Source: https://openjurist.org/347/us/535
Timestamp: 2019-04-21 18:15:43+00:00

Document:
Argued May 11, 12, 1954.
The principal question for decision is whether the Defense Production Act of 19501 authorized the President to apply administrative action to the enforcement of its wage stabilization provisions. For the reasons hereafter stated, we decide that it did.
There is here also the question whether such administrative enforcement may be applied even after the restrictions placed on wages under Title IV of the Act2 have expired, provided the enforcement is limited to violations antedating such expiration. Our answer is in the affirmative.
The proposed hearings are to be held before an Enforcement Commissioner with authority merely to recommend findings to a Regional Enforcement Commission subject to review by the National Enforcement Commission. Those findings may show no violation of wage ceilings. At most, they will be concerned with appellee's alleged payment of wages in excess of wage ceilings to an extent of about $750,000. If such a violation of the ceilings is found by the National Enforcement Commission, it may then, under § 405(b) of the Defense Production Act of 1950 and the President's delegated authority, certify to governmental agencies, including the Bureau of Internal Revenue for income-tax purposes, the disallowance of all or part of appellee's illegal wage payments. Appellee argues that such proceedings carry the possibility of the disallowance as a business expense, for income-tax purposes, of $750,000, more or less, up to the total wages paid, exceeding $5,500,000. Appellee contends also that the mere threat of such action would jeopardize the bank credit upon which it depends for essential working capital. There is grave doubt of the right of appellee thus to test the validity of administrative procedure before exhausting it or bringing the issues closer to a focus than it has done. However, it is clear that once the right of the Government to hold administrative hearings is established, a litigant cannot enjoin them merely because they might jeopardize his bank credit or otherwise be inconvenient or embarrassing. Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U.S. 752, 777 779, 67 S.Ct. 1493, 91 L.Ed. 1796. '(T)he expense and annoyance of litigation is 'part of the social burden of living under government." Petroleum Exploration, Inc. v. Public Service Commission of Kentucky, 304 U.S. 209, 222, 58 S.Ct. 834, 841, 82 L.Ed. 1294. See also, Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 47, 58 S.Ct. 459, 461, 82 L.Ed. 638; Chicago & Southern Air Lines v. Waterman S.S. Corp., 333 U.S. 103, 112—113, 68 S.Ct. 431, 436—437, 92 L.Ed. 568; Franklin v. Jonco Aircraft Corp., per curiam, 346 U.S. 868, 74 S.Ct. 126.
The Act granted the President broad powers to promulgate regulations.8 October 3, 1942, he issued Executive Order No. 9250, U.S. Code Cong. Service 1942, p. 1259, 7 Fed.Reg. 7871, 'to control so far as possible the inflationary tendencies and the vast dislocations attendant thereon which threaten our military effort and our domestic economic structure, and for the more effective prosecution of the war'. That order established an Office of Economic Stablization, headed by an Economic Stabilization Director. In Title II it established a national 'Wage and Salary Stabilization Policy'. This placed wage rates under the control of the National War Labor Board and froze them generally at the levels prevailing September 15, 1942. In Title III it authorized the National War Labor Board to issue rules and regulations 'for the speedy determination of the propriety of any wage increases or decreases in accordance with this Order'. It thus established administrative processes for making specific determinations of wages paid in contravention of the Act. The same processes also enabled the Government, through other agencies, to disregard such illegal payments when computing taxes, compensation under cost-plus contracts and other governmental transactions.
Nearly 100,000 proceedings were thus held and disallowances of nearly $30,000,000 were made up to February 24, 1947.11 Those proceedings were matters of general public knowledge and were well known to Congress.12 They support the natural presumption that Congress, in its subsequent actions, accepted them as legitimate interpretations of the Stabilization Act. Shapiro v. United States, 335 U.S. 1, 16, 68 S.Ct. 1375, 1383, 92 L.Ed. 1787; Helvering v. Winmill, 305 U.S. 79, 82—83, 59 S.Ct. 45, 46, 83 L.Ed. 52; Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 310—315, 53 S.Ct. 350, 356—358, 77 L.Ed. 796; Hecht v. Malley, 265 U.S. 144, 153, 44 S.Ct. 462, 465, 68 L.Ed. 949.
It follows, almost word for word, the language of § 5(a) of the earlier Act, supra, at pp. 6—7. While it substitutes the phrase 'any wage, salary, or other compensation' in place of 'wages or salaries,' and the phrase 'any regulation or order' in place of 'the regulations,' the substance of the two sections is inescapably the same.
The Act of 1950 granted the President broad powers to make regulations under it and to delegate the authority conferred upon him by it.13 His orders and regulations follow the pattern of the earlier ones. September 9, 1950, he issued Executive Order No. 10161, 50 U.S.C.A.Appendix, § 2071 note, 15 Fed.Reg. 6105, 6106, Part IV of which created a new agency known as the Economic Stabilization Agency, headed by an Economic Stabilization Administrator. To him the President delegated responsibility for wage stabilization. He established, within such agency, a Wage Stabilization Board with functions to be determined by the Administrator. January 24, 1951, Eric Johnston, then the Administrator, delegated to that Board his functions of wage stabilization. ESA Gen. Order No. 3, 16 Fed.Reg. 739. January 26, he froze wages generally at the levels prevailing January 25. Gen.Wage Stabilization Regulation No. 1, 16 Fed.Reg. 816.
A similar situation followed the expiration, in 1946, of the substantive provisions of the Stabilization Act of 1942,24 and we have seen that the enforcement proceedings continued under it until 1949. See note 11, supra. On that occasion the authority to make disallowances was transferred to the Department of the Treasury. Executive Order No. 9809, 10(b), U.S. Code Cong.Service, p. 1877, 11 Fed.Reg. 14281, 14283. In the present instance, wage stabilization enforcement has been transferred to the Director of the Office of Defense Mobilization. Exec. Order No. 10494, October 14, 1953, 18 Fed.Reg. 6585. The authority of the President to make such a delegation of his powers appears in §§ 703 and 705, and such authority remains effective until June 30, 1955, § 717(a), note 23, supra.
'Title IV—Price and Wage Stabilization' containing §§ 401 412, 64 Stat. 803-812, 66 Stat. 304, and see 50 U.S.C.Appendix (1946 ed., Supp. V) §§ 2101—2110, 50 U.S.C.A.Appendix, §§ 2101 2110.
Office of Economic Stabilization—Pt. 4001—Wages and Salaries, 7 Fed.Reg. 8748 et seq. Subsequent amendments did not change the provisions for making tax disallowances based upon specific administrative determinations.
From October 3, 1942, to December 29, 1945, 68,233 cases, resulting in disallowances of $19,018,820.19, were handled by the National War Labor Board. 1 Termination Report, National War Labor Board, 428—441. From January 1, 1946, to January 30, 1947, 30,071 cases, resulting in disallowances of $11,822,609, were handled by the National Wage Stabilization Board. National Wage Stabilization Board (1946—1947) 223—235. While many cases resulted in findings of no violation or were closed without penalty or disallowance, many others were terminated with disallowances, either by consent or after hearings. There were 282 appeal cases processed by the National Boards, and although the controls were terminated in November 1946 by Executive Order No. 9801, U.S.Code Cong. Service 1946, p. 1865, 11 Fed.Reg. 13435, the enforcement activities, based on earlier violations, were carried on by the Department of the Treasury until 1949. See Ann.Reps. of the Commissioner of Internal Revenue 62—63 (1947); 33—34 (1948); 26—27 (1949).
Not only was the life of the Act extended three times (see note 7, supra) but its administration was reviewed during annual appropriation hearings. See Hearings before the House Subcommittee on Appropriations on National War Agencies Appropriation Bills for 1944, Pt. 2, 78th Cong., 1st Sess. 667 668; for 1945, Pt. 1, 78th Cong., 2d Sess. 240—241, 303—304; for 1946, 79th Cong., 1st Sess. 12—13.
See S.Rep.No. 2250, 81st Cong., 2d Sess. 4—5, 20—40.
First Ann.Rep. of the Joint Committee on Defense Production, S.Rep.No. 1040, 82d Cong., 1st Sess. 98—103 (1951); Second Ann.Rep. of the same Committee, S.Rep.No. 3, 83d Cong., 1st Sess. 108—119 (1952).
See also, Hearings before the House Subcommittees on Appropriations, Pt. 1, 83d Cong., 1st Sess. 439—441, on The Supplemental Appropriation Bill, 1954, introduced in the House as H.R. 6200, and those on the same bill before the Senate Committee on Appropriations, 83d Cong., 1st Sess. 423—431.

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 § 5
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 § 717