Joanna L Grisinger
Assistant Professor
Department of History
ClemsonUniversity
[this is still very much a draft – please do not quote or cite without permission]
Chapter 1: The Administrative Process at Work
By 1940, the bureaucrats were in charge. In expanding the federal government’s field of play in previous decades, Congress and the White House had transferred a remarkable amount of authority to agencies and commissions to handle the new and staggering workload. In learning how to navigate the administrative state, individualswho claimed benefits from the Social Security Board, the Railroad Retirement Board, and the Veterans Administration joined businessmen who defended their companies against claims of unfair competition before the Federal Trade Commission, submitted their shipping rates to the Interstate Commerce Commission and the Maritime Commission, and sought permits to sell liquor from the Federal Alcohol Administration and permits to operate radio stations from the Federal Communications Commission. Over 100 agencies, commissions, bureaus, and departments operated across the federal landscape, and the number of matters handled by these administrative bodies dwarfed the caseload of Congress or the federal courts. The National Labor Relations Board, for example, resolved over 22,500 cases in its first four years of operation, while the Board of Veterans’ Appeals held hearings in 46,000 cases in less than six years.[1] By 1940, the Interstate Commerce Commission had received over 98,000 certificate applications under the Motor Carrier Act of 1935 alone. In volume, at least, administrative officials had taken on the lion’s share of federal governance.[2]
These officials also took on larger roles in American lawmaking. Federal law was no longer the exclusive province of Congress, the courts, and the president, constitutional branches with almost two centuries of experience and scholarly theorizing among them. Instead, it also came from agencies and commissions exercising their own authority and often bearing no clear relationship to the Constitution’s separation of powers. As J. Willard Hurst has observed, as early as the late nineteenth century, rules made by administrators became “the predominant body of public policy” in the economic sphere, and this pattern had only intensified.[3] Administrative officials were charged with “filling in the blanks” of their congressional directives, and often had a great deal of freedom to do so. Congress, in drafting the initial legislation for each agency, set out that agency’s general jurisdiction and the broad (often very broad) standards it was to apply. When Congress banned “unfair methods of competition” in the Federal Trade Act of 1914, for example, it did not define what this might include. Instead, legislators at the same time established the Federal Trade Commission to figure out what practices this language might cover, now and in the future.[4] Government lawyers managed to avoid difficulties with the non-delegation doctrine by arguing that Congress had provided enough specificity that administrators could not do anything they liked. While such arguments generally passed constitutional muster (with the National Industrial Recovery Act as a significant exception), the authority given to agencies and commissions to define vague congressional commands and police violations thereof was nonetheless considerable.[5]
Such a massive shift in power to a new “fourth branch” of independent commissions, to say nothing of the executive agencies and departments wielding similar power, transformed the political relationships, the institutional framework, and the legal structure of American governance. Not surprisingly, throughout the twentieth century, both individual agencies and the “administrative state” as a whole were the subject of questions, concerns, and, often, hostility from members of Congress and executive officials troubled by this shift in authority, from regulated parties and their lawyers worried about how their interests would be affected, from Democrats and Republicans concerned about the administration of such laws, and from law professors, constitutional scholars, and political scientists writing about what this did to the logic of the constitutional system. At stake was the political legitimacy of the agencies themselves and the laws they produced. Some of the most powerful critiques, and proposals for change, came from observers – many of whom had trained as lawyers –who measured administrative action against the proceduresof common law courts and found the agencies lacking. Against such attack, however, agency representatives and their supporters countered opponents’ claims of lawlessness by pointing to the elaborate procedures already in use, and to the courts’ approval of these procedures. Meeting their opponents on their own territory of law – rather than relying entirely on non-legal arguments about efficiency and economy– proved an effective strategy in building legitimacy for the institutions of the administrative state.
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By 1940, there was little new about the administrative process. The Interstate Commerce Commission had been operating for fifty-three years, and the Federal Trade Commission for twenty-six, and, as Robert Wiebe has described, the “bureaucratic orientation” of American life had been evident for decades. Forced to react to the legal challenge posed by the ICC and later agencies, federal courts had developed a fairly coherent body of doctrine that recognized that the agencies and commissions differed from courts and held them to different standards. Even the vast expansion of administrative capacities by President Roosevelt and the Democratic Congressduring the 1930s was no longer news. The agencies created in the New Deal’s “alphabet soup” approachto policymaking – the WPA, the CCC, the TVA, the FCC, the NLRB, the Social Security Administration, and the SEC, to name just a few – had been created on the model of existing agencies and had, in the years after their creation, developed organizations and procedures that allowed regulated parties and interests to engage with administrative officials more or less smoothly.[6] Many of the methods in use had been developed by the ICC in previous decades, and, as ICC Commissioner Clyde Aitchison pointed out in 1940, “our administrative procedure is controlled by 350 Supreme Court decisions.”[7] Aitchison’s point – that the courts themselves had established a certain legal legitimacy for administrative procedure – was one repeatedly made by agency representatives and by those in favor of this shift in authority. It was also a fair description of the Supreme Court’s own view of the administrative state.
At the same time, however, an observer interested in learning about how these agencies and commissions conducted themselves was in for some difficulty. Beyond the formal rules and regulations that the Federal Register Act of 1935 required them to publish, agencies and commissions were not obliged to make their decisionmaking public. While the general outlines of administrative organizations tended to resemble one another in broad strokes (i.e. Congress applied the model of interstate commerce regulation under the Interstate Commerce Act to the communications field in the Communications Act of 1934), agencies and commissions also varied widely, as Congress then tailored each statute to the task at hand (and the task of administering the Meat Inspection Act differed significantly from that of, say, the Securities and Exchange Act). Each agency had its own statutes for officials to flesh out, its own more or less controversial set of businesses and industrial problems it was responsible for managing, and its own group of interested parties – businessmen, trade associations and lawyers’ groups, members of Congress, and scholars – who sought to influence the agency’s operations. In addition, Congress had given agencies a great deal of discretion to determine their internal operations – how they would carry out congressional policy. While specialized bar associations developed around several of the agencies, a lawyer might find that his knowledge of ICC procedures was of little help if he was asked for advice about the Department of Agriculture. Even more problematic was the damage to public opinion. The opaque nature of the administrative process gave rumors and charges of “administrative absolutism” an opportunity to flourish. The task of maintaining political legitimacy for the agencies, of convincing both regulated parties, and Americans as a whole, that agencies were trustworthy, was thus made that much harder.
It was especially difficult given that critics of the agency form of government, and of the substantive laws, were increasingly making charges of agency lawlessness and “administrative absolutism.” Members of the American Bar Association Members of the American Bar Association’s Special Committee on Administrative Law were among the most vocal critics of this “quasi-judicial” process, as many members of the traditionally conservative lawyers’ organization (and their corporate clients) opposed the new regulatory demands of the New Deal agencies, and also balked at the combination of investigation, prosecution, and adjudication functions within a single agency that seemed contrary to their legal training. Measuring the administrative process against a judicial standard and finding the administrative process wanting, the ABA sought to constrain administrative discretion through drastic procedural reform. Their proposed solution, the so-called Walter-Logan bill, was roundly denounced by the affected agencies during its progress through Congress during 1939 and 1940.
These critics were joined by conservatives like Rep. Martin Dies Jr. of Texas, who saw the administrative state as a possible source of contagion and opposition.[8] In 1938, under the leadership of Rep. Dies, the new House Special Committee to Investigate Un-American Activities included in its task of investigating “un-American” activities and propaganda allegations of Communist infiltration of the federal government. Alongside allegations of Communist influence at the CIO, the New York Times, the American League for Peace and Democracy, and the World Youth Congress, and the questionable motives of Shirley Temple, witnesses before the Committee testified about Communist infiltration in the Roosevelt administration. Included were Labor Secretary Frances Perkins, and such symbols of the New Deal as the WPA’s Federal Writers Project and Federal Theatre Project.[9] Calling out the Federal Theatre Project as “infested with radicals from top to bottom” Rep. J. Parnell Thomas (R-N.J.) claimed it produced “sheer propaganda for communism or the New Deal.”[10] According to Thomas, “New Dealism” joined Communism, Nazism, and fascism as one of the “four horsemen of autocracy[.]”[11] Linking inherently undemocratic administrative forms to questionable political sympathies would prove to be an effective method of calling administrative action into question and tainting the agency outputs.
Against this background of public suspicion and hostility, various parties attempted to defend the administrative state. James M. Landis’s The Administrative Process (1938) offered a view of expert administrators reaching for scientific solutions, whose very professionalism would steer them away from malfeasance. Others, however, pointed to their established procedures to reassure observers that bureaucratic discretion was, in fact, already circumscribed by law. Agency representatives patiently explained their procedures to other lawyers during speeches at the American Bar Association and in the pages of law reviews, presumably in the hope of dispelling some of the mystery and heading off radical procedural reform.[12] (Since NLRB hearings were held throughout the country, one NLRB representative suggested to his ABA audience, “If you have the opportunity to attend one, I hope you will do so.”)[13] The triumph of this new effort at transparency was conducted by a Roosevelt administration initiative, in which President Roosevelt asked his new Attorney General, Frank Murphy, to lead a “thorough and comprehensive study” of administrative procedure in the federal departments, agencies, and commissions.[14] The members of the committee, which included Solicitor General Robert H. Jackson (who was succeeded by Francis Biddle), Assistant Attorney General Carl McFarland, former Treasury Under Secretary Dean Acheson, Judge D. Lawrence Groner of the U.S. Court of Appeals, Lloyd Garrison, dean of the University of Wisconsin Law School and the first chairman of the labor board, and Henry M. Hart, Jr., of Harvard Law School, embarked on the first comprehensive investigation of how the administrative process actually worked. As Walter Gellhorn, the committee’s staff director, described their work, the Committee sought “to find out what I think nobody truly knows as yet, that is, how the Federal administrative agencies do actually conduct their business.”[15] The implication, that the rumors and innuendo which underlay existing criticism (the “invective and investigation” Louis Jaffe had described) could be banished with more information, was clear.[16]
The Committee’s research staff sent out lengthy, open-ended questionnaires to agency officials, familiarized themselves with agency files and annual reports, interviewed agency staff members and attorneys who practiced before the agencies, and attended administrative hearings. These initial investigations resulted in 27 separate monographs, covering some 40 agencies. Agency representatives had a great deal of input into the final documents, and the monographs were generally fairly sympathetic to the agencies’ efforts. At the same time, the documents – in their own dry and encyclopedic style –illuminated the internal workings of the administrative process. Over hundreds of pages, they implicitly rebuked claims of lawlessness by demonstrating the wealth of multi-stepprocedures for hearings and appeals that existed for every phase of the administrative process. At the same time, however, by making clear the differences in logic and goals of the various agencies, and the value of informality, the monographs took the position that the single model of courtroom procedure invoked by opponents was not the appropriate standard for measuring the administrative process. Overall, the documents served as briefs in support of flexibility and informal dealings between the regulators and the regulated, and suggested to readers that agency officials were correct when they asserted that uniformity and judicial standards were unattainable goals for their widely variant work. Finally, the work of the Attorney General's Committee also demonstrated the degree to which agency officials were concerned with establishing their own legitimacy with regulated parties, with other branches of government, and with the public, and the extent to which they were willing to shape their legal operations accordingly.
- What was the “administrative process”?
- rulemaking
The inapplicability of procedures from other branches was made evident, first, in the staff’s description of the ways in which administrative officials promulgated their rules and regulations. In some cases, agencies confined their rulemaking to matters of internal operations; in others, rulemaking was used to give specific content to Congress’s broad statutory commands. How agencies made rules and set standards was mostly up to them. Most agencies were not required by statuteto hold public hearings before they issued binding rules, and, when given the choice, they avoideddoing so. Agency officials did, however, greatly value the input of interested parties – first and foremost the parties being regulated, but also the trade associations, industry groups, and the specialized bar associations that were within the agency’s orbit – as well as the public or members of Congress. At the FCC, as at many other agencies, new rules were suggested both by staff members and by industry representatives and communications lawyers.[17] Agency staffers also commonly solicited feedback on proposed rules through telephone calls, written correspondence, and informal conferences with these parties. The Division of Labor Contracts, when required to establish the prevailing wage rate in an area, often called on an “advisory panel” of industry officials which “meets with complete informality in the Administrator’s office. Nothing remotely resembling a hearing is held, but on the basis of this conference it frequently happens that the contentious problem of definition is amicably resolved[.]”[18] Similarly, Abe Fortas, representing the Bituminous Coal Commission, told the Attorney General's Committee that
we do get tremendous assistance from the industries informally. We turn out a draft in our shop, we then call up the executive secretary and say we are sending over a draft, will they get their people together and go over the rules and when they feel that they have their views in hand that they call us and we will have a joint meeting. He may take a day, two or three days working over these rules and finally when we get the rules out they are something acceptible [sic] to the industry and to us.[19]
As Fortas concluded, “I think it would be perfectly absurd for a Government agency to try to work it out except in the closest cooperation with the industry.”[20] Writing administrative rules through such close working relationships mollified industry representatives. This process also benefited the agencies, which could use businesses’ research to supplement their own fact-finding processes and likely found that their perennially-understaffed task of enforcement was made easier. As the monograph on the Department of Commerce’s Bureau of Marine Inspection and Navigation reported, “the tendency to resist and to violate [the regulations] is greatly diminished if, instead of simply being thrust upon industry, they are formulated only after consultation and joint deliberation.”[21] Regulated industries thus played a significant – and unpublicized – role in shaping the rules and regulations that would bind them, a relationship that the staff apparently found unproblematic.[22]