Attorney General's Manual on the Administrative Procedure Act (1947) |
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Section 9 generally prohibits unauthorized action by agencies and
prescribes certain rules to govern licensing proceedings. The provisions of section 9 apply to all
relevant cases (other than the agencies and functions exempted by section 2 (a) ) regardless of the
applicability of the other sections of the Act.
Section 9 (a) provides that "in the exercise of any power or authority
no sanction shall be imposed or substantive rule or order be issued except within jurisdiction
delegated to the agency and as authorized by law." The term sanction is broadly defined in
section 2(f) to include the whole or part of any agency "(1) prohibition, requirement,
limitation, or other condition affecting the freedom of any person; (2) withholding of relief; (3)
imposition of any form of penalty or fine; (4) destruction, taking, seizure, or withholding of property;
(5) assessment of damages, reimbursement, restitution, compensation, costs, charges, or fees; (6)
requirement, revocation, or suspension of a license;1 or (7) taking of other compulsory or restrictive action."
The original draft of section 9 (a) limited the imposition of sanctions to
those "as specified and authorized by statute." Senate Comparative Print, June 1945, p.
17 (Sen. Doc. p. 159). The change of the word "statute" to "law" was inten-
tional so as to recognize that an agency may impose a sanction or issue a substantive rule or order
if such power is authorized not only by statutes but by treaties, court decisions, commonly recog-
nized administrative practices, or other law. See United States v. MacDaniel, 7 Pet.
(32 U.S.) 1, 13-14 (1833). Both the Senate and House reports recognize that the source of authority
for the imposition of a sanction or the issuance of a substantive rule or order may be either specific
or general, as the case may be. Sen. Rep. p. 25, H.R. Rep. p. 40 (Sen. Doc. pp. 211, 274).
The purpose of section 9(a) is, evidently, to assure that agencies will not
appropriate to themselves powers Congress has not intended them to exercise. Section 9(a) merely
restates existing law. Sen. Rep. p. 43 (Sen. Doc. p. 229). Many agencies' powers
are very clear; they are set forth specifically in the act creating the agency. Still other powers may
be readily inferred from the framework of the act creating the agency or may be logically necessary
for the conduct of the powers granted to the agency. But whether an agency's powers are express
or implied, in either case they may be exercised. Particularly pertinent in this connection is the
language of the Supreme Court in Phelps Dodge Corp. v. National Labor Relations
Board, 313 U.S. 177, 194 (1941):
Section 9 (b) is composed of three sentences, each of which is mutually
exclusive of the others. The first sentence applies specifically to applications for licenses, the second
to suspension or revocation of licenses, and the third to renewals. Each of these will be considered
separately.
Applications for licenses. The first
sentence of section 9(b) provides: "In any case in which application is made for a license
required by law the agency, with due regard to the rights or privileges of all the interested parties or
adversely affected persons and with reasonable dispatch, shall set and complete any proceedings
required to be conducted pursuant to sections 7 and 8 of this Act or other proceedings required by
law and shall make its decision." The import of this sentence is that an agency shall hear and
decide licensing proceedings as quickly as possible. Should the licensing proceedings be required
by statute to be determined upon the record after opportunity for an agency hearing, an agency will
be required to follow the provisions as to hearing and decision contained in sections 7 and 8 of the
Act. As to other types of licensing proceedings, the Act does not formulate any fixed procedure (just
as no fixed procedure has been formulated for adjudications other than those that are required
by statute to be determined on the record after opportunity for an agency hearing).
The requirement that licensing proceedings be completed with reasonable
dispatch is merely a statement of fair administrative procedure. Congress decided not to set any
maximum period of time for agency consideration of applications for licenses. In the first draft of
S. 7 there was a provision to the effect that an application for a license would be deemed granted
unless the agency within 60 days after the application was made, rendered its decision or set the
matter down for hearing. Senate Comparative Print, June 1945, p. 17 (Sen. Doc. p. 159). This
provision was dropped in later drafts and replaced with the phrase "with reasonable
dispatch."
The term "reasonable dispatch" is not an absolute one and
cannot be described in precise terms. What is reasonable for one agency may not be reasonable for
another agency. The time necessary to consider license applications for certificates of public
convenience and necessity is much greater, as a rule, than that needed for issuing warehousemen's
licenses under 7 U.S.C. 244. Similarly, variations in an agency's work-load, reflecting developments
in an industry, may result in unavoidable temporary backlogs. Of course, where another statute
prescribes a specific period of time for agency consideration of an application for a license, such
specific provision will be controlling. For example, under section 355(c) of Title 21, U.S.C., an
application for a license for the sale of new drugs becomes effective on the sixtieth day after the
filing of the application unless the Federal Security Administrator takes appropriate action.
Suspension or revocation of licenses.
The second sentence of section 9(b) provides: "Except in cases of willfulness or those in
which public health, interest, or safety requires otherwise, no withdrawal, suspension, revocation,
or annulment of any license shall be lawful unless, prior to the institution of agency proceedings
therefor, facts or conduct which may warrant such action shall have been called to the attention of
the licensee by the agency in writing and the licensee shall have been accorded opportunity to
demonstrate or achieve compliance with all lawful requirements." This sentence requires an
agency to give a licensee an opportunity to change his conduct before his license can be revoked by
the agency unless the licensee's conduct is willful or the public health, interest or safety requires
otherwise.
Thus, if a particular licensee should under ordinary circumstances transcend
the bounds of the privilege granted to him, the agency which has granted him the license must
inform him in writing of such conduct and afford him an opportunity to comply with the
requirements of the agency before it can revoke, withdraw, suspend or annul his license. While the
warning must be in writing, it need not take any special form.
No prior notice need be given if the licensee's conduct is willful. In such
a situation the license may be revoked immediately without "another chance." Also,
"another chance" need not be given where "the public health, interest, or safety
requires otherwise." The latter phrase refers to a situation where immediate cancellation of a
license is necessary in the public interest irrespective "of the equities or injuries to the
licensee." Sen. Rep. p. 26 (Sen. Doc. p. 212). For example, in case of an accident involving
aircraft, the Administrator of Civil Aeronautics may suspend the license of the pilot pending
investigation. The public safety and interest require such immediate suspension. 49 U.S.C. 559.
It is clear that the provisions of this second sentence do not apply to
temporary permits or temporary licenses. Sen. Rep. p. 26, H.R. Rep. p. 41 (Sen. Doc. pp. 212, 275).
Such permits or licenses may be revoked without "another chance" and regardless of
whether there is willfulness or whether the public health, interest, or safety is involved. And it is
clear, too, that the provisions of this sentence do not apply to renewal of licenses. Renewals are
treated specifically in the next sentence.
Renewal of licenses. The last sentence of
section 9(b) provides: "In any case in which the licensee has, in accordance with agency rules,
made timely and sufficient application for a renewal or a new license, no license with reference to
any activity of a continuing nature shall expire until such application shall have been finally
determined by the agency." This sentence states the best existing law and practice. Sen. Rep.
p. 43 (Sen. Doc. p. 229). It is only fair where a licensee has filed his application for a renewal or
a new license in ample time prior to the expiration of his license, and where the application itself is
sufficient, that his license should not expire until his application shall have been determined by the
agency. In such a case the licensee has done everything that is within his power to do and he should
not suffer if the agency has failed, for one reason or another, to con-
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sider his application prior to the lapse of his license. Agencies, of course, may make reasonable
rules requiring sufficient advance application.2
1The denial of an application for a renewal
of a license is not a penal measure, Federal Communications Commission v.
WOKO,. 329 U.S. 223 (1946). It is, by definition in section 2(f), a form of agency
sanction.
2The Office of Alien Property of the
Department of Justice has adopted such a rule with reference to renewal of licenses. 11 F.R. 177A-629.
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