Opposition Brief — Willapoint Oysters, Inc. v. Ewing

is

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INDEX

Page

I -oeh tees ca citer cs ae 8 aay 1

EE Nira. wit re SSNS Cae ip a eicid vs aioig we vik ee cee 2

ES a waa oie cihwin ais oka gunn Waisin cdke te 2

ie ond On Cee ean < 5014 bade eh aaa cuee 2

SPAN i CLs ant wh Be ode kn vhs ok ca ee ks 4

EER OSE PERE RPE ETE PUES TEE CT POET Oe 14

i ES ER pe § = Se ap rete” ee ee ee ee D 26

CITATIONS

Cases :

Berkshire Employees Association v. National Labor Rela-

ee Oe OD cs. ss ccc ea ecd cdecees 21

Bi-Metallic Investment Co. v. State Board, etc., 239 U. 8.

SE DO re te Saye er ee 17

Bowles, etc. v. Willingham et al., 321 U. 8. 503......... 17

Dorsey v. Kingland, 173 F. 2d 405.................... 21

Federal Security Administrator v. Quaker Oats Company,

CS ah a et ean ge es pccak cs oie 16,17

Morgan v. United States, 298 U. 8. 468................ 18

Morgan v. United States, 304 U.S.1.................. 18, 19

Norwegian Nitrogen Products Co. v. United States, 288

IS AEC VEE wie d gsc trek cg S ws Cis do oh ne ac, 17

Pacific States Box & Basket Co. v. White et al., 296 U. S.

LSE he SRS Ra ap SUR Ot a iia en oO a 17

Powhatan Mining Co. v. Ickes, co Se - Se 21

Statutes :

Administrative Procedure Act (60 Stat. 237; 5 U.S.C.

1001 et seq.) :

Da OC uk buco s eae ke werdans MERE D che cee: 24

MC MES Retry t's oko S Abe am besa tu ekes op hana _ 24

EN TERI RCC lane cae ocdbies Lada ace «ean o Las 23

OS BE UPR A ie Od Ook Re rer on 24

GG ite eo Ghani edbids Gale nics evade ket. 24

Federal Food, Drug, and Cosmetic Act of 1938, 52 Stat.

1040, 21 U.S.C. 301 et seq.:

EE NS Ga ales Kes ce $k Kae Gk Caw Saber cs 2

EE on rcratean svat ae au eaien cus oc nas 3, 19, 22

Miscellaneous :

Attorney General’s Manual on the Administrative Pro-

I Me Ws Goon adele bc vccccclncckcc,! 24

H. Rep. 1980, 79th Cong., 2d sess., p. 30............... 25

S. Doe. 248, 79th Cong., 2d sess., pp. 24-25............ 25

S. Rep. 752, 79th Cong., Ist sess p.18................ 25

(1)

Inthe Supreme Court of the Wnited States

OcroBER TERM, 1949

No. 280

WILLaPoInT Oysters, INC., PETITIONER

v.

Oscar R. Ewina, ApMINIsTRATOR, AND J. DoNAL

KINGSLEY, ACTING ADMINISTRATOR, FEDERAL

Security AGENcy, Foop anp Drug ADMINISTRA-

TION

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE NINTH

CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

OPINION BELOW

The opinion (R. Vol. XI, p. 1) of the Court of

Appeals is reported at 174 F. 2d 676. The adminis-

trative orders under review (R. Vol. II, p. 40 and

Vol. IX, p. 1) were published at 13 F. R. 1337,

4663.

(1)

2

JURISDICTION

The judgment of the Court of Appeals was

entered April 29, 1949 (R. Vol. XI, p. 33). A peti-

tion for rehearing (It. Vol. XII, p. 1) was denied

June 3, 1949 (R. Vol. XII, p. 53). The petition for

a writ of certiorari was filed August 19, 1949. The

jurisdiction of this Court is involved under 28

U.S. C. 1254(1) and Section 701(f) (4) of the Fed-

eral Food, Drug, and Cosmetic Act of June 25,

1938, 52 Stat. 1040, 1055, 21 U. S. C. 371(f) (4).

QUESTIONS PRESENTED

1. Whether, in a rule-making proceeding inci-

dent to the establishment of a standard of fill of

container for canned oysters under the Federal

Food, Drug and Cosmetic Act, the hearing ex-

aminer’s rejection of an offer of proof intended

to show that the separation-of-functions require-

ment of Section 5(c) of the Administrative Pro-

cedure Act, 5 U. S. C. 1004(c), had not been ob-

_ served, denied petitioner means of vindicating a

right to a ‘‘fair hearing’? guaranteed by the due

process clause of the Fifth Amendment.

2. Whether the rejection of the offer of proof

was contrary to the provisions of the Administra-

tive Procedure Act.

STATUTE INVOLVED

The Federal Food, Drug, and Cosmetic Act of

1938, 52 Stat. 1040, 21 U.S. C. 301 et seq., provides:

Sec. 401. Whenever in the judgment of the

Administrator such action will promote hon-

3

esty and fair dealing in the interest of con-

sumers, he shall promulgate regulations fixing

and establishing for any food, under its com-

mon or usual name so far as practicable, a rea-

sonable definition and standard of identity, a

reasonable standard of quality, and/or rea-

sonable standards of fill of container; * * *

[21 U.S. C. 341.]

me we? 2

* * * * *

(e) The Administrator, on his own initia-

tive or upon an application of any interested

industry or substantial portion thereof stat-

ing reasonable grounds therefor, shall hold a

public hearing upon a proposal to issue, amend,

or repeal any regulation contemplated by any

of the following sections of the Act: 401 * * *

At the hearing any interested person may be

heard in person or by his representative. As

soon as practicable after completion of the

hearing, the Administrator shall by order

make public his action in issuing * * * the

reguiation * * *,. The Administrator shall

base his order only on substantial evidence of

record at the hearing and shall set forth as

part of the order detailed findings of fact on

which the order is based. * * *

(f)(1) Ina case of actual controversy as to

the validity of any order under subsection

(e), any person who will be adversely affected

by such order if placed in effect may * * *

file a petition with the Circuit Court of Appeals

of the United States for the circuit wherein

such person resides or has his principal place

4

of business, for a judicial review of such or-

aa ee

(2) If the petitioner applies to the court for

leave to adduce additional evidence, and shows

to the satisfaction of the court that such addi-

tional evidence is material and that there were

reasonable grounds for the failure to adduce

such evidence in the proceeding before the Ad-

ministrator, the court may order such addi-

tional evidence (and evidence in rebuttal

thereof) to be taken before the Administrator,

and to be adduced upon the hearing, in such

manner and upon such terms and conditions

as to the court may seem proper. The Admin-

istrator may modify his findings as to the facts,

or make new findings, by reason of the addi-

tional evidence so taken, and he shall file such

modified or new findings, and his recommen-

daticn, if any, for the modification or setting

aside of his original order, with the return of

such additional evidence.

(3) The court shall have jurisdiction to af-

firm the order, or to set it aside in whole or in

part, temporarily or permanently. * * *

The findings of the Administrator as to the

facts, if supported by substantial evidence,

shall be conclusive.

[21 U.S.C. 371.]

STATEMENT

This is a special statutory proceeding for judi-

cial review of orders of the Federal Security Ad-

ministrator which established a definition and

standard of identity and a standard of fill of con-

5

tainer for canned oysters. The orders, which are

by nature rule-making in that they establish regu-

lations of general applicability, were promulgated

under the authority of Section 401 of the Federal

Food, Drug, and Cosmetic Act, supra, pp. 2-3.

(1) Historical background.—Oysters are canned

commercially in three areas of the United States,

the South Atlantic coastal area, the Gulf area, and

the Pacific Northwest (R. Vol. ITI, p. 33). The

markets for the canned food are primarily in the

mid-west and western states (R. Vol. III, pp. 17,

18).

Before 1942, canners of oysters in all areas filled

the No. 1 Eastern Oyster can, the can in principal

use, to yield a drained or cut-out weight of 5 ounces

of oysters. This practice was condoned by an early

official expression of the Food and Drug Adminis-

tration that such a fill would not be considered adul-

terated on a charge that excessive brine had been

substituted in part for oysters (R. Vol. IV, Ex.

3). In 1942 the supply of tin plate became short,

and the War Production Board decided that there

was wastage of tin plate in oyster canning because

of the light 5-ounce fill. Conservation Order M-81

was issued, and it effectively denied tin plate to

oyster canners except where No. 1 EO cans were

filled to yield at least 744 ounces of oysters (R.

Vol. ITT, p. 448; Vol. II, p. 42, Finding 1).

Shortly thereafter, the Federal Security Admin-

istrator announced that a public hearing would be

6

held, under the Federal Food, Drug, and Cosmetic

Act, upon a proposal to establish a fill of container

standard for canned oysters. Public proceedings

were held in accordance with law, and on November

18, 1944, the standard was promulgated (R. Vol.

IV, Ex. 3). It required a drained weight of not

less than 68% of the water capacity of the container

(71% ounces for the No. 1 EO can). The standard

was made to apply to canned oysters that averaged

less than 14 ounce each, and was largely inappli-

cable to Pacific oysters because they average more

than %4 ounce. Canners of Pacific oysters had

discontinued canning in 1942. (R. Vol. I, p. 49,

Finding 12.) That order was not challenged.

In the spring of 1946, canning operations began

anew on the Pacific coast, and there soon appeared

in the same markets in competition canned Pacific

oysters in the No. 1 EO can with cut-out weight of

approximately 5 ounces and Atlantic and Gulf

oysters in the same size can with cut-out weight

of 744 ounces of oysters. The difference in the

amounts of oysters in cans was known to wholesale

dealers, but was not generally known to retailers

or to consumers, with the result that there was like-

lihood of deceptica of consumers who would pur-

chase the canned product on the basis of size of

container alone without knowledge of the weight

differential (R. Vol. II, p. 43, Finding 5). The

existing standard gave a decided competitive ad-

vantage to canners who were not bound by it and

were using the 5-ounce fill.

nn

7

(2) The March 10, 1948, order—The Federal

Security Administrator ordered a public proceed-

ing upon proposals to adopt standards of identity

and a standard of fill of container (R. Vol. III,

p. 4; Vol. II, p. 118). A public hearing was held

in which the Food and Drug Administration and

canners of Pacific and Gulf oysters participated

(R. Vols. III and IV), a tentative order was pub-

lished (R. Vol. II, p. 115a), exceptions were filed

(R. Vol. II, pp. 84, 86), and » “‘tioner filed a re-

quest for postponement and recunsideration of the

tentative order (R. Vol. il, p. 52). Petitioner’s

counsel conferred with Administrator Ewing in

order to support his request (R. Vol. IT, p. 51).

On March 10, 1948, a final order was issued (R. Vol.

II, p. 40).

This order contained detailed findings of fact.

The findings, reciting first the existing require-

ments as to fill of container (Findings 1-3), were

to the effect that the 714 ounce fill to which Eastern

and Gulf packers had been subject caused minor

manufacturing difficulties and some changes in

the oysters (Finding 3) ; that canned Pacific oys-

ters packed to the cut-out weight in use prior to

1942—5 ounces—were not well filled ( Finding 4) ;

that sale in the same markets of No. 1 cans of

oysters some of which were filled to yield 714 ounces

of meat and some of which were filled to yield only

5 ounces was likely to confuse and deceive consum-

ers who generally did not know of the difference

in fill (Finding 5) ; that in respect of Pacific oysters

2 ee og oe eee

Se

8

there had been no commercial practice of filling

cans to capacity and thus no basis of commercial

experience on which to determine the maximum fill

that could be used without impairment of quality

(Finding 6); but that experimental packs made

in West Coast canneries both by canners of Pacific

oysters and the Food and Drug Administration

showed that Pacific oysters could be packed to yield

a cut-out weight of at least 614 ounces from the No.

1 can without significant impairment of the qual-

ity of the food (Findings 6-8). (R. Vol. II, pp.

40-45.)

The Administrator concluded that it would not

promote honesty and fair dealing in the interest

of consumers to return to the 5-cunce fill; that hon-

esty and fair dealing in the interest of consumers

would not be promoted by establishing separate

standards of fill of container for oysters of dif-

ferent sizes or species ; and that a 614 ounce drained

weight from the No. 1 can could be met by all can-

ners with any heat treatment and without impair-

ment of quality.

(3) The remand and the August 3, 1948, order.—

A petition for judicial review was filed by petitioner

alone on May 22, 1948, together with a motion for

leave to adduce additional evidence (R. Vol. I, p. 1).

Petitioner represented that subsequent to the public

hearing it had developed and put into commercial

operation an entirely new method of preparing

oysters for canning, described as a blanching

— a

9

method. Petitioner alleged that the record con-

tained no evidence respecting this new method, and

asserted that the March 10 order would preclude its

use and would destroy petitioner’s business.

The Court of Appeals granted the motion on

June 8, 1948, ordering the proceeding remanded

‘““with direction to take such additional evidence

(and evidence in rebuttal thereof) as may be

offered relative to said process of packing blanched

oysters, within a period of 30 days from the date

of this Order on such reasonable notice to the peti-

tioner as he may give’’ (R. Vol. V, pp. 40, 42).

The Administrator complied with this mandate

(R. Vol. VI and VII). It was at the hearing on

the remand that the claimed error upon which peti-

tioner relies was committed. During the cross-

cxamination of a witness for the Food and Drug

Administration, he was asked (R. Vol. VI, pp. 960-

962) whether he had a hand in preparing, or whether

he had written, the March 10 order. The questions

were objected to on tne ground that the Adminis-

trator’s decisional process was not a proper subject

of interrogation. The hearing examiner ruled that

he did not consider the questions pertinent to the

issue before him. Shortly thereafter, the witness

again was asked whether either he or the attorney

appearing on behalf of the Food and Drug Adminis-

tration contributed a specified sentence to the lan-

guage of the March 10 order. (R. Vol. VII, pp.

991-992.) Objection was sustained, and petitioner

10

made an offer of proof as follows (R. Vol. VII,

pp. 993-994) :

Mr. STEPHAN: I offer to prove by these ques-

tions presently addressed to Mr. Callaway and

likewise questions yesterday that, in violation

of my understanding of the Administrative

Procedure Act, Section 5(c), the order in issue

of March 10, 1948, violates so much of that

section as provides that ‘‘save to the extent

required for the disposition of ex-parte mat-

ters as authorized by law, no such officer (re-

ferring to the officers who presided at the hear-

ings) shall consult any person or party on any

fact in issue unless upon notice and opportunity

for all parties to participate, nor shall such

offiicer——”?

PRESIDING OFFICER GopiNnG: I hesitate to do

this, but I think I am constrained to break in

on you. I think what you are reading is en-

tirely irrelevant to these proceedings, because

what you are referring to, sir, relates exclu-

sively to quasi-judicial matters; this is a rule

making hearing and it is quasi-legislative, and

I do not think you are gaining anything by

any extended discussion of Section 5 or any

part of it.

Mr. StTerHaN: I will then accede to the

Examiner’s statement and preserve an excep-

tion as to whether or not the function presently

before us falls within the classification indi-

cated.

PRESIDING OFFICER GopING: Very well. Shall

we get on now with interrogation?

11

Petitioner’s position was made sufficiently clear

by the quoted statement, and no prejudice ensued

from the presiding officer’s interjection.

At the completion of the hearing, the record was

certified to the Acting Administrator,’ who made

findings of fact and conclusions upon the new evi-

dence (R. Vol. IX, pp. i-vii). His findings were:

Pacific oysters canned after blanching are no better

than those canned after pre-steaming and many

persons regard them as inferior because of mate-

rial suspended in the liquid and because they break

more readily (Finding 9). To attain a given drained

weight of oysters account must be taken of the

changes in the food which occur during preparation

for and in canning, the most significant of which

is the loss of liquid from the oysters during heat

treatment. The total amount of liquid that sep-

arates from the oysters is approximately the same

whether the oysters are packed in the container

raw, are given partial cooking by blanching, or are

partly cooked in the shell by pre-steaming (Find-

ing 10). The ditference is that with raw oysters

the loss oceurs in the can whereas with the other

methods the loss occurs partly in the can and partly

during the pre-canning operations. The blanching

loss and the light pre-steaming loss approximates

16% by weight, the pre-steaming loss generally be-

ing slightly higher. The put-in weight of oysters,

therefore, is not an accurate measure of fill of con-

* Administrator Ewing was absent from duty at the time.

RE eS ee eee

i.

tainer and would be only if all oysters were pre-

cooked to the same degree before weighing into the

cans (Findings 11-14). When a 5 ounce cut-out

weight is used for blanched oysters, a put-in weight

of approximately 714 ounces is necessary ; and for

u 7 ounce cut-out, a put-in of approximately 914

ounces is required. Thus the lighter drained weight

permits a canner to replace 2 ounces of blanchea

oysters with 2 ounces of water (Finding 12). The

liquid drained from canned oysters has food value

and flavor, but it is much less valuable than the

oyster meat, and the smaller the put-in weight of

oysters the greater the water addition to make up

the packing medium (Finding 15). The 5 ounce cut-

out can is slack-filled. No new equipment and no

significant change in canning procedure is required

to meet the 61 ounce fill (Finding 16). Based upon

the number of oysters showing defects, there is no

real difference between canned oysters filled to

yield 5 ounces of drained weight and those filled

to yield 61% ounces, whether they were pre-steamed

or blanched prior to canning (Finding 17). Except

for slight differences in flavor and appearance, the

food value of the liquid packing medium is approxi-

mately the same in cans having the same drained

weight regardless of the method used in preparing

the oysters for canning. As drained weight in-

creases, packing medium decreases, and the flavor

and food value of the liquid packing medium is in-

versely proportional to the amount of water added

to make up the packing medium (Finding 18).

»

Pe ee 13

The Acting Administrator concluded that there

was no basis for prescribing separate standards of

fill based upon the method of preparing oysters for

canning; that it would not promote honesty and

fair dealing in the interest of consumers to base

the standard on put-in-weight or the method of pre-

paring oysters for canning ; but that it will promote

honesty and fair dealing to base the standard of

fill of container on drained weight without differ-

entiation as to whether the oysters are canned raw,

or are blanched or pre-steamed before canning. The

standard prescribed in the March 10 order was not

changed. (R. Vol. IX, p. vii.)

(4) The Court of Appeals decision—The court

below held that the orders of March 10 and August

3, 1948, were supported by substantial evidence

(174 F. 2d at 685-686, 688-689). It disposed of peti-

tioner’s claim that the standard of fill was unrea-

sonable as follows (p. 695) :

* * * it is argued that it is unreasonable

that a new method of canning oysters which

results in a much higher quality product as

shown by established and increasing consumer

acceptance should be destroyed, purportedly to

protect that very consumer. Therein lies much

superficial persuasiveness. A short and suffi-

cient answer is that the findings supported by

substantial evidence are, in substance, that the

higher requirement of fill will not result in im-

pairment of quality when using petitioner’s

method of canning blanched oysters.

14

The court found that the record did not support

petitioner’s claim that Administrator Ewing had

not conscientiously considered the evidence. On

the contrary, it pointed to letters from Ewing to

petitioner’s counsel stating that he had ‘‘person-

ally”’ and ‘‘thoroughly”’ considered the record (174

F’. 2d at 695), and to the recitations of regularity

in the orders (174 F. 2d at 695-696). The court

added (p. 696) :

Furthermore, we cannot allow the Adminis-

trator’s recitation that he has personally ex-

amined and considered the evidence in making

his decision to be successfully challenged by a

mere allegation in a brief. We have neither

moral nor legal right to presume that only

those who occupy judicial office respect their

obligations and perform their official duties

honestly, sincerely and conscientiously. Nor

can we presume the subordinate personnel to

be a camarilla.

The court affirmed the administrative orders in-

sofar as fill of container was concerned and re-

versed the orders as to standards of identity. (R.

Vol. XI, pp. 33-34).?

ARGUMENT

Petitioner presents six questions (Pet. 5-7), but

they may be consolidated into the two questions

stated above, p. 2. In his statement of the case

? Petitioner was granted stays of enforcement of the Ad-

ministrator’s orders pending decision in the Court of Appeals

and disposition of the present petition (R. Vol. XT) pp. 55-61).

~

15

(Pet. 13-28), counsel for petitioner repeatedly as-

serts that it has some sort of vested right to con-

tinue a 5-ounce fill in the No. 1 can, that it is un-

reasonable to fix the fill on cut-out weight instead

of on put-in weight, that the Administrator im-

properly classified Pacific oysters with Gulf oysters

for purposes of the standard of fill, and that pack-

ing blanched Pacific oysters to meet the 64 ounce

requirement of the Administrator’s order is impos-

sible and would result in disfiguration of oysters

in the form of browning, pressure blemishes, dis-

tortion, twisting and breakage. Since these asser-

tions raise questions of judgment which were the

concern of the Administrator, and since the court

below has found that the order was based upon

substantial evidence, petitioner does not argue these

points outside its statement of the case and we shall

not take them up specifically. While we are willing

to rest upon the Court of Appeals’ disposition of

these contentions, we feel that there are certain

undisputed, fundamental, and basic facts to which

the attention of this Court should be directed. As

shown by petitioner, the can most geuerally used in

the packing of oysters is the No. 1 EO can, which

holds 10.94 ounces of water (Pet. 15). Prior to the

issuance of Conservation Order No. M-81, the pack-

ers followed the practice of canning oysters to yield

5 ounces drained weight of oyster meat. No

amount of argument can successfully refute the

proposition that, under this practice, the person

who buys a can of oysters the contents of which

- —_——

16

weigh about 11 ounces actually receives only 5

ounces of oyster meat. The evidence at the hearing

disclosed that the cans of blanched oysters commer-

cially packed by petitioner contained more liquid

than oysters when opened and weighed (R. Vol.

7, Ex. 33). This is the situation which the order

of the Administrator seeks to correct. All it does

is to require that the consumer who purchases the

11 ounce can receive 114 ounces more of oysters and

a correspondingly less amount of liquid.'

1. Petitioner claims a denial of procedural due

process in the hearing examiner’s exclusion of ques-

tions calculated to show, so it was alleged, that a

witness for the Food and Drug Administration

either wrote or had a hand in preparing portions

of the findings of fact that appeared in the

March 10 order (Pet. 28-30).

The proceeding before the Administrator was

not quasi-judicial in character. It was part of the

rule making process established by the Act. The

standards for canned oysters under consideration

affected not only petitioner, but all other oyster

*In the Quaker Oats case, 318 U.S. 218, 232, this Court

pointed out that the legislative history of the Act manifests

a congressional purpose to substitute for informative labeling,

standards of identity for food sold under a common or usual

name, so as to give to consumers who purchase it under that

name assurance that they will get what they may reasonably

expect to receive. The same design for consumer protection

is manifest in the similar provision in the Act providing for a

standard of fill of the food container. It recognizes that some

method should be provided to correct a constant practice

under which the consumer who purchases a container of food

fails to receive as much as he has a reasonable right to expect

from a container of that size.

)[COS

17

canners throughout the United States. This Court,

in Federal Security Administrator v. Quaker Oats

Company, 318 U. S. 218, 228, in passing on another

food standard issued under sections 401 and 701

of the Act, stated that the ‘review is of regulations

of general application adopted by an administra-

tive agency under its rule-making power in carry-

ing out the policy of a statute with whose enforce-

ment it is charged.’’

It has long been recognized that the procedural

requirements imposed in any given rule-making

activity are to be found in the statute which vests

authority to issue the regulations. N orwegian Ni-

trogen Products Co. v. United States, 288 U. 8.

294, 303-312. The due process provisions of the

Constitution do not require that a hearing be ac-

corded to persons affected by general regulations

or legislation. See Bi-Metallic Investment Co. v.

State Board, etc., 239 U.S. 441; Bowles, etc. v. Wil-

lingham et al., 321 U. S. 503. Even where notice

and public hearing are given, there is no constitu-

tional requirement that an administrative agency

make special findings of fact as part of its rule-

making process. Pacific States Box & Basket Co.

v. White et al., 296 U. S. 176.

The Federal Food, Drug, and Cosmetic Act does

not preclude consultation between the Adminis-

trator and subordinate personnel in food stand-

ards proceedings, and the due process clause im-

plies no such prohibition. Since the Constitution

requires no hearing at all in rule-making, we find

18

no basis for the contention that it proscribes the

consultation which petitioner attempted to prove.

Petitioner grounds its contention of denial of

procedural due process on Morgan v. United States,

298 U. S. 468, and Morgan v. United States, 304

U.S. 1, 19-20. These cases were not ‘‘ignored”’ by

the Court of Appeals, as petitioner asserts (Pet.

29). The conduct of the administrative proceed-

ings involved here was in accord with the rules

announced in those cases. The first Morgan opin-

ion includes a statement that the duty of making

an order ‘‘cannot be performed by one who has not

considered evidence or argument,”’ but this Court

also said (pp. 481-482) :

This necessary rule does not preclude practi-

cable administrative procedure in obtaining

the aid of assistants in the department. As-

sistants may proseeute inquiries. Evidence

may be taken by an examiner. Evidence thus

taken may be sifted and analyzed by competent

subordinates.

In the second Morgan case, the Secretary of Agri-

culture, in answer to the question whether the order

represented his independent conclusion, stated that

the order ‘‘represented my own independent reac-

tions to the findings of the men in the Bureau of

Animal Industry”’ (304 U. S. at 18). This Court

said (ibid.) :

In the light of this testimony there is no

occasion to discuss the extent to which the

Secretary examined the evidence, and we agree

_—

a

with the Government’s contention that it was

not the function of the court to probe the

mental processes of the Secretary in reach-

ing his conclusions if he gave the hearing

which the law required. The Secretary read

the summary presented by appellants’ briefs

and he conferred with his subordinates who

had sifted and analyzed the evidence. We

assume that the Secretary sufficiently under-

stood its purport.

19

The decision in the second Morgan case grew

out of the circumstances that no specific complaint

had been formulated, there had been no examiner’s

report, and no proposed findings had been sub-

mitted for consideration. This Court held that

the essentials of a fair hearing could not be met

in such a case if the Secretary accepted and adopted

as his own findings which were prepared by the

active prosecutors for the Government, after an

ex parte discussion with them and without accord-

ing any reasonable opportunity to the-respondents

to know the claims and to contest them.‘

In the present case, pursuant to Section 701(e)

of the Act, notice of hearing was published in the

Federal Register containing a detailed statement

of the proposed regulation (Ex. 1, Vol. IV, follow-

ing p. 701). After the close of the evidence at the

* It was conceded in the second Morgan case that attorneys

for the prosecution, assisted by witnesses for the prosecution,

had prepared the order for the Secretary. But it was not

claimed or held that this circumstance voided the order. See

304 US. at p. 8.

—

20

first hearing in July 1947, a period vf 30 days was

set for the submission of findings of fact (R. Vol.

IV, p. 651). Following the usual practice, the

tentative or proposed order issued by the Adminis-

trator on October 4, 1947, provided that any inter-

ested person could file exceptions within 20 days.

On October 27, 1947, an additional period of 30

days for filing exceptions was granted (R. Vol. IT,

p- 111). Exceptions to the proposed order were

filed by petitioner, by the Pacific Coast Oyster

Growers Association, and by other packers (R.

Vol. II, pp. 52-110). New counsel filed a brief

on petitioner’s behalf on February 5, 1948, and

conferred personally with Administrator Ewing

(R. Vol. II, pp. 51, 52). All of these exceptions

and proposals were considered by the Adminis-

trator (R. Vol. IT, p. 46). A final order was issued

on March 10, 1948, approxip:ately five months after

the issuance of the tentative order. On that day,

Mr. Ewing wrote to petitioner’s counsel (R. Vol.

II, p. 51):

Dear Huan:

I have given careful consideration to your

requests for postponing issuance of a final or-

der and for calling another hearing for the

purpose of taking additional evidence in the

matter of amending the standard of fill of

container for canned oysters.

I have personally examined the record of

hearing, and I am convinced that the amend-

ment of the standard of fill of container pro-

—e

21

posed in the tentative order is based on good

substantial evidence.

a * *

Sincerely yours,

Oscar R. Ewa,

Administrator.

After the final order was issued, petitioner’s pres-

ent counsel appeared and requested that i+ be

reconsidered (R. Vol. IJ, p. 2). Mr. Ewing denied

this petition (R. Vol. IT, p. 1) and advised coun-

sel that his study of the record had satisfied him

that the March 10 order was proper in all respects.

Thus, the procedural steps observed here clearly

take this case outside the rule of the M organ cases.®

® The cases cited by petitioner (Pet. 36-39) as in conflict

with the decision below are inapposite. In Powhatan Mining

Co. v. Ickes, 118 F. 2d 105 (C.A. 6), coded statistical material

was admitted into evidence, but the hearing officer refused to

have the data decoded so that the facts could be fully explored

on cross-examination. In the case at bar, the petitioner’s

counsel was allowed every opportunity to cross-examine on

material facts. He was stopped only when he undertook to

show a violation of Section 5(c) of the Administrative Pro-

cedure Act, which, as we show below, is inapplicable in a

proceeding of the type involved here. Berkshire Employees

Association v. National Labor Relations Board, 121 F. 2d 235

(C.A. 3), involved possible prejudice on the part of one of the

members of the Board. An offer of proof was made to show

that the member had attempted through letters to Berkshire’s

customers to pressure it to cease certain practices which were

the subject of inquiry at the hearing. The case was remanded

to the Board to hear the evidence. The case at bar involves

no charge of bias on the part of either Mr. Kingsley or Mr.

Ewing. Dorsey v. Kingsland, 173 F. 2d 405 (C.A.D.C.), cer-

tiorari granted, 337 U.S. 914, No. 53, this Term, involves

issues as to the scope of judicial review of a decision disbarring

an attorney from practice before the Patent Office. The

Federal Food, Drug, and Cosmetic Act clearly makes the

substantial evidence rule applicable in this proceeding, and

it was properly applied by the court below.

22

Petitioner also challenges (Pet. 6-7) respondent

Kingsley’s consideration of the record made at

the hearing on the remand. The question is not

argued in the petition, and we shall give it only

brief consideration. The contention appears to be

based upon the certificate Mr. Kingsley signed

to authenticate the record of the supplemental

hearing, which shows that he considered only the

evidence taken at the hearing and not the evidence

theretofore reviewed by Mr. Ewing (R. Vol. VI,

cover). Petitioner apparently contends that be-

cause of the absence of Administrator Ewing, the

Acting Administrator could reach a decision on

the additional evidence only after having studied

the evidence underlying the original order. In

this, it relies entirely upon the first Morgan case.

It is important to note that the proceedings on the

remand were to be conducted within the statutory

bounds of Section 701(f) (2), 21 U.S. C. 371(f) (2).

It is clear from the statute and the court’s order

(R. Vol. V, p. 40) that the Administrator was not

required to re-hear the entire case. Evidence was

to be taken and findings made only upon a narrow

issue, i. e., as to the alleged new method of prepar-

ing oysters for canning and as to the relation-

ship of such method to a reasonable standard of fill

of container. The facts shown by the record are

that respondent Kingsley based his supplemental

order on the evidence taken at the hearing on the

remand and so certified, and that he did in fact

refer to the earlier record where necessary to make

-

23

comparisons in his findings of fact (R. Vol. IX).

The record shows that Mr. Kingsley read the earlier

findings and conclusions of Mr. Ewing and that

he was thoroughly familiar with the March 10

order. The findings made by Mr. Kingsley did

not change any finding previously made; they were

supplemental findings which were consistent with

the earlier findings of Mr. Ewing. Nothing in

the Morgan decisions required that the Acting Ad-

ministrator personally review the matters that had

already been decided by Mr. Ewing before making

his findings on the new questions interjected by

petitioner.

2. Petitioner contends (Pet. 30-34) that it was

denied the right to show that the March 10 order was

made in violation of the separation of functions re-

quirements of Section 5(¢c) of the Administrative

Procedure Act, 60 Stat. 237, 239; 5 U. S. C. 1004(c),

which prohibits officers or employees of an agency

from participating or advising in the decision of

any case in which they performed investigative or

prosecuting functions.

We think it is clear that Section 5(¢) is inap-

plicable to the rule making proceeding involved in

this case. Prior to the passage of the Adminis-

trative Procedure Act, Congress and a host of legal

specialists in the field of administrative law strug-

gled with the task of prescribing an intelligent code

of fair administrative procedure in all agency ac-

tivities. In all of the reports, debates and com-

—=—e

EE TE

24

ments and, most important, in the scheme and con-

text of the law itself, the distinction between rule

making and adjudication was made clear. The his-

torical development of the distinction between these

two classes of proceedings was recognized and re-

stated. ‘‘The Administrative Procedure Act is based

upon a broad and logical dichotomy between rule

making and adjudication, i.e., between the legis-

lative and judicial functions.”” Attorney General’s

Manual on the Administrative Procedure Act

(1947), p. 50. In the framework of the Act sep-

arate sections deal exclusively with rule making and

adjudication: section 4 is concerned with “rule

making,’’* section 5 deals expressly with ‘‘adjudi-

eations,’’" and section 7 and 8 fix rules governing

hearings and decisions in both classes of proceed-

*Sec. 2(c), 5 U.S.C. 1001(c): “Rule” means the whole or

any part of any agency statement of general or particular

applicability and future effect designed to implement, interpret,

or prescribe law or policy or to describe the organization,

procedure, or practice requirements of any agency and in-

cludes the approval or prescription for the future of rates,

wages, corporate or financial structures or reorganizations

thereof, prices, facilities, appliances, services or allowances

therefor or of valuations, costs, or accounting, or practices

bearing upon any of the foregoing. “Rule making” means

agency process for the formulation, amendment, or repeal

of a rule.

TSec. 2(d), 5 U.S.C. 1001(d): “Order” means the whole

or any part of the final disposition (whether affirmative,

negative, injunctive, or declaratory in form) of any agency

in any matter other than rule making but including licensing.

“Adjudication” means agency process for the formulation of

an order.

ee

CO SS

25

ings. As specifically stated by the Judiciary

Committees of both the Senate and the House of

Representatives when reporting the bill which

later became the Administrative Procedure Act,

it was not intended that rule making should be

subject to any provision of Section 5. 8. Rep. 752,

79th Cong., Ist sess., p. 18; H. Rep. 1980, 79th

Cong., 2d sess., p. 30. See also S. Doe. 248, 79th

Cong., 2d sess., pp. 24, 25.

Petitioner argues, however, that Section 5(c)

should be applied in a rule-making proceeding that

involves sharply controverted factual issues. The

Court of Appeals properly disposed of this conten-

tion as follows (R. Vol. XI, p. 24; 174 F. 2d 693) :

Cited in support [of this contention] are ex-

cerpts from Congressional hearings to the effect

that in such a situation, ‘good practice” would

be for the agencies to follow the rule laid down

for adjudications. As a matter of policy, such

may be true, but the Act as finally enacted did

not so provide and we cannot believe that the

omission was the result of oversight.’

® The motion of the State of Washington for leave to file

a brief as amicus curiae and the brief offered in support of

the petition here proceed upon the mistaken assumption that

the orders entered in the administrative proceeding will ad-

versely affect canned Pacific oysters. Both the Administrator

and the court below have found upon substantial evidence

that the new standard can be met without quality deteriora-

tion.

26

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

y Pup B. PERLMAN,

Solicitor General.

v ALEXANDER M. CAMPBELL,

Assistant Attorney General.

, Ropert 8S. Erpaugt,

/ JoHN T. Griassy,

Attorneys.

J WILLIAM W. GoopricH,

Attorney, Federal Security Agency.

SEPTEMBER 1949,

wos. GCVERNMENT PRINTING OFFICE: 1949 escose 8