Jurisdictional Statement — Allen v. Grand Central Aircraft Co.

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1953

No. 450

THUR P. ALLEN, Cuaimman, Tweirrn Recion Wace

SrapitizaTion Boarp; Ey Au.,

Appellants,

vs.

GRAND CENTRAL AIRCRAFT CO., a Cauirornia

CORPORATION

PEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF CALIFORNIA

STATEMENT OPPOSING JURISDICTION AND

MOTION TO AFFIRM

Paut R. Warxtys,

Dawa Latuam,

R. W. Luwp,

Counsel for Appellee.

ENR OENNY ETE PTT t q

Bias een:

&

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ork oly ea Ee ee aS - >

——, ROO i BOS Dies EIDE Sper Si DS est EAA ne EGE

INDEX

Suspsect INDEX

Page

Statement opposing jurisdiction and motion to

"te TORE OS ee Pe 1

Statement De SUR ye De Sony 1

Statutes inv olved. Gt pire he tats athess 5

The judgment of the District Court should be

affirmed _. 5

The Defense Production Act of 1950 authorizes

the courts, not the executive, to determine

whether the Act has been violated, and to im-

pose penalties prescribed by the executive 6

Appellee would be irreparably injured by a Na-

tional Enforcement Commission hosing, re-

gardless of the outcome....... 10

The National Enforcement Commission’ s threat-

ened action was in violation of statute upon

grounds additional to those relied upon by the

District Court ..... 12

The Commission had no authority to make

determinations after April 30th, 1953 12

The collapse of the tripartite wage stabiliza-

tion board destroyed the statutory scheme

for administration of wage controls 15

The governing regulations were invalid be-

cause of the absence of adequate state-

ments of considerations 16

The regulation which prescribes the extent

to which wage payments may be dis-

I IE ine ian ee een ve 17

General Order 15, in denying any judicial re-

view of disallowance proceedings, was un-

authorized by the Act and deprived ap-

pellee of due process of law 18

The threatened application of Title TV and Sec-

tion 405(b) of the Act — appellee was

pie. ons fee eh os dire 19

ae

tine RRL", a

il INDEX

Page

Title IV of the Defense Production Act de-

nied appellee of due process of law ..__. 20

Lack of judicial review. BY ws 20

Excessive penalty without relation to

damages suffered 20

Section 405(b) as interpreted by appellants

denied appellee its right to a jury trial

under the Sixth Amendment... ae eats 21

Disallowance of wage payments for tax pur-

poses resulted in the imposition of a tax

on gross receipts and was unconstitu-

ss ee re 22

Other constitutional objections .... . 23

Conclusion and motion to affirm... s—~ 23

Appendix ‘‘A’’—Pertinent Sections of the Defense

Production Act of 1950 (50 U.S.C. App. Sections

2061, et seq.)

TABLE oF Cases CrTED

Belcher Oil Company v. Griffin, 23 CCH Lab. Cas.,

Par. @7,723 .......

Ss ls. or PE: eA i Neh Si ar oe 10

Doyle v. Mitchell Brothers, 247 U.S. 179, 38. S. Ct.

467 . NE a Fie eee TR PIA eave 22

Estep v. United States, 327 U.S. 114, 66 S. Ct. 423. 20

Ex Parte Endo, 323 U.S. 283, 65S. Ct. 208...

Fleming v. Mohawk Wrecking and Lumber Company,

331 U.S. 111, 678. Ct.1129...................... 9

Grand Central Aircraft Company v. Jones, No. 15,603,

United States District Court for the Southern Dis-

trict of California............. sists 11

Helvering v. Mitchell, 303 U.S. 391, 58 S. Ct. 630. 22

Hertz v. Woodman, 218 U.S. 205, 30'S. Ct. 621. 14

Leimer v. Woods, 196 F.2d828. sts 22

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. sneusneeeene

INDEX iil

Page

National Labor Relations Board v. Jones Laughlin

Steel Corporation, 301 U.S. 1, 57 S. Ct. 615. 22

Ng Fung Ho v. White, 259 U.S. 276, 42 S. Ct. 492 20

People ex rel. Lemon v. Elmore, 256 N. Y. 489, 177

N.E. 4, 75 A.L.R. 1292 vn hy BB

Pollack v. Farmers Loan and Trust Company, 157

U.S. 429, 15 S. Ct. 673 . 22

Southwestern Telephone and Te legraph Company v.

Danaher, 238 U. $4 662, 36S. Ct. GBG.............. 20

Sullenger, Lela, 11 Tax Court 1076... 22

Troy Laundry Company v. Wirtz, 329 U.S. 723, 155 F.

MP oleae Saas Pees es 10

United States v. Jepson, 90 F. Supp. 983..... 22

United States v. Ship Helen, 6 Cranch 203 12

Wadley Southern Railroad Company v. Georgia, 235

U.S. 651, 35 S. Ct. 214. ee 20

Weather-Seal Manufacturing Company v . Commis-

sioner, 199 F. 2d 376, 16 T.C, 1312 . Be

Woodworth Company v. Kavanagh, 202 F. 2d 154, 102

| SS mae ee 10,18

STATUTES AND Otner AUTHORITIES CITED

Congressional Record:

Volume 96:

Page 12,133 ...... ao ee 20

Page 12,480 ......... AF Ag taness 20

Page 14,072 ..... Pewee . 20

Puse neers ...........:.; Sats 20

Volume 99:

Number 144, Page 10,712 ................. 14

Constitution of the United States:

Article 1, Section9 ........ Teer See 22

Fifth Amendment ........... SPY Lert Ae Por ee 20

Sixth Amendment ..... CN ee . i 22

Kighth Amendment ......... o 7 23

Sixteenth Amendment ........ WP Ppetinen: 22

iv INDEX

Page

Defense Production Act of 1950 (50 U.S.C. App. 2061,

et seq. ; 64 Stat. 798), Section 403(b), as amended in

1952, 50 U.S.C. App. 2103(b) ; 66 Stat. 300 15

Defense Production Act of 1950 (50 U.S.C. App. 2061,

et seq.; 64 Stat. 798):

Section 403(b)(1), 50 U.S.C. App. 2103(b)(1),

66 Stat. 300 15

Section 403(b) (5), 50 U S. C. App. 2103(b) (5) 2,15

Section 405(a), 50 U.S.C. App. 2105(a) 23

Section 405(b), 50 U.S.C. App. said 2.2

Section 407 he 4)

Section 408, 50 U.S.C. App. 2107 20

Section 409(b), 50 U.S.C. App. 2109(b) 18

Section 705(b), 50 U.S.C. App. 2155(b) . 13, 28

Section 706(b), 50 U.S.C. App. 2156(b) ... 7, 13, 23, 24

Section 709, 50 U.S.C. App. 2159... oe Se

Section 717, 50 U.S.C. App. 2166. ee 12

Section 717(a), as amended, 50 U.S.C. App.

eee, A a eek MRE Pim Aime iy S88 AO ee ‘6 12

Section 717(b) (3), 50 U.S.C. App. 2166(b) (3) 12

Executive Order 10,161, 15 F.R. 6105.00” 2

Executive Order 10,434, 18 F.R. 809 verre 14

Federal Register, Volume 17, Page 11,368. eres 4

General Order of the Administrator to the Wage

Stabilization Board:

Number 15, Section 4, (17 F.R. 2994, sic ee Ae

Number 15, Section6 ..... . 18

Number 18, (17 F.R. 6225, 9 9977). .. ae

Number 19, (17 F.R. 11,368). SPA rae 15

General Procedural Regulation of the National En-

forcement Commission Number 1, Revised:

cts apes. ere cP pt

einige cag te | ee 11

Section 8.1(b), (17 F R. 7737, 18 F.R. 1663) 3, 6, 17

Section 10.1, (17 F.R. 7737)... ep aS 20

General Wage Stabilization Regulation Number 1 3

:

a

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ee eae ee 7 “

a —— SOLA AN PPE I EN SD I a all te AN

INDEX Vv

Hearings Before the Senate Committee on Appropri-

ations on the Supplemental Appropriation Bill,

House Report 6200, 83rd Congress, First Session:

Pages 424 through 434 9

Page 457 | . 14

Pages 464 through 466 14

House of Representativ es Report Number 1090, 83rd

Congress, First Session, Pages 5 and 13, Amend-

ments 76 and 77 15

House of Representatives Report Number 2759... 8

House of Representatives Report Number 3042 (on

House of Representatives Report Number 9176),

Sist Congress, Second Session, 1950 8

Senate Report Number 677, 83rd Congress, First

Session, Page 17 14

Senate Report Number 1599, 82nd C ongr ens, Second

Session ._.. 15

Senate Report Number 22: 50, Sist Congress, Second

Session, 1950, Page 39... S

Stabilization Act of 1942, Section d(a), 50 U S.C.

App. 965(a), 56 Stat. 767. . 8

Supplemental Appropriation Bill of 1954, (Publie

Law Number 207, 83rd Congress, First Session) 9,14

United States, Title I, Section 109, 61 Stat. 633... _.. 14

Tee

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a ceanmentniemer ie

IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF CALIFORNIA,

SUUTHERN DIVISION

Civil Action No. 32541

GRAND CENTRAL AIRCRAFT CO., 4 Caurrornia Cor-

PORATION,

Plaintiff-Appecllee,

Us.

ARTHUR P. ALLEN, Cuammay, Twetrtu Recion Wace

SraBiLizaTion Boarp; Er Au.,

Defendants-A ppellants

STATEMENT OPPOSING JURISDICTION AND

MOTION TO AFFIRM

The appellee in the above-entitled cause for its statement

in opposition to appellants’ statement as to jurisdiction

herein, respectfully shows the following:

Statement

Appellee corporation has been engaged since before 1950

in the production, modification and overhaul of military

aircraft and equipment under contracts with the United

States Air Force. Its plants are located at Tucson, Arizona,

in ta ee |

2

and Glendale, California. This suit was brought to restrain

an administrative proceeding instituted to impose penalties

on appellee for alleged violations of wage stabilization

regulations.

Wage stabilization was inaugurated under authority of

the Defense Production Act of 1950 (00 U.S. C. App. 2061,

et seq., 64 Stat. 798). On September 9, 1950, an Keonomic

Stabilization Agency, headed by an Eeonomie Stabilization

Administrator, was created by Executive Order 10161,

1) F. R. 6105. On July 30, 1952, administration of wae

controls was delegated by the Administrator to the Wage

Stabilization Board established by Section 403(b) of the

Defense Production Act, as amended in 1952, 530 U. 8. ¢.

App. 2103(b), 66 Stat. 300.

The Administrator established sanetions for violations

of wage regulations in his General Order 15 (17 F. R. 2994,

9977). This regulation provided for disallowance by gov-

ernmental agencies of the cost of wages paid in violation

of regulation. It specified that the amount to be disallowed

was the entire amount of the wage paid in violation, not

merely the excess over the legal payment, unless particular

extenuating circumstances were found to exist. The statu-

tory authority apparently relied upon was Section 405(h)

of the Act, 50 U.S. ¢, App. 2105(b) which provides as

follows:

‘*No employer shall pay, and no employee shall

receive, any wage, salary or other compensation in

contravention of any regulation or order promulgated

by the President under this title. The President shall

also prescribe the extent to which any wage, salary,

or compensation payment made in contravention of any

such regulation or order shall be disregarded by the

executive departments and other governmental agencies

in determining the costs or expenses of any employer

for the purposes of any other law or regulation.’’

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In addition to establishing sanctions, the Administrator

l also provided for administrative adjudication of alleged

violations, creating a National Enforcement Commission

for this purpose. (General Order 18, 17 F. R. 6925, 9977,

issued July 30, 1952). If it found there had been a viola-

tion, the Commission was directed to certify to other gov-

ernment agencies, and to direct such agencies to disregard

for purposes of determining costs, the amount of wages

paid in violation.

Disallowance of wages for income tax purposes has been

the principal result of a determination of violation.

Conduct of proceedings before the National Enforcement

Commission was governed by General Procedural Regula-

tion 1, Revised (17 F. R. 7737, 18 F. R. 1663). Initial deeci-

sions were made by Enforcement Commissioners, appointed

by the Commission to conduct the hearings, to make find-

ings, and to recommend the amounts to be disallowed. If

no appeal to the Commission was taken from such findings,

they became final in the absence of clear error and the

recommended amount of disallowance was adopted.

On November 4, 1952, the Wage Stabilization Board filed

a complaint with the National Enforcement Commission

against appellee, alleging, without greater particularity,

that appellee had, during the period from January 26, 1951,

to January 1, 1952, granted to its employees wage increases

in violation of General Wage Stabilization Regulation 1 (the

wage-freeze regulation). On November 21, 1952, appellee

moved the National Enforcement Commission for a more

definite statement of the allegations contained in the

complaint.

On December 6, 1952, industry members of the Wage

Stabilization Board resigned and were never replaced. A

Wage Stabilization Committee, composed of the public

Bevis. ROMANS.

4

members of the Board, was appointed by the Administrator.

(General Order 19, 17 F. R. 1136s.)

On December 15, 1952, the wage complaint was ordered

amended by the National Enforcement Commission by 4

statement that the wage increases complained of were those

shown as ‘merit’ increases on appellee’s records, that such

increases required prior approval of The Wage Stabiliza-

tion Board, and that such approval had not been obtained.

Subsequently, appellee was advised by the Regional Counei|

of the Twelfth Regional Wage Stabilization Board that the

total payroll allegedly in violation was over five and one-

half million dollars, Disallowance of this payroll for

income tax purposes would result in the assessment of

two to three million dollars additional income tax for the

year 1951,

A hearing before an Knforeement Commissioner was set

for February 24, 1953. The present suit was instituted

February 13, 1953 against the officials and agents of the

Wage Stabilization Committee and the National Enforee-

ment Commission threatening to conduct. said hearing.

Service was obtained upon regional wage officials and the

Enforcement Commissioner designated to conduct the

administrative hearing. National committee and commiis-

sion officials were not served and, with the exception of

defendant Groner, who argued the case for defendants,

did not appear in the action.

Appellee'’s complaint alleged that the threatened appli-

‘ation of Section 405(b) against appellee was repugnant

to the United States Constitution. Alternatively, it was

alleged that the regulations and orders establishing the

National Enforcement Commission and providing for cer-

tifications of disallowance were unauthorized by the Act.

Appellee alleged that it would he irreparably injured by

appellants’ threatened action in holding a hearing prin-

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cipally because of the disastrous effect such a hearing would

have on appellee's ability to obtain indispensable weekly

Joans under an existing credit agreement with certain banks.

Lengthy oral argument on appellee's application for a

preliminary injunction was held before a three-judge court

and on Mareh 11, 1953, a temporary restraining order was

issued against appellants. An interlocutory injunction was

issued by said court on May 28. Appellants’ application

for stay of the interlocutory injunetion pending appeal was

denied by this court June 15, 1953 (345 U.S. 988). Trial

was held July 24 and further eral argument was heard at

that time. A deeree permanently restraining appellants

from: prosecuting or hearing the charges brought against

appellee was granted by the three-judge court on July 31.

The district court found that there was no statutory

authority for the imposition of penalties by the National

Enforcement Commission but that jurisdiction was in the

distriet courts. It further found that the very continuance

of the threatened administrative hearing would cause ap-

pellee’s bank credit to be eut off, which would disable

appellee from continuing in operation and would thereby

cause irreparable injury. The «rounds for these eonelu-

sions were amplified ina written opinion.

Statutes Involved

In addition to the statutes set forth in Appendix B of

Appellants’ Statement as to Jurisdiction, other provisions

of the Act pertinent to the issues discussed herein are set

forth in Appendix A attached hereto,

The Judgment of the District Court Should Be Affirmed

Appellant invites review of the district court's judgement

on the ground that the decision jeopardizes about 2.500

proceedings in which disallowances have already been

eo ta sates

i.

6

determined or stipulated, It is intimated that all violators

of wage regulations will, as the result of such judgment,

be enabled to avoid the consequences of their conduct. Whi

appellee’s rights should depend upon the fact that appel-

lants have for several years been conducting hearings and

certifying disallowances without statutory authority is not

made clear,

Furthermore, the intimation that punishment will be cir-

cumvented is without foundation. First, it is doubtful that

stipulated settlements could be reopened in any event,

Stipulations are required to set forth facts establishing

the violation of a wage order and the existence of extenuat-

ing or mitigating circumstances justifying disallowance of

less than the full amount of the illegal payment (General

Procedural Regulation 1, Revised, See. 8.1(b), 17 F. R.

4737). The district court merely held that violations were

to be determined and penalties imposed by the district

courts. Settlements of liability are not prohibited and these

stipulations constitute admissions which undoubtedly would

prevent recovery in any refund suit. Second, even in the

case of disallowances resulting from contested proceedings,

appellants do not suggest that a federal court in a refund

suit (in which the plaintiff must show he is justly entitled

to refund) could not itself determine whether a Violation

had oceurred and uphold any tax disallowance, As a matter

of fact, the district court here concluded that there was

such jurisdiction.

I

The Defense Production Act of 1950 Authorizes the Courts,

Not the Executive, to Determine Whether the Act Has

Been Violated, and to Impose Penalties Prescribed by the

Executive.

Appellants assert that the President had power under

Section 405(b) to direct the executive departments to dis-

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regard for tax computation and other purposes, wages paid

in violation of wage ceilings. This view is not at variance

with that of the district court, which recognized in its

opinion that **. . . the Act authorizes the President to

preseribe the extent to which any unauthorized payment

may be disregarded. . . .’’ Section 405(b), by its

very terms, went this far but no further. In order to sus-

tain the claimed authority of the National Enforcement

Commission, there must be read into the section further

executive authority to ad judge that a violation has oceurred

and to decree imposition of the penalties prescribed. It is

respectfully submitted that no such authority existed and

that the executive authority given by Section 405(b) was

exhausted after the establishment in Section 4 of General

Order 15, (17 F. R. 2994, 9977), of the standards for the

disallowance of payments in violation of the statute.

The plain words of Section 405(b) authorized the exeeu-

tive to promulgate rules establishing penalties. The plain

words of Section 706(b), 50 U.S. C. App. 2156(b), granted

to the district courts the authority to adjudge whether vio-

lations occurred and to impose the prescribed penalty :

“The district courts of the United States and the

United States courts of any Territory or other place

subject to the jurisdiction of the United States shall

have jurisdiction of violations of this Aet or any rule,

regulation, order, or subpena thereunder, and of all

civil actions under this Act to enforce any liability or

duty created by, or to enjoin any violation of, this Aet

or any rule, regulation, order, or subpena_ there-

under sit

Appellants attempt te dispose of this section by arguing

it was limited in application to injunction suits and criminal

prosecutions ( Appts’. Statement, pp. 7-8), but this construe-

tion simply ignores the breadth and inclusiveness of the

language used.

pat

Racise se

Fat yon, F

Bitiecwue:

8

It is said that the Act exhibited Congressional intention

to vest the President with authority to combat inflation,

and appellants cite numerous sections from Title IV to

show that the President had broad powers. But the see.

tions cited uniformly conferred rule-making, as opposed to

adjudicatory, power. The argument really proves that Sce-

tion 405(b) was also intended to relate only to rule-making.

This crucial distinction between the two kings of power

was observed by the district court.

- Legislative history does not furnish support for the con-

struction proffered by appellants. Admittedly, Section

405(b) follows the language of Section D(a) of the Stabiliza-

tion Act of 1942, 50 U.S. ¢. App. 965(a), 56 Stat. 767. How-

ever, even assuming the validity of administrative deter-

minations of violation undex that act—and, as we point out

below, no court has passed upon the point—the legislative

history of the 1950 Act does not indicate any Congressional

awareness, much less approval, of such administrative pro-

cedure. On the contrary, the Senate Committee Report

merely noted the similarity in language and stated that dis-

allowance was an effective deterrent (S. Rep. No. 2250, 81st

Cong., 2d Sess. p. 39, 1950), while the House and Confer-

ence reports did not even mention the provision (H. R. Rep.

No. 2759, H. R. Rep. No. 3042 (on H. R. 9176), 81st Cong.,

2d Sess., 1950). Even if it were shown that the Congress

which passed the Defense Production Act was aware of the

World War IT administrative practice we submit that Con-

gress’ intent to repudiate and prevent such practice was

manifested by the enactment of a specific provision giving

the district courts jurisdication of . . . Violations of this

Act or any rule, regulation, order, or subpena thereunder.

.”’ (See. 706(b)). This provision, enacted for the first

time in 1950, marked a complete departure from the 1942

Act and rendered irrelevant any argument based on con-

struction of the earlier act. See the decision directly in

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>» ae TR GB NSA AISLE WELL AS ile a NAD Ri eA

9

point in Belcher Oil Co. v. Griffin, 23 CCH Lab. Cas., Par.

67,723 (D. C. N. D. Ga. 1953).

Appellants urge legislative ‘‘ratification’’ of their action

by the Supplemental Appropriation Bill of 1954 (Pub. L.

No. 207, 83d Cong., Ist Sess.) passed months after both

the suspension of wage controls and the expiration, on

April 30, 1953, of authority conferred under Section 405(b)

(cf. Section 717). But the appropriation in Public Law 207

for the ‘‘EKeonomie Stabilization Agency’’ cannot be said

to indicate the specific approval of the action of the Na-

tional Enforcement Commission which is required by the

doctrines of Fleming v. Mohawk Wrecking & Lumber Co.,

331 U.S. 111, 118 (N. 10), 67 S. Ct. 1129 (1947), and Brooks

v. Dewar, 313 U. S. 354, 61 S. Ct. 979 (1941), compare Ex

Parte Endo, 323 U.S. 283, 303 (NX. 24), 65 S. Ct. 208 (1944),

particularly in view of the fact that the Economie Stabiliza-

tion Agency's principal activity at the time was in connec-

tion with rent control. In fact, members of the Senate Com-

mittee on Appropriations, upon being apprised of the

pendency of the present case, clearly recognized that the

issues presented were for the courts to decide (Hearings

Before the Senate Committee on Appropriations on the

Supplemental Appropriation Bill, Hl. R. 6200, 88rd Cong.,

Ist Sess., pp. 424-484). And, in the full context cited, it can

be seen that the statement of appellee’s representative Hol-

land, relied on so heavily by appellants, could not be under-

stood even as dealing with, much less as ‘‘eonceding’’, the

validity of the National Enforcement Commission’s estab-

lishment.

Several cases are cited by appellants as upholding, under

the 1942 Act, the administrative imposition of disallow-

ances. Of them two things may be said. First, they in-

volved a different statute, which made no provision for

adjudication in the district courts. Second, in none of them

was the issue raised of the agency’s power to make deter-

10

minations of violations for disallowance purposes. In Troy

Laundry Co. v. Wirtz, 155 F. 2d 53, 55 (9th Cir. 1946), cert.

denied, 329 U. S. 723 (1946), the issue was the subpena

power of the War Labor Board. The court treated the ad-

ministrative hearing involved as one intended to ‘‘enable

the President to perform his administrative function with

reference to the fixing of prices for commodities or services

in which the wage is a factor’’, and again, as one intended

‘*to enable him to perform his function of fixing the price

of the service or goods referred to above.’’ In De La Rama

S.S. Co. v. Pierson, 174 F. 2d 84 (9th Cir. 1949), a contract

action involving the defense of illegality, there is neither

a holding nor language remotely in point. In Woodworth

Co. v. Kavanagh, 102 F. Supp. 9 (D. C. E. D. Mich. 1952),

aff'd per curiam, 202 F. 2d 154 (6th Cir. 1953), the distine-

tion between prescription and imposition of penalties was

not discussed by the court and was not raised by counsel

(Brief of Appellants, pp. 12-13, Transcript of Record, p. 6).

In Weather-Seal Mfg. Co. v. Commissioner, 16 T. C. 1312

(1951), aff’d mem., 199 F. 2d 376 (6th Cir. 1952), only the

constitutionality of disallowing wages as tax deductions

Was in issue. Our disagreement with the Woodworth and

Weather-Seal cases—both of which received memorandum

affrmance from the Sixth Circuit—is noted below, but it is

not upon the ground that those cases are opposed to the

reasoning of the district court here.

II

Appellee Would Be Irreparably Injured by a National

Enforcement Commission Hearing, Regardless of the

Outcome.

The district court found, as stated in its Findings of Fact,

‘*that the continuance of the threatened administrative pro-

ceeding will cause plaintiff’s bank credit to be shut off and

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11

will disable plaintiff from continuing its operations.’’ This

finding was based upon uncontradicted evidence, including

the testimony of an official of one of the banks extending

credit to appellee, and upon examination of the existing

credit agreement. Appellants do not, nor could they rea-

sonably, assert that the finding was unsupported by evi-

dence.

Appellants argue that the district court is in error be-

cause no tax disallowance sanction could have been assessed

by the Enforcement Commissioner, that he could do no more

than issue an advisory opinion to the Commission. This

argument completely ignores the specific finding quoted

above, for the district court was not concerned with the

stage of the proceedings at which finality would attach but

rather with what would in fact happen to appellee’s exten-

sion of credit if the hearing were held at all. In any event,

the premise is false. The Enforcement Commissioner’s

determination has many aspects of finality. He is directed

to issue his ‘‘Findings and Determination’’

peal is taken therefrom these ‘‘shall, in the absence of clear

and prejudicial error, be adopted by the National Enforce-

ment Commission and a certificate of disallowance based

thereon issue . . .’’ (General Procedural Regulation 1,

Revised, See. 4.1(f), 17 F. R. 7737).

The decision in the case of Grand Central Aircraft Co.

v. Jones, No. 15603, D. C. S. D. Cal., which was adverse to

appellee on the issue of equitable jurisdiction, was not only

handed down before trial, while full trial was held by the

district court here, but was issued without the benefit of

any oral argument. The cases cited therein rest on the

doctrine of exhaustion of administrative ‘‘remedies’’.

None of them holds that such exhaustion is required where,

as found by the district court herein, a plaintiff would

thereby be forced out of business and hence would be de-

prived of all recourse to the courts,

and if no ap-

nest

Brean cn QA Moy

12

Ill

The National Enforcement Commission’s Threatened Action

Was in Violation of Statute upon Grounds Additional to

Those Relied upon by the District Court.

The district court’s judgment may be supported upon

other statutory grounds in addition to those relied upon

by that court.

A. Tue Commission Hap No Avtuority To Make

DeteRMINATIONS AFTER APRIL 30, 1953

Although it did not reach the point, the district court

noted, in its opinion, that there was substantial merit in

appellee’s argument. that any authority of the National

Knforcement Commission ceased in any event on April

30, 1953, under Section 717 (50 U.S. C. App. 2166). This

ground is respectfully urged in support of the district

court’s judgment.

Section 717(a), as amended (50 U. S. C. App. 2166(a)),

provides:

“. . . titles IV and V of this Act and all authority

conterred thereunder shall terminate at the close of

April 30, 1953.’

Hence, Section 405(b), part of Title IV, expired on April

30, When a statute is repealed, or, as in the ease of Title

IV, expires under its own terms, any liability created

ceases, in the absence of a ‘“‘savings”’ clause. United States

v. Ship Helen, 6 Cranch 203 (1810).

Section 717(b) (3), 50 U.S. ¢. App. 2166(b) (3), provides:

‘‘Any agency created under this Act may be con-

tinued in existence for purposes of liquidation for not

to exceed six months after the termination of the pro-

vision authorizing the creation of such agency.’’

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This section did not permit continuance of the Commission

for two reasons. First, it was not invoked. The language

“may be continued’? is permissive only. It obviously did

not permit the ageney to continue itself, and no higher

authority issued any order continuing the ageney prior

to the expiration of its powers. Second, an agency could be

continue | only ‘for purposes of liquidation.’? It is sub-

mitted that this did not mean doing business as usual. Even

if the ageney were properly continued in existence, it could

not hold hearings, for conducting such hearings would be

merely a continuation of its pre-April 30 activities and

would render meaningless the clause “for purposes of

liquidation. ”’

13

Nor was the threatened proceeding saved by the specific

“savings’’ clause in Section 706(b), 50 U. S. ©, App.

2156(b) :

oe

- . . The termination of the authority granted in

any title or section of this Act, or of any rule, regula-

tion, or order issued, thereunder, shall not operate to

defeat any suit, action, or prosecution, whether there-

tofore or thereafter commenced, with respect to any

right, liability, or offense incurred or committed prior

to the termination date of such title or of such rule,

regulation, or order. . . .”?

This provision was not intended to apply to administra-

tive proceedings. First, it appeared in a section dealing

exclusively with court litigation. Seeond, the language

Was not applicable to administrative proceedings. A ‘suit’?

is an equity ease, an “action” is a law case, and a ‘‘prosecu-

tion’? is a criminal ease. And when Congress intended to

include an ‘administrative proceeding’? within the scope of

any provision of the Act, it specifically used the term, as in

the case of the ‘immunity bath’? provision, Section 705(b),

00 U. S.C. App. 2155(b), which refers to the ‘‘erand jury

14 i

or in any court or administrative proceeding.”’ Compare,

in this connection, Executive Order 10434, 18 F. R. 809,

suspending controls, which contained a savings clause

covering ‘‘any suit, action, prosecution, or administrative

enforcement proceeding.’’

Nor was the general ‘‘savings”’ clause, 1 U.S. C. See. 109,

U1 Stat. 633, applicable. It was clearly superseded by the

specific savings clause in the Defense Production Act. [ert:

v. Woodman, 218 U.S. 205, 30S. Ct. 621, 625 (1910).

The legislative history of the Supplemental Appropria-

tions Bill of 1954, Publie Law 207, 83d Cong. Ist Sess., gives

strong support to the contention that any adjudicatory au-

thority possessed by the National Enforcement Commission

expired on April 30, 1953. The KEeonomie Stabilization

Agency had requested 290,000 for liquidation. This

amount included expenses of ‘‘Wage & Salary Enforce-

ment,’’ ‘‘Supervision,’’ ‘Legal Protests to Price Reeula-

tions,’’ ‘*Price Enforcement’? and ‘Fiseal Operations.”

(Hearings Before the Senate Committee on Appropri-

ations on the Supplemental Appropriation Bill, H. R. 6200,

83d Cong., Ist Sess., pp. 457, 464-466.) The Senate commit-

tee reduced the House appropriation by $290,000, struck

7 the reference to the Economie Stabilization Agency, leaving

funds available only for the Office of Rent Stabilization, and

reported as follows to the Senate:

‘It is the sense of the committee that pending cases

should be turned over to the Department of Justice for

review, so that the agency will not be continued by a

continuation of these suits.’’ (S. Rep. No. 677, 83d

Cong., Ist Sess., p. 17).

On the Senate floor, the $900,000 recommended by the

Committee was raised to $1,500,000, solely in order to make

provision for terminal leave payments (99 Cong. Ree. No.

144, p. 10712). The committee’s directive was in no way

%

«

: .

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modified by such action. And even the increased appropri-

ation for terminal leave purposes was reduced by the Con-

ference committee to $1,200,000. While it was necessary to

make the appropriation available to the Economie Stabiliza-

tion Agency so that terminal leave could be paid to em-

ployees besides those in the Office of Rent Control, it is

clear that there was no intention to restore amounts for

continuation of administrative disallowance proceedings,

which the Senate committee had recognized were outside the

liquidation function. (I. R. Rep. 1090, 83d Cong., Ist Sess.,

pp. 9, 15, Amdts. 76, 77.)

B. Tuk Coi.tarse or THE TRIPARTITE WaGE STABILIZATION

Boarp Destroyep THE Sratutory SCHEME For Ap-

MINISTRATION OF WAGE CONTROLS

Under Seetion 403(b)(1) of the Act, added in 1952, (50

U.S. C. App. Seetion 2103(b) (1), 66 Stat. 500), Congress

created a Wage Stabilization Board composed of public,

industry, and labor members, apparently believing that the

interests of labor and industry could only be protected with

such a Board as a watchdog, even though the ultimate power

be in the Eeonomie Stabilization Administrator. Yet there

has been no statutory Wage Stabilization Board since the

resignation of industry members on December 6, 1952. The

Administrator sought to fill this gap by creating an all-

public-member Wave Stabilization Committee on December

15, 1952 (17 F. R. 11368). He, of course, had no authority

to take action clearly conflicting with the express will of

Congress, and Congress had expressly disapproved estab-

lishment of a wage hoard composed solely of public mem-

bers, (S. Rep. 1599, 82d Cong. 2d Sess.).

The significance of this development in the present case

is that the Board was vested with the function, under Sec-

tion 403(b) (5), (50 U.S. C. App. See. 2103(b)(5)), of ad-

=

eet Ee Be oe

Prtrnrninn...

16

vising as to ‘‘the application to particular circumstances

of policies and regulations promulgated by the Adminis-

trator’’ and relating to wages. Under this provision ap-

pellee would have been entitled, as a matter of right, had

the Board not been defunct, to have sought a ruling by the

Board that appellee’s wage increases were authorized under

the applicable regulations, or, at least, to have obtained an

interpretation as to the application of the regulations in the

particular circumstances. Such advice from the Board

would have gone far to preclude agents of the Adminis-

trator from seeking the commencement of court action, or,

if the administrative enforcement procedure were valid,

would have been binding upon the National Enforcement

Commission. However, from December 6, 1952—before

appellee was apprised of the particular grounds upon which

it was alleged to have violated the applicaole regulations—

this route through which appellee could have obtained relief

was closed.

C. Tue Governinc Recuiations Were INvautip BEcavseE oF

THE ABSENCE OF ADEQUATE STATEMENTS OF CONSIDERA-

TIONS

The administrative disallowance procedure was invalid

not only because unauthorized by statute, but also because

the regulations purporting to establish it were void for lack

of an adequate statement of considerations. Section 709

(59 U.S. C. App. 2159) required that any rule or regulation

issued under authority of the Act be accompanied by a state-

ment that in its formulation there was consultation with

industry representatives and that consideration was given

to their recommendations, or that special circumstances

rendered such consultation impractical or contrary to the

interest of national defense. It further provided that no

rule should be held invalid by reason of a finding that such

statement was imaccurate.

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Neither General Order 15 (17 F. R. 2994, 9977), General

Order 18 (17 F. R. 6925, 9977), nor General Procedural

Regulation 1, Revised (17 F. R. 7737, 18 F. R. 1663), con-

tained a statement of considerations adequate under this

section. Yet the requirement of a statement applied to

“all” regulations; this was recognized by the agencies

themselves, as was demonstrated by the half-hearted at-

tempt at compliance in General Procedural Regulation 1,

Revised, supra.

The section declared that a regulation should not be held

invalid for non-compliance with the section’s requirements

only in one instance—where the statement was inaccurate.

The clear implication was that in all other instances of non-

compliance with the section’s requirements, such as com-

plete omission of the statement or the statement’s failure to

set forth the fact of consultation or non-consultation with

industry representatives, the regulation was invalid. The

result was to require a statement of considerations but to

prevent collateral inquiries. Such inquiries would be un-

necessary; Congress could assume the truth of the state-

ment because the possibly burdensome requirement of con-

sultation could be avoided by the agency’s written state-

ment that consultation was impracticable. But Congress

did put agencies under a duty to consult when practicable

and coneluded that the best way of insuring compliance,

wihout injecting extraneous issues into every suit for viola-

tion, was to require that a statement of considerations be

made. Beeause of the complete absence of such a statement

the cited regulations are, we submit, invalid.

D. Tre Recuiation Wnuicu Prescrines THE EXTENT TO

Wuicn Wace Payments May Be Dtsattowep Is Vorp

While Section 4 of General Order 15 (17 F. R. 2994,

9977) provided that the entire amount of any wage paid

DAR LIRR ad NA ——'

Sao ne ee aon a

Si Laces Si Epes a Me ae eA ELS

ae Salina

18

in violation of regulation could be disallowed, we submit

that such an interpretation was in conflict with the authority

granted by Section 405(b) of the Act and that only the

excess illegally paid was subject to disallowance. Only

that part of the wage payment in excess of the allowable

was ‘‘in contravention”’ of any regulation. Suppose, for

example, that instead of an illegal salary increase, an illegal

bonus had been given to an employee. Obviously, only the

bonus payment was illegal and the regular paycheck was

not an illegal payment. The same should have been true

where an employer improperly granted an illegal raise,

We are aware that under the 1942 Act a contrary point of

view Was expressed in Woodworth vy. Kavanaugh, 102 F.

Supp. 9, D. C. Ed. Mich., 1952; aff'd. per curiam, 202 F.2d

154 (6th Cir., 1953), but the court’s discussion of the sub-

ject is not convincing and the only question properly before

the court was the Government’s motion to dismiss on other

grounds,

E. Generat Orver 15, 1n Denyinc Any Jupretat Review

OF DISALLOWANCE Proceepincs, Was Unavruorizep BY

THE Act AND Deprivep APPELLEE OF Dur Process or Law

The difficulty with appellants’ theory that the Act author-

ized administrative disallowance proceedings is emphasized

by the provision in Section 6 of General Order 15 (17 F. R.

2994, 9977), that determinations of Violations and disallow-

ances ‘‘shall be final and not subject to review by the Tax

Court of the United States or by any court in any civil

proceeding’’,

As we discuss below, Congress concededly intended to

make wage regulations non-reviewable. But there is no

indication that disallowances were not to be subject to

review. The penalty provided by Congress for a wilful

violation is $10,000 (See. 409(b), 50 U.S.C, App. 2109(b))

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19

the penalty authorized by General Order 15, if the order

was legal, amounted to several millions of dollars in the

instant ease if there had been a violation. This is shock-

ingly severe, Certainly, if Congress had intended to permit

findings of violation, resulting in the imposition of such

a penalty, by the extraordinary procedure of a non-review-

able administrative determination without the safeguards

of a jury trial or the rules of evidence, it clearly would have

said so in no uncertain terms. Yet there is not one single

provision in the Act providing for notice, hearing and other

procedures which would insure fairness in administrative

disallowance determinations. Even the protection provided

in the Administrative Procedure Act is not applicable to

any administrative hearings necessary under the Defense

Production Act (See. 709, 50 U. S. C. App. 2159). Surely

if Congress had intended a determination of disallowance

by administrative action it would have made some provision

granting, defining, and limiting such administrative au-

thority.

It is therefore clear that the provision for complete

administrative finality not only rendered illegal the entire

administrative proceeding, because it denied due process

of law for the reasons discussed in point ITV(A)(1) below,

but was also unauthorized under the Act.

Of course, no problem could have existed in this con-

nection had disallowances been sought in the district courts,

as the statute directed.

IV

The Threatened Application of Title IV and Section 405(b)

of the Act Against Appellee Was Unconstitutional

While the District Court properly avoided the consti-

tutional issues raised by the Complaint, we respectfully

urge these issues before this Court as constituting addi-

tional support for the judgment below.

20

. A. Titte IV or tue Derense Propuetion Act Dexiep

: ApreLLee Dur Process or Law

‘

; 1. Lack of Judicial Review. No provision was made jy

; the Defense Production Act for judicial determination of

: the validity of wage and salary regulations, although there

‘ was detailed provision (Secs. 407, 408, 50 U.S. (. App.

: 2107, 2108) for such review of price regulations. This lack

é of provision for review in the statute itself, taken in cop.

: junction with the Congressional history explaining the

: reason for such absence (96 Cong. Ree. 12133, 12480, 14079.

; 14073), showed persuasively that Coneress intended that

‘ such regulations be non-reviewable. However practical the

‘ reason for this withdrawal of review, it clearly contravened

# the due process clause of the Fifth Amendment. Ny Funa

; Ho v. White, 259 U.S. 276, 42 S. Ct. 492 (1922) ; see Estep

; v. United States, 327 U.S. 114, 120, 66S. Ct. 423 (1945),

é Thus, the effect of the statute was not only to require sub-

mission to a challenged regulation, in the face of the risk

: of heavy penalty—a procedure held unconstitutional iy

: prior Supreme Court eases of unimpaired anthority,

f Southwestern Telephone & Telegraph Co. v. Danaher,

: 238 U.S. 482, 490, 35.8. Ct. 886 (1914); Wadley Southern R.

: Co. v. Georgia, 235 U. 8. 651, 662, 35 S. Ct. 214 (1918) —bnt,

as extended by the Administrator (General Procedural

a Regulation 1, Revised, sec. 10.1, 17 F. R. 7757), to prevent

: any challenge of the regulations even in a proceeding

4 brought to determine violation. The unconstitutionality

3 of such a procedure is highlighted when the heavy penalties

2 which Section 405(b) of the Aet purportedly authorized

{ are considered.

2. Excessive Penalty Without Relation to Daimaaes

3 Suffered. The regulations of the Eeonomic Stabilization

Administrator interpreted the statute as authorizing dis-

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21

allowance of the entire amount of wage paid in violation

of regulation, not only of the illegal excess (General Order

15, 17 F. R. 2994, 9977). While we submit that this con-

struction was untenable, if the statute did authorize

disallowance of the entire amount then it is clear that the

penalty bore no relation either to the damage to the public

interest or to the extent of the violation or to any other

standard. In some cases, the amount of excess might have

been very small and the remaining wage very large, while

in others the amount of excess itself might have been

very large—yet there was no statutory differentiation

between the minor violation and the major violation and

the lack thereof rendered the statute invalid, Missouri

Pacific Railway Co. vy. Tucker, 230 U.S. 340, 351, 33.8, Ct.

961 (1912). Furthermore, application of the penalty of tax

disallowance denied due process to the extent that different

monetary penalties resulted solely because of the tax bracket

of the particular employer-taxpayer and without relation

to the degree of the violation. Nor, it is interesting to note,

did the regulations governing the disallowance standards

to be followed make any express provision for mitigating

the effect of these inequalities, although providing for other

mitigating cireumstances (General Order 15, Section 4, 17

F. R. 2994, 9977).

B. Section 405(b) as Inrerrretep By ApreELLANTs Dentep

Apre.uee Its Ricut to a Jury Tria, Unber THE 6TH

AMENDMENT

The disallowance provision of the statute, at least to the

extent that the entire amount of a wage could be disallowed,

clearly imposed a penalty and in an action on a statutory

penalty, analogous to the common law action of debt, the

constitutional right to a jury trial must be recognized.

People ex rel Lemon v. Elmore, 256 N. Y. 489, 177 N. E. 14,

oo *

a,

22

mo A. L. R. 1292 (1931); Leimer v. Woods, 196 F. 2d 82,

S34 (Sth Cir. 1952). Yet no jury trial was available jy

administrative disallowance proceedings which appellants

claim were authorized by the statute. While it can be said

that the imposition of penalties for wage violations was not

a proceeding known to the common law, this fact does

not furnish the premise for an argument that the right

to a jury trial need not have been afforded, for it proves

too much, If it were a complete answer to say that any

administrative proceeding is an action unknown to. the

common law, then Congress could, by statutory enactment,

destroy the right of trial by jury. By such specious reason-

ing the effectiveness of the 6th Amendment would be com.

pletely nullified. See United States v. Jepson, 90 F. Supp.

983, 986 (D.C. N. J. 1950). Cases such as National Labor

Relations Board vy. Jones Laughlin Steel Corp., 301 U.S.

1, 57S. Ct. 615 (1937), and Helvering v. Mitchell, 303 U. §.

391, 58 St. Ct. 6830 (1938), involved merely remedial sanc-

tions and hence are distinguishable.

C. Disattowance or Wace Payments ror Tax Purposes

ResuLtep tn THE Imposition or a Tax on Gross Re-

CEIPTS AND Was UnconstIruTIONAL

Under Article 1, Section 9, of the Constitution, a tax on

“ross receipts is unconstitutional unless apportioned. — Pol-

lack v. Farmers Loan and Trust Co., 157 U.S. 429, 15S. Ct.

6753 (1895). By the statutory device of disallowance, the

right to include wages as part of the cost of goods or serv-

ices sold for income tax purposes was impaired. The re-

sult was imposition of a gross receipts tax, not permitted

by the Sixteenth Amendment. Cf. Doyle v. Mitchell Bros.,

247 U.S. 179, 38'S. Ct. 467 (1918) ; Lela Sullenger, 11 Tax

Court 1076 (1948) ; but cf. Weather-Seal Mfg. Co. v. Com-

missioner, 16 T. C. 1312, aff’d mem., 199 F. 2d 376 (6th Cir.

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1952). See also Commissioner v. Weisman, 197 F. 2d 221

(ist Cir. 1952), a case involving price disallowance, where

the court carefully avoided the constitutional issue but

nevertheless noted (at note 1, p. 224) that under Section

405(a), 50 U. S. C. App. 2105(a), which is identical in effect

with Section 405(b) :

‘It is possible . . . that in effect the tax levied

would amount to a gross receipts tax.’

D. OrneR ConstTITUTIONAL OBJECTIONS

Other doubts concerning the constitutionality of Section

405(b), as urged in appellee’s complaint, are that the see-

tion involved an unconstitutional delegation of legislative

power; that its application resulted in the imposition of an

excessive fine, prohibited by the Eighth Amendment; and

that its application impaired the obligation of contracts and

thereby denied due process of law.

Conclusion and Motion to Affirm

Under the district court’s construction of the statute

many of the difficulties raised by an administrative proceed-

ing are obviated. Thus, construing the grant of jurisdic-

tion over violations to the federal courts to be unlimited

and therefore to include authority to impose disallowance

penalties is not only in accordance with the express terms of

Section 706(b) (50 U. S. C. App. 2156(b)), but such con-

struction avoids constitutional issues of denial of judicial

review and right to jury trial. The construction of Sec-

tion 405(b) (50 U.S. C. App. 2105(a)) need not be strained

to derive administrative authority to determine violations

when such authority is not granted expressly. The absence

of specification of notice and hearing procedures which are

ordinarily part of a grant of administrative adjudication

authority—indeed, the expressed inapplicability of the

Administrative Procedure Act—requires no dubious impli-

24

:

: cation that such procedures were intended when it is recog.

: nized that administrative adjudication was not intended,

: The ‘‘savings’’ clause in Section 706(b) (50 U.S. C. App.

2 2156(b)) ean be applied to save all liabilities, as would not

: be the case if some were enforceable only by agency action,

; authority for which has already expired. The term ‘‘liqui-

dation’’ need not be construed to authorize doing business

as usual.

In view of the above, the entire proposed administrative

enforcement proceeding against appellee, through a com-

missioner of the National Enforcement Commission, was il-

; legal under the statute. Consequently, it should not be ne-

cessary for the court to even consider the constitutional

issues. However, if it should be determined that the pro-

: ceedings were valid under the Act, then, we submit, the stat-

ute is unconstitutional in the various respects discussed.

For the reasons hereinabove set forth, it is submitted

that the appellants present no substantial question for the

decision of this court and appellee respectfully moves that

$ the final judgment and decree of the district court be

: affirmed.

Respectfully submitted,

Paut R. Watkins,

Dana LatTHam,

R. W. Lunn,

Counsel for Appellee.

*

5

o4

*

¢

+4

a

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APPENDIX A

PERTINENT SECTIONS OF THE

DEFENSE PRODUCTION ACT OF 1950

(50 U.S. C. App. See. 2061 et seq.)

Section 403(a) and (b), as added 66 Stat. 300:

(U.S. C. See. 2103(a) and (b))

‘‘(a) At such time as the President determines that it is

necessary to impose price and wage controls generally over

a substantial portion of the national economy, he shall ad-

minister such controls, and rationing at the retail level of

consumer goods for household and personal use under au-

thority of Title I of this Act (when and to the extent that

he exercises such authority), through a new independent

agency created for such purpose; Provided, however, That

the President shall administer any controls over the wages

or salaries of employees subject to the provisions of the

Railway Labor Act, as amended, through a separate board

or panel having jurisdiction only over such emplovees.

Such agency may utilize the services, information and fa-

cilities of other agencies and departments of the Govern-

ment, but such agency shall not delegate enforcement of any

of the controls to be administered by it under this section

to any other agency or department.

‘‘(b) (1) There is created, in the present Economic

Stabilization Ageney, or any successor agency, a Wage

Stabilization Board (hereinafter in this subsection referred

to as the ‘‘Board’’), which shall be composed, in equal

numbers, of members representative of the general public,

members representative of labor, and members representa-

tive of business and industry. The number of offices on the

Board shall be established by Executive order.

**(2) The members of the Board shall be appointed by

the President, by and with the advice and consent of the

Senate. The President shall designate a Chairman and

Vice Chairman of the Board from among the members

representative of the general public.

SAULT sae semaine:

’

‘*(3) The term of office of the members of the Board

shall terminate on May 1, 1953. Any member appointed to

fill a vacancy occurring prior to the expiration of the tern

for which his predecessor was appointed shall be appointed

for the remainder of such term.

**(4) Each member representative of the general public

shall receive compensation at the rate of $15,000 a year,

and while a member of the Board shall engage in no other

business, vocation, or employment. Each member repre-

sentative of labor, and each member representative of busi-

ness and industry, shall receive $50 for each day he is actu-

ally engaged in the performance of his duties as a member

of the Board, and in addition he shall be paid his actual and

necessary travel and subsistence expenses in accordance

with the Travel Expense Act of 1949 while so engaged away

from his home or regular place of business. The members

representative of labor, and the members representative of

business and industry, shall, in respect of their functions

on the Board, be exempt from the operation of sections 281,

283, 284, 434, and 1914 of Title 18 and 99 of Title 5.

**(5) The Board shall, under the supervision and diree-

tion of the Eeonomie Stabilization Administrator—

26

‘*(A) formulate, and recommend to such Adminis-

trator for promulgation, general policies and eeneral

regulations relating to the stabilization of wages,

salaries, and other compensation; and

‘*(B) upon the request of (i) any person substan-

tially affected thereby, or (ii) any Federal department

or agency whose functions, as provided by law, may be

affected thereby or may have an effect thereon, advise

as to the interpretation, or the application to particular

circumstances, of policies and regulations promulgated

by such Administrator which relate to the stabilization

of wages, salaries, and other compensation.

‘‘For the purposes of this Act, stabilization of wages,

salaries, and other compensation means prescribing maxi-

mum limits thereon. Except as provided in clause (B) of

this paragraph, the Board shall have no jurisdiction with

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27

respect to any labor dispute or with respect to any issue

involved therein. Labor disputes, and labor matters in dis-

pute, which do not involve the interpretation or application

of such regulations or policies shall be dealt with, if at all,

insofar as the Federal Government is concerned, under the

conciliation, mediation, emergency or other provisions of

laws heretofore or hereafter enacted by the Congress.

‘“‘(6) Paragraph (5) of this subsection shall take effect

thirty days after the date on which this subsection is en-

acted. The Wage Stabilization Board created by Executive

Order Numbered 10161, and reconstituted by Executive

Order Numbered 10233, as amended by Executive Order

Numbered 10301, is abolished, effective at the close of the

twenty-ninth day following the date on which this subsection

is enacted. After June 27, 1952, the present Wage Stabili-

zation Board shall issue no regulation or order except with

respect to individual cases pending before the Board prior

to such date.’’

Section 404:

(U. S. C. See. 2104)

“Tn carrying out the provisions of this title, the President

shall, so far as practicable, advise and consult with, and

establish and utilize committees of, representatives of per-

sons substantially affected by regulations or orders issued

hereunder.”’

Section 409(a) and (b):

(U.S. C. See. 2109(a) and (b))

‘‘(a) Whenever in the judgment of the President any

person has engaged or is about to engage in any acts or

practices which constitute or will constitute a violation of

any provision of section 405 of this title, he may make appli-

cation to any district court of the United States or any

United States court of any Territory or other place subject

to the jurisdiction of the United States for an order enjoin-

ing such acts or practives, or for an order enforcing compli-

ance with such provision and upon a showing by the Presi-

dent that such person has engaged or is about to engage in

MI AD eg EA AS

28

any such acts or practices a permanent or temporary in.

junction, restraining order, or other order, with or without

such injunction or restraining order shall be granted with.

out bond.

**(b) Any person who willfully violates any provision of

section 405 of this title shall be guilty of a misdemeanor

and shall, upon conviction thereof, be subject to a fine of not

more than $10,000, or to imprisonment for not more than

one year, or both. Whenever the President has reason to

believe that any person is liable to punishment under this

subsection, he may certify the facts to the Attorney General,

who may, in his discretion cause appropriate proceedings

to be brought.’’

Section 705(b) :

(U.S. C. See. 2155(b) )

‘‘No person shall be excused from complying with any

requirement under this section, or from attending and

testifying or from producing books, papers, documents, and

other evidence in obedience to a subpena before any grand

jury or in any court or administrative proceeding hased

upon or growing out of any alleged violation of this Act on

the ground that the testimony or evidence, documentary or

otherwise, required of him may tend to incriminate him or

subject him to penalty or forfeiture; . . .”

Section 709:

(U.S. C. See. 2159)

‘‘The functions exercised under this Act shall be excluded

from the operation of the Administrative Procedure Act

(60 Stat. 237) except as to the requirements of section 3

thereof. Any rule, regulation, or order, or amendment

thereto, issued under authority of this Act shall be accom-

panied by a statement that in the formulation thereof there

has been consultation with industry representatives, in-

eluding trade assqgiation representatives, and that con-

sideration has been given to their recommendations, or that

special circumstances have rendered such consultation im-

practicable or contrary to the interest of the national de

fense, but no such rule, regulation, or order shall be invalid

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by reason of any subsequent finding by judicial or other

authority that such a statement is inaccurate.’’

Section 717, as amended 66 Stat. 306:

(U.S. C. Sec. 2166(a) and (b))

‘‘(a) Titles I, II, II, VI, and VII of this Act and all

authority conferred thereunder shall terminate at the close

of June 30, 1953; and titles IV and V of this Act and all

authority conferred thereunder shal! terminate at the close

of April 30, 1953.

‘‘(b) Notwithstanding the foregoing—

‘““(3) Any agency created under this Act may be con-

tinued in existence for purposes of liquidation for not to

exceed six months after the termination of the provision

authorizing the creation of such agency.’’

(2009)