HEARING BEFORE THE SUBCOMMITTEE ON ADMINISTRATIVE LAW AND GOVERNMENT RELATIONS OF THE COMMITTEE ON THE JUDICIARY HOUSES OF REPRESENTATIVES ON H.R. 10194, H.R. 10195, H.R. 1016 H.R. 10197, H.R. 10198, AND H.R. 10199

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP77M00144R000800160004-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 78
• Document Creation Date: December 12, 2016
• Document Release Date: May 13, 2002
• Sequence Number: 4
• Publication Date: December 4, 1975
• Content Type: OPEN

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ADMINISTRATIVE PROCEDURE
HEARING
SUBCOMMITTEE ON ADMINISTRATIVE LAW
AND GOVERNMENTAL RELATIONS
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
NINETY-FOURTH CONGRESS
H.R. 10194, H.R. 10195, H.R. 10196, H.R.
10197, H.R. 10198, and H.R 10199
ADMINISTRATIVE PROCEDURE
Serial No. 29
OLC)
C: 6-C
GOVERNMENT PRINTING OFFICE
634180 WASHINGTON : 1976
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COMMITTEE ON THE JUDICIARY
PETER W. RODINO, JR., New Jersey, Chairman
JACK BROOKS, Texas EDWARD HUTCHINSON, Michigan
ROBERT W. KASTENMEIER, Wisconsin ROBERT MOCLORY, Illinois
DON EDWARDS, California TOM RAILSBACK, Illinois
WILLIAM L. HUNGATE, Missouri CHARLES E. WIGGINS, California
JOHN CONYERS, JR., Michigan HAMILTON FISH, JR., New York
JOSHUA EILBERG, Pennsylvania M. CALDWELL BUTLER, Virginia
WALTER FLOWERS, Alabama WILLIAM S. COHEN, Maine
JAMES R. MANN, South Carolina CARLOS J. MOORHEAD, California
PAUL S. SARBANES, Maryland JOHN M. ASHBROOK, Ohio
JOHN F. SEIBERLING, Ohio HENRY J. HYDE, Illinois
GEORGE E. DANIELSON, California THOMAS N. KINDNESS, Ohio
ROBERT F. DRINAN, Massachusetts
BARBARA JORDAN, Texas
RAY THORNTON, Arkansas
ELIZABETH HOLTZMAN, New York
EDWARD MEZVINSKY, Iowa
HERMAN BADILLO, New York
ROMANO L. MAZZOLI, Kentucky
EDWARD W. PATTISON, New York
CHRISTOPHER J. DODD, Connecticut
WILLIAM J. HUGHES, New Jersey
MARTIN A. RUSSO, Illinois
EARL C. DUDLEY, JR., General Counsel
GARNER J. CLINE, Staff Director
HERBERT FUCHS, Counsel
WILLIAM P. SHATTUCK, Counsel
ALAN A. PARKER, Counsel
JAMES F. FALCO, Counsel
MAURICE A. BARBOZA, Counsel
THOMAS W. HUTCHISON, Counsel
ARTHUR P. ENDRES, Jr., Counsel
DANIEL L. COHEN, Counsel
JAY T. TURNIPSEED, Counsel
FRANKLIN G. POLK, Counsel
THOMAS E. MOONEY, Counsel
ALEXANDER B. COOK, Counsel
CONSTANTINE J. GEKAS, Counsel
ALAN F. COFFEY, Jr., Counsel
KENNETH N. KLEE, Counsel
RAYMOND V. SMIETANKA, Counsel
SUBCOMMITTEE ON ADMINISTRATIVE LAW AND GOVERNMENTAL RELATIONS
WALTER FLOWERS, Alabama, Chairman
GEORGE E. DANIELSON, California CARLOS J. MOORHEAD, California
BARBARA JORDAN, Texas THOMAS N. KINDNESS, Ohio
ROMANO L. MAZZOLI, Kentucky
EDWARD W. PATTISON, New York
WILLIAM P. SHATTUCK, Counsel
JAY T. TURNIPSEED, Counsel
ALAN F. CoTFEY, Associate Counsel
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CONTENTS
Text of-
Page
H.R. 10194-------------------------------------------------------
3
H.R. 10195-------------------------------------------------------
6
H.R. 10196-------------------------------------------------------
9
H.R. 10197-------------------------------------------------------
12
H.R. 10198-------------------------------------------------------
21
H.R. 10199-------------------------------------------------------
25
Witnesses-
Berg, Richard K., executive secretary, Administrative Conference of
the United States----------------------------------------------
40
Fauver, Hon. William, president, the Federal Administrative Law
Judges Conference----------------------------------------------
59
Prepared statement-------------------------------------------
59
Gregory, Francis M., attorney, Administrative Law Section of the
American Bar Association--------------------------------------
28
Prepared statement-------------------------------------------
38
Ross, William Warfleld, chairman, Committee on Revision of the Ad-
ministrative Procedure Act, Section of Administrative Law, Ameri-
can Bar Asssociation____________________________________________
28
Prepared statement-------------------------------------------
30
Additional material-
Anthony, Robert A., chairman, Administrative Conference of the
United States, letter dated December 2, 1975, to Hon. Peter W.
Rodino, Jr., chairman, House Committee on the Judiciary----------
40
Berg, Richard K., executive secretary, Administrative Conference of
the United States, letter dated February 3, 1976, to Hon. Walter
Flowers -------------------------------------------------------
73
McCloskey, Robert J., Assistant Secretary, Congressional Relations,
Department of State, letter dated March 2, 1976, to Hon. Peter W.
Rodino, Jr-----------------------------------------------------
75
Ross, William Warfleld, American Bar Association, letter dated Jan-
uary 29, 1976, to Hon. Walter Flowers---------------------------
72
Wiley, Richard A., General Counsel of the Department of Defense,
letter dated February 17, 1976, to Hon. Peter W. Rodino, Jr-------
76
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ADMINISTRATIVE PROCEDURE
THURSDAY, DECEMBER 4, 1975
HOUSE Or REPRESENTATIVES,
SUBCOMMITTEE ON ADMINISTRATIVE LAW
AND GOVERNMENTAL RELATIONS
OF THE COMMITTEE ON THE JUDICIARY,
Wa.shington, D.C.
The subcommittee met, pursuant to notice, at 10:10 a.m., in room
2141, Rayburn House Office Building, Hon. Walter Flowers [chair-
man of the subcommittee] presiding.
Present : Representatives Flowers and Kindness.
Also present: William P. Shattuck and Jay T. Turnipseed, counsels;
David Minge, consultant; and Alan F. Coffey, Jr., associate counsel.
Mr. FLOWERS. We will have to begin promptly. The schedule has
been changed on the House floor, and the House went into session at
10 this morning. We are going into continued session and after that, the
tax bill. Our hearing this morning may be limited to an hour, or
slightly less. I have a few remarks which I would like to make by way
of an opening statement. Then we will see if we can't establish some
ground rules for the hearing this morning in order to expedite the
process.
The hearing this morning is on a series of bills which I introduced
on October 9, 1975, which are intended to improve administrative pro-
cedures. The basis for administrative justice in our country is the
Administrative Procedure Act adopted in 1946. Since that date, the act
has not been materially changed other than by addition of what is
properly known as the Freedom of Information Act. However, the
Administrative Procedure Act has deficiencies. As early as 1953, the
President's Conference on Administrative Procedures was formed to
recommend improvements. The Conference's report in 1955 together
with that of the Hoover Commission and its task force on legal services
convinced the American Bar Association that it should join in these
efforts. In the 22 years since that time a number of basic reforms have
been generally recognized as desirable. However, differences of ap-
proach and lack of joint congressional action have frustrated the enact-
ment of the legislation.
Finally, in 1972 the American Bar Association adopted a resolution
endorsing 12 proposals for a change. All of these proposals have been
reviewed by the Administrative Conference of the United States and
other interested parties. Finally, we are at the point now where firm
positions have crystalized and the matter is fit for quick and long-
awaited congressional action.
H.R. 10194 through H.R. 10199 are designed to implement these
and other reforms and the administrative process.
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We have with us this morning a distinguished group of witnesses:
Mr. Warfield Ross, an attorney for the Administrative Law Section
of the American Bar Association; Francis M. Gregory, also an at-
torney for the Administrative Law Section of the American Bar Asso-
ciation; Mr. Richard Berg, executive secretary of the Administrative
Conference of the United States; and William Fauver, president of the
Federal Administrative Law Judges Conference. Judge Fauver has
been a friend of mine since we both matriculated at the University of
Alabama Law School just about the year before last, wasn't it?
Judge FAUVER. Just about that time.
Mr. FLOWERS. It is excellent to have all of you here, particularly my
old classmate William. Gentlemen, I have distributed copies of the
ABA statement as well as the administrative conference statement.
Judge, if you have a statement, we will, of course, receive the full state-
ment for the record. But because of the limitations of time and in
order to get into the real nuts and bolts of those proposals as quickly as
possible, I would suggest that each of you make what comments you
would like to make and that we then regard this as a roundtable discus-
sion. We will just go down the line and discuss the matter point by
point. Does that suit everyone? Would my colleague Mr. Kindness
from Ohio like to make an opening statement?
Mr. KINDNESS. Thank you, Mr. Chairman. I don't have any opening
statement to make by way of introduction, other than to express the
concern that the changes that are proposed here are certainly, in part,
controversial. I'm sure they would have an effect upon the operations
of most of the administrative agencies, and a comment from that quar-
ter might certainly be in order. But the attempt to better safeguard the
rights of individuals and corporations, having their interests affected
by administrative actions, and by administrative rulemaking, is a con-
cern in which I certainly share.
It is, however, a concurrent concern that there not be made of the
administrative process something too closely akin to the judicial proc-
ess so that adjudicatory cases, at any rate, that one might as well be in
court. These quasi-judicial administrative agencies were established
for the purpose of making expert determinations on an administrative
level, without having to resort to the courts at the initial stage of de-
cisionmaking. But if, in the administrative process, we too closely par-
allel the procedures that are inherent in the judicial process, then we
will have created something that might be a little bit too complex and
make too much work for lawyers. Being a lawyer myself, I can appre-
ciate that; but being also a taxpaying citizen, I must express the con-
cern that maybe we have a little bit too much complication arising out
of the proposals that are before us.
So I will be very interested to hear the statements of the witnesses,
directed at those particular concerns.
Mr. FLOWERS. Thank you very much, Tom. Without objection the
bills H.R. 10194 through 10199 will be placed in the record at this
point.
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94Tii cS Ssro O
1sTSrsN H? Rs 1 ?194
OCTOBER 9,1975
Mr. FLOWERS introduced the following bill; which was referred to the Com-
mittee on the Judiciary
A BILL
To amend chapter 5, subchapter II, of title 5, United States
Code, to provide for improved administrative procedures.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That (a) section 551 (4) of title 5, United States Code, is
4 amended to read as follows :
5 " (4) `rule' means the whole or a part of an agency
6 statement of general applicability and future effect
7 designed to implement, interpret, or prescribe law or
8 policy or to describe the organization, procedure, or
9 practice requirements of an agency;".
10 (b) Section 551 (14) is added to read as follows:
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1 " (14) `ratemaking and cognate proceedings'
2 means agency process for the approval or prescription
3 for the future of rates, wages, corporate or financial
4 structure of reorganizations thereof, prices, facilities, ap-
5 pliances, services, or allowances therefor or of valuations,
6 costs, or accounting, or practices bearing on any of the
7 foregoing.".
8 (c) Section 556 (d) is amended to insert before the
9 words "rule making" in the last sentence thereof the words
10 "artemaking and cognate proceedings,".
11 (d) Section 557 (b) is amended to insert before the
12 words "rule making" in the fourth sentence thereof the words
13. "ratemaking and cognate proceedings,".
14 SEC. 2. Section 553 of title 5, United States Code, is
15 amended as follows :
16 (1) Paragraph (1). of subsection (a) is amended to
17 read as follows :
18 " (1) a matter pertaining to a military or foreign
19 affairs function of the United States that is (A) specifi-
20' cally authorized under criteria established by Executive
21 order to be kept secret in the interest of the national
22 defense or foreign policy and (B) is in fact properly
23 classified pursuant to such Executive order; or".
24 (2) Paragraph (2) of subsection (a) is amended by
25 inserting a period after "personnel" to read as follows:
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3
1 " (2) a matter relating to agency management or
2 personnel.".
3 (3) Clause (B) of the third sentence of subsection (b)
4 is amended to read as follows :
5 " (B) when the agency for good cause finds that
6 notice and public procedure thereon would be impracti-
7 cable, unnecessary, or contrary to the public interest
8 (including the interest of national defense or foreign
9 policy in a matter pertaining to a military or foreign
10 affairs function) . The agency shall publish in the docu-
11 ment promulgating each rule issued in reliance upon this
12 provision either (i) the finding and a brief statement of
13 reasons therefor, or (ii) a statement that the rule is
14 within a category of rules established by a specified rule
15 which has been previously published and for which
1e the finding and statement of reasons have been made.".
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94TII CONGRESS H
1sT SESSION
. R. 10195
OCTOBER 9, 19755
Mr. FLOWERS introduced the following bill; which was referred to the Com-
mittee on the Judiciary
A BILL
To amend chapter 5, subchapter II, of title 5, United States
Code, to provide for improved administrative procedures.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That section 554 (d) of title 5, United States Code, is
4 amended to read as follows :
5 " (d) The employee who presides at the reception of
6 evidence pursuant to section 556 of this title shall make the
7 recommended decision or initial decision required by section
8 557 of this title, unless lie becomes unavailable to the
9 agency, in which case such decision shall be made by an
10 employee qualified to preside at hearings pursuant to section
11 556 of this title. This subsection does not apply-
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1 " (A) in determining applications for initial licenses;
2 " (B) to proceedings involving the validity or ap-
3 plication of rates, facilities, or practices of public facili-
4 ties or carriers; or
5 " (C) to the agency or a member or members of
6 the body comprising the agency.".
7 S.no. 2. Section 556 of title 5, United States Code, is
8 amended by adding a now subsection (g) to read as follows :
9 " (g) (1) Except to the extent required for the disposi-
10 tion of ex parte matters as authorized by law, the employee
11 who presides at the reception of evidence may notes
12 " (i) consult a person or party on a fact in issue,
13 unless on notice and opportunity for all parties to par-
14 ticipate; or
15 "(ii) be responsible to or subject to the supervision
16 or direction of an employee or agent engaged in the
17 performance of investigative or prosecuting functions
18 for an agency.
19 " (2) An employee or agent engaged in the perform-
20 ance of investigative or prosecuting functions for an agency
21 in a case may not, in that case or a factually related case,
22 participate or advise in the decision, or agency review pur-
23 suant to section 557 of this title, or in a review by an
24 appeals board pursuant to section 557 (e) of this title, except
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1 on the record as witness or counsel in public proceedings
2 unless timely and adequate notice and reasonable opportu-
pity to respond is given to all parties.
4 " (3) This subsection does not apply to the agency or
5 any member of the body comprising the agency.".
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94TH CONGRESS
1ST SESSION
. R 10196
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 9, 1975
Mr. FLOWERS introduced the following bill; which was referred to the Conte
mittee on the Judiciary
A BILL
To amend chapter 5, subchapter II, of title 5, United States
Code, to provide for improved administrative procedures.
1 Be it enacted by the Senate and House of Representa-
2 tines of the United States of America in Congress assembled,
3 That section 554 (d) of title 5, United States Code, is
4 amended to road as follows:
5 " (d) The employee who presides at the reception of
6 evidence pursuant to section 556 of this title shall make the
7 recommended decision or initial decision required by section
S 557 of this title, unless lie becomes unavailable to the agency,
9 in which case such decision shall be made by an employee
to qualified to preside at hearings pursuant to section 556 of
11 this title. This subsection does not apply-
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2
1 " (A) in determining applications for initial licenses;
2 " (B) to proceedings involving the validity or ap-
3 plication of rates, facilities, or practices of public utilities
.4 or carriers; or
5 " (C) to the agency or a member or members of
6 the body comprising the agency.".
7 SEC. 2. Section 556 of title 5, United States Code,
8 is amended by adding a new subsection (g) to read as
9 follows:
10 " (g) (1) Except to the extent required for the disposi-
11 tion of ex parte matters as authorized by law, the employee
12 who presides at the reception of evidence may not-
13 "(i) consult a person or party on a fact in issue,
14 unless on notice and opportunity for all parties to
15 participate; or
16 (ii) be responsible to or subject to the supervision
17 or direction of an employee or agent engaged in the
18 performance of investigative or prosecuting functions for
19 an agency.
20 " (2) An employee or agent engaged in the perform-
21 ante of investigative or prosecuting functions for an agency
22 in a case may not, in that or a factually related case, par-
23 ticipate or advise in the decision, recommended decision, or
24 agency review pursuant to section 557 of this title, except
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1 as witness or counsel in public proceedings or as authorized
2 by section 557 (b) (1), except that in ratemaking and cog-
3 nate proceedings and in cases not subject to section 554 (d)
4 of this title, an employee shall not be deemed to have en-
5 gaged in the performance of investigative or prosecuting
6 functions solely by virtue of his general organizational or
7 supervisory responsibility for such functions.".
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A BILL
To amend chapter 5 of title 5, United States Code, to provide for
improved administrative procedures.
1 Be it enacterl by the Senate and House of Representa-
2 tives o f the United States of America in. Congre.,4s assembled,
3 That section 557 (b) of title 5, United States Code, is
4 amended to read as follows :
5 " (b) When the agency did not preside at the reception
6 of the evidence, the presiding employee or, in cases not
7 subject to section 554 (d) of this title, an employ ee qualified
8 to preside at hearings pursuant to section 556 of this title,
64TR SSSI0 ESS
1ST SEESSION H
. R. 10197
OCTOBER 9, 1975
Mr. FLOWERS introduced the following bill; which was referred to the Com-
mittec on the Judiciary
shall initially decide the case unless the agency requires,
either in specific cases or by general rule, the entire record
to be certified to it for decision. When the presiding employee
I
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1 makes an initial decision, that decision then becomes the
2 decision of the agency without further proceedings unless
3 there is an appeal to, or review on motion of, the agency
4 or appeal Ito an agency appeal board established pursuant
5 to section 557 (d) of this title within the time provided by
6 rule. On appeal from or review of the initial decision, the
7 agency has all the powers which it would have in making
8 the initial decision, except as it may limit the issues on
9 notice or by rule. An agency may provide by rule that deci-
10 sions, or categories of decisions incuding agency appeal
11 board decisions, become final, unless reviewed by the agency
12 at its discretion. When the agency makes the decision with-
13 out having presided at the reception of the evidence, the
14 presiding employee or an employee qualified to preside at
15 hearings pursuant to section 556,of this title shall first recom-
16 mend a decision, except that in ratemaking and cognate
17 proceedings, rulemaking, or determining applications for ini-
18 ?tial licenses, the procedure required by this subsection may
19 be omitted for a particular proceeding or a specified category
20 of proceedings for which an agency finds, on the record,
21 that an expedited decision is imperatively and unavoidably
22 required to prevent public injury or defeat of legislative
23 policies.".
24 SEC. 2. (a) Section 575 of title 5, United States Code, is
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1 amended by adding at the end thereof a new subsection
2 (d) as follows :
3 "(d) The Conference is authorized to establish a Com-
4 mittee on Uniform Rules composed of (1) the Chairman of
5 the Conference, who shall serve during his term of office as
6 chairman of the committee, (2) two members of the Council
7 designated from time to time by the Chairman, and (3)
S eight other members of the Conference who shall be ap-
9 pointed by the Chairman with the approval of the Council.
10 Five members of the committee (excluding the chairman
11 for this purpose) shall be employees of Federal regulatory
12 agencies or executive departments; and five shall not be so
13 employed. A vice chairman shall be designated by the com-
mittee from among its members. The committee is authorized
to draft and submit to the Conference uniform procedural
rules to be utilized by all agencies in conducting proceedings
subject to section 554 of this title, and amend or revise such
rules from time to time. Notice to the public and participation
by the public, orally, or in writing, in drafting such rules
shall be provided. If not disapproved by a majority vote
of the members of the Conference in attendance at the next
succeeding plenary session, such rules or amendments shall
be binding on all agencies in proceedings subject to section
5,54 of this- title, The chairman, with the approval of a
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1 majority of the committee, is empowered to grant waivers
2 or modifications of particular rules on petition of affected
3 agencies, and agencies may adopt other procedural rules not
4 inconsistent with any effective uniform rule.".
5 (b) Section 576 of title 5, United States Code, is
6 amended by redesignating the first sentence as subsection
(a) and adding at the end thereof a now subsection (b)
8 as follows :
9 " (b) There are authorized to be appropriated $50,000
10 for the fiscal year ending June 30, 1976, $100,000 for the
11 fiscal year ending June 30, 1977, and $100,000 for the
12 fiscal year ending June 30, 1978, to carry out the purposes.
13 of section 575 (d) of this title.".
14 SEc. 3. (a) Section 557 of title 5, United States Code,
15 is amended by adding at the end thereof a new subsection
16 (e) as follows:
17 " (e) In any agency proceeding which is subject to sub-
18 section (a) of this section, except to the extent required for
19 the disposition of ex parte matters as authorized by law
20 " (1) No interested person shall make or cause to
21 be made to any member of the body comprising the
22 agency, hearing examiner, or employee. who is or may
23 be involved in the decisional process of said proceeding,
24 an ex parte communication relevant to the merits of the
25 proceeding.
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1 " (2) No member of the body comprising the
2 agency, heating examiner, or employee who is or may
3 be involved in the decisional process of said proceeding,
4 shall make or cause to be made to an interested person
5 an ex party communication relevant to the merits of the
6 proceeding.
7 " (3) A member of the body comprising the agency,
8 hearing examiner, or employee who is or may be in-
9 volved in the decisional process or said proceeding, who
10 receives a communication in violation of this subsection,
11 shall place on the public record of the proceeding:
12 " (A) written information submitted in viola-
13 tion of this subsection;
14 " (B) memorandums stating the substance of all
15 oral communications submitted in violation of this
16 subsection;
17 " (C) responses submitted to the materials
1s described in subparagraphs (A) and (B) of this
19 subsection.
20 " (4) 1`pon receipt of a communication in violation
21 of this subsection from a party or which was cause to
22 be made by a party, the agency, hearing examiner, or
23 employee presiding at the hearing may, to the extent
24 consistent with the interests of justice and the policy of
25 the underlying statutes, require the person or party to
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show cause why his claim or interest in the proceeding
should not be dismissed, denied, disregarded, or other-
wise adversely affected by virtue of such violation.
(5) The prohibitions of this subsection shall apply
at such time as the agency may designate, but in no
case shall they apply later than the time at which a
proceeding is noticed for hearing unless the person re-
sponsible for the communication has knowledge that it
will lu noticed, in which case said prohibitions shall
apply at the time of his acquisition of such knowledge.".
11 (b) Section 551 of title 5, United States Code, i's
amended by adding a new paragraph (14) to read as
follows :
14 " (14) `ex party communication' means an oral or
15 written communication not on the record with respect
16 to which reasonable prior notice to all parties is not
17 given.".
18 (e) Section 556 (d) of title 5, United States Code, is
19 amended by inserting after the third sentence thereof the
following : "The agency may, to the extent consistent with
the interests of justice and the policy of the underlying
statutes administered by the agency, consider a violation of
section 557 (e) of this title sufficient grounds for a decision
adverse to a party who has committed such violation or
caused such violation to occur."
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Si:c. 4. Section 554 of title 5, United States Code, is
unrended by adding at the end thereof a new subsection (f)
as follows :
" (f) The agency may provide by rule for abridged hear-
ing procedures for use in such proceedings as the agency may
designate by rule or order. Such abridged procedures shall
be on the record, shall be reasonably calculated to promptly,
adequately, and fairly inform the agency and the parties as
to the issues, facts, and arguments involved, and shall be for
use only by the unanimous consent of the parties. Wherever
possible, hearing examiners shall be designated to conduct
such abridged proceedings unless the agency itself makes the
decision. The availability of an abridged hearing procedure
shall not preclude the agency, in any other proceeding or
class of proceedings to the extent authorized by section 556
(d) of this title, from requiring the submission of all or part
of the evidence in written form without the consent of all
parties where the interest of any party will not be prejudiced
thereby.".
SEC. 5. (a) Subchapter II of chapter 5 of title 5, United
States Code, is amended by adding at the end thereof a new
section as follows :
560. Prejudicial publicity
" (a) Except as provided by subsection (b), no agency,
or any member, employee, or agent thereof, shall make any
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9
ably be expected to alleviate the harm to which the adversely
affected person has been exposed.
" (c) Any person aggrieved by a violation of this section
may obtain judicial relief, either in a proceeding relevant
to the subject matter in a court specified by statute, or in
an action for declaratory judgment or writ of prohibitory or
mandatory injunction in a court of competent jurisdiction.
The reviewing court may set aside any agency action taken
in an agency proceeding or enter such other order as it
deems appropriate, if it finds that this section has been
violated.".
(b) The analysis of chapter 5 of subtitle is amended
by adding after item "559" the following:
"560. Prejudicial pull licity.",
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8
1 written or oral public statement or release, or make public
2 any document, concerning or relating to an agency investi-
3 gation or proceeding if the contents of the statement, release,
4 or document (i) evidence prejudicial bias or prejudgment
5 concerning facts in issue in the investigation or proceeding,
6 or (ii) may otherwise harm any person in his business, prop-
7 erty, or reputation, unless the benefit to the public clearly
8 exceeds the potential harm to the person adversely affected:
9 Provided, however, That nothing herein shall be construed
10 to prevent or prohibit the disclosure of any document which
11 is part of the public record in an agency proceeding or any
12 other document available to the public pursuant to section
13 552 of this title.
14 " (b) When any agency, or any member, employee, or
15 agent thereof, makes any such. statement or release, or makes
16 public any such document, which may reasonably be ex-
17 pected to cause harm of the type described in susbection (a)
18 (ii), the agency shall (1) notify the adversely affected
19 person and, if it is a written statement, release, or document,
20 supply him with a copy thereof, at least seventy-two hours
21 prior to making such statement, release, or document public
22 except in emergency circumstances or where impracticable,
23 and (2) make public by the same means as the statement,
24 release, or document is made public any further agency
25 action or determination the publication of which may reason-
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94'rn CONGRESS
1ST SESSION
. R. 10198
IN THE IhOCTSE OF REPRESENTATIVES
OCTOBER 9,1975
Mr. FLOWERS introduced the following bill; which was referred to the Com-
mittee on the Judiciary
A BILL
To amend cliapter 5, subchapter II, of title 5, United States
Code, to provide for improved administrative procedures.
1 Be it enacted by the Senate and House of Representa-
2 fives of the United States of America in Congress assembled,
3 That section 557 of title 5, United States Code, is amended
by adding at the end thereof a new subsection (d) as
follows
(d) Eucli agency may establish, by rule, one or more
agency appeal boards for review of decisions of presiding
employees. Such appeal boards shall be composed of agency
members, hearing examiners (other than the presiding em-
ployee in the proceeding on appeal) , or other appropriate
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t agency employees. Such other agency employees shall be in
2 a grade classification or,salary level commensurate with their
3 review duties, in no event less than the grade classification or
4 salary level of the employee or employees whose actions are
5 to be reviewed, and they shall not be removable from ap-
6 peals boards except in the mannerprovided for hearing
7 examiners. In the performance of their review functions such
8 employees shall not be responsible to or subject to the super-
9 vision or direction of any officer, employee, or agent en-
10 gaged in the performance of investigative or prosecuting
11 functions for any agency. Each agency shall specify in such
12 rules the circtunstances and conditions under which the
13 agency will (1) entertain and consider appeals to it directly
14 from the decision of a presiding employee, and (2) enter-
15 taro and consider appeals only after decision of an agency
16 appeal board. X it agency may provide by rule that decisions
17 or categories of decisions, including agency appeal board
18 decisions, become final unless reviewed by the agency in
19 its discretion.".
20 SEC. 2. (a) Section 555 (d) of title 5, 1 nited States
21 Code, is amended as follows:
22 "(d) Agency subpenas authorized by law shall be is-
23 stied to a party on request and, when required by rules of
24 procedure, on a statement or showing of general relevance
and reasonable scope of the evidence sought. Each agency
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1 shall designate by rule the officers, who shall include the
2 presiding officer in all proceedings subject to section 556 of
3 this title, authorized to sign and issue subpenas. On contest,
4 the court shall sustain the subpena or similar process or
5 demand to the extent that it is found to be in accordance
6 with law. In a proceeding for enforcement, the court shall
7 issue an order requiring the appearance of the witness or the
8 production of the evidence or data within a reasonable time
9 under penalty of punishment for contempt in case of con-
10 tumacious failure to comply.",
11 (b) (1) Section 556 of title 5, United States Code, is
12 amended by deleting the words "authorized? by law" in sub-
13 paragraph (c) (2) of such section, redesignating subsections
14 (d) and (e) as (e) and (f), respectively, and by inserting
15 after subsection (c) the following new subsection (d) :
1.6 " (d) In any proceeding subject to the provisions of
17 this section, the agency is authorized to require by subpena
18 any person to appear and testify or to appear and produce
1.9 books, papers, documents, or tangible things, or both, at a
20 hearing or deposition at any designated place. Subpenas shall
21 be issued and enforced in accordance with the procedures
22 set forth in section 555 (d) of this title. In case of failure or
23 refusal of any person to obey a subpena., the agency may
24 invoke the aid of the district court of the United States
25 for any district in which such person is found or resides or
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1 transacts business in requiring the attendance and testimony
2 of such person and the production by him of books, papers,
3 documents, or tangible things. Unless otherwise authorized
4 by law, the Attorney General shall represent the agency in
5 appeals from district court decisions granting or denying on-
6 forcement of subpenas. The authority granted by this snb-
7 section is in addition to and not in limitation of any other stat-
8 utory authority for the issuance of agency subpenas nd
9 for the judicial enforcement thereof.".
10 (2) The heading of such section 556 is amended to read
11 as follows :
12 1556. Hearings; presiding employees; powers and duties;
13 subpena power; burden of proof; evidence;
14 record as basis of decision".
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94TH CONGRESS
1ST SESSION
. R. 10199
IN TIIE HOUSE OF REPRESENTATIVES
OCTOBER 9, 1975
Mr. FLOWERS introduced the following bill; which was referred to the Com.-
inittee on the Judiciary
A BILL
To amend chapter 7, title 5, United States Code, with respect
to procedure for judicial review of certain administrative
agency action, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That sections 702 and 703 of title 5, United States Code, are
4 amended to read as follows :
5 "? 702. Right of review
6 "A person suffering legal wrong because of agency
7 action, or adversely affected or aggrieved by agency action
8 within the meaning of a relevant statute, is entitled to
9 judicial review thereof. An action in a court of the United
10 States seeking relief other than money damages and stating
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2
1 a claim that an agency or an officer or employee thereof
2 acted or failed to act in an official capacity or under color of
3 legal authority shall not be dismissed nor relief therein be
4 denied on the ground that it is against the United States or
5 that the United States is an indispensable party. The United
6 States may be named as a defendant in any such action, and
7 a judgment or decree may be entered against the United
8 States. Nothing herein (1) affects other limitations on judi-
9 cial review or the power or duty of the court to dismiss any
10 action or deny relief on any other appropriate legal or equi-
11 table ground; or (2) confers authority to grant relief if any
12 other statute granting consent to suit for money damages
13 forbids the relief which is sought.
14 "? 703. Form and venue of proceeding
15 "The form of proceeding for judicial review is the special
16 statutory review proceeding relevant to the subject matter in
17 a court specified. by statute or, in the absence or inadequacy
18 thereof, any applicable form of legal action, including actions
19 for declaratory judgments or writs of prohibitory or manda-
21
22
23
24
tory injunction or habeas corpus, in a court of competent
jurisdiction. If no special statutory review' proceeding is ap-
plicable, the action for judicial review may be brought against
the United States, the agency by its official title, or the
appropriate officer. Except to the extent that prior, adequate,
25 and exclusive opportunity for judicial review is provided by
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3
1 law, agency action is subject to judicial review in civil or
2 criminal proceedings for judicial enforcement.".
3 SEC. 2. (a) Section 1331, title 28, United States Code,
4 is amended to read as follows :
5 "? 1331. Federal questions
6 "The district courts shall have original jurisdiction of all
7 civil actions wherein the matter in controversy arises under
8 the Constitution, laws, or treaties of the United States.".
9 (b) The item relating to section 1331, title 28, United
10 States Code, contained in the section analysis of chapter 85,
11 title 28, United States Code, is amended to read as follows:
"1331. Federal questions.".
12 SEC. 3. The first paragraph of section 1391 (e) of title
13 28, United States 'Code, is amended to read as follows:
14 " (e) A civil action in which a defendant is an officer
15 or employee of the United States or any agency thereof
16 acting in his official capacity or under color of legal authority,
17 or an agency of the United States, or the United States
18 may, except as otherwise provided by law, be brought in
19 any judicial district in which (1) a defendant in the action
20 resides, or (2) the cause of action arose, or (3) any real
21 property involved in the action is situated, or (4) the
22 plaintiff resides if no real property is involved in the action.
23 Additional persons may be joined as parties to any such
24 action in accordance with the Federal Rules of Civil Pro-
25 cedure without regard to other venue requirements.".
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Mr. FLOWERS. Our first witness is Mr. William Ross.
TESTIMONY OF WILLIAM WARFIELD ROSS, ATTORNEY, ADMINIS-
TRATIVE LAW SECTION OF THE AMERICAN BAR ASSOCIATION;
ACCOMPANIED BY FRANCIS M. GREGORY, ATTORNEY, ADMINIS-
TRATIVE LAW SECTION OF THE AMERICAN BAR ASSOCIATION
Mr. Ross. Thank you, Mr. Chairman. I am William Ross. I will be
speaking on bills H.R. 10194 through H.R. 10198. My colleague will be
speaking on H.R. 10199, which is commonly known as the sovereign
immunity bill. The preceding bills, that is 10194 through H.R. 10198,
stem from studies made by the American Bar Association of the Ad-
ministrative Procedure Act commencing in 1956. There were exten-
sive hearings before a subcommittee of the Senate Judiciary Commit-
tee in the mid-1960's on proposals of this kind which led to the enact-
ment of a bill in the Senate revising the Administrative Procedure
Act. No action was taken on that bill in the House unfortunately.
Since that time and particularly since 1963, the ABA has had con-
stant study of revisions of the act. We believe on the 30th anniversary
of the enactment of the act, serious congressional attention is fully
warranted.
Our revisions are intended as essentially nonpartisan. They are not
designed to overjudicialize the adjudicatory processes of the Federal
administrative agencies. Whereas in the past, certain ABA proposals
would have been subject to that criticism, we submit that these are not.
They are nonpartisan balancing agency needs, with those of the pub-
lic and individuals. They specifically take account of the problems of
delay and overcomplexity in our opinion.
Our focus is to improve agency adjudications, which is where we are
encountering our main problems in agency process today. Our purpose
is to improve agency performance on the merits : That is, to produce
better quality decisions. Our purpose is to make the agency process
faster by dealing with specific procedure problems which present oc-
casions of delay and to make the agency process fairer for the indi-
vidual. We believe that our proposals are timely in the sense that there
is public focus today on government and on the impact of government
on citizens.
The ABA's prepared statement on these bills I understand will be
incorporated into the record. I am going to only give four very brief
illustrations of our proposals and why we think they are important
and should receive attention by this Congress and should be enacted.
First, the proposals providing for subpena powers for Federal agen-
cies. I practice, among other things that I do, before the Food and
Drug Administration. The Food and Drug Administration is con-
cerned with safeguarding our citizens from illness and injury as a
result of dangers in foods, drugs, cosmetics, and devices. The Food
and Drug Administration must make literally thousands of factual
determinations every year as to whether or not foods or drugs or so
forth are safe and effective. The Food and Drug Administration has
no subpena powers. I can tell you as a practitioner before that agency
that it is a great disadvantage. There are other Federal agencies today
that make many adjudications that have no power to compel the pro-
duction of testimony or documents. This is not merely a present prob-
lem. If it were, the Congress could enact secific le islat'a
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subpena power to these agencies. Our proposal would remedy that. It
would provide for a general subpena power in the Federal agency
where the agency has the responsibility to resolve issues of fact.
We also think that agency heads need employee appeals boards.
They need at least the authority to establish such boards, which is
really all that our proposal does. It does not force them to do so. It
merely makes clear what is now quite doubtful as a matter of law that
they have the authority to delegate their responsibility to decide rou-
tine, minor and possibly trivial adjudicatory matters in the review
stage, to delegate them to employee boards which are responsible to
them. Now this process has worked well before the Federal Communi-
cations Commission, the ICC, and the NRC. We believe that it is ex-
tremely helpful in enabling the agency heads to focus on the important
matters to decide issues and policies. Today the agency head is con-
fronted with literally hundreds or thousands of adjudications which
they must decide, Mr. Chairman, since virtually every adjudication
is appealed. We think, therefore, that this proposal is essentially non-
controversial and should be enacted.
I have only two more examples. It is an astonishing thing that at
this stage of the development of administrative practice, secret and
illicit communications to the heads of Federal administrative agencies
do not violate any Federal statute. It is true that they may vio-
late the Federal Constitution because they may result in a denial of
due process as the Federal courts have held, but we think it is long
overdue that there be a Federal law which tells both the head of
the agency and the person outside the agency that he should not make
this kind of secret communication on the merits of an adjudicatory
on-the-record proceeding.
The provision which we recommend has already been enacted by
the Senate as a part of the sunshine legislation. Again we think it is
inherently noncontroversial.
Finally, and this is my last example and I deliberately restrict
myself to just these four examples because of the shortage of time and
I would refer the committee most earnestly to our statement in support
of the other legislative proposals. Finally, we believe that Government
procurement regulations, for example, should be adopted through
open process, through open proceedings. Our proposal, which has the
support of the Administrative Conference, would provide ordinary
notice and comment rulemaking, which is not at all burdensome, and
provide that such rulemaking should be followed in the adoption of,
for example, Government procurement regulations. Government
procurement as you know in certain sectors of our economy is the
single, most important economic impact. We think that these regu-
lations, which need not be secret should certainly be adopted after
receipt of comments from the public.
These are simply four examples of what we believe to be long over-
due revisions of the Administrative Procedure Act and we would most
respectfully request that this subcommittee report out legislation
which would propose enactment of our revisions.
Thank you very much.
Mr. FLOWERS. Thank you.
Mr. Gregory, would you like to make a comment at this time?
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Mr. GREGORY. Thank you very much, Mr. Chairman. I appreciate
the opportunity to be here. I am vice chairman of the committee on
judicial review of the administrative law section. I am here together
with my colleague Bill Ross because one bill namely, H.R. 10199, more
directly affects matters of interest to our committee, namely, judicial
review. I have a prepared statement summarizing the bill and our
comments on it which you stated would be introduced in the record.
Mr. FLOWERS. Fine.
[The statements referred to follow:]
STATEMENT OF WILLIAM WARFIELD ROSS, CHAIRMAN,, COMMITTEE ON REVISION
OF THE ADMINISTRATIVE PROCEDURE ACT, SECTION OF ADMINISTRATIVE LAW,
AMERICAN BAR ASSOCIATION
This testimony is addressed to four bills : H.R. 10194, H.R. 10195, H.R. 10197,
and HE. 10198. These bills represent the American Bar Association's proposals to
revise the Administrative Procedure Act. They contain ten amendments that
would make the administrative process both faster and fairer. Now, that
government regulation is increasingly under attack, this kind of reform is highly
desirable. The American Bar Association urges the passage of these bills.
This statement will discuss the ten proposals one-by-one. It should be noted at
the outset that H.R. 10194 and H.R. 10198 have been endorsed by both the ABA
and the Administrative Conference (except for slight modifications in H.R. 10198
that will be explained below). This statement begins with six proposals that are
solely the ABA's (H.R. 10195 and H.R. 10197) and concludes with four that
both organizations have endorsed (H.R. 10194 and H.R. 10198).
The remaining bills under consideration are H.R. 10106, an Administrative
Conference alternate for H.R. 10195, and H.R. 10199, a proposal on a different
subject-judicial review of administrative actions. The ABA's position on H.R.
10199 will be presented by Mr. Francis Gregory in a separate statement.
SEPARATION OF FUNCTIONS (H.& 10195)
It is basic to our concept of fairness that the same person should not be both
prosecutor and judge. The present Administrative Procedure Act embodies this
principle by requiring agencies to separate functions : employees who investigate
or prosecute cases cannot participate in deciding them. This requirement, how-
ever, does not extend, under the present Act to many kinds of proceedings. The
ABA proposal would assure a complete separation of functions within agencies,
thereby ensuring that prosecutorial bias will not infect agency decisions.
The present Act prohibits an agency employee engaged in the performance of
"investigative or prosecuting functions" in a case from participating or ad-
vising in the decision of that case, except in ratemaking, rulemaking and initial
licensing proceedings. H.R. 10195 would remove that exception. The result would
be that in all agency proceedings which are required by law to be decided on the
record after opportunity for hearing, agency employees engaged in investigative
or prosecuting functions could not participate in or advise in the decision of the
proceeding on an ex parte basis. Any participation by such an employee would
require notice to the parties and an opportunity for them to respond except where
the employee is employed as witness or counsel in public proceedings. The pro-
posal would ensure that the presiding employee at such proceedings would not
be responsible to any employee who is investigating or prosecuting for the
agency. The provision would ensure, for example, that a senior staff member with
a prosecutorial interest in a case would not be the supervisor of the employee
assigned to decide the case. As under existing law, none of these prohibitions
would apply to agency or Commission members.
The Report of the Attorney General's Committee on Administrative Procedure
which led to the adoption of the Administrative Procedure Act recognized that
separation of functions is vital.'
"[T]he advocate-the agency's attorney who upheld a definite position adverse
to the private parties at the hearing-cannot be permitted to participate after
the hearing in the making of the decision. A man who has buried himself in one
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side of an issue is disabled from bringing to its decision that dispassionate judg-
ment which Anglo-American tradition demands of officials who decide questions.
Clearly the advocate's view ought to be presented publicly and not privately to
those who decide.
"These types of commingling of functions of investigation or advocacy with the
function of deciding are thus plainly undesirable. But they are also avoidable
and should be avoided by appropriate internal division of labor."
In the present Act, ratemaking and initial licensing were exempted from the
separation of functions requirement, largely by historical accident (because rate-
making was originally performed by the legislature) and by a misplaced emphasis
upon their policy making aspects. Experience since the enactment of the APA in
1946 has demonstrated that such distinctions are artificial and without sound
rational basis. Initial licensing and ratemaking, like other adjudicatory and
quasi-adjudicatory proceedings, frequently involve the resolution of conflicting
principles and claims and contested factual issues, of vital importance to members
of the public. Despite the fact that they can also involve-like any important
adjudications-significant policy matters, "basic fairness requires that such a
proceeding be carried on in the open." 2
Professor Kenneth Culp Davis, a leading authority on administrative law,
contends that a proceeding involving fixing rates for the future "has a quality
resembling that of a judicial proceeding," and cites the Supreme Court's holding
in the Second Morgan case' that it is not only an irregularity in practice, but a
vital defect, when the decisional officer "accepts and makes as his own the findings
which have been prepared by the active prosecutors for the Government, after an
ex parte discussion with them and without according any reasonable opportunity
to the respondents in the proceeding to know the claims thus presented and to
contest them."' The ABA proposal would close the loophole that presently exempts
many important agency decisions from this fundamental requirement.
H.R. 10195 also has a provision making it clear that if an Administrative Law
Judge (ALJ) becomes unavailable to the agency before making his decision, the
decision shall be made by another ALJ.
2. ASSURING DECISIONS BY ADMINISTRATIVE LAW JUDGES
(H.R. 10197, SEC. 1)
The usual procedure in agency adjudications is to hold a hearing before an
ALJ who renders an initial decision, subject to appeal within the agency. This
procedure assures a full, fair hearing and an impartial decision based solely on
the evidence adduced at the hearing. The present Act, however, permits agencies
holding evidentiary hearings in ratemaking, rulemaking and initial licensing
cases to omit the ALJ decision in favor of a tentative decision by the staff or
the agency itself. The ABA proposal would delete this exception except where a
real need for urgent action requires otherwise.
At present, Section 554(d) and Section 57(b) of the Act require that the
presiding officer issue an initial decision in all cases in which there is a hearing
on the record, except in certain ratemaking, rulemaking and initial licensing
proceedings. The purpose of this requirement, "to assure an objective appraisal
of the facts and the furtherance of the public duty imposed upon the agency,"
was recognized in the Report of the Attorney General's Committee on Adminis-
trative Procedure leading to the adoption of the Administrative Procedure Act: s
"To accomplish this it is necessary that the evidence be heard and the facts
be reported to the agency head by an official who shall command public, con-
fidence both by his capacity to grasp the matter at issue and by his impartiality
in dealing with it. The heads of the agency cannot, through press of duties, sit
to hear all the cases which must be decided. Their function is to supervise and
direct and to hear protests of alleged error. If the initial decision-which may
dispose of the case or be the statement of it from which the appeal may be taken
to the heads-can carry a hallmark of fairness and capacity, a great part of the
criticism of administrative agencies will have been met." [Emphasis added]
2 Sangamon Valley Television Corp. v. United States, 106 U.S. App. D.C. 30, 33, 269
F.2d 221, 224 (1959).
S United States V. Morgan, 304 U.S. 1, 22 (1937).
4 Davis, Administrative Law ? 3.00 (1970 Supp.), p. 454.
S. Doe. No. 8, 77th Cong., 1st Sess. (1941), pp. 43-44.
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The importance and independence of the hearing officer were characterized as
"the heart of formal administrative adjudication."' The requirement of ALJ
decisions embodies the maxim of hornbook law that "he who hears should
decide."
In ratemaking cases before some agencies, in particular the Interstate Com-
merce Commission (ICC) and Federal Communications Commission (FCC), a
general practice has evolved of bypassing the initial decision of the presiding
officer in favor of a recommended decision by a staff official. This practice has
had several very unsatisfactory results:
a. Delay.-Where the presiding ALJ is to issue the initial decision, he is able
to follow the evidence closely, is fully familiar with the complete record, and
is able to embark promptly upon the writing of his decision. Where the recom-
mended decision is prepared by a staff official who must make himself familiar
with the record after the hearing is closed, sometimes completely unjustifiable
delays of as much as three years have resulted.
b. Analysis of the issues and evidence in the decision.-A presiding ALJ's
initial decision generally follows the traditional practice of exposition and
evaluation of the evidence developed on the record in the light of the issues,
while a staff official not involved in the day-to-day hearing is more likely to
ignore substantial blocks of evidence in the record due to his greater interest
in policy formulation.
c. Unfairness.-A hearing looks fairer and probably is fairer when the initial
decision is issued by an impartial and independent presiding officer rather than
by a staff official. This is especially true when the alternative is a staff official
who has been involved in the investigation or prosecution of the case.
d. Diminished Role of ALJ.-When the presiding officer is not charged with
writing the initial decision, his responsibility for developing the record is dimin-
ished and the importance of his role as the presiding judicial officer in the hear-
ing is demeaned. Too often under those circumstances he feels constrained to sit
merely as a proctor deferring to the views of the trial staff of what is material
(particularly if the staff is to write the recommended decision), and as a result
the evidence may be inadequately developed.
It is noteworthy that the FCC has recently decided to alter its procedures,
so that the ALJ will "generally" (but apparently not in all cases) prepare an
initial decision in ratemaking cases.' The FCC thereby proposes to adopt the
recommendations of its Task Force on Adjudicatory Reregulation, which has
stated, based on the previous experience of the agency in pursuing the alternate
course of a recommended decision by a staff official :
"The current failure to use the presiding officer to prepare an intermediate
decision for consideration by the Commission would seem necessarily to prolong
the time for preparation of the decision. Bureau staff who have not participated
in the hearing must become familiar with a voluminous record. This in itself is
a duplication of effort that is unsupportable if expedition is of primary concern
to the Commission. The Administrative Law Judge is already familiar with the
case from his role as presiding officer. Decision writing is one of the regular
duties of his position. By examination he has been found qualified to prepare
decisions. He is accustomed to making impartial judgments on the evidence,
finding facts, and drawing conclusions. These are sound arguments for the Com-
mission to require the preparation of the intermediate decision by the Adminis-
trative Law Judge.
"Lack of experience in the subject matter is no deterrent. Experience can be
acquired and ad hoc assistance can be provided in disciplines such as account-
ing and statistics on an ad hoc basis if necessary.
"The reasons for a general rule requiring the presiding judge to prepare the
intermediate decision have been persuasively argued for many years. The Task
Force does not see any viable counter-argument to that made in 1965: 8
"The issuance of an intermediate decision by the examiner who presided
at the hearing utilizes the familiarity with the case acquired by his exposure
to the raw data during the hearing. The meaningful participation of the
parties is enhanced by their opportunity, prior to a final decision by the
8 Id. at p. 46.
Amendments of Parts 0 and 1 of the Commfsejon'8 Rules With Respect to AdiluI.leatory -re Re 8 Cramton, Administrate Docket
Procedure Reform: The Effects of 41663 Son the Conduct
of Federal Rate Proceedings, 16 Adm. L. Rev. 108, 139 (1964).
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agency, to respond to a tentative formulation of agency policy applied to the
facts of the particular case. Experience indicates that the issuance of a
comprehensive and well-reasoned intermediate decision by the presiding
examiner frequently results in the elimination of some of the controverted
issues, while the remaining issues, as a result of the intermediate decision
and the exceptions to it, are reduced to more manageable proportions by
the time the case reaches the agency for final decision.
"This reliance on the presiding officer to write the decision means that the
Commission is fully using judges' abilities for the benefit of the Commission. The
fact that most ratemaking proceedings concern far-reaching and important mat-
ters of policy that could seriously affect the economy and the industry should not
preclude preparation of a decision by an Administrative Law Judge. The Task
Force recommends that the rule prescribe that he is to prepare only a recom-
mended decision. Thus, no decision of a judge could become final for lack of
review and the Commission would continue to exercise its policy making
functions."
One of the principal arguments which have been advanced in favor of a recom-
mended decision by the staff official or a tentative decision by the agency itself
has been that the parties are thereby apprised in advance of "the agency's think-
ing before it hardens into a final decision."' This view, however, turns principles
of fairness upside down. As Circuit Judge Friendly has noted, "for commis-
sioners, as for judges, freedom of decision is at least subconsciously constricted
once a position has been publicly taken." 'O The time for views to be presented, so
that they may be tested in the crucible of the hearing, is during the hearing
itself, when the parties have the opportunity to present evidence bearing on those
views, not after the record has been closed. If the trial staff is not able to articu-
late during the hearing the views which may be anticipated, and which should be
fairly subsumed in the designated issues, then the trial staff has been deficient in
the performance of its functions in the course of the hearing. Moreover, the value
of having an impartial ALJ decision far outweighs the benefit to the parties of
having a sneak preview of the agency's thought processes.
The claim has also been made that the agency or its staff should issue the
intermediate decision in ratemaking cases because the issues are too complex
and difficult for the ALJ. This is an unwarranted aspersion upon the competency
of the members of the ALJ corps, who as much as Federal judges, are often
called upon to render decisions in cases involving huge records, a maze of evi-
dence, and extremely technical jargon and concepts. If the issues and evidence
adduced are difficult and complex, the burden is upon the counsel participating
in the hearing to make them understandable so that the presiding officer may
render an informed decision. In addition, unless the agency is to delegate its
decision-making function to its staff, if the issues and evidence are unintelli-
gible to the ALJ, it is likely that they will be equally unintelligible to the non-
specialist members of the agency who are charged with the responsibility of
deciding the case.
The proposal would also make it clear that an ALJ decision is final unless
appealed to or reviewed on motion of the agency or commission. The proposal
does not, however, impinge in any way on the authority of the agency or com-
mission to make decisions in all cases it wants to, decide.
Finally, the ABA proposal deals with the problems presented by the unusu-
ally urgent case. In some instances, we recognize, it is necessary to omit the
ALJ decision in favor of immediate action by the agency or commission. How-
ever, the language in the present Act authorizing such a procedure (6 U.S.C.
552(b) (2)) is being used by some agencies-e.g. the Interstate Commerce Com-
mission-'to routinely omit ALJ decisions in large numbers of cases."' The ABA,
proposal therefore substitutes more precise language, requiring that "for a
particular proceeding or a specified category of proceedings," the agency find
on the record that "an expedited decision is imperatively and unavoidably re-
quired to prevent public injury or defeat of legislative purposes." This amend-
ment would ensure that the original purpose of the provision is adhered to:
that ALJ decisions be omitted only where there is a genuine need for urgency.
a Goodman, "An Analysis of ABA Recommendation 8," Administrative Conference of
the United States study.
10 Davis and Randall, Inc. v. United States, 219 F. Supp. 673, 679 (W.D.N.Y, 1983).
11 A study of the Administrative Conference of the United States, fn. 5 supra, indicates
that generally there is no substantial savings of time in the ICC practice.
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3. UNIFORM RULER OF PROCEDURE (H.R. 10197, REC. 2)
This amendment deals with the rules of procedure in normal adjudications :
the rules that govern such matters as the taking of evidence, when motions
may be made, time limits, and so on. At present each Federal agency sets its
own procedures, producing a multiplicity of rules. The amendment would lead
to the adoption of a uniform set of rules.
The present procedural rules followed by Federal administrative agencies
are a veritable jungle of requirements, with numerous traps for the unwary.
Countless pages in the Federal Register and the Code of Federal Regulations
are consumed in detailing adjudication procedures for each of the many agen-
cies of the Federal Government. This complex diversity is one of the reasons
why many practitioners specialize in practicing before one agency. It is also
a factor which contributes to localizing the practice of administrative law in
the District of Columbia.
As long as each Federal administrative agency has its own unique rules, the
person who has practiced before that agency will have a distinct advantage
over the person who is unfamiliar with its rules. In most cases the person
unfamiliar with the agency and its rules is your constituent who lives out-
side the Washington, D.C. area and has little if any prior contact with a
particular agency. Maintenance of the present system will continue this
disadvantage.
The existing diversity is not the product of or required by differences in
agency function. Rather it is caused largely by historical accident and the in-
evitable tendency of each agency to look on its procedural problems as unique,
whereas they are common to all agencies engaged in formal adjudication.
Many distinguished persons and organizations have advocated the adoption
and use of uniform procedural rules in formal adjudication. The precursor to
the present Administrative Conference recommended uniform rules in a 1955
report to President Eisenhower.' The late Chief Justice Earl Warren, in sup-
porting a permanent Administrative Conference, stated that one of its missions
would be "to develop uniform rules of practice and procedure." " When Pres-
ident Kennedy established the second temporary Administrative Conference in
1961, he said that an important purpose would be to "bring a sense of unity of our
administrative agencies and a desirable degree of uniformity to their proce-
dures." 14 The House of Delegates of the American Bar Association adopted a
resolution in August, 1970, calling for the adoption, "in formal adjudication,
to the extent practicable, [of] uniform rules governing pleadings, discovery,
the admission of evidence, requirements of proof, decisions, and appeals."
Section 2 of H.R. 10197 empowers the Administrative Conference to establish
a Committee on Uniform Rules to direct the drafting and promulgation of uni-
form rules. The Committee is to be comprised of ten conference members and the
chairman. Five of the members are to be from Federal regulatory agencies or
executive departments and five are to be from outside the Federal government.
This Committee is authorized to draft and to amend or revise uniform rules
for use by Federal regulatory agencies in formal adjudication. The drafting
would be done by the Committee, its staff, and leading authorities in the academic
community.
The public is to be notified and given an opportunity to participate, either
orally or in writing, in the drafting process. The Committee will submit its draft
rules to the Conference as a whole. If not disapproved by the Conference, the
rules will become binding upon all Federal regulatory agencies undertaking
formal adjudication.
There may arise an instance where a Federal agency may need to use a pro-
cedure which does not conform with a uniform rule. In such a case, the agency
may petition the Committee on Uniform Rules to-grant it a waiver or modifica-
tion of the rule. Further flexibility is granted to agencies in that they may
adopt additional rules, to the extent they do not conflict with the uniform rules.
Finally, besides setting tip the mechanism for drafting and implementing uni-
form rules, Section 2 authorizes the expenditure of $250,000 on this project over
a three-year period. The money is to be used primarily to provide a working
12 Report of the Conference on Administrative Procedures called by the President on
April 29, 1953, Recommendation E5, p. 14.
18 Hearings before the Subcommitee on Administrative Practice and Procedure of the
Senate Committee on the Judiciary on S. 1664, 88th Cong., let Sees., (1963) at p. 10.
1* Hearings, eupra, at p. 12.
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staff for the committee on Uniform Rules because the budget of the Administra-
tive conference may not presently permit the undertaking of such a project.
This proposal will improve Federal administrative procedures by :
(a) Clarifying and simplifying the procedures followed by Federal regulatory
agencies. By providing more simple and direct procedures, the rules will be an
aid to speeding up the administrative process.
(b) Aiding the process of deregulation by weeding out those rules which are
redundant and ineffective. The present diversity of procedural rules has pro-
duced a plethora of needless government regulations. Once a uniform rule is
adopted, all other rules on the same subject will be superseded.
(c) Making it easier for the public to work with Federal regulatory agencies
because it will no longer be necessary to learn a different set of procedural rules
for each agency.
(d) Ensuring that agencies' rules are of high quality and contain the safe-
guards necessary to due process. The quality and completeness of rules vary
from agency to agency, and uniformity should not only simplify, but enhance
the quality of formal agency adjudication.
4. EX PASTE COMMUNICATIONS (H.R. 10197, SEC. 3)
The traditional requirement of a hearing and decision on the record is to en-
sure both fairness and soundness; such hearings give all parties an opportunity
to participate and to rebut others' presentations. Such proceedings cannot be
fair or soundly decided, however, when persons outside the agency are allowed
to communicate with the decision-maker in private and others are denied the
opportunity to respond.
The present Act places some limits on such ex parte communications, bilt it
leaves large gaps. For example, ex parte contacts with agency heads are not
covered, and neither are contacts relating to formal, on-the-record rulemaking
hearings. The ABA proposal would close all the loopholes, prohibiting all ex-
ternal ex parte communications between agency members (and decisional em-
ployees) and persons outside the agency regarding the merits of any formal
proceeding. The proposal also provides that any prohibited communication re-
ceived by an agency must be placed on the public record and that the agency may
rule against the person who made the communication as a sanction for doing so.
A similar provision, which is acceptable to the ABA, has passed the Senate as
Section 6 of S. 5, the Government in the Sunshine Act.
. 5. PREJUDICIAL PUBLICITY (H.$. 10197, SEC. 5)
As the Federal agencies in increasing numbers and to an increasing degree
enter into the daily life of the public through their regulation of business, con-
sumer protection, wages, prices and trade practices and so on, steps should be
taken to prevent agencies from abusing their power to release information to the
press as a means of obtaining compliance or engaging in trial by publicity. The
ABA proposal would set such limits, while recognizing that in some cases urgency
or other circumstances may make immediate release of information appropriate.
When Federal agencies release inaccurate information about a company or a
product, they can do devastating harm. A classic example was the highly pub-
licized warning issued by the Secretary of Health, Education, and Welfare in
November, 1959, against buying cranberries. Although the contamination prob-
lem that prompted this warning only applied to berries from two states, the
Secretary suggested that all cranberries might be dangerous ; the result was that
virtually the entire crop went unsold. More recently, in 1970, the Federal Trade
Commission (FTC) issued a proposed complaint alleging that Zerex antifreeze
was ineffective and dangerous. The FTC's charges received widespread pub-
licity. Subsequent FTC investigations concluded, however, that the product cur-
rently being sold was effective and that the manufacturer had long since
withdrawn from the market the possibly dangerous formulation. This develop-
ment was not publicized, and the manufacturer was seriously injured.'`
The ABA proposal would forbid agencies and their employees from making
information concerning an agency investigation public if the contents evidenced
1s "Adverse Publicity by Administrative Agencies," report by Prof. Ernest Gelhorn to
Administrative Conference, April 15, 1973.
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prejudgment concerning facts at issue or would otherwise harm any person,
unless the benefit to the public clearly exceeded the potential harm to the person.
The bill would also require agencies to give advance notice to the person
affected by proposed publicity, so that he would have sufficient time to seek ap-
propriate judicial review of the matter or prepare an answer which he could
release to the press. This requirement would not apply in'emergency situations
or where otherwise impracticable. The bill would further require agencies to
make public any subsequent agency action which might alleviate the harm to the
person affected.
Finally, the bill would authorize any aggrieved party to obtain injunctive
relief and would authorize courts to consider violation of these provisions as
sufficient ground for setting aside the agency actions.
This bill's restriction on release of information doesnot apply to documents
in the public record or otherwise subject to the Freedom of Information Act.
6. ABRIDGED HEARING PROCEDURES (H.R. 10197, SEC. 4)
A common complaint about theadministrative process is that it is too slow.
One solution is to use abridged procedures where no fundamental rights are
denied thereby. Parties to administrative proceedings are frequently willing to
agree on abridged hearing procedures that will speed decisions and reduce the
drain on agency personnel and private and public resources. The ABA proposal
would authorize agencies to use such abridged procedures when all the parties
so agree.
While some agencies already use such abridged procedures, their legality has
at times been challenged. This .provision would make it clear, that they are always
lawful when based on consent. In addition, this provision should encourage
practitioners to agree to abridged procedures, and thereby substantially increase
the use of such procedures.
The distinction between "rulemaking" and "adjudication" plays a central role
in the Act and in the work of Federal agencies. The Act. presently rests this
distinction on whether the agency's action is of present or past effect-which it
terms adjudication-or of future effect-which it terms rulemaking. This defini-
tion does not accord with generally accepted concepts as to the nature of
adjudication, and has lead to anomalous results. The ABA proposal would change
the definitions, so that actions of particular applicability would be "adjudica-
tion", and those of general applicability would be "rulemaking". That definition
does accord with generally accepted concepts.
Under the present Act, the provisions governing rulemaking proceedings apply
not only to general policy matters but also to cases involving individuals. As a
result, difficulties have arisen because an appropriate procedure for making
policy decisions is not necessarily the best way to decide eases involving the
rights and obligations of particular persons. Policymaking requires input from
many sources. Proceedings involving the rights and obligations of particular
persons, on the other hand, require focus on the facts relevant to that particular
case. Thus, it is desirable to limit notice and comment procedures to matters of
general applicability and future effect and to treat matters of particular ap-
plicability as adjudication.
The effect of this amendment will be to change some proceedings from rule-
making to adjudication. These proceedings will then become subject to the separa-
tion of functions requirement discussed at page 2 of this statement-,a require-
ment that helps assure fairness.
Under this amendment, ratemaking involving a single entity would be included
in adjudication. However, inasmuch as such ratemaking often involves general
policy issues, the proposal preserves the right of agencies to retain two pro-
cedures they currently use in such cases : they may receive evidence in writing
unless a party is prejudiced thereby (under 5 U.S.C. 556(d)) and they may omit
an initial ALJ decision where expedition so requires (under Section 1 of H.R.
10197).
8. PUBLIC PARTICIPATION IN RULEMAKING (H.R. 10194, SEC. 2)
Under the present Act, there are several exceptions to the requirement that an
agency must give notice and allow the public to comment before it issues a rule.
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The ABA-Administrative Conference proposal would narrow those exceptions,
thereby assuring the public an opportunity to be heard on rules which are
frequently of great public importance.
One of the current exceptions permits agencies to omit notice and comment on
rules relating to "public property, loans, grants, benefits, or contracts." The ABA
proposal would eliminate this so-called "proprietary exemption."
Under the present exemption, the Defense Department promulgates bidding
procedures for billions of dollars of contracts without providing contractors or
anyone else an opportunity to comment. The result is that rules are sometimes
adopted which are either unfair or unworkable or both because they do not take
account of relevant matters not known to the issuing agency. There is nothing
inherently secret about these procedures and there is therefore, every reason to
subject them to public comment just like other agency rules.
In addition, the ABA proposal would limit the present exemption covering
foreign affairs and military policy. The purpose of this exception is to protect
classified information, but it is worded much more generally.
The ABA proposal would narrow the exception to properly classified matters
and parallels recent changes in the Freedom of Information Act exemption for
classified information.
It should be understood that this proposal, giving the public an opportunity to
comment on proposed rules, does not limit agency discretion in adopting any
rule. It only assures the public an opportunity to comment before the agency
makes its decision.
9. CREATION OF APPEALS BOARDS ($.R. 10198, SEC. 1)
A major source of delay in the administrative process is at the top level. More
and more cases of increasing complexity have to funnel through a Single com-
mission or individual for a final decision, making backlogs inevitable. The ABA
proposes that agencies be authorized to set up internal appeals boards to hear
routine adjudications. By reducing backlogs at the top, such boards should
significantly speed up both the administrative and appeal process.
At present, a typical adjudication is heard by an ALJ, who renders an initial
decision. Practically all such decisions go to a commission or administrator for
a final decision. The result is a backlog of cases which -are routine but nonethe-
less must be finally decided by the agency itself. In addition to causing delay,
this process tends to -prevent agency members from giving necessary attention
to complex individual cases and to prevent them from giving sufficient attention
to major policy questions. To deal with this problem some agency members assign
their personal staffs the task of screening and effectively deciding many routine
cases: an off-the-record process inconsistent with the quasi-judicial model con-
templated by the Act.
The ABA proposal offers agencies a better solution to this problem by author-
izing them to create internal appeals boards. These boards would consist of
agency members, ALJ's, or other appropriate agency employees. They would hear
appeals from initial decisions in categories of cases specified by agency rule.
The proposal also authorizes a procedure comparable to the certiorari system of
the Supreme Court, in that certain categories of decisions can be made final
unless the agency chooses on its own motion to review them. Thus, an appeals
board would not normally be an intermediate review stage, but a final review
within the agency. The proposal authorizes agencies to adopt such a procedure
for ALJ decisions as well as appeals board decisions. Of course, nothing in this
proposal would restrict a party's right to seek judicial review of an administra-
tive action.
The appeals board would typically provide a final review of ALJ decision in
routine adjudications which do not involve major policy questions. They would
thereby speed final decisions while ensuring that they conform with agency
policy, and the boards would replace the present anonymous staff review with
one that is on-the-record.
H.R. 10198 as introduced in the House departs from the ABA proposal in two
respects. First, it requires that the "other employees" on appeals boards have
salaries or grades at least equal to that of ALJ's and be protected from removal.
The ABA objects to the provision restricting removal (p. 2, lines 5-7 of H.R.
10198) because the purpose of appeals boards is to reflect agency policy and the
members of such boards should be alter egos of the agency itself, subject to its
immediate direction and control.
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Second, H.R. 10198 requires that appeals board members not be responsible to
employees with investigative or prosecuting functions, The ABA agrees with the
purpose of this addition, but suggests that the provision logically belongs with
the identically worded provision covering ALJ's which appears in H.R. 10195
(p. 2, lines 9-18). We suggest that the latter provision be extended to cover
appeals board members and that the point be dropped from H.R. 10198.
SUBPOENA POWER (H.R. 10198, SEC. 2)
To do their job, Federal agencies resolving fact disputes must be able to gather
evidence, and the power to issue subpoenas is essential to that process. Yet sev-
eral important agencies, including the Food and Drug Administration, the Postal
Service, and the Department of the Interior, do not have such power. The ABA
proposal would give all Federal agencies that conduct formal, on-the-record
proceedings, such power.
Most administrative agencies do have subpoena power, granted them in the
statutes which created them. However, several such statutes omit this power.
The consequence is a severe strain upon those agencies' ability to carry out their
responsibilities. For example, the FDA lacks subpoena power to compel produc-
tion of safety data in its on-the-record proceedings (e.g. to set tolerances for
potentially dangerous substances in foods). Thus, the FDA's efforts to ensure the
safety of foods and drugs can be slowed for months or years by the need to
independently resolve matters on which data already exist. The FDA's effort to
protect tktle public health is significantly hobbled by its lack of subpoena power.
The ABA proposal would solve such problems by adding to the Act a general
grant of subpoena power for all agency proceedings, both rulemaking and ad-
judication, which are required to be conducted on the record with opportunity for
a hearing. The proposal only applies to such formal proceedings ; it is not a
general grant of investigatory power. A provision in the present Act would ensure
that when agencies have subpoena power, private parties to such hearings also
have the right to compel production of evidence.
H.R. 10198 modifies the original ABA proposal by permitting agencies to go
directly to court to enforce their subpoenas instead of going through the Attorney
General. The ABA takes no position on this point.
STATEMENT OF FRANCIS M. GREGORY, JR., VICE CHAIRMAN, COMMITTEE ON JuDIcrAL
REVIEW SECTION of ADMINISTRATIVE LAW, AMERICAN BAR ASSOCIATION
I am Francis M. Gregory, Jr., partner in the Washington, D.C. office of Suther-
land, Asbill & Brennan. I appear today as Vice Chairman of the Committee on
Judicial Review of the Administrative Law Section of the American Bar Asso-
ciation to testify in support of H.R. 10199. I appreciate the opportunity to be here.
H.R. 10199 is one of a series of six bills introduced by Subcommittee Chairman
Walter Flowers on November 18, 1975, designed to improve federal administrative
procedures and to which my colleague, William Warfleld Ross, Chairman of the
Committee on Revision of the Administrative Procedure Act of the Administra-
tive Law Section will address himself. My testimony is limited to H.R. 10199
because of its peculiar effect on judicial review.
H.A. 10199 contains a series of legislative amendments that have been endorsed
both by the American Bar Association and by the Administrative Conference of
the United States. For the record, I would like to explain the effect of the pro-
visions of H.R. 10199. The bill would first amend Section 702 of Title 5 of the
United States Code. That section currently provides that a person suffering legal
wrong because of agency action, or adversely affected or aggrieved by agency
action within the meaning of a relevant statute, is entitled to judicial review
thereunder. H.R. 10199 would not alter this provision ; it would add to it. In
effect the bill would provide for abolishment of the defense of sovereign immunity
in equitable actionsagainst the United States. More specifically, it would add
to section 702 a provision that an action in a court of the United States seeking
relief other than money damages and stating a claim that an agency or an officer
or employee thereof acted or failed to act in an official capacity or under color
of legal authority shall not be dismissed nor relief therein be denied on the ground
that it is against the United States or that the United States is an indispen-
sable party. It would also provide that the United States may be named as a de-
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fendant in any such action, and a judgment or decree may be entered against
the United States.
In considering these recommended additions, it is important to note that the
amended section 702 would specifically provide that it would not affect other
limitations on judicial review or the power or duty of the court to dismiss any
action or deny relief on any other approriate legal or equitable ground. Fur-
ther, section 702 clearly would specify that it does not confer authority to grant
relief if any other statute granting consent to suit for money damages forbids
the relief which is sought.
H.R. 10199 also would amend section 703 of Title 5 of the United States Code
to remove the current uncertainty as to who may be named as a defendant
when the United States is sued. Specifically, the sentence to be added to section
703 would provide that if no special statutory review proceeding is applicable,
the action for judicial review may be brought against the United States, the
agency by its official title, or the appropriate officer.
H.R. 10199 also provides two amendments to Title 28 of the United States
Code. Section 2 of the bill would amend Section 1331 to eliminate the current re-
quirement that $10,000 damages be alleged before federal courts have general
jurisdiction over federal questions. The amendment would grant jurisdiction
to federal courts without regard to the amount in controversey whenever a fed-
eral question is litigated.
Section 3 of H.R. .10199 would amend Section 1391(e) of Title 28 to permit the
joinder of third parties in litigation in which the federal government is a de-
fendant.
I would like to emphasize again that none of the changes proposed by H.R.
10199 affects explicit limits on judicial review of agency action otherwise found
in the statutes of the United States. Mr. Chairman, the recommendations con-
tained in H.R. 10199 have been the subject of long and considered study and de-
bate. I recommend the bill's enactment and I would be happy to respond to any
questions.
Mr. FLOWERS. So, gentlemen, I have you listed in the following
order : the American Bar Association, the Administrative Conference,
and the Federal Administrative Law Judges Conference. So let us
proceed. Mr. Ross and Mr. Gregory. Why don't you proceed with what
additional comments you would like to make.
Mr. GREGORY. I would like to make but one general comment, which
I think is important to make in addition to the written statement. This
bill is properly known as the Sovereign Immunity bill and has been
described properly as eliminating sovereign immunity as a defense
in equitable actions against the United States. Because the phrase
"sovereign immunity" has had a long history in this country both at
the Federal and State level, I believe it is important to note that this
bill is not an earth-shaking development of general application that
would somehow change in full measure the concept of judicial review
and agency action. To the contrary, it is a relatively limited proposal
applying only to equitable actions not in actions involving allegations
of money damages. In no respect would it eliminate additional de-
fenses against the appropriateness of judicial review such as right-
ness.
For example, a situation where a case has not been properly pre-
sented. So that could be reviewed.
The bill ought to be looked at in accordance with only its precise
effect and not debated on the general terminology of "sovereign im-
munity." I make this point-and I hope I don't overemphasize it be-
cause my experience in legislation is that through the press of time
sometimes a debate can be held on a general concept which, while valid
in itself, is perhaps not applicable to the precise legislation before the
committee-but the bill is relatively simple in its terms. It is contained
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in my statement. It was well set out in your statement upon introduc-
tion. The Administrative Conference comments on it. And I would
limit myself to that general observation and would hope to participate
in your discussion and answer any questions you might have.
Mr. FLOWERS. Thank you very much, sir.
Mr. Berg is with the Administrative Conference. We would be de-
lighted to hear from you.
TESTIMONY OF RICHARD BERG, EXECUTIVE SECRETARY, ADMIN-
ISTRATIVE CONFERENCE OF THE UNITED STATES
Mr. BERG. Thank you. I am Richard Berg, executive secretary of
the Administrative Conference. I don't have a prepared statement but
we have submitted our commentary in some detail on all of these bills.
Mr. FLOWERS. Fine, that too will be placed in the record.
[The statement referred to follows.]
ADMINISTRATIVE CONFERENCE OF THE UNITED 'STATES,
Chairman, Comn9ttee on the Judiciary, House of Representatives, Washington,
D.C.
DEAR CHAIRMAN RODINO: This is in response to your letter of October 20, re-
questing the comments of this Office with respect to H.R. 10194, H.R. 10195, H.R.
10196, H.R. 10197, H.R. 10198, and H.R. 10199, bills relating to improved ad-
ministrative procedure.
The bills derive from consideration by the American Bar Association and by
the Administrative Conference of certain ' proposals to amend the Administra-
tive Procedure Act. The Administrative Procedure Art, 5 U:S.C. ?? 551-559,
701-706, establishes the general principles and requirements governing pro-
cedures in nearly all Federal agencies. Enacted in 1946, the APA has stood sub-
stantially unchanged since then, except for the enactment and subsequent
amendment of the Freedom of Information Act, 5 U.S.C. ? 552. (Section 3 of the
Privacy Act of 1974 added to title 5 a new section 552a, but this is a self-con-
tained provision, not functionally a part of the APA.)
In August, 1970, the House of Delegates of the American Bar Association
adopted twelveresolutions calling in general terms for amendments to the APA.
These resolutions were referred to the Administrative Law Section of the ABA
for the preparation of implementing legislation.
Meanwhile the Administrative Conference initiated its own study of the ABA
proposals. At Its plenary session in June, 1973, the Conference adopted a com-
prehensive statement addressed to the ABA resolutions, which was amplified in
some particulars by statements adopted at subsequent plenary sessions. (Copies
enclosed.) Stated briefly, the Conference is in entire or substantial agreement
with five of the ABA proposals, is noncommittal on one, and disagrees toa greater
or lesser extent with five others. Regarding one of the twelve ABA resolution's
relating to pretrial conferences, the Conference and the Administrative Law Sec-
tion agree that legislation is not called for.
Over the past year my staff have worked with representatives of the ABA's
Administrative Law Section in an effort to narrow areas of difference between
the organizations' positions and to perfect legislative -language to implement the
various proposals. One result of this effort has been to group in separate bills
those provisions on which the Conference and the ABA are in entire or substan-
tial agreement, those on which we have alternative proposals, and those with re-
spect to which we have "agreed to disagree." With this brief sketch of the back-
ground, I turn to the particular bills.
H.R. 10194 would implement two of the proposals on which there is entire
agreement between the Bar Association and the Administrative Conference.
Section 1 would implement the ABA resolution calling for "providing improved
definitions for rule and order which clearly distinguish the nature of rulem'aking
from the nature of adjudication." The purpose of the redefinition contained in
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section 1 is to make the distinction between rulemaking and adjudication turn
on whether the agency's action is of general or of particular applicability, rather
than on whether it is of future or of retrospective effect. The general versus par-
ticular distinction seems more in accord with ordinary understanding hnd usage.
The Administrative Conference has endorsed the proposed redefinition, but
on the understanding that those formal proceedings, particularly ratemaking,
which have heretofore been subject to more flexible procedural requirements
than ordinary formal adjudication in sections 554, 556 and 557 of the APA,
should be permitted to retain such flexibility because of the strong policy com-
ponent in these determinations. Section 1 does provide the necessary flexibility.
Subsection (a) amends the APA's definition of "rule" to exclude agency state-
ments of particular applicability, i.e., statements applicable to named or similarly
specified parties, and to delete that part of the definition which classifies any
agency approval or prescription for the future of rates, wages, corporate struc-
tures, etc., as a rule. The result will be to classify all actions of particular appli-
cability as "orders" and the process for taking such actions as "adjudication."
'Subsection (b) establishes a new classification, "ratemaking and cognate
proceedings," defined to include the process for taking those actions which were
previously specifically classified as rules but which under the revised definition of
rule areor might be orders. This new classification is used elsewhere in the bill
in order to permit the agencies to retain their present procedural flexibility under
sections 556 and 557 of the APA in conducting such proceedings.
Subsections (e) and (d) would amend sections 556(d) and 557(b) to permit
the continued use in iatemaking and cognate proceedings of two procedural de-
vices available in rulemaking, submission of written evidence and omission of
an initial or recommended decision of an administrative law judge.
Section 2 of H.R. 10194 is intended to narrow the present exemptions from the
requirement in 5 U.S.C. 553 for notice and opportunity for public comment on
proposed agency rules. The section would delete entirely the so-called proprietary
exemption for matters relating to "public property, loans, grants, benefits, or
contracts," and it would cut back the present exemption for rulemaking involv-
ing a military or foreign 'affairs function, so that the exemption would apply
only to matters required to be kept secret in the interest of national defense or
foreign policy. Agencies would, of course, continue to be able to dispense with
notice and opportunity for comment on the basis of a specific finding that such
public procedures are "impracticable, unnecessary, or contrary to the public
interest." In addition, the bill would make it clear that such a finding may be
made by rule with respect to a category of future rulemaking proceedings.
Section 2 would implement the second of the ABA resolutions as well as two
formal recommendations of the Administrative Conference, Recommendations
69-8 and 73-5.
H.R. 10195 and H.R. 10196 are alternative bills dealing with the problem of
separation of functions. Section 554(d) of the Administrative Procedure Act now
provides that an employee engaged in the performance of investigative or pros-
ecutive functions for an agency may not participate in the decisionmaking proc-
ess, except as witness or counsel, in the same or a factually related case. He can-
not, in other words, participate first as an 'investigator or advocate and then
turn around and act as decisionmaker or confidential adviser to the decision-
maker in the same case. This separation-of-functions requirement, however, is
applicable only to certain classes of formal adjudications 'and it is not applicable
at all to formal rulemaking.
The American Bar Association proposes to apply this provision across the
board in all on-the-record proceedings governed by sections 556 and 557. H.R.
10195 would achieve this result. The Administrative Conference has endorsed
the ABA approach with a single reservation : In those proceedings not now sub-
ject to section 554 (d), the bar on participating or advising In the decision should
not extend to agency officials who have not personally been involved in the case
but who have general supervisory responsibility over employees who have par-
ticipated in the case. In other words, the general counsel of any agency should
not be disqualified from advising the agency members with respect to a formal
rulemaking proceeding simply because attorneys in the general counsel's office
participated in the hearing. H.R. 10196 would implement the Administrative Con-
ference position with respect to this issue.
H.R. 10197 would implement five ABA resolutions which the. Administrative
Conference has declined to endorse. Section 1 is intended to implement ABA
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Resolution No. 8, which calls for "conferring greater authority upon the presid-
ing officer in the conduct of adjudicatory proceedings * * *." To that end section
1 would add to section 557 (b) of the APA a new sentence empowering agencies to
delegate to presiding employees and to agency appeal boards authority to make
final decisions subject to review at the agency's discretion. The Administrative
Conference agrees with this proposal, which we will consider further in our
discussion of section 1 of H.R. 10198.
Section 1 of H.R. 10197 would also amend section 557(b) to narrow significantly
the circumstances under which an agency may omit entirely the decision of the
presiding officer. Section 557 now requires, in general, that where the agency
head does not himself preside over the hearing, the presiding employee, ordinarily
an administrative law judge, 5 U.S.C. $ 556(b), or an employee qualified to
preside, i.e., another ALJ, must make an initial or recommended decision,'
which is then subject to agency review. However, the last section of 557(b) pro-
vides that in certain circumstances the record may be directly certified to the
agency for decision without an initial or recommended decision of the presiding
officer :
"* * * [T]he presiding employee * * * shall first recommend a decision, ex-
cept that in rulemaking' or determining applications for initial licenses-
"(1) instead thereof the agency may issue a tentative decision or one of its
responsible employees may recommend a decision ; or
"(2) this procedure may be omitted in a case in which the agency finds on the
record that due and timely execution of its functions imperatively and unavoid-
ably so requires."
Section 1 of H.R. 10197 would amend this sentence to eliminate entirely
the authority of the agency to substitute for the presiding employee's decision
a tentative decision of the agency itself or a recommended decision of a "re-
sponsible employee," i.e., not necessarily an employee qualified to preside. Sec-
tion 1 also attempts to narrow the circumstances under which an agency may dis-
pense entirely with the preliminary decision by providing that an agency may
do so only when it finds that "an expedited decision is imperatively and un-
avoidably required to prevent public Injury or defeat of legislative policies."
These changes in the last sentence of section 557(b) are aimed at two distinct
agency practices. First, in formal rulemaking proceedings in a number of agencies
the presiding employee's decision is omitted in favor of a tentative decision of the
agency or a recommended decision prepared by agency staff. This practice can be
defended on the ground that where a case does not turn on questions of demeanor
evidence (where, of course, a presiding officer's findings are uniquely valuable)
and does raise novel questions of policy, a recommended decision which dis-
closes the current thinking of the agency or its influential staff may be more
valuable to the parties and more helpful in eliciting from them relevant comment
than the decision of an administrative law judge. The practice of having the
recommended decision prepared by agency staff was followed until recently
in rate proceedings in the Federal Communications Commission, and we under-
stand, is still followed in rulemaking proceedings in the Department of Agricul-
ture, the Food and Drug Administration, and perhaps, in other agencies.
The second target of the amendment is the Interstate Commerce Commission's
practice of omitting the ALJ decision in all rate suspension cases on the ground
that the omission is necessary because Congress intended that such cases be
finally decided within the statutory seven-month suspension period or as soon
thereafter as feasible. An earlier version of the ABA's proposed amendment
would have required that the finding as to the need for an expedited decision be
made in each particular case. This would have struck more directly at the ICC's
blanket determination of need. However, section 1 of H.R. 10197 would now per-
mit an agency finding to be made with respect to "a specified category of pro-
ceedings" (page 2, lines 19--20), so that It is not clear whether the proposed
amendment would in fact alter the ICC's practice.
i An initial decision becomes a final decision if it to not appealed by one of the parties
or reviewed at the instance of the agency. A recommended decision to one which must be
reviewed by the agency. There is little practical distinction between an initial and a
recommended decision, and an agency is free to direct the presiding employee to make
either one.
2 It should be noted that section 1(d) of H.R. 10194 would Insert before "rulemaking"
the words "ratemaking and cognate proceedings," a conforming change necessitated by
the narrower definition of "rule."
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The Administrative Conference considered the legislative proposal to imple-
ment ABA Resolution No. 8 e at its June, 1973 and May, 1974 plenary sessions.
Our current position is set forth in the attached statement on Resolution No. 8
adopted in May, 1974. Although we agree in general with the ABA's desire to
encourage intermediate decisions by presiding employees, we are not prepared
to endorse the proposed restriction on agency authority to omit the decision in
appropriate circumstances. In Paragraph (d) of our statement, we say:
"d. In ratemaking, initial licensing and rulemaking, fact issues turning upon
credibility and demeanor are not often central. Since the need for expedition may
outweigh the value of an intermediate decision in some such proceedings, agen-
cies should be authorized to omit the intermediate decision, either on a case-by-
case basis or by a determination applicable to a specifically defined category of
proceedings. In other such proceedings it may be useful for the agency to supply
for party comments its own tentative decision or the recommended decision of a
responsible agency employee other than the presiding administrative law judge."
Accordingly, we oppose section 1 insofar as it amends the last sentence of
section 557(b).
Section 2 of H.R. 10197 would implement ABA Resolution No. 5, which calls
for uniform rules of agency procedure in formal adjudication. Section 2 would
add a new subsection to section 575 of the Administrative Conference Act, au-
thorizing the Conference to establish from its membership a Committee on
Uniform Rules to prepare uniform procedural rules to be used in proceedings
subject to section 554 of the APA. Such rules, unless disapproved by a majority
vote of the Conference membership, would be binding on the agencies, but the
Chairman of the Conference, with the approval of the Committee, could grant
waivers.
The Conference opposes this proposal. Although our statement addressed to
Resolution No. 5 endorses the principle of uniform procedures, "where considera-
tions of fairness or expedition do not justify differences," we do not "desire a
statutory mandate to enforce the single goal of uniformity with respect to par-
ticular provisions of administrative law, but would prefer to further * * * all
the values of sound administrative procedure-including the value of uni-
formity-by making recommendations in those areas where the need and the
utility of Conference action are most apparent." In short, we do not believe that
pursuit of the goal of procedural uniformity for its own sake would represent
a wise use of Conference resources.
Section 3 of H.R. 10197 would prohibit ex parte communications between
agency decisionmaking personnel and interested persons outside the agency.
Although the Administrative Procedure Act contains a limited prohibition of
ex parte communications in section 554(d), the subject is largely governed
by agency rules. The Conference statement on the ABA resolution agreed that
ex parte communications should be prohibited, but took no position as to whether
the prohibition should be effected by statute or left to agency rule. Accordingly,
we take no position on section 3.
Section 4 of the bill would amend section 554 to authorize use of "abridged
hearing procedures" where all parties consent thereto. The Conference opposes
this provision on the ground that it would not accord the agencies any authority
they do not now possess and that it might be construed to withdraw existing
authority to employ expedited procedures in the absence of unanimous consent.
Section 5 of the bill would implement ABA Resolution No. 12, which is ad-
dressed to prejudicial agency publicity. Section 5 would add a new section
560 to the APA, forbidding agency personnel to make public statements or news
releases concerning pending investigations or proceedings which evidence prej-
udicial bias or otherwise harm any person in his business, property, or reputa-
tion, except, in the latter case, where the benefit to the public clearly outweighs
the harm to the affected person. Judicial relief would be available for violation
of the prohibition and might include setting aside the agency action in the
relevant proceeding.
The Conference has expressed its opposition to this proposal on the ground
that "there exists at present an adequate legal remedy for agency publicity which
affects the integrity of an on-the-record agency proceeding." Agency publicity
which injures a'person in his business, property, or reputation presents a dif-
ferent problem, but one for which the judicial relief provided by section 5 affords
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only a limited remedy. The Conference has issued its own recommendation on
the subject, Recommendation No. 73-1, which sets forth criteria which the
agencies should apply in handling publicity relating to investigations and pend-
ing proceedings.
H.R. 10198 would implement the remaining two ABA resolutions on which
the ABA and the Conference have achieved agreement. Section 1 would add a
new subsection (d) to section 557 of the APA, authorizing agencies conducting
formal proceedings-rulemaking or adjudication-under sections 556 and 551
of the APA to establish appeal boards, made up of agency employees, to review
decisions of administrative law judges. It would further authorize the agency to
delegate final decisional authority to such boards or to the administrative law
judges, subject to discretionary, so-called certiorari-type, review by the agency.
One of the common criticisms of regulatory agencies today is that they are so
caught up in the problems of processing and resolving individual cases that they
do not have adequate time or energy left for considering the broader questions
of regulatory policy. In order to free the agency members of the burden of de-
ciding routine cases, both the ABA and the Conference have recommended that
the agencies have authority to delegate final decisions to appeal boards or to
the presiding administrative law judge, subject to the agency's right to review
cases which appear to the agency to present important issues. Many agencies,
among them the ICC, the FCC, and the CAB, have such authority already, either
by statute or by reorganization plan. This bill would make a general grant of
authority in connection with proceedings governed by sections556 and 557.
The third 4nd fourth sentences of proposed subsection (d) were not contained
in the agreed ABA-Conference draft bill. The third sentence provides (1) that
members of appeal boards shall be in a grade classification or salary level com-
mensurate with their duties and in no event less than that of the employees
whose actions are to be reviewed ; and (2) that they not be removable from appeal
boards except in the manner provided for hearing examininers, i.e., only for good
cause, as determined by the Civil Service Commission on the record after hearing,
5 U.S.C. ? 7521. The fourth sentence provides that review board members not be
subject to the supervision or direction of any officer or employee engaged in the
performance of investigative or prosecuting functions.
The fourth sentence's provision for the organizational separation of the appeal
board from the investigative and prosecuting arms of the agency is consistent
with Paragraph 2(a) (8) of Conference Recommendation No. 88-6 and with the
present statutory provision governing the employee review board of the Federal
Communications Commission, 47 U.S.C. ? 155(d) (8). We favor this provision.
The substance of the third sentence was not addressed either in Recommenda-
tion No. 68-6 nor in the Conference statement on the ABA Resolutions. Accord-
ingly, the views I express on this part of H.R. 10198 are my own and not neces-
sarily those of the Conference. I believe that the provisions of the third sentence
would constitute an undesirable limitation on the discretion which agencies
should have in setting up and staffing appeal boards. It is true that, as a general
rule, members of such boards should be at least equivalent in grade to the officers
whose decisions they are reviewing. (It is not clear whether the third sentence
would require that the board members be at least equal to the presiding em-
ployees in both grade and salary or in either grade or -salary.) It is at least
equally important, however, that the board members possess the confidence of the
agency head or heads, since the appeal board will frequently serve as the finds de-
cisional authority within the agency, and thus, in a manner of speaking, as the
alter ego of the agency itself. Therefore, the agency should have broad discretion
in its selection of members of an appeal board. There may be occasions in which
an agency desires to place on the board an employee junior in grade to some or
all of the presiding employees. I am not persuaded that an agency ought to be
prohibited from doing so.`
The proposal that appeal board members be subject to the same protections
against removal as administrative law judgesstrikes me as highly undesirable
and likely to defeat the purpose behind creating such boards. The need for the
independence of the presiding officer at the initial decisional level is based on
his broad discretionary authority in assembling the record and conducting the
4 It must be borne in mind that an agency may not be able to provide for all board
members the same grades as ALJ's because of limitations on the number of super grades
available Goverment-wide. Furthermore, the skills demanded of an ALJ and an appeal
board member are not necessarily the same.
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proceedings and his unique role as a finder of fact. See Universal Camera Corp.
v. NLRB, 340 U. S. 474, 493-97 (1951). By contrast, the appeal board reviews the
case on the record made before the ALJ, and its principal tasks are to apply to
that case the law and policies already formulated by the agency and, to the
extent possible, to anticipate and contribute to the development of new policy.
Whatever their individual merits and skills, appeal board members who are
"out of tune" with agency thinking are of little value in easing the decisional
burden on the agency heads, and this, after all, is the basic purpose for which
such boards are established. Accordingly, I believe that agencies should have
some flexibility in prescribing the tenure of appeal board members.
It should be noted that the third sentence of proposed section 557 (d) would
apply to existing as well as newly created appeal boards. Neither the statutory
provisions governing appeal boards in the Interstate Commerce Commission, 49
U.S.C. ? 17, nor in the Federal Communications Commission, 47 U.S.C. ? 155(d),
provide that board members may be removed only for cause. This provision
would alter the practice in these as well as in other agencies, which now have
appeal boards. I recommend deletion of the third sentence in proposed section
557(d).
Section 2 of H.R. 10198 relates to agency subpena power. The Administrative
Procedure Act does not at present contain a grant of subpena power, but pro-
vides (? 555 (d) ) that where agency subpena power exists, subpenas must be
made available to private parties in adversary proceedings to the same extent
that they are available to agency counsel. Most agencies which conduct pro-
ceedings under sections 556 and 557 of the APA do have subpena power. The
purpose of section 2 is to fill existing gaps by providing within the APA a grant
of subpena power for all agency proceedings, both rulemaking and adjudication,
which are governed by sections 556 and 557.
Subsection (a) would amend section 555(d) of the APA to require agencies
to delegate to presiding officers in all proceedings subject to section 556 the au-
thority to sign and issue subpenas. Such authority would continue to be exercised
"subject to published rules of the agency and within its powers," ? 556(c) (2),
but the agency could not by such a rule withhold the authority entirely. This
amendment is intended to clarify existing law. See Attorney General's Manual
on the Administrative Procedure Act (1947) 74-75.
Subsection (b) adds a new subsection to section 556, granting subpena power
to agencies for use in any proceeding to which sections 556 and 557 are ap-
plicable, i.e., any proceeding required by stdtute to be on the record with op-
portunity for an agency hearing. This grant of subpena power is "in addition to
and not in limitation of" any other statutory authority which an agency may
have to issue or to enforce subpenas. Where such other authority is adequate
for an agency's purposes, the agency need not rely on this provision and will
not be affected by it. Conversely, the subpena power granted by proposed sec-
tion 556(d) is independent and self-contained ; where any agency has at present
a subpena power which is limited or inadequate in some respect, it may rely in-
stead on the power granted by this provision.
Section 2, would implement ABA Resolution No. 10 and Recommendation
No. 74-1 of the Administrative Conference. The text of section 2 differs from the
text proposed in Recommendation 74-1, only in that it deletes from the third
sentence of proposed section 556(d) the words "through the Attorney General
unless otherwise authorized by law" and adds instead a new sentence reading :
"Unless otherwise authorized by law, the Attorney General shall represent the
agency in appeals from district court decisions granting or denying enforcement
of subpenas."
The text proposed by Recommendation 74-1 was intended neither to grant nor
to withhold from the agencies authority to conduct litigation, but merely to
refer to existing law. When an agency seeks judicial enforcement of a subpena
under section ? 556(d) it would be required to proceed through the Attorney
General "unless otherwise authorized by law." This is consistent with the gen-
eral principle that conduct and supervision of agency litigation is in the Depart-
ment of Justice "except as otherwise authorized by law," 28 U.S.C. ?? 516, 519.
Some agencies do, of course, have specific authority to conduct their own litiga-
tion, see F.T.C. v. C uignon, 390 F. 2d 323, 324-25 (8th Cir. 1968), and such au-
thority would, under the Conference's language, be applicable in accordance with
its terms to subpena enforcement proceedings. The effect of the revised text con-
tained in H.R. 10198 is not at all clear, but the intent seems to be to permit
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agencies to conduct their own litigation at the district court level and to au-
thorize the Department of Justice to control litigation at the appellate levels.
We have a number of problems with the revision, the most serious of which is
that it would raise questions as to who controls litigation under existing subpena
statutes. It must be emphasized that proposed section 556(d) is a grant of sub-
pena power "in addition to and not in limitation of" any other statutory author-
ity which an agency may have to issue or to enforce subpenas. Therefore, our
text avoids any language which might be construed as applicable to agency sub-
penas issued under other statutory authority. The problem of control of agency
litigation is somewhat complicated, and we do not think that this fairly narrow
provision regarding subpena power is the place to resolve it. Therefore, we recom-
mend that the text of section 556(d) contained in Recommendation 74-1 be sub-
stituted for that in H.R. 10198.
H.R. 10199 would remove certain technical obstacles to suits for judicial re-
view of Federal administrative actions by (1) eliminating the doctrine of sov-
ereign immunity as a bar to judicial review of Federal administrative action
otherwise subject to judicial review, (2) eliminating the requirement of $10,000
jurisdictional amount in a narrow category of Federal-question cases in United
States district courts; and (3) removing technical complexities concerning the
naming of the party defendant in actions challenging Federal administrative
action. The bill would implement Recommendations 69-1, 68-7, and 70-1, re-
spectively, of the Administrative Conference of the United States.
Section 1 would amend section 702 of title 5, U.S. Code, to eliminate the de-
fense of sovereign immunity with respect to any action in a court of the United
States seeking relief other than money damages and based on an assertion of un-
lawful official action by a Federal officer or employee. The amendment would not
affect other limitations on judicial review, such as that plaintiff lacks standing
to challenge the agency action, that the action is not ripe for review, or that
the action is committed to unreviewable agency discretion, nor would it confer
authority to grant relief whereanother statute limits relief for the action to a
suit for money damages. Section 1 would also amend section 703 of title 5, U.S.
Code to permit the plaintiff in actions for non-statutory review of administrative
action to name the United States, the agency, or the appropriate officer as de-
fendant. This is intended to eliminate technical problems arising from plaintiff's
failure to name the proper Government officer as defendant.
Section 2 would amend section 1331 of title 28, U.S. Code, to eliminate the re-
quirement that there be at least $10,000 in controversy where the jurisdiction of
the U.S. district court is invoked on the ground that the matter arises under
Federal law. This would eliminate an obstacle to judicial review in situations
where the right asserted is not susceptible of dollar valuation.
Section 3 would amend section 1391(e) of title 28, U.S. Code, which governs
venue of actions against Federal officers and agencies, to make it clear that a
plaintiff may utilize that section's provisions for broad venue and extra-terri-
torial service of process against Government defendants notwithstanding the
presence in the action of a non-federal defendant. This is probably already
the law, see Macias v. Finch, 324 F. -Supp. 1252, 1254-55 (N.D. Cal. 1970) ;
People of Saipan v. Dept. of the Interior, 356 F. Supp. 645, 651, (D. Hawaii 1973),
modified on other grounds, 502 F. 2d 90 (9th Cir. 1974), but a clarifying amend-
ment would be desirable.
This bill does not derive directly from the ABA Resolution regarding amend-
ments to the Administrative Procedure Act. However, because its proposals
relate closely to the APA and have received Bar Association and Conference
support in the past, it seems appropriate to consider them together with the
other bills in this package.
I enclose the texts of the Conference's statements on the ABA resolutions
and of the Conference recommendations cited in this letter.
Sincerely yours,
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RECOMMENDATION No. 68-6--DELEGATION OF FINAL DECISIONAL AUTHORITY
SUBJECT TO DISCRETIONARY REVIEW BY THE AGENCY 1
RECOMMENDATION
1. In order to make more efficient use of the time and energies of agency
members and their staffs, to improve the quality of decision without sacrificing
procedural fairness, and to help eliminate delay in the administrative process,
every agency having a substantial caseload of formal adjudications should
consider the establishment of one or more intermediate appellate boards or
the adoption of procedures for according administrative finality to presiding
officers' decisions, with discretionary authority in the agency to affirm sum-
marily or to review, in whole or in part, the decisions. of such boards or officers.
2. Section 8 of the Administrative Procedure Act, 5 U.S.C. 557, should be
amended as necessary to clarify, the authority of agencies to restructure their
decisional processes along either of the following lines :
(a) Intermediate appellate boards
(1) Whenever an agency deems it appropriate for the efficient and orderly
conduct of its business, it may, by rule or order:
(A) Establish one or more intermediate appellate boards consisting of
agency employees qualified by training, experience, and competence to per-
form review functions,
(B) Authorize these boards to perform functions in connection with. the
disposition of cases of the same character as those which may be performed
by the agency,
(C) Prescribe procedures for review of subordinate decisions by such
boards or by the agency, and
(D) Restrict the scope of inquiry by such boards and by the agency in
any review, without impairing the authority of the agency in any case to
decide on its own motion any question of procedure, fact, law, policy, or
discretion as fully as if it were making the initial decision.
(2) Any order or decision of an intermediate appellate board, unless reviewed
by the agency, shall have the same force and effect and shall be made, evidenced,
and enforced in the same manner as orders and decisions of the agency.
(3) A party aggrieved by an order of such board may file an application for
review by the agency within such time and in such manner as the agency shall
prescribe, and every such application shall be passed upon by the agency.
(4) In passing upon such applications for review, an agency may grant, in
whole or in part, or deny the application without specifying any reasons there-
for. No such application shall rely upon questions of fact or law upon which the
intermediate appellate board has been offorded no opportunity to pass.
(5) An agency, on its own initiative, may review in whole or in part, at such
time and in such manner as it shall determine, any order, decision, report, or
other action made or taken by an intermediate appellate board.
(6) If an agency grants an application for review or undertakes review on
its own motion, it may affirm, modify, reverse, or set aside the order, decision,
report or other action of the intermediate appellate board, or may remand the
proceeding for reconsideration.
(7) The filing of an application for .agency review shall be a condition prece-
dent to judicial review of any order of an intermediate appellate board.
(8) Agency employees performing review functions shall not be responsible
to or subject to the supervision or direction of any employee or agent engaged in
the performance of investigative or prosecuting functions for any agency.
(b) Discretionary review of dec#sionS of presiding ofcer8
(1) When a party to a proceeding seeks administrative review of an initial
decision rendered by the presiding officer (or other officer authorized by law
to make such decision), the agency may accord administrative finality to the
initial decision by denying the petition for its review, or by summarily affirm-
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ing the initial decision, unless the party seeking review makes a reasonable
showing that :
(A) A prejudicial procedural error was committed in the conduct of
the proceeding, or
(B) The initial decision embodies (1) a finding or conclusion of material
fact which is erroneous or clearly erroneous, as the agency may by rule
provide; (ii) a legal conclusion which is erroneous; or (iii) an exercise
of discretion or decision of law or policy which is important and which
the agency should review.
(2) The agency's decision to accord or not to accord administrative finality
to an initial decision shall not be subject to judicial review. If the initial
decision becomes the decision of the agency, however, because it is summarily
affirmed by the agency or because the petition for its review is denied, such
decision of the agency will be subject to judicial review in accordance with
established law.
SECOND PLENARY SE99ION, DECEMBER 10-11, 1968--WASHINGTON, D.C.
RECOMMENDATION NO. 68-7-ELIMINATION OF JURISDICTIONAL AMOUNT
Recommendation
Title 28 of the United States Code should be amended to eliminate any require-
ment of a minimum jurisdictional amount before United States district courts
may exercise original jurisdiction over any action in which the plaintiff alleges
that he has been injured or threatened with injury by an officer or employee of
the United States or any agency thereof, acting under color of Federal law. This
amendment is not to affect other limitations on the availability or scope of judicial
review of Federal administrative action.
RECOMMENDATION No. 69-1-STATUTORY REFORM OF THE
SOVEREIGN IMMUNITY DOCTRINE.1
The technical legal defense of sovereign immunity, which the Government may
still use in some instances to block suits against it by its citizens regardless of the
merit of their claims, has become in large measure unacceptable. Many years ago
the United States by statute accepted legal responsibility for contractual liability
and for various types of misconduct by its employees. The "doctrine of sovereign
immunity" should be similarly limited where it blocks the right of citizens to chal-
lenge in courts the legality of acts of governmental administrators. To this end
the Administrative Procedure Act should be amended.
RECOMMENDATION
1. Section 702 of title 5, United States Code (formerly section 10(a) of the
Administrative Procedure Act), should be amended by adding the following at
the end of the section :
An action in -a court of the United States seeking relief other than money dam-
ages and stating a claim that an agency or an officer or employee thereof acted
or failed, to act in an official capacity or under color of legal authority shall not be
dismissed nor relief therein denied on the ground that it is. against the United
States or that the United States is an indispensable party. The United States may
be named as a defendant in any such action, and a judgment or decree may be
entered against the United States. Nothing herein (1) affects other limitations
on judicial review or the power or duty of the court to dismiss any action or deny
relief on any other appropriate legal or equitable ground ; or (2) confers authority
to grant relief if any other statute that grants consent to suit expressly or im-
pliedly forbids the relief which is sought.
2. Section 703 of title 5, United States Code (formerly section 10(b) of the
Administrative Procedure Act), should be amended by adding the following sen-
tence after the first full sentence :
If no special statutory review proceeding is applicable, the action for judicial
review may be brought against the United States, the agency by its official title,
or the appropriate officer.
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RECOMMENDATION No. 69-8-ELIMINATION OF CERTAIN EXEMPTIONS FROM THE
APA RULEMAKING REQUIREMENTS
RECOMMENDATION
In order to assure that Federal agencies will have the benefit of the informa-
tion and opinion that can be supplied by persons whom regulations will affect, the
Administrative Procedure Act requires that the public must have opportunity to
participate in rulemaking proceedings. The procedures to assure this opportunity
are not required by law, however, when rules are promulgated in relation to
"public property, loans, grants, benefits, or contracts." These types of rules may
nevertheless bear heavily upon nongovernmental interests. Exempting them from
generally applicable procedural requirements is unwise. The present law should
therefore be amended to discontinue the exemptions to strengthen procedures
that will make for fair, informed exercise of rulemaking authority in these as in
other areas.
Removing these statutory exemptions would not diminish the power of the
agencies to omit the prescribed rulemaking procedures whenever their observ-
ances were found to be impracticable, unnecessary, or contrary to the public
interest. A finding to that effect can be made, and published in the Federal
Register, as to an entire subject matter concerning which rules may be promul-
gated. Each finding of this type should be no broader than essential and should
include a statement of underlying reasons rather than a merely conclusory recital.
Wholly without statutory amendment, agencies already have the authority to
utilize the generally applicable procedural methods even when formulating rules
of the exempt types now under discussion. They are urged to utilize their existing
powers to employ the rulemaking procedures provided by the Administrative
Procedure Act, whenever appropriate, without awaiting a legislative command
to do so.
RECOMMENDATION No. 70-1 PARTIES DEFENDANT 1
The size and complexity of the Federal Government, coupled with the intricate
and technical law concerning official capacity and parties defendant, have given
rise to innumerable cases in which a plaintiff's claim has been dismissed because
the United States or one of its agencies or officers lacked capacity to be sued, was
improperly identified, or could not be joined as a defendant. The ends of justice
are not served when dismissal on these technical grounds prevents a determina-
tion on the merits of what may be just claims. Three attempts to cure the deficien-
cies of the law of parties defendant have achieved only partial success and further
changes are required to eliminate remaining technicalities concerning the identi-
fication, naming, capacity, and joinder of parties defendant in actions challenging
federal administrative action.
1. The Federal Rules of Civil Procedure contain liberal provisions for substitu-
tion of parties and for amendment of pleadings and correction of defects as to
parties defendant. The Department of Justice should instruct its lawyers and
United States Attorneys to call the attention of the court to these provisions in
cases involving technical defects with respect to the naming of parties defendant
in any situation in which the plaintiff's complaint provides fair notice of the na-
ture of the claim and the summons and complaint were properly served on a
United States Attorney, the Attorney General, or an officer or agency which would
have been a proper party if named. The Department of Justice should be responsi-
ble for determining who within our complex federal establishment is responsible
for the alleged wrong and should take the initiative in seeking correction of plead-
ings or adding of proper parties. Since the Department of Justice has acquiesced
in the substance of this recommendation, it would also be appropriate for the
Department of Justice and the Administrative Conference of the United States
to seek an amendment of the Federal Rules of Civil Procedure to provide that
the Attorney General shall have the responsibility to correct such deficiencies.
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2. Congress should enact legislation :
(a) Amending section 703 of title 5 to allow the plaintiff to name as de-
fendant in judicial review proceedings the United States, the agency by its
official title, the appropriate officer, or any combination of them.
(b) Amending section 1391 (e) of title 28 to include within its coverage
actions challenging federal administrative action in which the United States
is named as a party defendant, without affecting special venue provisions
which govern other types of actions against the United States.
(c) Amending section 1391 (e) of title 28 to allow a plaintiff to utilize that
section's broadened venue and extraterritorial service of process in actions
in which non-federal defendants who can be served in accordance with the
normal rulesgoverning service of process are joined with federal defendants.
(Adopted June 8, 1973)
Adverse agency publicity-that Is, statements made by an agency or its
personnel which invite public attention to an agency's action or policy and
which may adversely affect persons identified therein'-can cause serious and
sometimes unfair injury. Where a reasonable and equally effective alternative
is not available, adverse agency publicity is often necessary to warn of a danger
to public health or safety or a threat of significant economic harm, or to serve
other legitimate public purposes. However, adverse agency publicity is undesirable
when it is erroneous, misleading or excessive or it serves no authorized agency.
purpose.
Agency practices regarding adverse publicity vary widely. Some agencies use
adverse publicity as the primary method of enforcement ; for some others it is
merely action incidental to formal sanctions. Agency rules seldom establishpro-
cedures or standards for the use of adverse agency publicity, and it is almost
never subject to effective judicial review.
In meeting these concerns, this recommendation addresses agency use of adverse
publicity in connection with investigatory, rulemaking and agency adjudicatory
processes as well as informal agency actions. It recommends the adoption of
agency rules containing minimum standards and structured practices governing
the issuance of publicity.
Each agency should state in its published rules the procedures and policies to
be followed in publicizing agency action or policy, and internal operating prac-
tices should assure compliance. In the adoption of such procedures and policies,
each agency should balance the need for adequately serving the public interest
and the need for adequately protecting persons affected by adverse agency
publicity in accordance with the following standards :
1. All adverse agency publicity should be factual in content and accurate in
description. Disparaging terminology should be avoided.
2. Adverse agency publicity relating to regulatory investigations of specifically
identified persons or pending agency trial-type proceedings should issue only in
limited circumstances in accordance with the criteria outlined below.
(a) Where an agency determines that there is a significant risk the public
health or safety may be impaired or substantial economic harm may occur unless
the public is immediately notified, it may use publicity as one of the means of
speedily and accurately notifying the affected public. However, where public
harm can be avoided by immediate discontinuance of an offending practice, a
respondent should be allowed an opportunity, where feasible, to cease the practice
(pending a legal test) in lieu of adverse agency publicity.
(b) Where it is required in order to bring notice of pending agency adjudica-
tion to persons likely to be desirous of participating therein or likely to be
affected by that or a related adjudication, the agency should rely on publicity
i Publicity as used here is distinguished from the mere decision to make records avail-
able to the public rather than preserve their confidentiality. That decision is governed by
separate criteria set forth in the Freedom of Information Act (5 U.S.C. $ 552) and is not
within the scope of this recommendation.
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to the extent necessary to provide such notice even though it may be adverse to a
respondent.
(c) Where information concerning adverse agency action is available to the
public regardless of agency publicity measures and is likely to result in media
publicity, adverse agency publicity should be issued only to the extent necessary
to foster agency efficiency, public understanding, or the accuracy of news
coverage.
3. Adverse agency publicity not included in paragraph 2 above should issue
only after the agency has taken reasonable precautions to assure that the in-
formation stated is accurate and that the publicity fulfills an authorized purpose.
4. Where information in adverse agency publicity has a limited basis-for
example, allegations subject to subsequent agency adjudication-that fact should
be prominently disclosed. Any respondent or prospective respondent in an agency
proceeding should, if practicable and consistent with the nature of the proceeding,
be given advance notice of adverse agency publicity relating to the proceeding
and a reasonable opportunity to prepare in advance a response to such publicity.
5. Where adverse agency publicity is shown to be erroneous or misleading
and any person named therein requests a retraction or correction, the agency
should issue the retraction or correction in the same manner (or as close thereto
as feasible) as that by which the original publicity was disseminated.
RECOMMENDATION 73-5-ELIMINATION OF THE "MILITARY OR FOREIGN AFFAIRS
FUNCTION" EXEMPTION FROM APA RULEMAKING REQUIREMENTS-
(Adopted December 18, 1973)
The basic principle of the rulemaking provisions of the Administrative Proce-
dure Act-that an opportunity for public participation fosters the fair and in-
formed exercise of rulemaking authority-is undercut by various categorical
exemptions in 5 U.S.C. ? 553(a). More than 25 years' experience with rulemaking
under the APA has shown some of these broad exemptions to be neither necessary
nor desirable. The Administrative Conference has previously recommended
elimination of the exemptions for matters "relating to public property, loans,
grants, benefits, or contracts" (Recommendation 69-8, October 22, 1969). Since
rules on those subjects may bear heavily on nongovernmental interests, the Con-
ference concluded that their categorical exemption from generally applicable
procedural requirements was unwise. For similar reasons, the breadth of the
present exemption for all rules which involve a "military or foreign affairs func-
tion" is unwarranted.
As with the earlier Recommendation, elimination of the categorical exemption
for military or foreign affairs functions would not diminish the power of the
agencies to omit APA rulemaking procedures when their observance is found to
be impracticable, unnecessary, or contrary to the public interest, or when other
exemptions contained in Section 553 are applicable, such as those for "general
statements of policy" or for rules relating to "agency management or personnel."
In addition, the present Recommendation would retain limited exemptive provi-
sions specially directed to the needs of military and foreign affairs rulemaking.
(1) The APA's categorical exemption for "military or foreign affairs function"
rulemaking should be eliminated.
(2) Two aspects of special concern in the military and foreign affairs areas
should be dealt with by modified exemptive provisions in place of the present
categorical one :
(a) Rulemaking in which the usual procedures are inappropriate because of a
need for secrecy in the interest of national defense or foreign policy should be
exempted on the same basis now applied in the freedom of information provision,.
5 U.S.C. ? 552(b) (1). That is, Section 553(a) should contain an exemption for
rulemaking involving matters specifically required by Executive order to be kept
secret in the interest of national defense or foreign policy.
(b) Some of the agencies affected by elimination of the categorical exemption
issue numerous rules for which public procedures would be inappropriate or
unnecessary. Such agencies would find it burdensome to make case-by-case find-
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ings that the usual procedures are "impracticable, unnecessary, or contrary to
the public interest" under Section 553 (b) (B). Repeal of the categorical exemp-
tion for "military or foreign affairs functions" should not be construed to dis-
courage use of the implicit power to apply the Section 553(b) (B) exemption on
an advance basis to narrowly drawn classes of military or foreign affairs rule-
making. It is therefore recommended that repeal of the exemption be accompanied
by statutory clarification of the agencies' power to prescribe by rule specified
categories of rulemakings exempt by reason of Section 553 (b) (B), provided that
the appropriate finding and a brief statement of reasons are set forth with respect
to each category. Though it would not be mandatory, agencies should consider
using notice-and-comment procedures for adoption of the exemptive rule itself.
Statutory amendment should also amplify the existing Section 553(b) (B) stand-
ards for exemption by including specific reference to the national interest in the
military-foreign affairs area.'
(3) Wholly without statutory amendment, agencies already have the authority
to use the generally applicable APA procedures for rulemaking when formulating
rules of the exempt types. They are urged to do so, wherever appropriate, in
matters now excluded by the "military or foreign affairs function" exemption.
Section 553(a) and the relevant part of 553(b), amended in accordance with
this recommendation, might read as follows:
"? 553. Rule making
(a) This section applies, according to the provisions thereof, except to the
extent that there is involved-
(1) a matter pertaining to a military or foreign affairs function of the United
States specifically required by Executive order to be kept secret in the interest of
the national defense or foreign policy ; or
(2) a matter relating to agency management or personnel [or to public prop-
erty, loans, grants, benefits, or contracts] 2
(b) * * *
Except when notice or hearing is required by statute, this subsection does not
apply-
(B) when the agency for good cause finds that notice and public procedure
thereon would be impracticable, unnecessary, or contrary to the public interest
(including national interest factors if a military or foreign affairs function is
involved). The agency shall incorporate in each rule issued in reliance upon this
provision either (i) the finding and a brief statement of reasons therefor, or
(ii) a statement that the rule is within a category of rules established by a
specified rule which has been previously published and for which the finding and
statement of reasons have been made.
RECOMMENDATION 74-1 SUBPENA POWER IN FORMAL RULFMAKINO AND
ADJUDICATION
(Adopted May 30-31, 1974)
The present recommendation implements, and somewhat expands, the state-
ment of principle adopted by the Conference in June 1973 with respect to the
American Bar Association's Resolution No. 10 concerning proposed amendments
to the Administrative Procedure Act. It speaks only to the issue of subpena
authority in formal proceedings under the Administrative` Procedure Act, and
does not reflect any judgment as to the need for general or specific grants of
subpena authority in other situations.
' An Appendix to this recommendation sets forth suggested language to effect the
changes recommended by paragraph (2).
= Recommendation 69-8 proposes the deletion of the bracketed phrase.
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The Administrative Procedure Act should be amended (1) to make agency
subpenas available in all agency proceedings, both rulemaking and adjudica-
tion, which are subject to sections 556 and 557 of title 5, United States Code,
and (2) to make clear that the power to issue subpenas in such proceedings
shall be delegated to presiding officers.
We propose the following amendments to implement this recommendation :
1. Amend section 555(d) of title 5, United States Code to read as follows :
(d) Agency subpenas authorized by law shall be issued to a party on request
and, when required by rules of procedure, on a statement or showing of general
relevance and reasonable scope of the evidence sought. Each agency shall desig-
nate by rule the officers, who shall include the presiding officer in all proceedings
subject to section 556 of this title, authorized to sign and issue subpenas. On
contest, the court shall sustain the subpena or similar process or demand to the
extent that it is found to be in accordance with law. In a proceeding for en-
forcement, the court shall issue an order requiring the appearance of the witness
or the production of the evidence or data within a reasonable time under penalty
of punishment for contempt in case of contumacious failure to comply.
2. Amend section 556 of title 5, United States Code to add the words "subpena
authority ;" in the heading after the words "powers and duties ;", to delete the
words "authorized by law" in subparagraph (c) (2), to redesignate subsections
(d) and (e) as (e) and (f) respectively, and to add the following subsection (d) :
(d) In any proceeding subject to the provisions of this section, the agency is
authorized to require by subpena any person to appear and testify or to appear
and produce books, papers, documents or tangible things, or both, at a hearing
or deposition at any designated place. Subpenas shall be issued and enforced in
accordance with the procedures set forth in section 555(d) of this title. In case
of failure or refusal of any person to obey a subpena, the agency, through the
Attorney General unless otherwise authorized by law, may invoke the aid of
the district court of the United States for any district in which such person is
found or resides or transacts business in requiring the attendance and testimony
of such person and the production of him by books, papers, documents or tangible
things. The authority granted by this subsection is in addition to and not in
limitation of any other statutory authority for the issuance of agency subpenas
and for the judicial enforcement thereof.
ADMINISTRATIVE CONFERENCE STATEMENT ON ABA PROPosALS To AMEND THE
ADMINISTRATIVE PROCEDURE ACT
(Adopted June 7-8, 1973)
In August, 1970 the House of Delegates of the American Bar Association
adopted twelve resolutions calling in general terms for amendments to the Ad-
ministrative Procedure Act. They are a valuable means of focusing the attention
of the Administrative Conference, the organized bar, and other interested per-
sons upon revisions and improvements in the APA suggested by a quarter-
century of experience.
The Conference has studied the resolutions and the implementing recommenda-
tions prepared by the Administrative Law Section of the ABA. The Conference
has expressed its views in recommendations previously adopted respecting the
subject matter of several of the resolutions. We believe it desirable, however, to
state in a single document our views on the resolutions and on those parts of the
implementing recommendations which appear to raise issues separate from those
posed by the resolutions.
The Conference approves in principle Resolution No. 1, calling for improved
definitions of "rule' and "order" so as to distinguish clearly between the nature
of rulemaking and the nature of adjudication. The Conference has commenced,
and will continue, the further study that is needed to determine how this can
most effectively be achieved.
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The Conference agrees with Resolution No. 2. We have previously called for
eliminating from 5 U.B.C. ? 553 the exemption for rules relating to "public
property, loans, grants, benefits, or contracts" (Recommendation No. 69-8). We
also favor limiting or eliminating the present exemption that applies whenever a
military or foreign affairs function is involved, provided that appropriate safe-
guards can be retained to protect the aspects of those functions that concededly
need special treatment. This subject deserves further study, which the Con-
ference has already begun.
RESOLUTION NO. 3
Resolution No. 3 would extend the existing provisions regarding separation of
functions in 5 U.B.C. ? 554(d) to all formal proceedings, both adjudicatory and
rulemaking ; the existing exceptions for ratemaking, initial licensing and formal
rulemaking generally would be eliminated. With respect to such formal proceed-
ings, the Conference approves this proposal insofar as it applies to agency staff
who have actually engaged in investigative or prosecutorial functions in the
particular proceeding, including persons who have actually exercised super-
visory authority over such functions once the formal phase of the proceeding has
commenced. We do not believe, however, that agency officials having general
organizational or supervisory responsibility for such functions should, solely by
virtue of that responsibility, be barred from performing their customary func-
tion of advising agency members in proceedings not presently covered by 5 U.S.C.
?554(d).
RESOLUTION NO. 4
The Conference approves the purpose of Resolution No. 4, which seeks the
prohibtion of ex parte communications between agency members and parties or
other interested persons outside the agency on any fact in issue in an adjudicatory
or rulemaking proceeding subject to 5 U.S.C. ?? 556 and 557. We leave open for
further consideration by the Council and cognizant committees whether this ob-
jective can most effectively be sought by legislation or by agency rules.
RESOLUTION NO. 5
As the numerous Conference recommendations of general applicability indi-
cate, the Conference endorses the principle of uniformity of administrative
procedures-including procedures governing the conduct of formal adjudica-
tion-where considerations of fairness or expedition do not justify differences.
It is extremely difficult to determine, however, where such considerations are
widely applicable without an intensive agency-by-agency examination of the par-
ticular procedure in question. As a matter of priority, the advantages to be
gained by seeking standardization through agency-by-agency examination of a
procedure whose only apparent flaw may be its nonuniformity are not always
as important as improvement of some procedures whose actual operation has
been shown to be defective. The work involved, and hence the opportunity cost,
becomes even greater if the uniform procedure is to be not merely recommended
but imposed, making it necessary to pass upon exceptions for particular agencies.
For these reasons, the Conference would not desire a statutory mandate to en-
force the single goal of uniformity with respect to particular provisions of
administrative law, but would prefer to further, as it has in the past, all the
values of sound administrative procedure-including the value of uniformity-
by making recommendations in those areas where the need and the utility of
Conference action are most apparent.
The Conference has already called for agencies to consider delegating final
decisional authority to presiding officers or to intermediate appellate boards,
subject to discretionary review by the agency (Recommendation 68-6). ABA
Resolution No. 6 and that part of its Recommendation No. 8 which authorizes
such delegation are consistent with and would implement the Conference recom-
mendation, and we endorse them.
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Resolution No. 7 would require agencies "to the extent practicable and useful"
to provide by rule for prehearing conferences. The Conference has already en-
dorsed the principal objective of this resolution, which is increased use of pre-
hearing conferences in adjudicatory proceedings (Recommendation 70-4). We
agree with the conclusion expressed in ABA Recommendation No. 7 that pursuit
of this objective is best conducted through the Conference.
The Conference agrees that the presiding officer should have substantial
authority in the conduct of adjudicatory proceedings. The Conference has already
recommended legislation to authorize agencies, at their discretion, to accord
administrative finality to the decisions of administrative law judges (Recom-
mendaton 68-6). We endorse the ABA proposal insofar as it would achieve that
result.
The Conference shares the Association's view that an Administrative Law
Judge who has presided over the reception of evidence should exercise responsi-
bility for rendering the initial decision, with limited exceptions. The specifica-
tion of those exceptions and other matters set forth in the ABA's implementing
recommendation raise issues which the Chairman's Office of the Conference and
the Commitee on Agency Organization and Personnel have studied in some depth
and discussed with the relevant committee of the Administrative Law Section of
the ABA. Since further study and discussion would be fruitful, the Conference
takes no position on these matters at the present time.
Resolution No. 9, as elaborated upon by its implementing recommendation,
calls for legislation authorizing agencies to provide by rule for abridged on-the-
record procedures for use by unanimous consent of the parties. We do not believe
that such legislation would accord the agencies any authority they do not
already possess, and it might be construed to invalidate certain procedures at
present employed in the absence of unanimous consent. Accordingly, we recom-
mend against implementation of this proposal.
Resolution No. 10 would grant all agencies authority to make subpoenas gen-
erally available in adjudicatory proceedings. Those agencies which conduct
adjudications subject to 5 U.S.C. ?? 554, 556 and 557 or otherwise determined
on the record after hearing should, as a general rule, possess subpoena power,
and subpoenas should be available to the parties in such proceedings. We favor
an amendment to the Administrative Procedure Act which would achieve this
result with respect to adjudications subject to ?? 554, 556 and 557. It is not
feasible or desirable, however, to make subpoenas available to either the agen-
cies or the parties in every case of informal adjudication. Thus, amending the
Administrative Procedure Act to provide a grant of subpoena power in appro-
priate cases of informal adjudication will require a definition of the category
of proceedings to be covered ; since framing a workable definition is exceedingly
difficult, it may be found preferable for Congress to make such grants of sub-
poena power on a less general basis. In any event, we favor retention of that
provision of the Administrative Procedure Act (5 U.S.C. ? 555(d)) which per-
mits the agencies to require by rule a statement or showing of general relevance
and reasonable scope of the evidence sought before issuance of a subpoena.
The Conference agrees in principle with the proposal that agencies be required
to provide by rule the procedure applicable to cases of informal adjudication.
We are convinced that in view of the vast range of informal agency adjudica-
tion, more empirical study is necessary before sound procedures of general
applicability can be formulated.
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The Conference does not favor at this time amending the Administrative
Procedure Act to treat agency issuance of prejudicial publicity. We believe that
there exists at present an adequate legal remedy for agency publicity which
affects the integrity of an on-the-record agency proceeding. We agree with the
American Bar Association that agency practices in the issuance of publicity
adversely affecting persons in their businesses, property or reputations also
present a problem, and we have proposed in our -Recommendation 73-1 means of
dealing with it.
SEPARATE STATEMENT OF MAx D. PAGLIN, EARL W. KINTNER, ANTHONY L.
MONDELLO, WILLIAM A. NELSON, CHARLES F. BINGMAN AND JOHN H. POWELL, JR.
The above-named members of the Committee on Agency Organization and
Personnel are of the opinion, for the reasons set forth in the Staff report accom-
panying the proposed Recommendation, that the Conference's position on Resolu-
tion No. 3 of the ABA Proposals (Separation of Functions) should be in the form
and language originally submitted by the Council and various committees, to wit :
Resolution No. 3 would extend the existing provisions regarding separation of
functions in 5 U.S.C. ? 554(d) to all formal proceedings, both adjudicatory-and
rulemaking; the existing exceptions for ratemaking, initial licensing, and formal
rulemaking generally would be eliminated. With respect to rulemaking of par-
ticular applicability, all ratemaking, and initial licensing, the Conference ap-
proves this proposal insofar as it applies to agency staff actually engaged in
investigative or prosecutorial functions, including the actual exercise of super-
visory authority over such functions in a particular case. We do not believe,
however, that agency officials having general organizational or supervisory
responsibility for such functions should, solely by virtue of that responsibility,
be barred from performing their customary function of advising agency members
in proceedings not presently covered by 5 U.S.C. ? 554(d). With respect to rule-
making of general applicability, the Conference believes there should be no
statutory requirement of separation of functions.
SEPARATE STATEMENT OF MALCOLM S. MASON
I join in the above statement of Max D. Paglin and other named members of
the Committee on Agency Organization and Personnel, except that I favor that
portion of the Assembly's amendment to the original submission which would
permit consultation with staff members whose exercise of supervisory authority
occurs prior to commencement of the formal phase of the proceeding. More
generally, I am of the view that various portions of the Conference's Statement
concerning the ABA proposals overemphasize notions of formal neatness at the
expense of realistic examination of the actual problems encountered in actual
agencies in various kinds of proceedings.
STATEMENT OF THE ADMINISTRATIVE CONFERENCE ON ABA RESOLUTION NO. 1
PROPOSING TO AMEND THE DEFINITION OF "RULE" IN THE ADMINISTRATIVE
PROCEDURE ACT
(Adopted December 19, 1973)
The Conference agrees with Resolution No. 1, calling for improved definitions
of "rule" and "order" so as to distinguish more clearly between the nature of
rulemaking and the nature of -adjudication ; it endorses the recommendation of
the ABA that the words "or particular" and the entire second clause be deleted
from the definition of "rule" in the Administrative Procedure Act. The Con-
ference endorses this proposal upon the express understanding that-
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(1) A matter may be considered to be of "general applicability" even though
it is directly applicable to a class which consists of only one or a few persons if
the class is open in the sense that in the future the number of members of the
class may be increased. Thus, for example, smoke emission standards for a
particular area are of general applicability even though at the time of their
issuance they may, as a practical matter, be applicable to only one plant. On the
other hand, a rate established for a single company on the basis of the capital
requirements and credit rating of that company, and applicable only to that
company, would be a matter of particular applicability and an order rather than
a rule.
(2) A matter may be of "particular applicability" (and therefore an order)
even though it is applicable to several persons, if the agency clearly specifies an
intention to limit its applicability to the particular persons concerned.
(3) The deletion of the second clause does not imply a determination that
the agency statements therein listed are not rules, but rather that they may be
either rules or orders, depending upon their applicability and effect. If such
statements become orders under the revised definition and are required by statute
to be determined on the record after opportunity for agency hearing, the Con-
ference believes that in the absence of a specific determination by Congress to
the contrary they should be treated in the same manner as suggested for rate-
making in the next to last paragraph of this Recommendation, and that amend-
ments of the Act necessary to achieve these results should accompany the pro-
posed redefinition of "rule."
(4) The proposed change in the definition of "rule" does not affect the prec-
edential value of an agency's decision in a matter of particular applicability if
the agency decides to proceed on a case-by-case basis rather than by rulemaking.
(5) This change is not intended to affect recommendations previously made
which urge-
(a) The use of notice-and-comment procedures when considering issues of
general applicability that may arise in the context of an adjudicatory proceeding
(Recommendation 71-6) ;
(b) The use of trial-type or similar procedures when considering issues of
specific fact in the context of a rulemaking proceeding (Recommendation 72-5) ;
and
(c) Articulation and continual review of agency policies through rules,
precedents and policy statements (Recommendation 71-3).
In endorsing the proposed redefinition, the Conference does not imply that a
formal proceeding fixing the permissible rates of a specific enterprise-the
agency activity principally affected-should be treated in all respects like other
formal adjudication. To the contrary, we believe that ratemaking, like initial
licensing, should receive special treatment with respect to the separation of
functions requirements of 5 U.S.C. ? 554(d), as set forth in the Conference State-
ment concerning ABA Resolution No. 3; that ratemaking should not be subject
to the mandatory initial decision requirement of 5 U.S.C. ? 557 (b) and should
continue to be governed by the provision of 5 U.S.C. ? 556(d) authorizing agencies
to require that evidence be submitted in writing. Amendments of the Act neces-
sary to achieve these results should accompany the proposed redefinition of
"rule."
The question of appropriate procedures for informal adjudication is a subject
deserving further study. Meanwhile, we recommend that agencies continue,
despite the reclassification, to give informal action of particular applicability
and future effect at least the same procedural protections that are now in fact
accorded.
The principal purpose of the suggested changes is definitional and prospective
rather than operational and retrospective. That is, they are intended to provide a
clearer definitional structure that will facilitate proper allocation of procedures
with respect to legislation adopted in the future or new activities undertaken
under existing law ; they are not aimed at the correction of what are thought to be
existing abuses. Accordingly, to the extent any agency believes that activities
currently conducted as rulemaking would be adversely affected by the conversion
which the ABA proposal would effect, it would not be inconsistent with the Con-
ference's Statement to propose special procedural provisions therefor, so long as
the integrity of the definition of "rule" (as here set forth) is not affected.
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Following a study of these bills by our Legislative Committee and deliberation
and vote by our Executive Committee, we propose the following changes :
(1) Amend the bills and the APA to change the title "hearing examiner" to
"administrative law judge". This will accord with the official action taken by
the Civil Service Commission in its 1972 title regulation, which was promulgated
in public rulemaking proceedings after extensive study to determine the appro-
priate title for this position. It may be noted that this title change is recognized
and effectuated in S. 5, which recently passed the Senate 94-0.
(2) H.R.10195 and H.R.10196
With the amendment proposed below, we prefer H.R. 10195 (the ABA bill)
over H.R. 10196 (the ACUIS bill) because the latter would weaken the applica-
tion of the separation of function provisions in the case of investigation and
prosecution supervisors in "ratemaking and cognate proceedings and in cases
not subject to section 554(d)". With respect to agency employees (i.e., exclud-
ing the agency head or members), we believe no distinction should be made
between formal rulemaking and adjudicatory proceedings in requiring separa-
tion of functions between investigation/prosecution and decisionmaking.
However, we believe such a distinction is warranted withrespect to the agency
heads and members of bodies comprising agencies. We therefore propose the
following amendment to H.R. 10195:
At p. 3, delete subsection (3) and substitute the following: "(3) In
cases subject to section 554 of this title, but not in other cases, this sub-
section applies to the agency and to each member of the body comprising
the agency".
(3) Agency Review Processes-Sec. 1 of H.R. 10197 and See. 1 of H.R. 10198
The right to an impartial and independent hearing can be effectively eroded
by an agency's power to conduct de novo review of the judge's findings. In addi-
tion, standardless review of hearings decisions frequently results in great delay,
uncertainty, cost to the taxpayer and the parties, and loss of efficiency and in-
tegrity in the administrative process. Such deficiencies are compounded when
agencies delegate de novo review authority to agency employees (review boards,
judicial officers, etc.) who are selected without judicial qualification standards
and who serve without tenure rights to protect them against undue agency
influence or control.
To prevent this erosion of rights and to promote the efficiency and basic fair-
ness of the administrative review process, we recommend standards for internal
agency review that will establish in proceedings subject to Sec. 554:
(1) Certiorari review by the agency (or a review board), rather than
review as a matter of right.
(2) Limited grounds on which review may be petitioned, i.e.,
(a) A finding or conclusion of material fact is not supported by
substantial evidence.
(b) A necessary legal conclusion is erroneous.
(c) The decision is contrary to law or to the duly promulgated rules
or decisions of the agency.
(d) A substantial question of law, policy, or discretion is involved.
(e) A prejudicial procedural error was committed.
(3) Restriction of agency review sua sponte to matters of policy and
law, with the requirement that the agency issue an order for review speci-
fying the issue of law or policy to be examined (or re-examined) when it
decides to review on its own motion.
(4) Restriction of appointments to agency review boards, the position
of judicial officer, or other agency review authority to APA members of
the agency and administrative law judges.
As early as the reports of the Hoover Commission and Task Forces in 1949
and 1955, and through a continuous stream of reports and studies since then,
researchers, leading experts, and legislators have recommended procedural
reforms that would give greater finality to the decisions of administrative
law judges, thereby to reduce the delays, uncertainty and waste in the existing
internal agency review processes.
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The Hoover Commission Task Force in 1955 recommended the following corner-
stone for internal review standards :
"Upon review of an initial decision of a presiding officer in adjudication or
rule making required under the Constitution or by statute to be made after
hearing, except for questions of policy delegated to the agency by the Congress,
the agency should have only the powers of review that a court has upon judicial
review of agency decisions." [Hoover Commission, Task Force Report on Legal
Services and Procedures, p. 203 (1955).]
In 1959 Senator Ervin introduced a bill to improve federal administrative pro-
cedures which rested upon a standard that, on review of a hearing decision, the
agency shall not set aside findings of evidentiary fact unless they are shown to
be "contrary to the weight of the evidence". (S. 1070, 86th Cong., 1st Sess. (1959).)
This major bill having failed to pass, in 1961 the Subcommittee on Administra-
tive Practice and Procedure of the Senate Judiciary Committee commenced a
renewed attack on the problems of delay and uncertainty in agency reviews under
the APA and, following hearings, reported, inter alia:
The subcommittee believes that the readiest instrument available for a
concerted effort to eliminate backlogs and delays in the administrative process is
the utilization of the existing hearing examiner corps by increased delegation of
authority, increased finality of their decisions, and increased authority to con-
trol the course of hearings.
" To the extent that other statutes interfere with such delegations of au-
thority, the subcommittee recommends legislation which will not only permit,
but require, the full utilization of the potential of the hearing examiner corps.
[S. Rep. No. 168, Subcomm. on Administrative Practice and Procedure of the
Senate Comm. on the Judiciary, 87th Cong., 1st Sess. pp. 7-8 (1961).]
These proposals and further extensive study of the problems resulted in the
Subcommittee's proposals of major amendments to the APA in 1965. The bill,
introduced by the late Senator Dirksen, provided a "clearly erroneous" standard
for agency review of "findings or conclusions of material fact" and standards
for the selection and independence of agency appeals boards (limiting selection
to agency heads, members of the body comprising the agency and administrative
law judges), and provided for certiorari review by the agencies. It also provided
that if an agency decided to review on its own motion, it must enter an order for
review specifying the "agency policy or novel question involved". (S. 1336, 89th
Cong., 1st Sess., introduced March 4, 1965 and passed by the Senate on June 21,
1966).
In 1971 the Ash Council reported continued deterioration through problems of
delay, inefficiency, waste and uncertainty in the administrative process, finding
that the agencies' strong tendency toward "systematic review of decisions," fre-
quently characterized by "de novo review of findings," has "unduly prolonged
proceedings and nurtured high case backlogs leading to ineffective uses of agency
resources" and unjust burdens upon the parties and the taxpayers. (The Presi-
dent's Advisory Counotl on Executive Organization, A new Regulatory Frame-
vtork, Report on Selected Independent Regulatory Agencies, pp. 21-22, 49 (1971).)
As recommended by the Ash Council, if the serious deficiencies of agency review
processes are to be overcome, it will be necessary to place a greater share of the
responsibility for individual case determinations on the administrative law
judges, "leaving the administrator relatively free to concentrate on more appro-
priate means of formulating broad policy." The Council therefore proposed to
replace "systematic review of initial decisions" with discretionary reviews "pri-
mar ly for consistency with agency policy."
These problems persist today, as we believe this Subcommittee's hearings will
reveal. As recognized by the FCC, for example, in reviewing the recent Task
Force Report on its internal review processes :
"At present the Commission and Review Board engage in de novo review of
Initial Decisions. The time from Initial Decision to Board decision averaged 350
days in 1973, and from Initial Decision to Commission decision averaged 382 days
in that year. * * *
"Currently, parties seeking review of a final decision may file a 25-page appli-
cation for review which can address virtually any alleged error by the Board.
As a result of this de novo review of the Board's de novo review of an Initial
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Decision, the time span from Board decision to Commission action on the appli-
cation for review averaged 248 days in 1913." [Notice of Proposed Rulemaking,
FCC 75-1250 38922, adopted November 11, 1975, pp. 14 and 16.]
Our own studies reflect that such problems are widespread. It is evident that
what is needed to reduce or eliminate existing delays, duplicated efforts, waste
and uncertainty in the agency review processes is a requirement that internal
agency review be discretionary and subject to review standards to prevent de
now review of evidentiary findings. Without these changes, we submit, the ills
of the existing system cannot be cured.
Sec. 1 of H.R. 10197 and Sec. 1 of H.R. 10198 do not meet the obvious needs for
necessary improvements. On the contrary, See. 1 of H.R..10197 (lines 6-9, p. 2)
retains the de nave review authority of existing section 8(a) of the APA; and
Sec. 1 of H.R. 10198 authorizes "agency appeals boards" without requiring dis-
cretionary review, and without preventing de novo review by such boards, allow-
ing the buildup of another layer of delay, confusion and uncertainty in the
agency review process. In addition, Sec. 1 of H.R. 10198 fails to employ a realistic
standard to ensure judicial qualifications and impartiality of agency review
board members.
We agree that agency review board members must be well-qualified to review
hearings decisions, and should be immune from agency pressures in exercising
their impartial, independent judgment. However, it is unfair, and unrealistic, to
expect an agency to grant a life-time appointment to an agency review board
member, since one of the basic purposes of such boards is to ensure consistency
of the administrative law judges' decisions with agency rules, decisions, and
enunciated policy.
On the other hand, we disagree with the view of Mr. Wm. Warfield Ross that
agency review board members "should be alter egos of the agency itself, and sub-
ject to its immediate direction and control" (his ltr. of November 18, 1975, to you,
p. 2)-that is, the view that board members should not be protected against
agency influence or control. We also disagree with Mr. Ross' conception of review
boards as an instrument for putting on the record a review function now carried
out by an anonymous staff. On the contrary, we believethe problems of delay are
toomuch review-on and off the record-and too much review without standards
of any description.
Instead, we believe the fundamental purpose of agency review boards-if they
are to increase the effectiveness and basic fairness of the administrative proc-
ess-is to provide an efficient and speedy process for correcting errors in hearings
decisions that do not warrant or justify the personal attention of agency heads
and members of a body comprising an agency. As the Ash Council recom.
mended, agency heads and members must be free to concentrate on major issues
and to formulate broad policies to effectuate that statutes they administer. Effi-
ciency and fairness to the parties will obviously not be realized if agency review
boards are created to carry out de novo, standardless review by employees de-
pendent upon agency supervisors.
We believe a most desirable solution is found in the Dirksen bill, passed by the
Senate in 1966, which would limit appointments to agency review boards to agency
members and administrative law judges. Under this approach, administrative law
judges would be available to sit on agency boards somewhat analogously to the
invitation of district judges to sit on a court of appeals. In this way, the agency
and the administrative law judge would have mutual discretion to agree to the
appointment, while the judge would be in no way hindered In the exercise of
impartial, independent judgment on the issues. We also favor the approach of
that bill to set a standard for agency review of evidentiary findings and to require
the agency to limit review sua sponte to important issues of policy and law.
We therefore propose amendments to Sec. 1 of H.R. 10197 and Sec. 1 of H.R.
10198 that will eliminate de novo review of findings of fact in adjudication hear-
ings decisions, that will require a certiorari review system for internal agency
review, and that will restrict appointments to agency review boards to agency
members and administrative law judges.
These proposals are as follows :
Sec. 1 of H.R. 10197
(a) Redesignate subsection "(b)" as "(b) (1)" and insert the following open-
ing sentence:
"(b) (1) This subsection does not apply to cases subject to section 554 of
this title, but applies to all other proceedings subject to section 556 of this
title."
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At line 4, p. 2, change "appeal" to "review".
At line 5, p. 2, change "557(d)" to "557(d) (2)".
At line 10, p. 2, change "appeal" to "review".
(b) Add the following new subsection after line 23 at p. 2:
"(b) (2) This subsection applies to cases subject to section 554 of this
title.
"(A) An administrative law judge assigned to conduct a proceeding sub-
ject to section 554 of this title shall hear, and make a determination upon,
such adjudicatory proceeding, and any motion in connection therewith, and
shall make a decision that constitutes his final disposition of the proceeding.
The decision of the administrative law judge shall become the final decision
of the agency thirty days after its issuance (or other period if specified by
staute) unless within such period the agency has directed that such decision
shall be reviewed by the agency in accordance with paragraph (C) of this
subsection. An administrative law judge shall not be assigned to prepare a
recommended decision in any proceeding subject to section 554 of this title.
"(B) The provisions of any other statute notwithstanding, an agency
may delegate to administrative law judges appointed under section 3105 of
this title the final authority of the agency to adjudicate any proceeding sub-
ject to section 554 of this title.
"(C) Each agency that conducts proceedings subject to section 554 of this
title shall prescribe rules of procedure for any agency review of the decisions
of administrative law judges in such proceedings which shall meet the follow-
ing standards :
"(1) Petitions for discretionary review. (a) any party may file and
serve a petition for discretionary review by the agency of a decision of
an administrative law judge within thirty days after the issuance of
such decision (or other period if specified by statute). Review by the
agency shall not be a matter of right but shall be within the discretion
of the agency.
"(b) Petitions for discretionary review shall be filed only upon one
or more of the following grounds :
"(1) A finding or conclusion of material fact is not supported by
substantial evidence.
"(2) A necessary legal conclusion is erroneous.
"(3) The decision is contrary to law or to the duly promulgated
and published rules or decisions of the agency.
"(4) A substantial question of law, policy, or discretion is in-
volved.
"(5) A prejudicial procedural error was committed.
"(c) Each issue shall be separately numbered and plainly and con-
cisely stated, and shall be supported by detailed citations to the record
when assignments of error are based on the record, and by statutes, regu-
lations or other principal authorities relied upon. Except for good cause
shown, no assignment of error by any party shall rely on a question of
fact or law upon which the administrative law judge had not been
afforded an opportunity to pass. Review, if granted by the agency, shall
be limited to the questions raised by the petition.
"(1i) Review by agency on its own motion. Except where a statute or
regulation precludes the agency from reviewing on its own motion, an
agency may .in its discretion, at any time within thirty days after the
issuance of a decision of an administrative law judge (or other period
if specified by statute), order the case before it for review on its own
motion, but only upon the ground that the decision may be contrary to
law or agency policy, or that an important question requiring examina-
tion of agency policy has been presented. The agency shall state in such
order the specific issue of law or agency policy to be reviewed. If a party's
petition for discretionary review has been granted, the agency shall not
raise or consider additional issues in such review proceedings except by
separate order for review in compliance with this paragraph.
"(iii) Agency review authority. The review proceedings subject to
paragraph (i) or (ii) of this subsection, the administrative law
judge's findings and conclusions of facts, as distinguished from discre-
tionary rulings and the application of agency policy, shall not be set
aside by the agency unless such findings or conclusions of fact are not
supported by substantial evidence on the record considered as a whole.
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The agency may affirm, set aside, or modify the decision or order of the
administrative law judge in conformity with the record, or may remand
the case to the administrative law judge for such further proceedings as
the agency may direct. If the agency determines that further evidence is
necessary on any issue, it shall remand the case for further proceedings
before the administrative law judge. If the agency consists of a body of
members, it shall grant review under paragraph (1) or order review on
its own motion under paragraph (Ii) of thissubsection only by the cast-
ing of the number of votes otherwise required for normal agency action.
"(iv) In proceedings subject to section 554 of this title, the review
standards required by this subsection sh ll also apply to review of an
administrative law judge's decision by a review board established pur
suant to section 557 (d) (2) of this title a 4d shall be construed to apply
to such review board to the same extent t 4t such standards apply &p the
agency within the meaning of paragrap s (1), (11), and (iii) o this
subsection."
Sec. 1 of H.R. 10198:
(a) Delete amended subsection (d), at pp. 1-21 and - substitute the following
subsections:
"(d) (1) The provisions of any other statute notwithstanding, agencies shall
not delegate to or establish a review board, judicial officer position or other
authority to review the decisions or ruling of administrative law judges in pro-
ceedings -subject to section 554 of this title unless appointments to such board,
position or other authority are made solely from one or more of the following
persons or a combination of such persons :
(A) the head of the agency ;
(B) members of the body which comprisesthe agency; or
(C) administration law judges appointed under section 3105 of this title.
Review by such boards, officers, or other authority delegated by the agency shall
be governed by the standards prescribed in section 557(b) (2) of this title. Ap-
pointment of an administrative law judge to a review position under this para-
graph or paragraph (2) of this subsection, and his continued service in such
position, shall be with the consent of the administrative law judge and at no
increase in the salary he would otherwise receive as an administrative law judge.
An administrative law judge so appointed may transfer voluntarily, or be trans-
ferred involuntarily (at the pleasure of the agency), from suchreview position;
provided: upon his transfer from such review posi~ion, whether at his discretion
or at the discretion of the agency, he shall be entitled to automaitc reinstatement
as administrative law judge with the agency, with the same classification, pay,
status, and office location therein that he would have had had he not entered
such agency review position.
."(2) The provisions of any other statute notwithstanding, whenever an agency
deems it appropriate for the efficient and orderly conduct of its business, it may,
by published rule or order, establish one or more review boards to review decisions
or rulings of presiding officers in proceedings subject to section 556 of this title ;
provided: that agency appointments to boards that review decisions of adminis-
trative law judges in proceedings subject to section 554 of this title shall be made
solely from the persons specified in paragraph (1) of this subsection, and in ac-
cordance with the requirements of said paragraph. Review by such boards of the
decisions of administrative law judges in proceedings subject to section 554 of this
title shall be governed by the standards required in section 557(b) (2) of this
title. In the performance of their review functions the members of an agency
review board shall not be responsible to or subject to the supervision or direction
of any official employee or agent engaged in the performance of investigative or
prosecuting functions for any agency. Each agency shall specify by published
rules the circumstances and conditionsunder which the agency will (1) entertain
petitions for review filed with the agency directly from the decision of a presiding
officer and (2) entertain a petition for review of the decision of a review board.
An agency may provide by rule that agency review board decisions become final
unless reviewed by the agency in its discretion; provided: that in proceedings
subject to section 554 of this title agency review of a review board's decision
shall not be a matter of right but shall be discretionary with the agency and shall
be governed bypublished agency standardp that conform to the standards of
discretionary and limited internal agency review provided in section 557(b) (2)
of this title.
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(b) Add the following new section to H.R. 10198:
"Sec. 3. Section 557(c) of this title is amended by adding the following sen-
tence immediately before the sentence, "The record shall show the ruling on
each finding, conclusion, or exception presented.":
"Provided: Before the decision of the presiding officer after an evidentiary
hearing subject to section 554 of this title, the parties may be limited to
oral presentation of their proposed findings and conclusions and supporting
reasons at the close of the evidentiary hearing, if in the sound discretion of
the presiding officer the nature of the evidence and the issues does not rea-
sonably require longer preparation or written submissions."
(4) Sec. 2 of H.R. 10197
Sec. 2 of H.R. 10197 would add a new subsection (d) to section 575 of title 5,
to empower the Administrative Conference of the United States to formulate
and promulgate uniform rules, and amendments thereto, which would be bind-
ing on all agencies in the conduct of adjudicatory proceedings under section 554.
The Administrative Conference was created for the purpose of studying, and
making recommendations to the President, Congress, the Judicial Conference
of the United States, and to administrative agencies concerning procedures and
practices used in the conduct of administrative programs, for the purposes of
achieving and improvixg efficiency, adequacy, and fairness in administrative
proceedings.
As it is constituted, it is an advisory body only. The proposed section (d),
if enacted, would broadly expand the purpose of the Conference and in a manner
not contemplated by the basic legislation creating it. In effect, the proposed
section (d) would allow ACUS to overreach all agencies in the matter of estab-
lishing procedures, which is an authority presently vested in each of the admin-
istrative agencies and in Congress. It would appear that such broad authority
should not be vested in ACUS in the absence of a comprehensive study, on an
agency by agency basis, to determine its probable effect on individual agency
programs and policies.
. While we share the goal of uniformity in administrative procedures wherever
feasible and desirable, it is considered that ACUS functions would more properly
be discharged in this field by recommendations to the agencies, or to the Con-
gress, after thorough study of individual proposals.
It is considered highly desirable that promulgation of any uniform rules be
done by the Congress, rather than by delegation to an advisory body such as
ACUS. The recent Federal Rules of Civil Procedure made effective for all civil
proceedings in the federal court system were instituted only after thorough
study by the Congress. We suggest that the adjudicatory proceedings conducted
by the several administrative agencies are of such importance and significance
to the public as to deserve the attention and oversight of the Congress for the
same reasons.
We therefore agree with ACUS in its opposition to Sec. 2 of H.R. 10197 (see
ACUS Comments on ABA Resolution No. 5, 1 CFR ? 310.2 (1973) ).
(5) Sec. 5 of H.R. 10197
This section would add a new section (? 560) to title 5, regulating and pro-
hibiting "Prejudicial Publicity" by agencies' statements or documents concern-
ing an investigation or proceeding if the statement or document released by the
agency evidence prejudicial bias or prejudgment concerning facts in issue or
"may otherwise harm any person in his business, property, or reputation, unless
the benefit to the public clearly exceeds the potential harm to the person ad-
versely affected". It requires 72 hours advance notice to the person affected by
an agency release of such a statement or document, and provides for court ac-
tion against the agency either to enjoin such a release or to nullify agency
actions and proceedings if the agency has violated the prohibition against prej-
udicial publicity.
This bill is proposed by the ABA and originates from its Resolution No. 12.
The Administrative Conference of the United States in a Statement Adopted
June 7-8, 1973, on the ABA proposals to amend the Administrative Procedure
Act has taken a position in opposition to Resolution No. 12. The ACUS state-
ment on prejudicial publicity provides :
"The Conference does not favor at this time amending the Administrative
Procedure Act to treat agency issuance of prejudicial publicity. We believe that
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there exists at present an adequate legal remedy for agency publicity which
affects the integrity of an on-the-record agency proceeding. We agree with the
American Bar Association that agency practices in the issuance of publicity
adversely affecting persons in their businesses, property or reputations also pre-
sent a problem, and we have proposed in our Recommendation 73-1 means of deal-
ing with it."
ACUS Recommendation 73-1, 1 CFR 305.73-1, recommends that the problem
of adverse publicity stemming from federal regulatory activity be handled by
regulations to be issued by the agencies. We endorse this approach to the prob-
lem because it avoids the serious problems posed by the ABA proposal.
Some of these problems are summarized below :
1. By authorizing a prior restraint on the issuance or publication of adverse
agency publicity that is factual in content and accurate in description the pro-
posal in a retreat from hard-won gains in protecting the public's right to know.
The general policy favoring disclosure of administrative proceedings is em-
bodied in the Freedom of Information Act, in the Sunshine Bill, S. 5, and has
been adopted and endorsed by the Supreme Court. See, FCC v. Schrieber, 381
U.S. 279, 293 (1965). Furthermore, New York Times v. Sullivan, 376 U.S. 254
(1964), and its hardy progeny have firmly established that any legislative pro-
posal to inhibit robust, wide-open debate and discussion of persons or corpora-
tions involved in public issues and matters of wide public interest is at war
with the First Amendment. Compare, Lamont v. Postmaster General, 381 U.S.
301 (1965). And this is especially so where the legislature attempts to establish
prior restraints on the publication of information that the public has a right
to know. See, New York Times v. United States, 403 U.S. 713 (1971) ; Rosen-
bloom v. Metromedia, Inc., 403 U.S. 29 (1971).
2. The courts have viewed with a jaundiced eye any law that inhibits a regu-
latory agency or any public official from publicizing and alerting the public to
suspected violations of the law by factual press releases, concluding that such
laws are contrary to the public's right to be informed and as having a chilling
effect on vigorous law enforcement. See, e.g. Barr v. Matteo, 360 U.S. 564; City
of Chicago v. Tribune Co., 307 Ill., at 610; Gregoire v. Biddle, 177 F. 2d 579, 581.
The leading case of recent vintage, of course, is FTC v. Cinderella Caree i and,
Finishing Schools, Inc., 404 F. 2d 1308 (D.C. Cir. 1968). There in upholding the
right of the FTC to issue a factual news release concerning a complaint issued
in a pending adjudicatory proceeding the court noted:
"We have no doubt that a press release of the kind herein involved results in
a substantial tarnishing of the name, reputation, and status of the named re-
spondent throughout the related business community as well as in the minds of
some portion of the general public. * *
"[Nevertheless] if the unsophisticated consumer is to be protected in any meas-
ure from deceptive or unfair practices, it is essential that he be informed in some
manner as to the identity of those most likely to prey upon him utilizing such
prohibited conduct. Certainly advice through news media as to the actions being
taken by a government agency in his behalf constitutes a prophylactic step
addressed ultimately to the elimination of the conduct prohibited by the statute.
[404 F. 2d. at 1313-1314.]"
In a concurring opinion, Judge Robinson found that not only does the regula-
tory news release serve as a warning to that segment of the public that may be
affected by the conduct charged but also serves as a vehicle for disseminating to
the public at large newsworthy information already in the public domain. This
difference in the emphasis on the purpose of such releases he found "fundamental
in terms of the nature of the problem with which we are confronted."
The effective functioning of a free government like ours depends largely on the
force of an informed public opinion. (Citation omitted) Relatively few matters
attract more readily the interest of the people than what government is doing
for the people. News releasing by the agencies of government has become a stand-
ard technique in the operations by which the people are kept knowledgeable as
to governmental affairs. Press releases by public officials, we have said, "serve a
useful if not essential role in the functioning of the democratic processes of
government." (Citation omitted)
An incidental and wholesome consequence of general publicity of proceedings
challenging the fairness and honesty of particular commercial practices may
well be the generation of a desirable if unnecessary measure of public caution
in dealings with those identified with such practices. Publicity, or the specter of
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publicity, may also, in a very practical way, achieve on its own a degree of
informal regulation by deterring those who otherwise might be tempted to take
liberties with the law. (Citation omitted) But beyond these factors is the con-
sideration that the business of an important governmental agency is everybody's
business. The people want to know, and are entitled to know, what goes on in
government (Citation omitted), and the thirst for information is not limited to
those who may have or may contemplate a direct commercial relationship with
the subject of governmental concern at the moment. The activities of the Federal
Trade Commission constitute news, and any restriction upon its machinery for
public accessibility to that news must be taken for what it really is. [404 F. 2d.
at 1317-1318.]
For these reasons, the court rejected as unsound the contention? that issuance
of the press release prior to final adjudication constituted or gave the appear-
ance of constituting, a prejudgment of the issues. As the court concluded :
"We are confronted, then, not with the question of whether the appellees have
suffered actual damage but whether the action of the Commission is so author-
ized or permitted in law as to place the appellees in the position of suffering
damnum ab8que injuria."
In answer to this question the court found the practice of issuing factually
accurate press releases concerning the institution of adjudicatory proceedings
was not violative of respondent's right to due process and did not violate the
Commission's duty to avoid prejudgment of the issues.
Thus, the court found the Commission and inferentially all regulatory agen-
cies are fully authorized to make available to news media, the public interest,
factually accurate summaries of significant developments in adjudicative. and
other proceedings instituted against members of the business community. Com-
pare, FCC v. Schrieber, supra; E. drif/iths Hughes, Inc. v. FTC, 68 F. 2d 362
(D.C. Cir. 1933) ; American Sumatra Tobacco Corp. v. SEC, 299 F. 2d. 127 (D.C.
Cir. 1962) ; Bowman v. United States Dept. of Agriculture, 362 F. 2d. 81 (5th
Cir. 1966).
3. The standards for determining when information may or may not be issued
under this bill are so vague as to defy specification and can only result in the
imposition of a legislative "gag" rule on the dissemination of news from the
regulatory agencies. The proposal permits the release of information or pub-
licity with respect to a respondent's conduct only if the "benefit to the public
clearly exceeds the potential harm to the person adversely affected." This highly
speculative standard is apparently intended to require that the regulatory
agencies weigh the benefit to the public against the harm to respondent, subject
to judicial review and the sanction of dismissal of the proceeding if the agency
guesses wrong or the courts disagree with the agency's exercise of discretion.
Moreover, under the Mandamus and Venue Act of 1962, the agencies must guess
which of the many District Courts the respondent may choose to make its chal-
lenge and the unknown attitudes of those courts. Certainly, if the exercise of
agency discretion is to be subject to such drastic judicial remedies the bill
should clearly articulate the preconditions for exercise and play of agency
discretion or standards similar to those espoused by Judge Robinson should be
codified. See, 404 F. 2d. 1320-1321.
4. Subsection (b) imposes limitations on its exceptions that are wholly imprac-
tical from the standpoint of administration. While in many instances a notice
of 72 hours may involve no prejudice to the public interest there clearly are
many others in which the health, safety, or economic well being of the public
will be adversely affected by such a delay. To require that waiver of this
requirement must be justified in a lawsuit brought to establish whether issuance
of a press release or even an oral statement was required by the exigencies of
the situation or was otherwise impractical is only to invite further delay and
complexity in the disposition of administrative proceedngs.
We appreciate the opportunity to present these views to you. The Federal
Administrative Law Judges Conference applauds the diligence and concern
of this Subcommittee in setting these hearings. We shall endeavor to assist the
work of the Subcommittee in any way that we can.
Judge FAUVER. I just wanted to comment on three aspects of this,
and the other matters are covered in my statement.
Mr. Chairman and members of the committee, as early as the re-
ports of the Hoover Commission in 1948 and 1955 and through a
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continuous stream of reports and studies since then, researchers, lead-
ing experts, and legislators have recommended an increase in the final-
ity of the decisions of administrative law judges applying predictable
review standards that the parties can rely on in forecasting where
that case is going. In 1955 the Hoover Commission task force pro-
posed a specific standard of internal agency review. In 1959, Senator
Ervin proposed that agencies be bound by a standard not to set aside
the findings of the administrative law judges, then known as hearing
examiners, unless they are shown to be contrary to the weight of the
evidence.
This bill having failed to pass, in 1961 the Senate Subcommittee
on Administrative Practice of the Judiciary Committee in the Senate
proposed a renewed attack on the problems of delay and uncertainty
in agency review. And after hearings it reported--and I will just
summarize some of those quotes-that :
The Subcommittee believes that the readiest instrument available for a con-
certed effort to eliminate backlogs and delays in the administrative practice is
the utilization of the existing hearing examiner corps by increased delegation
of authority, increased finality of their decisions, increased authority to control
the course of hearings. To the extent that other statutes interfere with such
delegation of authority, the Subcommittee recommends legislation which will
not only permit but require the full utilization of the convention of hearing
examiners.
Following these studies, gentlemen, Senator Dirksen picked up the
banner and he presented to the Senate a bill which resembles very
much the very proposal that we are now making today to you. I
would like to Per you to the opening statement that the late Senator
Dirksen made in introducing the forerunner to S. 1336 which passed
the Senate. He said :
As the workload of the larger agencies steadily Increases in volume, the time
required for agency members to review and sometimes rewrite the findings of
fact and application-
Excuse me, this was a quote from Mr. Kennedy, which I was going
to include in the statement, but I will move to Senator Dirksen's quote
in which he said :
The bill changes the manner in which decisions are made and reviewed. Sev-
eral years ago a critic of the administrative process said that decisions were
made "on the dark side of the moon." That is the place, they say, that a little
group of men meet and rewrite the decision of the officer who presided at the
hearing. This little group of men have not heard the evidence or seen the wit-
nesses. They have not heard the argument but they have the ear of the members
of theagency and the power to pick and choose from the record which has been
prepared as they rewrite the decision of the presiding officer. It is said that
they sometimes torture that record to get the result they want. That is a dark
picture indeed if the allegations are true. But we do not have to decide whether
the allegations are true or whether they are false. It is enough if they could
be true. I suggest that we bring this dark side of the administrative procedures
into the public view just as we are trying, in our space efforts, to bring the
dark side of the moon into public view.
And then he stated :
Under this proposal the decision of the presiding officer would not be sub-
ject to being rewritten by our little group of men on the dark side of the
moon. Instead, it would only be subject to review on the issues presented in
written exceptions which spelled out how some error was committed by the
presiding officer In making his decision or In some specific question which should
be reviewed. Everyone will then know what is being reviewed and why.
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Then he proposed, and the bill passed the Senate, a bill that pro-
vided a clearly erroneous standard for the review of the findings of
the administrative law judges; a bill that provided, yes, that there
should be authority appeals boards, that those numbers should
be limited,to the agency members or administrative law judges; a
bill that provided for a certiorari review; and a bill that provided
that if the agency wished to review sua sponte, it confined itself to
major issues of law and policy.
Now most regrettably for the Nation, Congressman Walter, who
was going to manage that bill in the House of Representatives, died.
And when he died, the agencies who were opposed to Senator Dirk-
sen's bill and the bill that was picked up by the Senate Judiciary
Committee, as I understand history or the record, they went to Pres-
ident Johnson and urged him to propose an Administrative Con-
ference Act. And that act was given to Congress saying if Senator
Dirksen's ideas are valid, why don't we form a permanent Admin-
istrative Conference and let them study it and report back to us.
That action was passed and the Administrative Conference of the
United States was then permanentized in 1968, but, gentlemen, ever
since then everything has been advisory. And I submit to you that
the merits of Senator Ervin's ideas, of former President Hoover
and his Commission, and of Senator Dirksen, that these ideas have
never fully been tested and found to be wanting in merit. We be-
lieve they were sound ideas and it was kind of a regretful happen-.
stance in history they were sidetracked. We ask you to reconsider
then again.
I would mention to you that in the Senate with 40 cosponsors,
Senator Harrison Williams of New Jersey has introduced, along
with Senator Kennedy, on a bipartisan basis with also members of
the other parties, S. 1302, which carries the same banner and stand-
ards that Senator Dirksen was talking about. And these would be
apprised, if that bill passes, to integrate all safety and health. This
would affect over 75 million workers and would affect over 10,000
mines and would affect over 4 million work places in this country
all applying Federal safety and health standards and subject, gentle-
men, to the same substantial evidence rule, the certiorari review
standards that we recommend.
So that I would say that I have seen criticisms of internal review
standards. I think that they are superficial. I commend to you the
contributions, experience, and quality of the minds through recent
history who have recommended review standards.
I would like to say also on the review standards, Mr. Chairman,
but I think that there is a misconception about the review standards
similar to Senator Dirksen's and those that we propose in that the
review standards we proposed unlike judicial review of an agency's
decisions, in that we do not propose that the findings of adminis-
trative law judges be conclusive on the agency at all. As you know,
that is the standards the courts have basically, that is, if they are
supported by substantial evidence, they are conclusive. We propose
instead the agencies be directed not to .set aside finding's if they are
supported by substantial evidence. This means that if the agency
feels that the judge has made a mistake, it can remand the case to
him for further evidence and further development of those issues.
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The agency is never bound by his findings. But the advantage we see
to the substantial evidence rule is that it will drastically reduce the
flow of the agency review and rehashing of evidence.
My points on the other two are really covered in my prepared
statement.
Thank you, Mr. Chairman.
Mr. FLOWERS. Thank you very much, gentlemen. Since counsel has
prepared a point-by-point analysis, I suggest that we do a point-by-
point rundown of the various provisions within the legislation. It
does not necessarily follow the bills, so I think all of you can speak
to the thing as we go down the line. I am going to attempt to begin
this on the less controversial matters we have before us and then
move into the more difficult ones in order to elicit from you your
various comments. Keep in mind, if you will, the constraint of time
that we do have. When the bell rings for a vote, we are going to
have to adjourn until another time.
I gather from what you have all said that as to H.R. 10194, as to
both the section 1 and section 2, there is very little, if any, contro-
versy. Is that the case?
Judge FAUVER. That is correct.
Mr. FLOWERS. We have specific questions on these matters. As to
section 1, will this adversely affect existing procedures of any agen-
cies? Second, why is the change necessary? And why was rule-
making defined so broadly in the Administrative Procedure Act
originally? Mr. Ross, would you like to answer?
Mr. Ross. Very briefly, Mr. Chairman. The main effect it will make
in the short term is that it will impose separation of functions re-
quirements on agencies which presently engage in formal rulemak-
ing, which will become adjudication under this bill. For the future
it will clarify and eliminate an anomaly in the 'act that can provide
trouble sometime in future legislation; that is, the original act clas-
sified, in a kind of a pig-wigglian way, "ratemaking" as "rulemak-
ing in particular applicability', which is principal] y ratemaking and
cognate proceedings involving the rates of a single company, well,
that was classified as "rulemaking".
Well in the Anglo-American law, Mr. Chairman, that is like an
anomaly. It is nonsense because such matters are essentially adjudi-
catory in nature.
So we will eliminate that anomaly. Now why it was done in the
first instance I think there is a fair amount of history about that.
I think some of the agencies, which have been using quasi-rulemak-
ing procedures in setting rates, were very reluctant to have that rate-
setting mechanism treated as an adjudication and they had the votes
in Congress. So this modification was made in the Administrative Pro-
cedure Act bill, as I understand it, fairly far along in the process. Now
I may be wrong about that. We are now correcting something that I
think is an anomaly and it is going to give problems in the future. This
is I think an appropriate time to do so.
Mr. FLOWERS. Would Mr. Berg have any comment on that?
Mr. BERG. Mr. Chairman, I would raise some question as to the effect
on separation of functions. To some extent that depends on what hap-
pens to other parts of this package because one of the thrusts of H.R.
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10195 and H.R. 10196 is to deal with both formal rulemaking and
formal adjudication more or less the same with respect to separation
of functions. So that if either one of these were enacted, the problem of
the definition of "rule" or "order" would become less significant. But
the reason that the Conference does favor this redefinition is that in
terms of usage, in terms of the ordinary understanding of "rulemak-
ing" and "adjudication," we feel the present definition in the APA,
which is based on the difference between future and retrospective ef-
fect, is not realistic and that the difference ought to be, as Bill Ross
maintains, between matters of general and of particular applicability.
Therefore, we favor redefinition which would make the test of ad-
judication one of particular applicability rather than of retrospec-
tive effect.
Mr. FLOWERS. I'm glad you all agree on that section. I don't know
what sort of debate we would have had if it was a matter of
disagreement.
Tom, do you have anything on this particular section? I hate to say
it, but we are not going to get very far today. I'm afraid we may have
bitten off a lot more than we can chew on this day's hearing, but we
will just go as far as we can. Let's try to be as precise as we can or we
won't even get into the first issue.
Mr. KINDNESS. I would just like to raise a question and ask for any
comments our witnesses have with respect to the military exemption
that would be changed by H.R. 10194. To your knowledge, do either
the Defense Department or the State Department have any problems
with the modification of the military and foreign affairs exemption?
Mr. Ross. I believe that to be addressed by Mr. Berg. I heard of none
but he would be in a better position to know.
Mr. BERG. My recollection is that when the conference adopted the
recommendations on this subject, there was no dissent from Defense
and State but I have not seen any comments addressed to this legisla-
tion either in the Senate or in the House. My understanding is that
they are willing to go along with it.
Mr. KINDNESS. Is anyone in the position to illustrate circumstances
under which the exemption is currently utilized or the frequency with
which it is utilized? Could that be commented upon?
Mr. Ross. My understanding is that it is very extensively used. In
other words, that-and I'm now speaking from memory as something
I got into about 2 years ago-but that they simply in general terms in
these areas, Mr. Kindness, do not now follow notice and comments
rulemaking; that they simply enact regulations without general pub-
lic participation.
Mr. KINDNESS. Is there any abuse that could be cited, or any wrong
that should be corrected, as a reason for the proposed change?
Mr. Ross. I'm not prepared at this point in time to give you an ex-
ample, Congressman Kindness. But I think that I would rely upon
the principle that there is no governmental need for excluding public
participation in important matters affecting the public and I think
the public should be allowed some participation.
Mr. KINDNESS. Obviously there is no information available with
respect to what cost might be incurred with respect to the result of
this change then?
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Mr. Ross. It would seem to me, if there were significant cost in-
volved, you would have those agencies objecting. Their silence is I
think probative on that matter.
Mr. KINDNESS. On that point we might differ. Thank you, Mr.
Chairman.
Mr. FLOWERS. Thank you, Mr. Kindness. I think that adequately
covers H.R. 10194 as far as I'm concerned unless staff on either side
can think of any matters that ought to be interjected here?
Mr. MINCE. Yes, I would like to bring up one point. In August 1974
Congress passed the Office of Federal Procurement Policy Act which
requires public participation in promulgation of procurement rules.
During its consideration of how best to achieve public participation,
Congress rejected proposals for amending the Administrative Pro-
cedure Act to delete the exception in section 553(a) (2) for contracts.
In light of this development, I wonder if some change in section 2 of
10194 is not appropriate.
Mr. Ross. Professor Minge, what I would like to do-and I'm per-
sonally not familiar with that for it did not come to my attention-I
would like to, if permitted to submit a brief statement on your point
to the committee for incorporation into the record.
Mr. FLOWERS. Fine, and it is so ordered.
[The letter subsequently received by the subcommittee is as follows:]
AMERICAN BAR ASSOCIATION,
Washington, D.C., January 29, 1976.
Hon. WALTER FLOWERS,
Chairman, Subcommittee on Administrative Law and Governmental Relations,
Committee on the Judiciary, U.S. House of Representatives, Washington,
D.C.
DEAR CHAIRMAN FLOWERS : At last month's hearing on the American Bar
Association and Administrative Conference proposals to revise the Administra-
tive Procedure Act, your staff expressed concern about possible inconsistency
between one of our proposals and PL 93-400. Our proposal (Section 2 of H.R.
10194) would require agencies to use notice and comment procedures when they
adopt rules relating to procurement contracts, while PL 93-404 created the
Office of Federal Procurement Policy and charged it with drawing up rules on
that subject.
The ABA strongly supports the principle that the public should be given an
opportunity to comment on proposed agency rules whenever possible. However,
to avoid possible difficulty, the ABA would not object to an amendment to the
notice requirement that would exempt procurement rules adopted by an agency
in compliance with criteria and procedures established by the Office for effective
and timely consideration of the viewpoints of interested parties. The ABA sug-
gests that this exemption not apply to the Office itself, so its own rules would
come under the APA's notice and comment procedures. The ABA also urges
the Subcommittee to include language in the legislative history stating that
the Congress believes public notice of prospective rulemaking and an opportunity
for the public to comment are desirable and important elements of an open
governmental process.
Sincerely yours,
Wu. WARFIELD Ross.
Mr. FLOWERS. Mr. Berg, do you have a comment on that?
Mr. BERG. No, I would like to reserve the opportunity to comment
in writing on that too. I recall that at the time that that bill was pend-
ing we submitted comments in which we suggested implementation of
our recommendation on the amendment to 553 could properly take
place in the context of that bill but the suggestion was not adopted.
Mr. FLOWERS. That will be placed in the record, too.
[The written comment is as follows:]
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ADMINISTRATIVE CONFERENCE OF THE UNITED STATES,
Washington, D.C., February 3, 1976.
Hon. WALTER FLOWERS,
Chairman, Subcommittee on Administrative Lain and Governmental Relations,
House Judiciary Committee, Washington, D.C.
DEAR CHAIRMAN FLOWERS : At the recent hearing on H.R. 10194-H.R. 10199,
bills relating to improved administrative procedure, I undertook to amplify in
writing my response to questions raised by members of the Committee.
First Congressman Kindness asked for illustrations of the use of the exemp-
tion in section 553 (a) (1) of the Administrative Procedure Act for rulemaking
involving a "military or foreign affairs function of the United States." According
to a survey conducted by the Conference in 1969 at least eight agencies and de-
partments, including not only the Departments of Defense and State, but also the
Departments of Agriculture, Commerce, and the Treasury, engage in some rule-
making asserted to be covered by the exemption, although the exemption is not
always invoked. Among the rules which are or might be covered by the exemption
are Defense Department procurement regulations (also exempt under section
553(a) (2) ), rules of the Passport Office and the Visa Office of the State Depart-
ment, Treasury Department rules relating to foreign assets control, to delivery
of checks and warrants outside the United States, and to the international traffic
in arms, and the regulations of a number of agencies relating to the export or
import of goods. -See Bonfield, Military and Foreign Affairs Function Rule-Making
under the APA, 71 Mich. L.R. 221, 232-33, 239, 261-65(1972) (copy enclosed).
We do not have current information as to the frequency with which the exemp-
tion is asserted in practice. In answers to our 1969 survey several agencies and
subunits of agencies indicated that where the exemption is available it is invoked
automatically, Bonfield, supra at 233-34, but agencies responding to our Recom-
mendation 73-5 expressed willingness to consider notice-and-comment procedures
on a voluntary basis, and some have taken formal steps in that direction. See
e.g., 32 CFR ? 296.4.
You asked me to comment on the fact that Congress in enacting the Office of
Federal Procurement Policy Act, P.L. 93-400, rejected the idea of subjecting
agency procurement regulations to the notice-and-comment procedures of section
553 and provided instead that the Administrator for Federal Procurement Policy
should establish "criteria and procedures for an effective and timely method of
soliciting the viewpoints of interested parties in the development of procurement
policies, regulations, procedures and forms," ? 6(d) (2). Naturally, the Confer-
ence was disappointed that Congress, in enacting the Office of Federal Procure-
ment Policy Act, did not take the opportunity to make procurement regulations
subject to notice-and-comment rulemaking procedures. Congress acted in accord-
ance with,. the Report of the Commission on Government Procurement, which
expressed a fear of "unduly burdening the procurement process with APA-type
rulemaking procedures."
In our view the notice-and-comment procedure required by section 553 is
simple, flexible, and efficient and should not impose an .undue burden on rule-
making in any agency. In fact it is no more than the Office of Federal Procurement
Policy is currently proposing to require, 41 F.R. 779, 780. The objections of
the Commission on Government Procurement seem to have been based not so
much on the notice-and-comment procedures themselves as on the difficulties in
determining to what sorts of agency actions such procedures should apply. We
believe that our proposed amendment to section 553(b) (B) would meet these
difficulties by enabling the procurement agencies and the Office of Federal Pro-
curement Policy to determine by category those procurement regulations as to
which notice and public procedure are "impracticable, unnecessary, or contrary
to the public interest". However, we recognize that the affected agencies may
desire some assurance that such determinations will be upheld. While we
think the Procurement Commission report exaggerates the perils of judicial sec-
ond guessing of agency determinations to forego notice and public procedure, a
possible compromise position might be to assign to the Office of Federal Pro-
curement Policy the task of defining those procurement regulations which are
exempt from section 553. We would be glad to explore this possibility with the
OFPP and your Committee.
Sincerely yours,
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Mr. FLOWERS. Mr. Coffey?
Mr. COFFEY. I should direct this to Mr. Berg, but I would be happy
to hear the comments of the witnesses. The third section of H.R. 10194
proposed some additional language to be added to the so-called good
cause exception. I'm not so concerned with that language as I am with
the good cause exception itself. I wonder if Mr. Berg or the other
witnesses would like to comment about whether or not the subcom-
mittee ought to consider additional language to define good cause.
Perhaps, we should further spell out what is impracticable, unneces-
sary, or contrary to the public interest.
Mr. BERG. We have never done a study. We have contemplated a
study but haven't found anyone to undertake it, as to exactly how and
to what extent this has been utilized since its enactment. There is a pas-
sage in the Manual on the APA and in this passage, as I recall, the
Attorney General Manual states that "impracticable" is the situation
where time does not permit the notice and comment process because
the agency must get its rules out; "unnecessary" is a fairly vague kind
of situation in which the agency, for one reason or another, concludes
that there is no useful purpose that could be served-perhaps the in-
formation is peculiarly within the agency's knowledge for example,
and it may cover a situation in which the individual rules are so nu-
merous that to go through notice and comment on each one just would
obscure the forest for the trees so to speak-and, finally, contrary to
public interest it is envisioned as a sort of situation similar to "imprac-
ticable"; it covers the situation in which the agency can't afford to tip
its hand in advance because people will then adjust themselves ac-
cordingly and defeat the purpose of the rule. That is how the Attor-
ney General Manual envisages the three circumstances.
I am inclined to think that the agency, when it decides it has good
reason for not going through notice and comment, probably cites all
three to be on the safe side.
Mr. COFFEY. But you don't feel that we need to be more specific in
the statute?
Mr. BERG. Let me put it this way. I think it would be very difficult
to be more specific. I don't know that it can't be done. I think it
would be nice if we had this study of what the agencies have done; but
we don't.
Mr. GREGORY. Might I comment on that?
Mr. COFFEY. Yes.
Mr. GREGORY. Thank you. I am commenting only because I had ex-
perience recently with an attempted definition through litigation of
the word "relevant" as it exists in another Federal statute. I don't
believe a word like "relevant" or a phrase like "contrary to the public
interest" nor "impracticable" can be defined by legislation. However,
the subcommittee, if it has a point of view as to when an agency
ought to be allowed to resort to using this kind of exception, ought to
spell out some parameters in the legislative history in the report ac-
companying the bill. You could use the phrase "impracticable, un-
necessary, contrary to the public interest" in 20 pieces of legislation
and have 20 different circumstances of legislative intent that caused
the insertion of the phrase in the bill. I don't believe you can define
it any better in the bill, but you can certainly state in the report the
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committee's attitude as to the circumstances and frequency when such
a phrase or word should be utilized as an exception.
Mr. COFFEY. Thank you, Mr. Chairman.
Mr. FLOWERS. Thank you. I think we probably have reached a
stopping place already because the two bells indicate the first vote on
the tax bill. My understanding is that we have only ten minutes of
debate between separate votes, and I think it would be fruitless for
us to try to proceed on that basis. I apologize to all of you gentlemen
for this inconvenience. I hope that you will be available for us as we
will continue this hearing probably some day next week..I know all of
you are from the Washington area, and we just ask your indulgence.
This is the way things happen around here at times.
Thank you, gentlemen. We will adjourn for the day.
[Whereupon, at 11 a.m. the subcommittee adjourned subject to call
of the Chair:]
[Subsequent to the hearing the following correspondence was re-
ceived for the record.]
DEPARTMENT OF STATE,
Washington, D.C., March 2, 1976.
Hon. PETER RoDINO,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, D.C.
DEAR MR. CHAIRMAN : Your letter of January 22, 1976, requested a report on
H.R. 10194, a bill "To amend chapter 5, subchapter II, of title 5, United States
Code, to provide for improved administrative procedures." The Department has
a special interest in section 2 of the bill which would amend section 553 of
title 5, United States Code, which relates to rulemaking. H.R. 10194 would de-
lete the present complete exemption from the public notice and comment re-
quirements of this section for foreign affairs functions of the United States and
substitute an exemption for only those foreign affairs functions which are re-
quired under Executive order criteria to be kept secret.
In our view, section 553 procedures are applicable to rules which are them-
selves to be published in the Federal Register. That is, if an agency statement
"of general or particular applicability and future effect designed to implement
policy" is not itself required to be published in the Federal Register under
5 U.S.C. 552(a) (1) or other law, and is not so published, we believe the agency
is not obliged to follow section 553 procedures before adopting that statement.
Quite apart from the foreign affairs function exemption, we do not believe
the Administrative Procedure Act contemplated, for example, that the Acting
Legal Adviser's letter of May 19, 1952 to the Acting Attorney General, the
so-called "Tate Letter" (XXVI Bulletin, Department of State, p. 984, June 23,
1952), should have been published in the Federal Register in draft for public
comment before being dispatched to its addressee. That letter states in perti-
nent part "(I)t will hereafter be the Department's policy to follow the restric-
tive theory of sovereign immunity in the consideration of requests of foreign
governments for a grant of sovereign immunity."
We believe the foregoing interpretation of the scope of section 553 is borne
out by consistent agency practice. We are unaware of any instance in which
an agency has published as a proposed rule under section 553 a statement of
policy that was not intended, as finally adopted, to be a public rule of the agency.
In this context the national defense and foreign policy exception in H.R. 10194
would have practical significance in only a very narrow range of circumstances.
It would have application only where an executive order precluded advance
public notice of a rule which itself would be made public.
Accordingly, paragraph (1) of section 2 of H.R. 10194 really amounts to a
repeal of the foreign affairs exemption. Rulemaking involving foreign affairs
functions might in some instances be so permeated with foreign policy considera-
tions that public participation would not be in the public interest. During con-
sideration of this question by the Administrative Conference it was suggested that
in such cases the Department could publish regulations in the Federal Register
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without prior public notice by relying upon the existing exemptions contained in
5 U.S.C. 553 (b) (B) and (d) (3). In our view, an expanded use of these exemp-
tions would introduce an undesirable subjective element into decisions as to
whether or not proposed rulemaking procedures should be utilized. Agency re-
liance upon such subjective standards as "impracticable, unnecessary, or con-
trary to the public interest" would seem less conducive to increased public par-
ticipation in rulemaking relating to foreign affairs functions. A more detailed
statement of the reason for finding that public participation would be contrary
the the public interest might itself have to be kept secret in the interest of
national defense or foreign policy.
Heretofore, it has not been necessary to consider whether the general language
of section 553 (b) (B) and (d) (3) covered foreign affairs functions. Rulemaking
relating to such functions is separately and explicitly exempted from the appli-
cation of section 553. Unless a clear and unambiguous legislative history indi-
cated otherwise, however, an inference might be drawn from the repeal of the
present foreign affairs exemption that the remaining general exemptions could
not be construed to embrace a specific ground for noncompliance with section 553
procedures which the Congress had eliminated from the statute. Whatever the
legislative history, such an argument would almost surely be made by some
litigant.
Paragraph (3) of section 2 of H.R. 10194 amends clause (B) of the third
sentence of 5 U.S.C. 553(b) to state that "contrary to the public interest" in-
cludes "the interest of national defense or foreign policy in a matter pertaining
to it military or foreign affairs function." This change appears to be intended to
overcome the concerns we have raised in the foregoing discussion.
In 1973, the Department voluntarily undertook to invite public participation
in rulemaking, and since then there have been no occasions when the foreign
affairs exemption has been invoked by this Department. We do not wish to speak
for other agencies on the foreign affairs exemption ; nor do we believe a sufficient
basis has been established fora public interest in statutorily repealing or modify-
ing the military exemption.
The Office of Management and Budget advises that from the standpoint of the
Administration's program there is no objection to the submission of this report.
Sincerely,
ROBERT J. MCCLOSKEY,
Assistant Secretary for Congressional Relations.
GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE
Washington, D.C., February 17, 1976.
Hon. PETER W. RODINO, Jr.,
Chairman, Committee on the Judiciary, House of Representatives,
Washington, D.C.
DEAR MR. CHAIRMAN : This is in response to your request for the views of the
Department of Defense on H.R. 10194, 94th Congress. This bill contains several
proposals to amend the Administrative Procedure Act. Those parts of the bill
dealing with the definition of "rule" and the definition of 'ratemaking and cog-
nate proceedings," as well as accommodating modifications of 5 U.S.C. 556(d)
and 5 U.S.C. 557(b), do not affect the day to day operation of this department.
We, therefore, defer to the views of the Department of Justice on those aspects of
the bill.
In our view the revision of section 553 of title 5, as set forth in section 2 of
the bill, is premature insofar as it repeals the "military or foreign affairs" rule-
making exemption. Following many years of practice under that exemption, this
department recently adopted proceduresfor public participation in rulemaking
having direct and substantial public impact. 32 CFR Part 296; 40 F.R. 4911 (Feb-
ruary 3, 1975). Because the regulations are only a few months old, we believe it
desirable to gain the benefit of some practice under these new procedures. Their
impact can then be realistically assessed in the light of actual experience. Ac-
cordingly, we submit that legislative changes in this area should await a period
of experimentation under 32 CFR Part 296 so as to determine what, if any, prac-
tical problems would be posed for this department by repeal of the exemption.
H.R. 10194 would replace the "military or foreign affairs" rulemaking exemp-
tion, with an exemption for matters which are "in fact properly classified" in the
interest of national defense or foreign policy. This language, apparently drawn
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from the 1974 Amendments to the Freedom of Information Act, poses obvious
problems. It is one thing to employ that standard in the context of a request for
pre-existing documents ; it is quite another matter to introduce that concept into
ongoing policy-making. Moreover, the bill fails to explain who determines what
"matter" is or is not "properly classified." Nor does the bill. explain whether this
issue is to be decided on review or de novo. In any event, we believe that a col-
lateral dispute over the propriety of a classification could well delay the promul-
gation or effectiveness of important rules-with concomitant prejudice to the
public interest.
The Commission on Government Procurement (created by Public Law 91-129)
in an exhaustive 21/2 year study of the entire Federal procurement process found
that the varied practices among agencies in soliciting coments on proposed pro-
curement regulations do not meet minimum standards for promoting fair dealing
and equitable relationships among the parties in Government contracting. The
Commission also found, however, that making procurement regulations subject
to APA provisions, together with interpretative problems of applying APA defi-
nitions or terms such as "impracticable, unnecessary, or contrary to the public in-
terest," among others, would significantly burden the procurement process. The
Commission concluded that the formal requirements of APA will not significantly
benefit the Government, the contractors, or other interested parties. In lieu of
inflicting the uncertainties of the APA on the procurement process and the agen-
cies, the Commission favored a requirement that an Office of Federal Procure-
ment Policy establish criterial for participation in the development of procure-
ment regulations.
This recommendation of the Commission on Government Procurement was in-
corporated into the statute (P.L. 93-400) which was enacted only last year and
which set up the Office of Federal Procurement Policy (OFPP) in the Office
of Management and Budget (OMB). The OFPP only became fully staffed and
operational within the past few months, and, we understand, has recently pub-
lished in the Federal Register a draft regulation which will be the initial imple-
mentation of this statutory requirement.
In view of the responsibility and authority that has been placed in the OFPP
on this matter of public participation in the procurement regulatory process, it
is premature at best to suggest eliminating the exemptions currently contained in
the Administrative Procedure Act. Therefore, the Department of Defense opposes
this change.
Because the exact scope of the bill and its application are unclear, any esti-
mate of the cost which its enactment would require would be purely speculative.
However, there would undoubtedly be some additional costs.
The Office of Management and Budget advises that, from the standpoint of the
Administration's program, there is no objection to the presentation of this report
for the consideration of the Committee.
Sincerely,
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