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Attorney General's Manual on the Administrative Procedure Act

Prepared by the United States Department of Justice Tom C. Clark, Attorney General, 1947.

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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 [89] 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 separately.

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 [90] 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. [91] 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 form.

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-[92]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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