The

suits during the corresponding period. Moreover it stands to reason that such would be the result of careful and correct implementation of statutes. practice is a common one in Europe."

12

JUDICIAL REVIEW OF THE REGULATIONS

Section 2 of the draft of bill provides, in effect, that in addition to the existing method of determining the validity of any regulation in a suit on the merits of any case by or against the United States or any officer thereof where there exists

12 The comparative law on this subject in Europe has been summarized by Mr. William B. Stern of the University of Chicago for the Committee as follows:

"In England, administrative legislation is resorted to probably as often as on the Continent. So, by statutory rule, taxation has been imposed, and Acts of Parliament were amended on the basis of the socalled 'Henry VIII Clause' (which enables Ministers to amend Acts of Parliament).

"The Italian Fascist and the German National Socialist States practically rely on administrative legislation although neither of them has formerly abandoned legislation by parliament. On the contrary, it will be seen that in both countries the parliaments still exercise important legislative functions.

"(a) The legislative powers of the Italian government are based on the Statute of January 31, 1926 (Gazzetta Officiale, of February 1, 1926). Its article 3 reads as follows:

"Provided that previous deliberation is had in the Council of Ministers, legal norms which have the force of law may be established by Royal Decree.

"(1) when such powers have been delegated to the government and when the delegated powers are not transgressed;

'(2) in extraordinary cases, in which reasons of urgent and absolute necessity demand such norm setting. The decision as to the necessity and urgency are subject to no other control than the political control of the legislature.'

All Royal Decrees must be presented to the legislature for 'conversion into statutes.' They must be presented at least to the third session which follows the publication of the decree. If not presented in time, the decree automatically becomes invalid. The presentation must be published in the Official Gazette. The legislation may either convert the decree or refuse to do so or change it. Such a change of the decree becomes valid with the publication of the statute. This cumbersome practice has been followed since the above quoted statute was passed, and thousands of decrees have been submitted to the legislature. "(b) In National Socialist Germany, the Reichstag still can legislate. The Collaboration of the Reichsrat, however, ceased with the abolition of the latter. Also emergency legislation on the basis of Article 48 of the Reich Constitution has been practiced under National Scoialist rule.

"Most laws, however, are made by the Reich Cabinet on the basis of a Statute of March 24, 1933 (RGB1. I p. 141) which was passed with qualified majority, i. e., with a majority by which authority to override the Constitution could be delegated. The text of this statute is as follows:

Article 1. In addition to the legislative method as provided for by the Reich Constitution, laws of the Reich may be passed by the Reich Cabinet. This applies also to laws on the basis of Articles 85 (2d paragraph) and 87 of the Reich Constitution.

Article 2. Laws passed by the Reich Cabinet must not be in conformity with the Reich Constitution unless they deal with the institutions and functions of the Reichstag and Reichsrat. The rights of the Reich President are not impaired by this statute.

"Article 3. The documents of the laws passed by the Reich Cabinet are executed by the Reich Chancellor, and the laws are published in the Reichsgesetzblatt. In default of specific stipulations to the contrary, they come into force on the day which follows the day of their publication. Articles 68 to 77 of the Reich Constitution are not applicable to laws passed by the Reich Cabinet.

"Article 4. Treaties of the Reich with other nations concerning subject matters for which the Reich has legislative powers, do not need the consent of the legislative bodies. The Reich Cabinet issues the ordinances necessary for the execution of such treaties.

"Article 5. This law comes into force on the day of its publication. It will cease to be in force on April 1, 1937; it will also cease to be in force if the present Cabinet is replaced by another.'

"According to the Statute of the Reichstag of January 30, 1937 (RGB1. I p. 105) the Statute of 1933 will be in force until April 1, 1941.

'By Article 4 of the Statute of January 30, 1934, for the Reconstruction of the Reich (RGB1. I p. 75) which was passed with qualified majority, the Reich Cabinet has been authorized to make new constitutional law, and subsequently by Cabinet Law of February 14, 1934 (RGB1 I p. 89) the Reichsrat was abolished. The text of the Cabinet Law is as follows:

"Article 1. The Reichsrat is abolished.

"Article 2. The participation of the Reichsrat in the creation and administration of law is ended. The independent activities of the Reichsrat are taken over by the competent Reich ministers or by an authority chosen by the latter with the consent of the Reich Minister of the Interior.

"Article 3. The competent Reich ministers are authorized to make, with the consent of the Reich Minister of the Interior, supplementary provisions and, if they publich a revised text of legal rules, to take into consideration changes of these rules emanating from this law.'

"Many enabling laws, ordinances and emergency ordinances provided for the participation of Committees of the Reichstag in administrative legislation. This participation has been abolished by the Decree of the Reich President of March 20, 1933, for the Simplification of the Issuance of Executive Ordinances (RGB1 . I p. 147) which reads as follows:

"The Committees of the Reichstag do not participate any longer in the process of making executive ordinances (ordinances or administrative orders) notwithstanding provisions in statutes and ordinances for their consent, being heard, or other participation.'

"2. The right to issue administrative regulations (Verwaltungsverordnungen) has been considered inherent in the executive branch of the government. Some of the Länder constitutions of the Weimar Republic did not even mention this right. In the Reich Constitution, however, the following provision was made: "Article 77. Unless statutes provide otherwise, the Reichsregierung issues general administrative regulations which are necessary for the execution of the statutes of the Reich. The Reichsregierung must secure the consent of the Reichsrat whenever the execution of the statutes is assigned to the authorities of the Länder.'

The question as to whether the term 'Reichsregierung' refers to the Cabinet in toto or to the competent Ministers was disputed. The majority of writers holds that with the term 'Reichsregierung' the full Cabinet is meant and that delegations to a member of the Cabinet is permissive.

"Administrative regulations do not need general publication in order to be valid. They become effective when they are officially communicated to the persons whom they concern."

jurisdiction in the courts for that purpose-the United States Court of Claims shall have jurisdiction to hear and determine the validity of such regulation for the purpose of either approving or annulling it. This court was established in 1855 and it now has the jurisdiction defined in Chapter 7, Title 28, Sections 241 to 293, U. S. Code. It is not a constitutional but a legislative court. See Williams vs. United States, 289 U. S. 559, with which compare United States vs. O'Donoghue, 289 U. S. 516. This means that the jurisdiction of the Court of Claims is not limited to a "case or controversy," as are the courts organized under Article III of the Constitution, but may have such jurisdiction as the Congress sees fit to confer on that court.

It is a court of more than three-quarters of a century of experience and its opinions are reported in some 80 volumes of reports. Except for customs matters, that court hears and determines money claims and demands against the United States arising under practically the entire field of Federal statutes. It is thus familiar with a great deal of Federal law and regulations and it has functioned exceedingly well during the long period of its existence. It has earned and commands the respect of the Supreme Court of the United States and of the litigants before said court. Absolute perfection can not be expected of human institutions, but by and large the Court of Claims has discharged its important and responsible duties toward both the Government and private litigants in a most acceptable

manner.

The proceeding before that court is by a suit de novo against the United States, except in a few instances set forth in Chapter 7, Title 28, U. S. Code. The court is equipped with commissioners who hear the evidence and submit their findings of facts to the court, which the court may accept, modify, or reject as it sees fit in particular cases. The judgments of the court are reviewable by certiorari in the Supreme Court of the United States and questions may be certified for decision-the review procedure being substantially identical with that relative to the United States Circuit Courts of Appeals.

The validity of a regulation may now be raised in any case where the courts have jurisdiction of the particular classes of actions. The proviso to section 2 of the draft would continue that procedure. However, there are a considerable number of cases where no court has such jurisdiction of the controversy that the merits of the case may be placed in issue and the validity of the regulation judicially tested.

The first purpose of this section 2 is to correct that defect in our procedure by conferring jurisdiction on the Court of Claims to determine whether the regulation is in accordance with the Constitution and statute under which issued. The procedure selected for that purpose is by petition to the court.

This procedure will enable the citizen or other person affected to test the legality of the regulation before such person takes action in accordance therewith if for any reason it is believed that the regulation is in excess of the powers conferred on the particular Department or other agency. The effect of a negativing judgment of the court in such a proceeding will be to annul the regulation; render it invalid for all future purposes. However, as to action taken by others prior to the invalidity of the regulation having been declared by the Court of Claims, any question as to validity of the regulation affecting them adversely prior to the annulling of such regulation, may be raised by them in a proceeding on the merits of their particular cases, in event such cases may be brought by them before the courts or if and when the United States should bring suit against such persons.

That is to say, section 2 gives a right where none now exists and does not take away any existing right. 13

The English procedure is generally to lay the regulations before Parliament. The Procurator-General and Treasury-Solicitor, in the above referred to statement before the Committee on Ministers' Powers, said:

"On the second point, viz., the need of securing some means whereby the public are protected against the undue exercise of Departmental powers, the two main safeguards are, or should be, parliamentary criticism and the action of the Courts." Also, that the protection of the public which is not represented by 13 Copies of the draft of bill with explanations were delivered to the chairmen of the Committees on Taxation and on Customs as well as the Section of Patent Law; in fact to the chairmen of all committees and sections of the Association. As this report is being written, the Chairman of the Committee on Taxation reported informally to the Chairman of this Committee that the Committee on Taxation did not want the additional right to apply to the tax laws. Presumably the reasons for such view will be stated in the report of said Committee. We believe that there is no justification for exemption of the regulations of the Bureau of Internal Revenue from this procedure to be followed if the taxpayer and his counsel see fit to elect to do so. Many tax cases are now decided on their merits by the Court of Claims; that court is thus familiar with the tax procedure; and the proposed procedure will enable taxpayers to determine in advance of filing their returns whether a particular regulation is valid or invalid if the knowledge becomes essential.

organized minorities "must necessarily rest in the hands of their parliamentary representative, who can at a later date criticise the action of the Minister in Parliament, a fact which the Minister is bound to bear in mind before the regulations are actually made."

We need not particularize the fact that in England the heads of the principal Departments are members of the House of Lords or of the House of Commons and that a Minister is answerable on the floor of the House of which he is a member for the discharge of the duties of his particular department—a form of procedure which we do not have in this country.

The procedure for laying regulations before Parliament to be annulled within a given period would not be satisfactory in this country because the head of Departments, independent agencies, etc., are not members of either the Senate or the House of Representatives and consequently not subject to questioning on the floor of either House; there is no procedure of dissolution of Congress and going to the Country for reelection when a vote of confidence is denied; the vast extent of this country and the volume of business make it practically impossible for members of Congress to take on further duties; and the considerable turnover in personnel in Congress deprives the Federal government of the services of many experienced men, a situation not obtaining in England where membership in the House of Lords is hereditary and where members of the House of Commons may stand from any constituency.

As stated, the Court of Claims is a legislative court, created to assist the Congress in disposing of many detailed matters and that court could very properly consider, annul, or affirm regulations.14

We have somewhat similar procedure in the Federal Declaratory Judgment Act of June 14, 1934, Public, No. 343, and the Court of Claims has exercised a somewhat similar jurisdiction for many years. See Chapter 7, Title 28, Sections 253, 254, 255, 256, and 257, U. S. Code. Further, the Supreme Courts of a number of the states have jurisdiction to render advisory opinions. No concrete case is submitted for such advisory opinions. Also, the Attorney General of the United States, since the foundation of the Government, and the Comptroller, since 1894, have had jurisdiction to render advisory opinions to certain officers of the Government; these opinions are frequently rendered on abstract questions of law; and the procedure is a necessity in the conduct of the administrative machinery of the Federal Government.

We think that such procedure will give a much needed, expeditions, and inexpensive method of determining the validity of regulations and that such action will uphold the hands of law officers of the Government who are not infrequently influenced in their decisions or opinions by lay direction.15 The procedure more nearly will insure regulations being issued within the four corners of the constitutional and statutory authority of the governmental agency concerned.

IMPROVEMENT IN THE ADMINISTRATIVE PROCESSES FOR HEARING AND DETERMINING

CONTROVERSIES

It is possible to provide that controversies between operating personnel of the administrative services and the aggrieved person (which is defined in the draft to include a corporation, partnership, or other business organization) may be taken at that point to the courts in many cases in a suit de novo against the United States or some of its officers; or that an appeal may be provided within the 14 Prof. Hart, above cited, seems to think that adequate safeguards against the issuance of illegal or void regulations may be found in clearing the regulations through the White House, the President having authority to secure the assistance of such officers of the Government as he may see fit, including the use of an advisory committee coupled with publicity, notice and hearing, judicial reviews where the regulation may come up in a case on its merits, and with congressional examinations of the administrators responsible for the regulations. While all these are of some value, we do not think they are sufficient. The President could now, by executive direction, bring about most of these needed reforms and Congressional Committees do occasionally examine an administrator as to regulations. However, these devices have not operated in the past to secure regulations issued in accordance with law or to insure that an administrator would not atetmpt to expand the law by means of a regulation. The simple and expeditious method of bringing the regulation before a trained court would certainly assist in the process of "a rule of law and not of men.'

It seems to be unquestioned that some form of effective control over the legality of regulations is needed in addition to the existing forms of control. We believe that the device of taking such regulations to the Court of Claims for a decision in the nature of an advisory judgment offers expeditious legal control with complete freedom for the department or other agency to try again in event the regulation is annulled. 15 Prof. Hart, above, cited p. 26, says: "The second problem (as to regulations) arises from the fact the solicitor of an agency is apt to give his superior the advice that he wants; for these solicitors are not, as they formerly were, officers of the Department of Justice. Legal officers should be in a position to advise administrators as to how to accomplish legally what they need to accomplish for the effective prosecution of their duties. But they should be in a position to say 'No' when they ought clearly to say 'No'.... They let by without any advice or control from the Department of Justice, things which that Department is later called upon to defend in the courts."

administrative services to higher authority with a suit de novo against the United States or some of its officers should that appeal fail to result in a proper decision of the controversy; or that an appeal may be taken from such higher authority on the administrative record to the United States Circuit Courts of Appeals or to the Court of Claims in cases where the latter court now has jurisdiction in a proceeding de novo.

Naturally, there may be and are differences of opinion as to which one of these possible procedures should be selected. A majority of this committee believes that the procedure should be selected which offers the greatest promise of an expeditious and inexpensive review and the greatest possibility of a correct decision. Also, we believe that, from both a theoretical and practical viewpoint, the procedure of an appeal within the administrative service concerned-equipped to get at the facts, with authority to build a record, where necessary, as in a trial court, and with the requirement for administrative findings of facts and decision from which a direct appeal will lie to the Circuit Courts of Appeals or to the Court of Claims-offers the greatest assurance for the attainment of justice between the United States and its citizens as to matters not now within the jurisdiction of independent boards and commissions. Section 3 of the draft of bill has been built upon that basis.

The point can not be too strongly emphasized that section 3 of the draft is designed to improve the administrative processes for the administrative determination of appeals and controversies. An analysis of the procedure now obtaining in the various departments, etc., of the Federal government which has been made for this Committee by The Brookings Institution-and copies of which will be mailed to the members of the House of Delegates, if and when the Committee succeeds in getting it printed-shows that much of the work is done by boards organized within the administrative agencies.

This section 3 of the draft is not a part of the judicial machinery, though a record may be built thereunder for an appeal to the Circuit Courts of Appeals or to the Court of Claims as provided in section 4 of the draft. Section 3 is intended to bring contested matters before a responsible intradepartmental board in such a manner as will result in informing these officials as to the facts and to give such officials the benefit of a formularized and regularized procedure. Incidentally the section will result in the procedure of administrative appeals being the same before all the departments and establishments of the Governmentand before the several boards, commissions, and other agencies set forth in Report No. 10 made by The Brookings Institution to the Byrd Committee, a copy of which has been sent to each member of the House of Delegates.16

The General Council of the English Bar submitted to the Committee on Ministers' Powers, above referred to, a summary of principal suggestions, in pertinent part, as follows:

"(1) That in all cases of at least other than purely administrative decisions, the applicant or person aggrieved should be entitled, on demand, to an oral hearing, which should be public, and at which witnesses on both sides should give evidence and be subject to cross examination.

"(2) That the parties should have the right to be represented by counsel or solicitor.

"(3) That those who inquire into the facts should decide the cases.

"(4) That all decisions should, on their face, state the reasons on which they are founded.

"(5) That the practice of publishing the reports of decisions should be extended. "(6) That in all cases departmental tribunals should possess the following powers:

"(a) To compel the attendance of witnesses.

(b) To administer oaths.

"(c) To require the production of documents.

"(d) To state questions of law for the opinion of the court.

"(7) That, in all cases, an aggrieved person should have the right of appeal on questions of law to the High Court.

"(8) That, in important cases, the aggrieved person should have a right of appeal on questions of fact to the High Court, subject to the permission of the Minister.

"(9) That the procedure on appeal should be simplified and the expenses restricted."

16 It will be noted that the President's Committee on Administrative Management recommended that the independent boards and commissions be placed in the executive departments. See Cushman "The Problem of the Independent Regulatory Commissions" prepared for said Committee.

56821-38-pt. 1-4

hearing if requested prior to such issuance of the rules and regulations; (3) To provide a method by which the subordinate officers and employees of the Government may be controlled, in their administration of the statutes; (4) To provide a method whereby business men and others may be advised in advance of administrative action determining particular cases as to the administrative interpretation of the statutes; and (5) To protect the citizen acting in good faith in accordance with rules and regulations for a reasonable period after the rule or regulation is rescinded, amended, or held invalid. The basic statute in this matter is section 161, Revised Statutes, which originated in the act of July 27, 1789, 1 Stat. 28. This section provides that: "The head of each Department is authorized to prescribe regulations, not inconsistent with law, for the government of his Department, the conduct of his officers and clerks, the distribution and performance of its business, and the custody, use, and preservation of the records, papers, and property appertaining to it."

Many statutes relating to particular subject matters likewise contain authority to issue rules and regulations. Possibly the best of these provisions is contained in the recent Securities and Exchange Act of May 27, 1933, 48 Stat. 85, as amended by the act of June 6, 1934, 48 Stat. 908, as follows: "The Commission shall have authority from time to time to make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of this title, including rules and regulations governing registration statements and prospectuses for various classes of securities and issuers, and defining accounting and trade terms used in this title. No provisions of this title imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the Commission, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

There are many decisions of the courts holding that rules and regulations issued pursuant to, and in conformity with law, have the force and effect of law. United States v. Eaton, 114 U. Š. 677; Caha v. United States, 152 U. S. 219; Haas v. Henkel, 216 U. S. 462; United States v. McDaniel, 7 Peters 1; Boake v. Comingore, 177 U. S. 459; Merrill v. Jones, 106 U. S. 466; Ex-Parte Reed, 100 U. S. 13; Sherlock v. United States, 43 Ct. Cls., 161; Exparte Curtis, 106 U. S. 371; Campbell v. United States, 107 U. S. 407; United States v. Foster, 233 U. S. 515; United States v. George, 228 U. S. 14.

Generally speaking, the practice in this country has not been to issue rules and regulations after notice and hearing of interested parties. As this Committee stated in its 1936 report to the Association, the Supreme Court of the United States held in the Panama Refining Company, 293 U. S. 388, 415, and Schechter, 295 U. S. 495, cases, that one of the three requisites for the exercise of delegated legislative power-or the issuance of rules and regulations having general application-was a requirement of a finding by the administrative agency in the exercise of the authority delegated. The English practice is for notice and hearing.

The First Parliamentary Counsel corresponding somewhat to the Legislative Counsel to the Senate and to the House of Representatives-stated to the Committee on Ministerial Powers (appointed by the Lord Chancellor to investigate the charges made by Lord Chief Justice Hewart in his book, The New Despotism) that:

"In my opinion one of the most important safeguards against the improper use of delegated powers (though this applies much more as respects Regulations of a personal or local character) is the fact that no Minister in his senses with the fear of Parliament before his eyes would ever think of making Regulations without (where practicable) giving the persons who will be affected thereby (or their representatives) an opportunity of saying what they think about the proposal."

The Procurator-General and Treasury-Solicitor of England stated before the same Committee that:

"It is, I think, important that due notice should be given of any intention on the part of a Department to make new rules and regulations. This is in fact secured very fully at the present time, because organizations of trade, professional and other interests, has proceeded so fast of late years that it can rarely, if ever, happen that there is not somebody whom a Department can consult before rules, regulations, or orders are made affecting the interests of the persons whom that body represents, and these organized bodies are in practice always consulted and an expression of their views obtained."