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