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cept of due process under law, to which our steamship clients, no less than anyone else, are entitled.

The very nature of the administrative-agency process, generally (and quite without regard for specific deficiencies of any particular agency, including this one), necessarily makes the agency a peculiarly ill-suited forum for the impo sition of punitive sanctions. Acting inevitably through its various branches as investigator, accusator, prosecutor and tribunal, the administrative agency simply cannot divorce the last of these functions from the integrally related prior three all of which prior functions are, indeed, carried out by personnel directly responsible to, and presumably under the direction of, the very persons (the Commissioners themselves) who are to make the final adjudication. This fact alone destroys any credible assertion of impartiality, in the achievement of the final results.

Yet this is a fact endemic to the very agency concept. By design the agency is supposed to be, at one and the same time, a kind of executive, legislator, and adjudicator, all rolled into one. By very design the agency is given broad latitude to "fill in the interstices” of a broadly-worded statute, to define and redefine, as it considers required by the needs (or supposed needs) of the times. It is thus (characteristically, and certainly so with the F.M.C.) given the power both to make the law and to enforce it. It is no surprise, therefore, that the vast majority of cases adjudicated before a regulatory agency such as this are in fact initiated by the agency itself. Similarly it should come as no great surprise that a great percentage of these self-generated cases deal not with applying established law (as is the judicial concept), but with creating "new law," new "policy.”

Applied prospectively (and provided there are adequate judicial safeguards against at least flagrant excesses), there is at best a rough-and-ready sort of justice, and a "fair warning,” in this characteristic agency "reshaping“ process Applied retrospectively, however, to condemn as “violation" a practice theretofore well-known (to the agency as well as everyone else) and widely utilized (with apparent agency blessing), simply because the agency has decided to redefine the “policy” of the law, is something less than square. This is what happens now, under the present terms of the statute. It would be superlatively unfair if in the same breath the agency were also to issue the pronouncement of sentence on this newly (indeed, instantly) created "violation.” The very intervention of a separate prosecuting Department of Justice, and an independent judicial tribunal, which the Commission Chairman decried in her recent testimony before your Committee on H.R. 755, in fact serves a vitally necessary function, in providing a buffer against such arbitrary treatment in the penalty phase—Justice often refusing to prosecute, and/or the courts refusing to convict (or finding at most a venial sin, completely unwittingly "committed"), where the agency's own ardor has been deeply charged.

Believing it unnecessary for present purposes (as well as practically infeasible, within the limits of this written statement) to give a detailed list of such occurrences with this particular agency, it should be enough to say that the Federal Maritime Commission is at least no less prone to such crusading zeal than any other agency-and, in the very broad power of redefinition allowed to it under Section 15 of the Shipping Act, is given a potent vehicle for such activity enjoyed by very few others. (Ay but one example, very recently the Commission outlawed as both unapproved and unapprovable the whole concept of steamship conference limitations and/or restrictions on wastefully duplicative ports-of-callpractices time-honored in its own and its predecessors' reported cases, consistently and repeatedly, beginning as far back as 1929.)

Other fundamental characteristics of the administrative agency construct make it a singularly defective organism to act as penal adjudicator. The composition of the top echelon, the final adjudicator (that is, the Commissioners themselves), is characteristically-indeed in some respects designedly-without any legal training whatsoever. (In the present Federal Maritime Commission there are two lawyers, three laymen.) By the well-established lore of administrative law, moreover, these laymen bodies are fully authorized and entitled to "substitute" their judgment for that of their lawyer-trained Hearing Examiners-an extraordinary privilege enjoyed, of course, by no reviewing court over its fact-finding subordinate courts, in any juridicial framework, civil or criminal. (And, again, this particular Commission is nothing if not liberal in its exercise of such "substituted judgment," to overrule its seasoned trial Examiners.)

Finally in this regard, even the hearing process itself, while considered appropriate to administrative regulation, is in singular respects the antithesis of what all would have to consider minimally adequate penal judicial process. Hearsay evidence, for example, is not only freely admitted, without regard for judicial exclusionary rules; it may be and not-infrequently is the sole basis for the agency's determination of past violation.

Even more dangerously, there is a growing tendency (particularly favored by the Federal Maritime Commission) to circumvent the hearing process entirely, and quite unabashedly to shift all burden of proof to the party under investigation. Such proceedings are instituted not by Order of investigation but by Order to Show Cause, which characteristically states (often on undisclosed or fragmentarily unclear "facts") the Commission's "opinion" that a given statutory provision (or, more commonly, plethora of provisions) has been violated, then directs the respondent party or parties to convince the agency otherwise. Evidentiary hearings are afforded only if the respondents can persuade the Commission of their absolute need. Otherwise the case proceeds to summary judgment on the basis of affidavits and “memoranda of law"-the respondents' first, and the Commission's staff counsel's second and last (no opportunity is generally afforded for the respondents to reply to the staff counsel's assertions of fact and/or law).

To the extent this sort of proceeding has a legitimate place anywhere in the administrative process, it should be clear it has none where the imposition of penal sanctions is involved. The Shipping Act's present provisions, requiring for the adjudication of penalties a trial de novo in a federal court,, with the burden of proving guilt, by reliable and probative evidence, placed squarely on the shoulders of the prosecuting governmental body, and with the agency's prior determination only prima facie evidence of guilt, quite clearly, it would seem, place the matter in proper alignment. This carefully constructed, deliberate procedure is indeed the private parties' only real protection against huge, unjustly-imposed penalties. It should not lightly be scrapped, simply because it is more "cumbersome" than if the agency could add “executioner” to its list of duties, mentioned above. Our whole jurisprudential heritage is document to the enduring belief that, in the infliction of punishment by the State, due process must prevail over administrative expediency and the summary exercise of the State's power. What appear to the current F.M.C. Chairman as niggling delays and fetters in the Shipping Act's present system of penalty determination are in fact fundamental protections, basic to our entire concept of justice under law.

The Commission seeks to justify the transferral of penalty powers on the basis of its "expertise" and considerations of uniformity of penalties imposed. Respecting the latter, it apparently regards its present arsenal of powers, disapproval, cease-and-desist, adjudication with referral to Justice for prosecution, etc.—as inadequate for its capable performance of its regulatory functions. If this is so, then, we submit, the fault with the agency, not the statute; as we detail below, no other comparable agency either has or, apparently, feels that it needs this additional, punitive "stick" in order to regulate properly. At the risk of repetition, we would observe, once again, our belief that the job of regulation should be primarily forward-looking and prospective in operation, with sanctions for past offenses reposed-here as generally-in the courts. Insofar as “uniformity" may be lacking, it is no more so than with any other federal statute where, of course, offenses may be and are subject to enforcement in a multitude of federal districts. With respect, we must observe that the Federal Maritime Commission has come forth with no reasons why its statutes requires an administration different from all others.

Insofar as the claim of agency "expertise" is concerned, we would only make two observations. First, there is of course the prima facie effect given to the agency's determination, under the statute as presently written; second, we would reiterate the fact that the “expertise" in question is that of a layman body. In light of this legally-untrained origin, we would suggest that prima facie effect is fully ample weight to be given to agency determinattions, where penal sanctions are invoked.

Viewing the question from still another aspect, the Federal Maritime Commission has itself already quite clearly evidenced, we believe, its inherent incapability to act with the impartiality constitutionally required for a just imposition of retributive punishment (be it denominated "civil” or “criminal"). Again, this may perhaps be no more a failing of the particular agency than of the whole agency concept; the important thing is that it does exist. In 1927, in

Actually two statutes, Shipping Act and Intercoastal Shipping Act.

the case of Tumey v. Ohio, 273 U.S. 510, the U.S. Supreme Court flatly outlawed as fundamentally unconstitutional a judicial system which compensated the judge according to the number of convictions he handed down. The Court stated, in part:

“We have been referred to no cases at common law in England prior to the separation of colonies from the mother country showing a practice that inferior judicial officers were dependent upon the conviction of the defendant for receiving their compensation. Indeed in analogous cases it is very clear that the slightest pecuniary interest of any officer, judicial or quasi judicial, in the re solving of the subject matter which he was to decide, rendered the decision voidable.

“There was then no usage at common law by which justices of the peace or inferior judicial officers were paid fees on condition that they convicted the defendants, and such a practice certainly can not find support as due process of law in English precedent.

"No matter what the evidence was against him, he (the defendant in the actual case) had the right to have an impartial judge. He seasonably raised the objection and was entitled to halt the trial because of the disqualification of the judge which existed both because of his direct pecuniary interest in the outcome and because of his official motive to convict..."

This Commission has well documented its “official motive to convict." Consistently since 1964 it has taken particular pains to point out proudly to this Congress the amounts of penalties which have been collected by the Department of Justice (generally by way of compromise), in suits instigated by the Commission. In its Eighth Annual Report, for example, the Commission reported (at p. 43):

“Of the investigative cases referred to the Department of Justice for prose cutive action, eight cases were finalized by pleas of guilty, award of judgment or by compromise settlement in the total amount of $77,000." In the Seventh Annual Report (at p. 60):

“Investigative activity for the final years resulted in the conclusion by the Department of Justice of 11 cases upon pleas of guilty, nolo contendere, or by compromise settlement in the amount of $78,060, for violation of the aforementioned statutes." In the Sixth Annual Report (at p. 32):

"Investigative activities resulted in fines and/or settlements totalling $68,350 for violations of the shipping statutes for the fiscal year." In the Fifth Annual Report (at p. 28) :

“'Investigative activities resulted in fines and/or settlements for violations of the shipping statutes in the amount of $66,650.” In the Fourth Annual Report (at p. 32) :

"Investigative activity resulted in fines and/or settlements involving 31 individuals or concerns for violations of the shipping statutes in the amount of $37,788." In the Third Annual Report (at pp. 25-26) :

“Investigative activity resulted in 11 convictions for criminal violations of the shipping statutes with resultant fines of $7,600. These convictions were based upon pleas of guilty or nolo contendere. Additionally 11 shipping entities, through compromise with the Department of Justice, paid $43,902.27 for violations of shipping statutes which are of a civil nature."

Nor is the matter limited simply to that of boastful accomplishment. In every year since Fiscal 1963 the Commission has reported the dollars collected in fines and penalties, for some reason higher, in every year except 1967, than the sums reported in the text, shown above) in its "Statement of Appropriation and Obligation” for the particular year. These figures, constituting the overwhelmingly largest part of the "Receipts Deposited With the General Fund of the Treasury" category, are apparently designed to be a compensating offset to the Appropriations costs of running the Commission (shown earlier in the Statement) (1969, $87,675 ; 1968, $83,125 ; 1967, $61,500; 1966, $113,550; 1965, $63,299 ; 1964, $88,902.)

In truth, the spectre of Tumey v. Ohio broods over the Commission's penaltypower request, in H.R. 755, like Marley's ghost.

In her remarks before your Committee in support of H.R. 755, the Commission Chairman suggested that the private parties' rights could be fully protected by the statutorily-guaranteed right of appeal. With respect, we must demur. In the first place, we find it difficult to believe that any review procedure, however broadly constructed, could possibly overcome the manifold deficiencies and inadequacies of the administrative process to the penal task of imposing sanctions, already noted. Far more fundamentally, however, the Chairman's suggested is a false assurance, because premised on a basic misconception--namely, that the right of review from agency determinations is (at least) the equivalent of such review from a district court decision. Such is not the case even where merely civil (let alone penal) decisions are involved. It has long been readily-acknowledged, undeniable fact that the appellate courts. are, in their review of administrative agency determinations, far more circumscribed than in review of their own inferior courts' proceedings. Nowhere, moreover, has this limited power of review been more forcefully brought home, with ever-increasing limitations on the appellate-court reviewing power, than in the recent history of this particular agency. In the 1966 case of Consolo v. Federal Maritime Commission, 383 U.S. 607, the Supreme Court expounded upon this narrow score of agency review (383 U.S. at 618-621), in a decision which summarily reversed the prior holding of the U.S. Court of Appeals for the District of Columbia Circuit (itself no stranger to the administrative appeals), which had, in turn, reversed this Commission for "ignorfingthe substantial weight of the evidence” (342 F20 924, 926), in reaching its determination. Stated the Supreme Court. “This standard is not consistent with that provided by the Administrative Procedure Act." In 1968 the Supreme Court again reversed the highly knowledgeable D.C. Circuit, in Federal Maritime Commission v. Aktiebolaget Svenska Amerika Linien, 390 U.S. 238, again for what it considered an "overbroad" exercise of review by that lower appellate Court. (Significantly, in both cases the Supreme Court departed from its customary practice of remanding the case back to the lower court for “further proceedings consistent with this opinion" and, by-passing such further appellate-court proceedings entirely, simply itself affirmed the Commission and directed that the case be dismissed forthwith.)

Finally, we must express our inability to concur in the Commission Chairman's statement that “H.R. 755 would bring the Commission's practices into line with those of other Federal agencies.” The Interstate Commerce Commission, notwithstanding its considerably longer experience (hence presumptively more highly developed expertise), has no such comparable powers. See, eg., 49 U.S. Code $ $ 1(17) (b), 10, 322, 917, 1021, 41 (1) (Elkins Act) (criminal sanctions) ; $$ 1(17) (a) (civil penalties); and 88 16(8)-(9), 20(d)-(e), 322(h) (“forfeitures”). In each of these penal sections, application to a federal district court, through the medium of the Department of Justice, is required.

Nor-contrary to the Commission Chairman's direct reference- does the Civil Aeronautics Board, the third and last of the major transportation regulatory agencies, have powers such as the Federal Maritime Commission seeks here. There is, it is true, an oblique, indirect, and quite "backdoor" reference to such a power, in 49 U.S.C. & 1371(n) (5) ("nothing in this sentence shall preclude the Board from imposing on such carrier a civil penalty for any violation of such provisions .."); however, just exactly what this means is highly questionable, in light of (1) the absence of any affirmative grant of penalty power to the Board ; together with (2) express statutory language, elsewhere, squarely vesting such power--as with the Shipping and Interstate Commerce Acts-in the federal district courts; and (3) the C.A.B.'s apparent total non-use of this "saving" provision. In 49 U.S.C. $ 1473, entitled “Venue and prosecution of offenses; procedure in respect of civil penalties," the air-carrier Act quite clearly, flatly, and unreservedly places the penalty-imposing power in the federal courts, See also $ 1474 (penalties there concerned may be “remitted or mitigated" by the Secretary of the Treasury or by the Attorney General; suit, however, is in the federal courts, alone. A similar compromise power-only-is given to the Board in $ 1471).

We put aside the references to possible civil penalty powers in the Coast Guard, Bureau of Customs, and/or Immigration and Naturalization Service (the latter, of course, itself an arm of the Department of Justice), as being

3 The Federal Maritime Commission does not make clear why it has singled out two particular provisions of Section 16 of the Shipping Act for conversion from criminal (mis. demeanor) to civil sanctions (except, of course, to increase its anticipated penalty powers). It is worth noting, however, that the comparable "false billing" provisions of both the Interstate Commerce Act and the Federal Aviation Program (containing the C.A.B.'s regulatory provisions) carry criminal (misdemeanor) sanctions for violation--just as does the Shipping Act now.

quite unprobative to the point at issue. Each of these bodies performs tasks quite remote from the “pervasive" regulatory functions which characterize the I.C.C., C.A.B., and F.M.C.; and the distinction is too fundamentally important to give the analogy much substance.

In this respect also, the F.M.C.'s proposal is in fact quite out of harmony with the overall transportation scheme and expressed Congressional policy.

For the foregoing reasons and on behalf of the numerous private interests whom we represent before the Federal Maritime Commission, we respectfully urge that H.R. 755 not be enacted. Congress was unquestionably well-advised in withholding this ultimate power from the Federal Maritime Commission (and its predecessors)—just as it has done with its two sister regulatory transportation agencies. It has been equally well-advised in ignoring the Commission's urgings for the contrary, for these past nine years. It should not, we respectfully submit, be persuaded otherwise, now.

Out of courtesy to the Commission, we are sending a copy of this statement directly to it, and are additionally mailing copies directly to your Republican counterpart on the Merchant Marine and Fisheries Committee, Mr. Pelly, to Mr. Mailliard, and the Committee's Chief Counsel and Minority Counsel.

We appreciate the opportunity given to submit this statement, and urge that
its contents be carefully considered before final action is taken on the subject
Very truly yours,


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Washington, D.C., August 5, 1971.
Chairman, Committee on Merchant Marine and Fisheries, House of Representa-

tives, Washington, D.C.
DEAR MR. CHAIRMAN: Reference is made to letter of July 19, 1971, from F.
Conger Fawcett of the law firm of Graham and James, expressing opposition to
H.R. 755 which would convert certain penalties of the Shipping Act, 1916, from
criminal to civil and would authorize the Federal Maritime Commission to
assess civil penalties.

At page one, Mr. Fawcett has inserted a footnote, which cites a recent Journal of Commerce report as stating that similar bills have been introduced for the past ten years and interprets my testimony as confirming this before your Committee. According to Mr. Fawcett, a letter addressed by Mr. Leonard James of Graham and James, to Congressman Mailliard, dated January 29th, referring to H.R. 755, stated that such a bill "has been introduced each year for the past three . .” The facts are as follows: Similar bills in behalf of the Commission have been introduced in only two preceding years. S. 3846 in 1968 and in 1970, House bill H.R. 15748 and Senate bill s. 3377. The Journal of Commerce report referred to by Mr. Fawcett does not state that similar bills have been introduced for the past ten years. It says "The Federal Maritime Commission, after pressing the issue for ten years, finally got a hearing” and makes reference to my statement before the Committee which referred to the fact that the Commission has been seeking this authority since its creation in 1961, as referred to in the quoted portion from the Commission's First Annual Report. The Commission, as is the case with other Federal Departments and Agencies, is required to clear proposed legislation with the Office of Management and Budget before submitting it to the Congress.

The first clearance the Commission was able to obtain was in 1968 which resulted in the introduction that year of S. 3846.

Page two of Mr. Fawcett's letter is devoted to an attack on the legislative proposal on the basis that it "undermines the very concept of due process under law, to which our steamship clients, no less than anyone else, are entitled.” He takes the position that the very nature of the administrative agency process necessarily makes the agency peculiarly ill-suited for the imposition of punitive sanctions. It is submitted that quite the contrary is true. We feel that the expertise of the agency makes it especially qualified to impose civil sanctions.

Mr. Fawcett's reasons in opposition to the administrative process are not un. like those of the imaginary Mr. Practitioner as set forth in Professor Davis' Administrative Law Text $ 1.06. As pointed out by Professor Davis, however,

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