was wide variation in violations, and thus successful litigation was of limited precedential value. An exception to this, however, was found in the insurance area. Insurance rate-making is, of course, a highly complex process, and the Price Commission's regulations reflected this. The Program never had a sufficient number of persons who understood both rate-making and the regulations to bring lawsuits against all the insurance companies alleged to have committed violations. However, it developed that most of the money involved in almost all cases derived from exactly the same alleged violation of the regulations, i.e., application of portions of the Phase II regulations, which were not promulgated until January 11, 1972, retroactively to the beginning of Phase II. This issue was fully litigated in only one lawsuit, with judgment for the Government being granted. 10 The successful prosecution of this violation in one instance was instrumental in the Government's being able to resolve, without litigation, approximately 20 other cases against insurance companies resulting in refunds or prospective rate-reductions of several million dollars. But other than in the insurance area and one or two other instances (e.g., U.S. v. AMFAC, which gave judicial sanction to the Price Commission's position that in determining the tier status of a firm, and thus its responsibility to prenotify its price increases or file quarterly reports, reference is made to the annual revenues of the parent company and all other companies controlled by it),11 subsequent to Phase I, litigation was seldom employed to establish helpful judicial precedent. CONCLUSION 11 In conclusion, several points can be made relative to the use of litigation as an enforcement tool in a program such as the Economic Stabilization Program. First and foremost, if litigation is to be a viable tool, policies and regulations must be promulgated with an eye toward their judicial enforceability. Further, in a program with limited manpower, litigation can only be used sparingly, and it is perhaps then even more important that some comprehensive strategy be developed to ensure its most efficacious use. Thought should be given to how litigation can best help a program, e.g., by establishing the credibility of the program with the public, by deterring potential violators, by establishing judicial precedent for the enforceability of the program's rules, etc., and then a coherent plan should be developed that will maximize the use of litigation in achieving these ends. It should be kept in mind that, as noted above, as the regulatory scheme involved gets more complicated, it becomes far more difficult to establish useful judicial precedent in support of the regulations. Perhaps the more significant litigation under the Economic Stabilization Act-significant because it did establish many judicial precedents that would doubtlessly apply to any future such programs was litigation brought against the Government. The many challenges to the Act itself, to the implementation of the Act, and to specific decisions of the agencies charged with carrying out the Act covered a broad panoply of legal issues. And the decisions of the courts in these cases, most notably the TECA, delineate the constitutional restrictions on such a program and the other, non-constitutional burdens placed on agencies in implementing and enforcing a program like the Economic Stabilization Program. In summary of these court decisions, it is perhaps fair to say that when faced with a short-term, emergency program designed to remedy an acute, pressing national problem, the courts are very reluctant to superimpose their judgments on those of the Congress or the agencies carrying out the program and are willing to give the agencies the utmost latitude to implement and enforce the program as they best see fit. The remainder of this paper then will focus on some of the specific attacks on the Economic Stabilization Act and the actions taken under its authority. Introduction Notes 1. The sections referred to below were added to the Act with December, 1971 Amendments, Public Law 92-210, and were continued in the April 30, 1973 renewal of the Act, Public Law 93-28. 2. In the beginning of Phase II a special section was created within the Civil Division of the Justice Department, having sole responsibility for litigation arising under the Economic Stabilization Act. 3. United States v. Cincinnati Transit, Inc., 337 F. Supp. 1068 (S.D. Ohio 1972). 4. United States v. Clark Distributing Co., C.A. No. 808-72-C-2 (W.D. Wash. Consent Judgment, Dec. 12, 1972). 5. United States v. American Petrofina Co., C.A. No. 3-5978-D (N.D. Tex. Consent Decree, Feb. 27, 1973). 6. United States v. Aircraftsmen, Inc., C. No. 72-714 (W.D. Okla., filed October 16, 1972). 7. United States v. Spartan Mills, C.A. No. 73-830 (D.S. Carolina, filed July 31, 1973). 8. United States v. Stratton Corp., C.A. No. 6761 (D. Vt. filed October 31, 1972). 9. United States v. Jupiter Industries and Testor Corp., C.A. No. 72-C-2988 (N.D. Ill. Consent Judgment, March 22, 1973). 10. United States v. Blue Cross/Blue Shield, C.A. No. 20657-1 (W.D. Mo. Consent Judgment, Feb. 23, 1972). 11. No. 72-3577 (D. Hawaii, November 15, 1972). The Constitutionality of the Economic One of the most fundamental challenges to the constitutionality of the Economic Stabilization Act, raised during the Phase I Freeze, concerned the extreme breadth of power which the Economic Stabilization Act of 1970 delegated to the President, and the dearth of guidance in the law as to the manner of its exercise. This challenge was, however, turned back so definitively as to pose no further threat to the operation of the Program. 1 In Amalgamated Meat Cutters v. Connally, the plaintiff union was suing a group of corporate defendants in order to force the payment of a previously negotiated wage increase, due to become effective in September, 1971. The employers had refused to pay the increases on the basis that to do so would be a violation of Executive Order 11615, which mandated the 90-day freeze commencing on August 15, 1971. When the employers attempted to raise this defense to the suit, however, the plaintiff union moved to have the defense stricken as insufficient because the law on which the freeze was based violated the constitutional boundaries of permissible delegation of powers. On the same basis, the union sought a declaratory judgment and an injunction to prevent the enforcement of the Act and the freeze order. The central claim of the union's case was that the ESA contained an unconstitutional delegation of legislative power to the President, in contravention of, specifically, Article 1, Section 1 of the Constitution ("All legislative Powers herein granted shall be vested in a Congress of the United States"), and, more generally, the Separation of Powers principle. In fact, the original 1970 Act contained only a brief description of the President's authority, in the broadest of terms: § 202. Presidential authority The President is authorized to issue such orders and regulations as he may deem appropriate to stabilize prices, rents, wages, and salaries at levels not less than those prevailing on May 25, 1970. Such order and regulations may provide for the making of such adjustments as may be necessary to prevent gross inequities.2 Later, largely in response to the Presidential imposition of controls on the construction industry, Congress added an additional limitation to the authority granted in § 202: (b) The authority conferred on the President by this section shall not be exercised with respect to a particular industry or segment of the economy unless the President determines, after taking into account the seasonal nature of employment, the rate |