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As will be noted, section 3 of the draft follows quite closely the above stated principal suggestions made by the General Council of the English Bar as to the powers of departmental tribunals. That part of the recommendations as to appeal to the courts will be taken up in commenting on section 4 of the said draft. Mr. Robson, testifying before the same committee on Ministers' Powers, summed up the advantages and disadvantages of departmental tribunals as they then existed in England as follows:

"Cheapness.

"Rapidity.

ADVANTAGES

"Conducive to efficient administration.

"Introduction of special knowledge and experience.

"Accumulated departmental information made available for use.

"Flexibility.

"Ability to prmote a policy of social improvement.

"Development of new standards.

"Infusion of new moral ideas."

DISADVANTAGES

"Secrecy or lack of publicity.

"Poor quality of investigations into facts.

"Inability to compel production of documents and attendance of witnesses. "Anonymity.

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Careful study of section 3 of the draft will show that it meets every one of the stated advantages of departmental tribunals and specifically every one of the stated disadvantages except the requirement for publication of reports. We think that such a matter may be left to the discretion of the head of the agency concerned, it now being the practice of the more important commissions to publish their decisions, and also of both the Attorney General and the Comptroller General to publish their decisions.

We now have these intra-departmental boards in operation in many of the departments and establishments of the Government with many of the disadvantages of the English boards, and this is due to the failure to regularize and formularize by statute their procedure which was, in effect, the recommendation of the organized lawyers of England to the Committee on Ministers' Powers with respect to what should be brought about as to a similar situation in Great Britain. These Federal boards have been established in nearly all instances by rules and regulations to act as an alter ego of the head of the department or establishThe statutes quite generally and almost uniformly confer on the head of the respective departments and establishments certain jurisdiction and duties. It is physically impossible for such head to personally perform any considerable part of such duties or to exercise a fraction of the jurisdiction so conferred. These heads have been driven by grim necessity to establish the departmental boards to hear and determine cases and controversies.

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The most striking example, known to most lawyers, was the act of March 2, 1919, authorizing and directing the Secretary of War to settle and adjust contracts which had been terminated at the end of hostilities in Europe. There were literally thousands of such contracts and, of course, the Secretary of War could not personally perform these duties. Secretary Baker, being an eminent lawyer, versed in administrative technique, and surrounded by Army officers who had spent their mature careers in the Army and who were likewise familiar with such technique, established Boards of Contract Adjustments to hear and determine these claims in the first instance. The claims following the Civil War dragged on for years and years but so efficient were these contract boards established by Secretary Baker that the bulk of claims were settled in the next two years. They were settled so well that, notwithstanding there was free and open access to the courts, a mere handful of cases reached the courts. What was so well done in the vast job of settling war claims is being done on a smaller scale by a large number of boards in the various departments and establishments today in the settlement of many and varied controversies.

The reason these boards have not functioned better is because they have had no statutory authority, with the safeguards which this section 3 would give to the person aggrieved and which safeguards were recommended by the lawyers of England for their departmental boards.

This section 3 does not make a formal hearing mandatory on the person aggrieved in attempting to secure relief from an unjust administrative decision made by some officer or employee. Section 3 (b) specifically provides that such hearing must be specially requested. This will permit informal negotiations with a superior administrative officer in an attempt to adjust a controversy with a subordinate officer or employee. However, if such an attempt should fail, the aggrieved person or his counsel may then elect whether to appeal to the departmental board or pursue such other remedy as may now exist to sue the United States or one of its officers. The latter right is specifically preserved in section 6 of the draft.

In other words, section 3 takes away none of the existing legal remedies in either the constitutional or legislative courts. It provides an additional remedy and creates a right where none now exists in many instances to contest an administrative decision. It provides a regularized and formularized machinery by which, and under which, the administrative officers of a Governmental agency may more nearly reach a correct result in particular cases, and this section in conjunction with sections 1 and 2 of the draft will enable the heads of the governmental agencies to maintain a greater degree of control by law over their subordinates.

In a few instances the Congress has set up machinery for intra-departmental hearings in particular classes of cases. For instance, the act of July 28, 1916, 39 Stat., 424, as amended by the act of June 7, 1934, 48 Stat., 926, as to the matter of an order by the Post Office Department in the transportation of mail provides that if the owner

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believes that he is unfairly discriminated against, he may apply to the Post Office Department for an opportunity to be heard; and upon such application being duly filed in writing, the owner of such publication shall have opportunity for a full and fair hearing before said department, and pending final determination no charge shall be made in the method of transportation of such publication as ordered by the department. The testimony in such any hearing or proceeding shall be reduced to writing and filed in the Post Office Department prior to entering an order upon such hearing. Upon such hearing if the Post Office Department decides adversely to the contentions of the publisher, such publisher shall have the right, within the 20 days after the date of the order of the Post Office Department made upon such hearing, to appeal to the United States Court of Appeals for the District of Columbia, for a review of such order by said court of appeals, by filing in the court a written petition praying that the order of the Post Office Department be set aside. A copy of the petition shall be forthwith served upon the Post Office Department and thereupon the said department shall certify and file in the court a transcript of the record and testimony. Upon the filing of such transcript the court shall have jurisdiction to firm, set aside or modify the order of the department."

The latter part of this section pertaining to judicial review of the administrative decision on the administrative record will be considered in commenting on section 4 of the draft. Here it is sufficient to point out that the method prescribed for an administrative hearing is not surrounded by the safeguards stated in section 3 of this draft, but even so, there appears to have been no appeal from such an order entered after hearing-showing that the procedure has worked well in practice.

The second intra-departmental board was established by section 906 of the act of June 22, 1936, 49 Stat. 1748, 1749, for the hearing and determination of appeals from the Commissioner of Internal Revenue for refunds of processing taxes. Said section provides, in pertinent part, that:

"(b) There is hereby established in the Treasury Department a Board of Review (hereinafter referred to as 'the Board'). The Board shall be composed of nine members who shall be officers or employees of the Treasury Department designated by the Secretary of the Treasury. One of such members shall be designated by the Secretary to act as chairman of the Board. The chairman may from time to time divide the board into divisions of one or more members, assign the members of the Board thereto, and in case of a division of more than one member designate the chief thereof. A majority of the members of the Board or of any divisions thereof shall constitute a quorum for the transaction of the business of the Board or of the division respectively. A vacancy in the Board or in any division thereof shall not impair the powers nor affect the duties of the Board or division nor of the remaining members of the Board or division respectively. The Secretary of the Treasury shall assign to the Board such personnel in the Treasury Department as may be necessary to perform its functions. The Board shall have jurisdiction in proceedings under this section to review the allowance

or disallowance of the Commissioner of a claim for refund, and to determine the amount of refund due any claimant with respect to such claim.

"(d) . . . The proceedings in such hearings shall be conducted in accordance with such rules of practice and procedure (other than rules of evidence) as the Board may prescribe with the approval of the Secretary of the Treasury, and in accordance with the rules of evidence applicable in courts of equity of the District of Columbia. The claimant and the Commissioner shall be entitled to be represented by counsel, to have witnesses subpoenaed, and to examine and crossexamine witnesses. The presiding officer shall have authority to administer oaths, examine witnesses, rule on questions of procedure and the admissibility of evidence, and to require by subpoena, signed by any member of the Board, the attendance and testimony of witnesses, and the production of all necessary returns, books, papers, records, correspondence, memoranda, and other evidence, from any place in the United States at any designated place of hearing, and to require the taking of a deposition by any designated individual competent to administer oaths.

99 17

Judicial review of the decisions of this Board is provided for in the same section of the statute, the particular subsection being quoted in explanation of the next section of this draft.

Under this section 3, an intra-departmental board may be organized to hear cases anywhere in the United States, with appeal to the United States Circuit Court of Appeals for the circuit in which the aggrieved person resides or maintains his principal place of business, or to the Court of Claims if the case is otherwise within the jurisdiction of that court. The appeal provision in section 4 will be considered more at length in commenting on that section.

Administrative work, so far as appeals are concerned in the departments and establishments of the Government, is being handled to a considerable extent, at the present time, by intra-departmental boards consisting of three to five employees but, except in few instances, without any machinery for determining the facts and without the benefit of written briefs on the law or oral arguments where such are necessary. These boards have been created by regulation by the heads of the respective agencies in an attempt to expedite the work of the particular agency and to insure that if one member overlooks some essential requirement, one or two of the other members of the board will catch the missing essentials. These boards are made up of specialists in the particular type of work coming before the said boards and when not engaged in deciding cases as members of the boards, they are engaged in the regular work of their departments. Such procedure has been developed over the years; it has served a useful purpose, even though the boards are not equipped with sufficient authority to compel the attendance and testimony of witnesses, etc., as here proposed.

The independent commissions, boards, or agencies consisting of three to five or more members have been required, in most instances, to provide for the hearing of witnesses, etc., by employees of the agencies, designated as trial examiners. These examiners prepare their findings of facts or reports to the independent agency concerned, which decides the cases, the procedure in this respect being similar to the mentioned procedure of the Court of Claims and its commissioners. In some instances, the orders or decisions of the examiner are satisfactory to both the Government and the private party or parties; they agree thereto; and the order or decision in such cases is made by the independent agency more or less perfunctorily. Section 3 (e) of this draft proposes to regularize this procedure and to provide that the examiner shall submit to both sides his findings and statement of proposed action and that the independent agency shall enter the appropriate order or decision unless one or the other of the parties objects, in which event the independent agency shall hold a public hearing after notice to all parties. In a sense the use of intra-departmental boards and the use by some independent boards and commissions of examiners to take evidence are extra-legal, though some statutory confirmation thereof might be traced to the appropriation. statutes providing funds for continuation of the employees engaged in such tasks. The procedure has been necessary in order to carry on the work of the departments and independent agencies.

There has been some suggestion that the personnel of the intra-departmental boards shall be permanently assigned thereto and should perform no other duties. 17 This statute was held constitutional by the Supreme Court of the United States in Anniston Manufacturing Company vs. Davis, No. 667, decided May 17, 1937, the Court saying: "The whole scheme of the administrative proceeding presupposes hearing and determination in accordance with the demands of due process. The Board which makes its findings and renders its decision must consider the evidence and base its findings and decision upon it, and until the contrary appears we must assume that the Board will do so. Morgan vs. United States, 298 U. S. 468."

The adoption of such a suggestion would destroy the necessary flexibility in the assignment of men and women peculiarly trained for the particular work of the boards; would tend to convert them into courts; and would not enable the return of members to administrative duties so as to retain their familiarity therewith. Further, it would tend to inject politics into the selection of the members of the boards instead of career men and women being assigned thereto as is now the situation as to many of these boards.

It has been suggested that the draft should define the cases or class of cases in which the appeal may be taken from the administrative officer to the intra-departmental board but this seems wholly unnecessary for the reason that the jurisdiction, duty, and authority of all departments and establishments, etc., are defined in the statutes. If any person believes that the subordinate administrative officer has not properly exercised such jurisdiction or authority or has not properly discharged his duty as to such person, he should have a legal right to appeal therefrom in all such cases. That is the procedure now followed and no reason has been seen for proposing a change in that procedure.

It has been suggested that the membership of the boards should consist of lawyers. Again it is believed that the situation should remain as it is in that respect so that the department being required to assign one lawyer to act as chairman-may assign men of other professions and training to assist in hearing and determining controversies, particularly those of a scientific or technical nature. It takes men and women of many professions today to run such a complex machinery of government as we have, and the head of a department or other agency I should not be required to limit his selections to members of the legal profession. This is an age of specialists, even in the practice of law, and specialists are necessary in running the Federal government.

It has been suggested that a trial court or trial board sufficiently large to hear all of the appeals from administrative decisions should be established, the purpose of these independent trial judges or board members being to take the evidence, make a record, and decide the cases so that appeals may be taken therefrom if desirable. Such suggestion overlooks the fact that this Committee is charged with the responsibility of making a workable recommendation to improve the present situation, which has come about through the application of common-law principles attributing to the Federal government the sovereign immunities of the King of England with whom we fought a war for independence; also, that commonlaw principles, the technique of the regular courts, and their lack of familiarity with the administrative processes-in fact, their hostility thereto in many cases, as summarized by Mr. Justice Stone in his address published in 50 Harvard Law Review, pp. 16, 17 et seq.-have contributed to the existing situation.

The General Council of the Bar of England in its statement before the above mentioned Committee on Ministers' Powers said with respect to this feature of the matter that:

"Let it be said at once that it is not suggested that the remedy can be found in either the adoption by Departments of the Government of the procedure of the Courts of Law, or in the general review of Departmental decisions by those courts. Considerations of time and expense forbid any such suggestions; though it may be observed that cheapness and expedition, pursued as ends in themselves, may be attained at too great a cost in other directions. Many of the persons concerned are poor. Further, it may well be doubted whether the courts of law possess either the appropriate experience or special knowledge which would render them satisfactory as appellate tribunals on questions of fact or administrative discretion."

We do not recommend the intra-departmental boards or the continuance of the independent boards and commissions, as stated in section 3, as being perfect. Frankly, we recommend the recognition of such boards in the departments which now have intra-departmental boards, with authority to establish them in other departments which do not have them, because we have been unable to find any better procedure for the expeditious, inexpensive, and fairly satisfactory handling of the vast number of controversies arising in the administrative service of the Federal government. We have made a careful study of the Federal organization and of the administrative service in European countries and we have invited suggestions and recommendations from all sources where we thought we might find help, including the Board of Governors. We have been driven back to the plan proposed in section 3 of this draft for want of a better one.

COMPARISON OF INTRA-DEPARTMENTAL BOARDS WITH SO-CALLED

COMMISSIONS OR BOARDS

INDEPENDENT

In view of the arguments advanced that no independence could be expected of intra-departmental boards and that all controversies with this United States should be tried before independent boards or trial courts in the first instance, it seems well to critically examine the differences 18 if any, between the two classes of boards.

The first so-called independent commission or board was the Civil Service Commission created by the act of January 16, 1883, 23 Stat. 403, for the purpose of establishing a merit system of appointment of Federal employees and following a revulsion from the Spoils System which resulted in the assassination of President James A. Garfield. However, as is well known, the Civil Service Commission was unpopular with the politicians and it did not commence to really function until the appointment in 1889 of Theodore Roosevelt as a member of the Commission. But even then and for many years afterwards, comparatively few positions in the Federal service were filled as the result of Civil Service examinations and these were limited to the minor clerical and stenographic forces. As a matter of fact, it is largely so limited today, and in so-called emergency agencies there are now included as political appointees vast numbers of employees in the clerical and stenographic grades. Exemptions have been by express statutory enactments.

It was during this early period that there was established the next commission, the Interstate Commerce Commission, by the act of February 4, 1887, 24 Stat., 379, 383, to meet the popular demand for regulation and control-a demand which has grown in volume and effectiveness during the intervening years and which has resulted in a vast number of regulating laws now in the Federal statutes. Undoubtedly the Interstate Commerce Commission-instead of a single official head--was established, among other reasons, because we had refused and failed to establish a career service for the higher positions in the Federal government; 19 we had no trained men in the administrative service to whom could be assigned such a complex task as was necessary to be performed in connection with the regulation of the railroads even in a limited way as provided at first; and the country refused to trust a political appointee, changing with each change of administration, with such responsibilities. Therefore, we created a Commission to consist of five commissioners with overlapping terms of six years each; who were not removable by the President except for certain specified causes and not more than three of whom could be appointed from the same political party. There have been subsequent changes in both the number of commissioners and their terms of office but such changes are not material here.

In general, that plan has been followed in the creation of all subsequent boards and commissions to administer regulatory laws and even to administer promotional activities, such as the former Shipping Board, now the Maritime Commission, and the Tennessee Valley Authority. However, regulatory functions have 18 As shown by the Supreme Court of the United States cases cited in the footnotes to this report, particularly the St. Joseph Stockyards case, Tagg vs. Moorhead, and the Anniston Manufacturing Company case, that court has made no distinction in the extent of appellate reveiw of such tribunals.

19 Cushman in "The Problem of the Independent Regulatory Commissions," published by the President's Committee on Administrative Management, suggests, p. 10, a number of other reasons for the establishment of these independent commissions, boards, etc., which he would place in the established departments of the Government. The Brookings Institution differs sharply with Cushman and the President's Committee in this respect. See Brookings' Report No. 10 to the Select Committee of the Senate to Investigate the Executive Agencies of the Government on the subject of Government Activities in the Regulation of Private Business Enterprises. It is stated in the latter report, p. 100, apparently with respect to the recommendation made by the President's Committee on Administrative Management and the suggestion by Prof. Cushman that:

"Although the arguments for integrating the independent boards and commissions into executive departments appear on the surface convincing, serious difficulties appear to stand in the way of their adoption. It is probable that the independence of these authorities is necessary to give stability to long range policies and relative freedom from pressure groups. It is impossible to effect any clear cut divisions of the functions of these commissions into administrative on the one hand and judicial on the other. The commissions are dealing not only with the application of law to facts but the application of policy to facts. A legislature enacts principles, a court decides cases, a board carries out a policy, enacting, ordering, and deciding as it goes,' says Oppenheimer. It is not deemed desirable to give the chief executive control over the policy and administration of these regulatory bodies unless his acts were made more responsible to the legislative body and to the courts. Probably most of the difficulties that now exist with respect to these boards and commissions would be removed by a proper system of administrative courts, by proper procedures, forms of administrative action, remedies, enforcement methods, and by a proper implementation of the law." There is a fundamental disagreement in point of view between the conclusions reached by the President's Committee on Administrative Management and The Brookings Institution with respect to these several so-called independent boards, commissions, and other agencies. This Committee has not seen fit to become involved in this difference of viewpoint for the reason that the proposal which we have worked out will operate equally well whichever iewpoint finally prevails or, which is more likely, if a compromise is finally reached with respect to the differences in the two viewpoints.

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