the demeanor of a witness include an analysis of how well he reads an involved rate history-his diction, grammar, emphasis, and so on?

In other instances, much of the important evidence is put into the record by means of exhibits. How can the demeanor of the witness be important here? And, further, in numerous situations the basic facts are not even contested and are introduced in evidence by both sides. You, as practitioners before the Commission, know that these things happen in many hearings.

This is not in any way to be taken as minimizing the highly significant role which hearing examiners play in formal administrative proceedings. It is mentioned only to attempt to dispel the notion that any lawyer who has had general trial or judicial experience can qualify as a hearing examiner to preside over hearings and issue reports on the tremendous number of greatly involved proceedings which form the basis of our activities. It is a protest against what others have correctly termed, "judicialization" of something that is first and foremost not basically judicial. True, the Commission functions in a quasi-judicial capacity, but the word "quasi" is one of limitation.

We should never forget the very basic premise that the Commission is not a judge in adversary proceedings, but rather a guardian of the public interest. Underlying each and every activity down at 12th and Constitution is the public interest. To attempt to fit that role into a strictly judicial mold might satisfy the rather abstract theorists, but it would prove highly impractical if any public good is to be advanced. Last, but not least, consultations and other ex parte contacts are necessarily a part of the administrative process and seem to be approved by the Courts. The Circuit Court of Appeals for the Ninth Circuit has said as much in National Labor Relations Board v. Biles Coleman Lumber Co., 98 F. 2d 16.

While in my opinion there has not been a very good case made for eliminating staff review of the hearing examiners' findings, I further think that the full impact of the proposed change to accomplish this elimination has not been appreciated generally. If "the findings of fact made by the presiding officer shall not be set aside by the agency unless clearly erroneous on the whole record" the end result would be to strip the agency of the power to finally determine those proceedings where the issues of fact are sufficiently close that the decision of the "presiding officer" is not clearly erroneous. In other words, there would be a substantial power transferred from the agency to the hearing examiners and there would most certainly be created a most encouraging atmosphere for litigation. The issues, of course, would be not whether the agency's decision was correct, but whether the hearing examiner was so "clearly" wrong as to warrant reversal.

I have been a member of the American Bar Association for more than thirty years and hate to see such misassessment but can understand the surface appeal of such proposals to the mass of lawyers who do not appear before our Commission. I am wholeheartedly in accord with the vast majority of the things for which the Association stands, but it would seem that they have been led astray in approving the new "Code."

The whole approach, not just in the past two or three years, but stretching as far back as 1937 and earlier, has been complete distrust of the administrative process with a resulting search for ways to supersede a working, flexible, procedure with rigid court rules and formalities. Always, we find the underlying philosophy to be that the decision of regulatory proceedings is basically a lawyer's search for precedent in an adversary proceeding between two litigants in short, what I have referred to as a judicial case.

Dean Landis and "The Administrative Process"

Administrative law is not a field which involves contests between private parties. This has been said in one way or another many times. It bears repeating. Perhaps the best exposition of the point comes from Dean Landis in his classic book, "The Administrative Process." He

states:

"* * * The test of the judicial process, traditionally, is not the fair disposition of the controversy; it is the fair disposition of the controversy upon the record as made by the parties. True, there are collateral sources of information which often affect judicial determinations. There is the more or less limited discretion under the doctrine of judicial notice; and there is the inarticulated but nonetheless substantial power to choose between competing premises based upon off-the-record considerations. But, in strictness, the judge must not know of the events of the controversy except as these may have been presented to him, in due form, by the parties. *

"On the other hand, these characteristics, conspicuously absent from the judicial process, do attend the administrative process. For that process to be successful in a particular field, it is imperative that controversies be decided as 'rightly' as possible, independently of the formal record the parties themselves produce. The ultimate test of the administrative is the policy that it formulates; not the fairness as between the parties of the disposition of a controversy on a record of their own making."

Of course I do not mean to assert that no changes are needed in our practice to meet changing conditions and public needs. We must not sit still but constantly strive to improve procedures. A ready means is by voluntary changes made without statutory amendment as proposed by Earl Kintner. I many times have reason to be thankful for the ready assistance always available from your fine organization. When you see places for improvement you should feel free to offer suggestions, either formally or by discussion with individual Commissioners. We can not sit still and must look and strive for improvement.

I should like to conclude these general observations with a final thought. It is also not new, but it does represent my philosophy of the decisional process in administrative law today. It is that an agency must always reach the "right" decision for the public's sake, not the "right" decision based upon strictly legalistic considerations in answer to demands of those who deal in plausible abstractions. I hope that your great organization of practitioners before our bar will continue to support this philosophy as it has done so many, many times in the past.

Smathers-Harris Bill S. 3778 Providing Relief to Rails and Other Carriers Becomes

Public Law 85-625

President Eisenhower signed the bill into law late on August 12, 1958. Designated as "The Transportation Act of 1958," the measure

1. Provides for government guarantee of loans to railroads for maintenance or purchase of capital equipment.

2. Gives the Interstate Commerce Commission greater authority over intrastate rates.

3. Gives the Interstate Commerce Commission for the first time authority to discontinue trains imposing a burden on interstate

commerce.

4. Adds a new paragraph to the "rule of ratemaking," section 15a of the Interstate Commerce Act.

5. Clarifies the exemption or nonexemption of motor transport of various agricultural commodities from I. C. C. economic regulation.

6. Makes "the primary business" test the basis for determining legality of private trucking operations.

Frank L. Barton, transportation counsel for the Senate Interstate and Foreign Commerce Committee, at the time the House-Senate Conferees agreed upon the terms of the measure, issued a resume of the bill, as follows:

1. Guaranteed Loans

"The Interstate Commerce Commission is authorized to guarantee loans made to railroads from private sources to the amount of $500 million. The loans must be repaid in 15 years and may be made either for the purchase of capital equipment or for maintenance. If the loan is made for maintenance purposes the railroad securing the guaranteed loan cannot declare dividends on its capital stock during the period the loan is outstanding. I. C. C. authority expires except for applications pending on March 31, 1961.

"In order to guarantee the loan the Interstate Commerce Commission must find that: (a) The carrier is unable to secure the necessary funds on reasonable terms. (b) The loan involved is being made at a reasonable rate of interest. (c) The United States is protected in its guarantee of the loan.

"Under the bill section 13(4) of the Interstate Commerce Act is amended to overcome the I. C. C.-adopted policy of 'comity' under which the Commission waits for action by State Commissions before taking action on intrastate rates that burden interstate commerce. The bill authorizes the Commission to deal 'forthwith' with such rates. The bill further overcomes the Supreme Court decisions in the Milwaukee and Utah cases 1 which place an almost insurmountable burden of proof on petitioners by requiring them to present a breakdown to show separately intrastate operations and costs in I. C. C. cases involving the lawfulness of the rates alleged to burden interstate commerce. The bill would restore the burden of proof required for many years prior to the Supreme Court action.

3. Discontinuance of Service

"The bill grants authority to discontinue service rendered by trains and ferries crossing state lines to the Interstate Commerce Commission. This marks the first time that the I. C. C. has been given authority to discontinue trains that impose a burden on interstate commerce. This provision, however, does not deprive the carrier of the right to go to State Commissions to ask for discontinuance of trains crossing state lines. Carriers invoking I. C. C. jurisdiction must give ample notice to the States in which such train or ferry is located.

"Jurisdiction over trains operating wholly within a single state remains with State regulatory Commissions in regard to public convenience and necessity of such service. If a State Commission does not act on a request for discontinuance within a period of 120 days, or hands down a decision adverse to the applicant carrier, the railroad involved is given right of petition to the I. C. C. The I. C. C. may grant discontinuance after a full hearing and upon finding that the public convenience and necessity requires such action and that the continued operation constitutes an undue burden upon interstate commerce.

"Notice to the State of the filing of such a petition with the I. C. C. is required, as well as provisions for hearings in the State in which such train or ferry is operated.

"The Commission now has power to determine whether intrastate rates impose a burden upon interstate commerce. The bill extends this power to the service itself.”

4. Competitive Ratemaking

Mr. Barton in his summary did not discuss the competitive ratemaking provision of the bill, -Section 6, which adds the following new paragraph (3) to Section 15a of the Interstate Commerce Act:

"In a proceeding involving competition between carriers of different modes of transportation subject to this Act, the Commission, in determining whether a rate is lower than a reasonable minimum rate, shall consider the facts and circumstances attending the movement of the traffic by the carrier or carriers to which the rate is applicable. Rates of a carrier shall not be held up to a particular level to protect the traffic of any other mode of transportation, giving due consideration to the objectives of the national transportation policy declared in this Act."

1 Chicago, Milwaukee, St. Paul and Pacific Railroad Co. v. the State of Illinois, 355 U. S. 300 (1958); Public Service Commission of Utah et al v. United States et al, 356 U. S. 421 (1958).

5. Agricultural Exemptions

Continuing Mr. Barton's summary, we quote:

"The bill incorporates the provisions of Ruling 107, Bureau of Motor Carriers, Interstate Commerce Commission, which sets forth various agricultural products that have been held to be 'exempt' and 'nonexempt' from economic regulation. As a suitable compromise it was determined that: 'frozen fruits, frozen berries, frozen vegetables, cocoa beans, coffee beans, tea, bananas, or hemp, and wool imported from any foreign country, wool tops and noils, or wool waste (carded, spun, woven, or knitted)' should be made subject to economic regulation.

"However, given exemption from economic regulation by I. C. C. were cooked or uncooked (including breaded) fish or shellfish when frozen or fresh (but not including fish or shellfish which have been treated for preserving, such as canned, smoked, pickled, spiced, corned or kippered products).

"Carriers that were in bona fide operation carrying, on May 1, 1958, the products made subject to regulation, are given 'grandfather rights or the right of continued operation.

6. Illegal Common Carrier

"In order to make more effective the law against illegal common carriage rendered without a permit or certificate granted by the I. С. С., the 'primary business' test, enunciated in Brooks Transportation Co. v. U. S., [340 U. S. 925 (1951)] was incorporated into the bill. The precise words used are:

"'nor shall any person engaged in any other business enterprise transport property by motor vehicle in interstate or foreign commerce for business purposes unless such transportation is within the scope, and in furtherance, of a primary business enterprise (other than transportation) of such person.''"

AN ACT

Public Law 85-625

85th Congress, S. 3778, August 12, 1958

To amend the Interstate Commerce Act, as amended, so as to strengthen and improve the national transportation system, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Transportation Act of 1958."

AMENDMENT TO INTERSTATE COMMERCE ACT, RELATING TO LOAN GUARANTIES

SEC. 2. The Interstate Commerce Act, as amended, is amended by inserting immediately after part IV thereof the following new part:

* I. C. C. Practitioners' Journal, Vol. XXV: No. 8, May, 1958, pages 867-877.