Exempted adjudications. Section 5 specifically exempts from
its provisions (and, accordingly, from the provisions of sections 7 and 8) six types of
adjudicatory functions or proceedings which are discussed hereafter. It is important to note that
these exemptions extend to all of the provisions of section 5. Furthermore, the exemption is
applicable even where the exempted function is required by statute to be exercised "on the
record after opportunity for an agency hearing". Sen. Rep. p. 16; H.R. Rep. p. 26 (Sen.
Doc. pp. 202, 260).
1. "Any matter subject to a subsequent trial of the law and the
facts de novo in any court". This exemption was explained in the reports of the Senate and
House Committees on the Judiciary, as follows: "Where the adjudication is subject to a
judicial trial de novo [it] is included because whatever judgment the agency makes is effective
only in a prima facie sense at most and the party aggrieved is entitled to complete judicial retrial
and decision." Sen. Rep. p. 16; H.R. Rep. p. 26 (Sen. Doc. pp. 202, 260). Exempt under
this heading are certain proceedings which lead to reparation orders awarding damages, such as
are issued by the Interstate Commerce Commission (49 U. S. C. 16) and the Secretary of
Agriculture (7 U. S. C. 210). Senate Hearings (1941) pp. 75, 1389, 1508. In the Senate
Comparative Print of June 1945
[Page 44]
(p. 8) (Sen. Doc. p. 22) the scope of the exemption was described as follows:
This exception also exempts administrative reparation orders assessing
damages, such as are issued by the Interstate Commerce Commission and the Secretary of
Agriculture, since such orders are subject to trial de novo in court upon attempted
enforcement.
2. "The selection or tenure of an officer or employee of the United
States other than examiners appointed pursuant to section 11". This exemption of
adjudications involving the selection and tenure of officers other than examiners was made
"because the selection and control of public personnel has been traditionally regarded as a
largely discretionary function". Sen. Rep. p. 16; H.R. Rep. p. 26 (Sen. Doc. pp. 202, 260).
There is excluded from this exemption the selection or tenure of "examiners appointed
pursuant to section 11"; this refers to the provision of section 11 that "Examiners
shall be removable by the agency in which they are employed only for good cause established
and determined by the Civil Service Commission * * * after opportunity for hearing and upon
the record thereof." Proceedings for the removal of such examiners must be conducted in
accordance with sections 5, 7 and 8.
3. "Proceedings in which decisions rest solely on inspections,
tests, or elections". The reason for the exemption is that "those methods of
determination do not lend themselves to the hearing process". Sen. Rep. p. 16; H.R. Rep.
p. 27 (Sen. Doc. pp. 202, 261). This exemption is applicable even though a statute requires an
opportunity for an agency hearing; thus the words "rest solely" do not mean that the
exemption is available only where decisions are based solely upon inspections, tests, or elections,
without opportunity for hearing or other proceedings. Rather, "rest solely" appears
to mean that the exemption shall apply where all the issues involved in the decision are
determined mainly on the basis of an inspection, test, or election. The legislative history of the
Act, commencing with the Final Report of the Attorney General's Committee on Administrative
Procedure, pp. 36-38, suggests the following as examples of "proceedings in which
decisions rest solely on inspections, tests, or elections":
(a) the denial of airman certificates under section 602 of the Civil
Aeronautics Act (49 U. S. C. 552) (statute provides for a hearing) ; Senate Hearings (1941) pp.
602-3;
(b) the denial or revocation of certificates of seaworthiness by local
inspectors of the Coast Guard (46 U. S. C. 391) ; Senate
[Page 45]
Hearings (1941) pp. 833-4;
(c) locomotive inspections by the Interstate Commerce Commission (45
U. S. C. 29) (statute provides for a hearing) ; Senate Hearings (1941) pp. 833-4;
(d) the grading of grain under the United States Grain Standards Act (7
U. S. C. 71 et seq.) ; Senate Hearings (1941) pp. 833-4.
The rationale for exempting such adjudications from formal procedural
requirements was well stated by the Attorney General's Committee on Administrative Procedure in
the following passage:
In all these cases, as well as in others not here described,
the most important element in the decision is the judgment of the man who saw and tested
the ship or grain or fruit or locomotive, or who examined the prospective airplane pilot, or
seaman, or proposed periodical. Formal proceedings are not. of course, impossible. A trial
examiner could be designated; the inspector could be summoned to testify, under oath,
concerning his observations just as a traffic officer who gives a driving test to an applicant
for a motor operator's permit could be required to describe the applicant's performance to a
second officer who could, in turn, decide whether the permit should be issued. But resort to
formal procedure in this type of administrative matter, although sometimes provided for as
in certain of the instances noted above, is not desired or utilized by the person whose rights
or privileges are being adjudicated, because it gives no added protection. The judgment of
the inspector who examined the applicant or tested the article would necessarily remain the
determining element in the decision, and, in any event, some immediate decision concerning
the fitness of an applicant, or of an airplane, or a locomotive, or a ship, is necessary to protect
the public interest. That cannot await a formal hearing. Nor would formal procedure give
greater assurance of a correct decision. The surest way to ascertain what is the grade of grain
is for a skilled inspector to test it; the best way to discover whether the radio equipment of
a ship is in proper working order is for a radio mechanic to examine it and test it. (Final
Report, p. 37)
For further legislative history relating to this exemption, see Senate Hearings (1941) pp. 590, 602,
833.
4. "The conduct of military, naval, or foreign affairs func-
tions". Both Committee reports state that the section "exempts military, naval, and
foreign affairs functions for the same reasons that they are exempted from section 4; and, in any
event, rarely if ever do statutes require such functions to be exercised upon hearing." Sen. Rep.
p. 16; H.R. Rep. p. 27 (Sen. Doc. pp. 202, 261). Thus, the exercise of adjudicatory functions by the
War and Navy Departments or by any other agency is exempt to the extent that the conduct of
military or naval affairs is involved. Senate Hearings (1941) pp. 502-3. The term "foreign
affairs functions" appears to be used in the same sense as in section 4. H.R. Rep. p. 27 (Sen.
Doc. p. 261).
5. "Cases in which an agency is acting as an agent for a
[Page 46]
court". This is self-explanatory. Senate Hearings (1941) pp. 422, 474, 1457.
6. "The certification of employee representatives". This ex-
emption for "the certification of employee representatives such as the Labor Board operations
under section 9(c) of the National Labor Relations Act, is included because those determinations rest
so largely upon an election or the availability of an election". Sen. Rep. p. 16; H.R. Rep. p.
27 (Sen. Doc. pp. 202, 261). And see Senate Hearings (1941) pp. 260, 271. It also exempts the
certification of employee representatives by the National Mediation Board pursuant to section 2 (9)
of the Railway Labor Act (45 U. S. C. 152).
1In the Senate Comparative Print of
June 1945, p. 2 (Sen. Doc. p. 13). it isstated: "It should be noted that the
definition of agencies does not mean that all acts of such agencies are subject to the procedural
requirements. * * * if an agency is subject to the proposal under this section, nevertheless it is
subject thereto only to the extent that acts, rules. or orders are defined and not further excluded in
the following sections and subsections."
2It is clear that nothing In the
Administrative Procedure Act precludes private parties from waiving their right to a hearing.
Similarily. an agency Is not prevented from requirIng parties to Indicate within a reasonable time
their desire for a hearing.
3The comma after
"hearing" in section 5 (b) is a printer's error.
4For example. the Civil
Aeronautics Board is required to hold hearings before granting a certificate of public
convenience and necessity for a new route (49 U. S. C. 491).
5Any other Interpretation of the
exemption will largely destroy It and will result in an erratic application of section 6(c). For
example. the function of the Civil Aeronautics Board with respect to certificates of public
convenience and necessity increasingly relates to applications for modifications or extensions of
existing routes rather than to original application" for entirely new routes. Thus, A, with a
certificate for a route from New York to Chicago with a stop at Cleveland, may apply for a
modification of the certificate to permit an additional stop at Pittsburgh. The considerations
involved in determining such an application for modification of A's certificate are the same an
those involved in his original application-traffic flow, availability of facilities, effect on com-
peting carriers, etc. The accusatory and disciplinary elements are entirely lacking. Another
example clearly illustrates the inconsistent results of such a narrow construction of the exemption
for initial licensing: A has a certificate for a route from New York to St. Louis, and he applies for
a modification which will authorize extension of the route to Omaha; B applies for a new
certificate authorizing him to operate a route between St. Louis and Omaha. Under the narrow
construction of the exemption, section 5(c) would apply to the Board's determination of A's
application, but would not be applicable with respect to B's application. Similar anomalies
would exist under the Federal Power Act, the Communications Act and the Natural Gas Act,
particularly the latter.
6The limitation of the prohibition
against consultation to those who performed investigative or prosecuting functions "in that
or a factually related case", should be construed literally. As this provision originally
appeared in H.R. 1203. 79th Cong., lst sess. (1945), it was a complete prohibition against
consultation with investigative and prosecuting personnel, as follows: "No officer,
employee, or agent engaged in the performance of investigative or prosecuting functions for any
agency shall participate or advise in the decision. recommended decision, or agency review
pursuant to section 8 except an witness or counsel in public Proceedings." See Sen. Doc.
p. 157.
The phrase "factually related case" connotes a situation in
which a party is faced with two different proceedings arising out of the same or a connected set
of facts. For example, a particular investigation may result in the institution of a cease and desist
proceeding against a party as well as a proceeding involving the revocation of his license. The
employees of the agency engaged in the investigation or prosecution of such a cease and desist
proceeding would be precluded from rendering any assistance to the agency. not only In the
decision of the cease and desist proceeding. but also in the decision of the revocation proceeding.
However, they would not be prevented from assisting the agency in the decision of other cases
(in which they had not engaged either as investigators or prosecutors) merely because the facts of
these other cases may form a pattern similar to those which they had theretofore investigated or
prosecuted.
7See discussion of
"factually related case" in footnote 6.
8The general counsel's
participation in rule making and in court litigation would he entirely compatible with his role in
advising the agency in the decision of adjudicatory cases subject to section 5(c).
9Of course, this does not affect the
Securities and Exchange Commission's advisory service described above.