Source: http://www.chanrobles.com/usa/us_supremecourt/354/363/case.php
Timestamp: 2020-01-25 23:20:19
Document Index: 555904275

Matched Legal Cases: ['§ 391', '§ 395', '§ 395', '§ 392', '§ 1213', '§ 391', '§ 393', '§393', '§ 393', '§ 801', '§ 1007', '§ 1008', '§ 211', '§ 826', '§ 390', '§ 22']

1. The Regulations of the State Department governing this subject were applicable to discharges under the McCarran Rider, as well as to those effected under the Loyalty-Security Program. Pp. 354 U. S. 373-381. chanrobles.com-red
98 U.S.App.D.C. 268, 235 F.2d 215, reversed and remanded. chanrobles.com-red
At the time of his discharge in 1951, Service had been a Foreign Service Officer for some sixteen years, during ten of which, 1935-1945, he had served in various capacities in China. In April, 1945, shortly after his return to this country, Service became involved in the so-called Amerasia investigation through having furnished to one Jaffe, the editor of the Amerasia magazine, copies of certain of his Foreign Service reports. Two months later, Service, Jaffe, and others were arrested and charged with violating the Espionage Act, [Footnote 1] but the grand jury, in August, 1945, refused to indict Service. He was thereupon restored to active duty in the Foreign Service, from which he had been on leave of absence since his arrest, and returned to duty in the Far East.
From then on, Service's loyalty and standing as a security risk were under recurrent investigation and review by a number of governmental agencies under the provisions of Executive Order No. 9835, [Footnote 2] establishing the President's Loyalty Program, and otherwise. He was accorded successive "clearances" by the State Department chanrobles.com-red
in each of the years 1945, 1946, and 1947, [Footnote 3] and a fourth clearance in 1949 by that Department's Loyalty Security Board, which, however, was directed by the Loyalty Review Board of the Civil Service Commission, when the case was examined by it on "post-audit," [Footnote 4] to prefer charges against Service and conduct a hearing thereon. This was done, and, on October 6, 1950, after extensive hearings, the Department Board concluded that "reasonable grounds do not exist for belief that . . . Service is disloyal to the Government of the United States . . . ," and that " . . . he does not constitute a security risk to the Department of State." These findings were approved by the Deputy Under Secretary of State, acting pursuant to authority delegated to him by the Secretary. [Footnote 5] Again, however, the Loyalty Review Board, on post-audit, remanded the case to the Department Board for further consideration. [Footnote 6] Such consideration was had, this time under the more stringent loyalty standard established by Executive Order No. 10241, [Footnote 7] amending the earlier Executive Order No. 9835, and again the Department Board, on July 31, 1951, decided favorably to Service. This determination was likewise approved by the Deputy Under Secretary. However, on a further post-audit, the Loyalty Review Board decided to conduct a new hearing itself, which resulted this time in the Board's finding that there was a reasonable doubt as to Service's loyalty, and chanrobles.com-red
in its advising the Secretary of State, on December 13, 1951, that, in the Board's opinion, Service "should be forthwith removed from the rolls of the Department of State," and that "the Secretary should approve and adopt the proceedings" had before the Board. [Footnote 8] On the same chanrobles.com-red
Section 103 of Public Law 188, 82d Congress, [Footnote 9] upon which the Secretary thus relied, was the so-called McCarran Rider, first enacted as a rider to the Appropriation Act for 1947, which provided:
"Notwithstanding the provisions of . . . any other law, the Secretary of State may, in his absolute discretion, . . . terminate the employment of any officer or employee of the Department of State or of the Foreign Service of the United States whenever he shall deem such termination necessary or advisable in the interests of the United States. . . . [Footnote 10]"
Similar provisions were reenacted in each subsequent appropriation act until 1953. [Footnote 11]
While cross-motions for summary judgment were pending before the District Court, this Court rendered its decision in Peters v. Hobby, 349 U. S. 331, holding that, under Executive Order No. 9835, the Loyalty Review Board had no authority to review, on post-audit, determinations favorable to employees made by department or agency chanrobles.com-red
authorities, or to adjudicate individual cases on its own motion. On the authority of that decision, the District Court declared the finding and opinion of the Loyalty Review Board respecting Service to be a nullity, and directed the Civil Service Commission to expunge from its records the Board's finding that there was reasonable doubt as to his loyalty. But since petitioner's removal rested not only upon Executive Order No. 9835, as amended, but also upon the McCarran Rider, the District Court sustained petitioner's discharge as a valid exercise of the "absolute discretion" conferred upon the Secretary by the latter provision, and granted summary judgment in favor of respondents in all other respects. [Footnote 12] The Court of Appeals affirmed, 98 U.S.App.D.C. 268, 235 F.2d chanrobles.com-red
Petitioner here attacks the validity of the termination of his employment on two separate grounds: first, he contends that the Secretary's exercise of discretion was invalid since the findings and opinion of the Loyalty Review Board, upon which alone the Secretary acted, were void because they were rendered without jurisdiction [Footnote 13] and were based upon procedures assertedly contrary to due process of law. Even conceding that the Secretary's powers under the McCarran Rider were such that he was not required to state the grounds for his decision, petitioner urges, his decision cannot stand, because he did, in fact, rely upon grounds that are invalid. See Securities and Exchange Commission v. Chenery Corp., 318 U. S. 80; Perkins v. Elg, 307 U. S. 325. Second, petitioner contends that the Secretary's action is subject to attack under the principles established by this Court's decision in Accardi v. Shaughnessy, 347 U. S. 260, namely, that regulations validly prescribed by a government administrator are binding upon him as well as the citizen, and that this principle holds even when the administrative action under review is discretionary in nature. Regulations relating to "loyalty and security of employees" which had been promulgated by the Secretary, petitioner asserts, were intended to govern discharges effected under the McCarran Rider as well as those effected under Executive Order No. 9835, as amended, and because those regulations were violated by the Secretary in this case, so petitioner claims, his dismissal by the Secretary cannot stand. Since, for reasons discussed hereafter, we have concluded that petitioner's second contention must be sustained, we do not reach the first. chanrobles.com-red
When the Department's proceedings against the petitioner, which resulted in the "clearances" of October 6, 1950, and July 31, 1951, were begun, the Regulations in effect were those of March 11, 1949, entitled "Regulations and Procedures relating to Loyalty and Security of chanrobles.com-red
Employees, U.S. Department of State." [Footnote 14] Section 391 stated the "Authority and General Policy" of the Regulations in three subsections. Subsection 391.1 stated that it was
"In the exercise of this right," the subsection concluded, "the Department will, so far as possible, [Footnote 15] afford its employees the same protection as those provided under the Loyalty Program." And, as we shall see hereafter, the Regulations made no provision for action by the chanrobles.com-red
Secretary himself, under the McCarran Rider or otherwise, except following unfavorable action in the employee's case by the Department Loyalty Security Board, after full hearing before that Board on the charges against him, and approval of the Board's action by the Deputy Under Secretary. [Footnote 16]
In May and September, 1951, prior to the time of petitioner's discharge, the Regulations were revised, and the amended § 391 provided even more explicitly than the original that the procedures and standards established were intended to govern exercise of the authority granted by the McCarran Rider. After stating in the first subsection [Footnote 17] that the Regulations were adopted to implement the Department's policy that "no person be employed in the Department [Footnote 18] who is disloyal or who constitutes a security risk," the section continues in the next two subsections [Footnote 19] to state in effect that the Regulations relating to the handling of loyalty cases were promulgated in accordance with Executive Order No. 9835, and that those relating to security cases were promulgated under chanrobles.com-red
the authority of the Act of August 26, 1950 [Footnote 20] and the McCarran Rider. [Footnote 21] The phrase "so far as possible," in reference to McCarran Rider authority, was deleted. The Regulations thus drew upon all the sources of authority available to the Secretary with reference to such cases, and purported to set forth definitively the procedures and standards to be followed in their handling.
The administrative proceedings held in petitioner's case were unquestionably conducted on the premise that the Regulations were applicable in this instance. The charges were based on the Regulations, and a copy of the Regulations was sent to Service along with the letter of charges. The hearing was scheduled under § 395 of the 1949 Regulations. In its opinion exonerating Service, the Department Board noted, following the Regulations, that "the issues here are (1) loyalty, and (2) security risk." The Board's favorable recommendations came twice before the Deputy Under Secretary for review under §§ 395.6 and 396.7 of these Regulations, and were approved by him. Later, before the Civil Service Commission's Loyalty Review Board, an additional charge was added to the Department's original charges by stipulation of the parties, and the stipulation expressly referred to §§ 392.2 and 393.1a of the Regulations. Indeed at no time during any of the administrative proceedings chanrobles.com-red
"The President's loyalty order of March 21, 1947, prescribed a comprehensive set of standards governing the executive branch as a whole. It was deemed applicable to the Department of State, as well as to other agencies. The unique powers conferred on the Department as a result of continuous reenactment of the McCarran rider led the Department to promulgate regulations which would encompass its duties and powers both under the Executive order and under the McCarran rider. [Footnote 22]"
That the policy of the Secretary to subject his plenary powers under the McCarran Rider to procedural limitations was deliberately adopted, and rested on decisions taken at the highest level, is evidenced by a letter dated September 6, 1950, from President Truman to the Secretary of State, which was made a part of the record below. In that letter, the President advised the Secretary that he had just approved H.R. 7786, the General Appropriation Act, 1951, 69 Stat. 595, 768, § 1213 of chanrobles.com-red
In view of the terms of the Regulations, the course of procedure followed by the Department, and the background materials we have noted, we think that there is no room for doubt that the departmental Regulations for the handling of loyalty and security cases were both intended and considered by the Department to apply in this instance. We cannot accept either of the respondents' present arguments to the contrary. The first argument, as put by the District Court, whose language was adopted by the Court of Appeals, [Footnote 23] is:
We gather from this that the lower courts though that the Secretary was powerless to bind himself by these Regulations as to McCarran Rider discharges based on loyalty or security grounds. We do not think this is so. Although Congress was advised in unmistakable terms that the Secretary had seen fit to limit by regulations the discretion conferred upon him, see pp. 354 U. S. 377-378, supra, it continued to reenact the McCarran Rider without change for several succeeding years. [Footnote 24] Cf. Labor Board v. Gullett Gin Co., 340 U. S. 361, 340 U. S. 366; Fleming v. Mohawk Wrecking Co., 331 U. S. 111, 331 U. S. 116. Nor do we see any inconsistency between this statute and the effect of the Regulations upon the Secretary under Accardi v. Shaughnessy, 347 U. S. 260, already discussed, pp. 354 U. S. 372-373, supra. Accardi, indeed, involved statutory authority as broad as that involved here. [Footnote 25]
The respondents' second argument is that the Regulations refer explicitly to discharges based on loyalty and security grounds, but make no reference to discharges chanrobles.com-red
deemed "necessary or advisable in the interests of the United States" -- the sole McCarran Rider standard -- and hence were not applicable to such discharges. But, as has already been demonstrated, both the Regulations and their historical context show that the Regulations were applicable to McCarran Rider discharges at least to the extent that they were based on loyalty or security grounds, and we do not see how it could seriously be considered, as the respondents now seem to urge, that Service was not discharged on such grounds. The Secretary's affidavit, [Footnote 26] and also the Department's formal notice to Service of his discharge, [Footnote 27] both of which, among other things, refer to Executive Order No. 9835 as well as to the McCarran Rider as authority for the Secretary's action, unmistakably show that the discharge was based on such grounds. chanrobles.com-red
Preliminarily, it must be noted that the parties are in dispute as to which of the two sets of Regulations -- those of 1949 or those of 1951 -- is applicable to petitioner's case, assuming, as we have held, that one or the other must govern. The departmental proceedings against petitioner were begun and were conducted under the 1949 Regulations. However, prior to petitioner's discharge in December, 1951, the revised Regulations of May and September, 1951, had become effective, and it is under those Regulations, the respondents say, that Service's discharge must be judged. [Footnote 28] On the other hand, the petitioner contends that the 1949 Regulations remained applicable to his case, since he was not advised of the existence of the 1951 Regulations until after his discharge had been accomplished and the present court proceedings had been commenced. [Footnote 29] However, it is unnecessary for us to make a choice between the two sets of Regulations, for we find the manner in which petitioner was discharged to have been inconsistent with both. chanrobles.com-red
"(1) The filing of charges, upon notice to the employee involved, accompanied by adequate factual details as to their basis, and a statement as to the employee's work and pay status pending further action. [Footnote 30]"
"(2) A hearing on such charges, if requested by the employee, before the Department's Loyalty Security Board, whose determination, together with the record of the hearings, were then to be forwarded to the Deputy Under Secretary for review. [Footnote 31]"
in writing; or (iii) to decide against the employee, and to notify him of his right to appeal to the Secretary within 10 days thereafter. [Footnote 32]"
"(4) In the event of such an appeal, the Secretary was empowered (i) to decide favorably to the employee, and to so notify him in writing; or (ii) to decided against the employee, and to notify him of such decision, and further, in a loyalty case, of his right to appeal to the Loyalty Review Board within 20 days thereafter. [Footnote 33]"
"(5) If, upon such an appeal, the Loyalty Review Board decided adversely to the employee and made an 'advisory' recommendation to the Secretary that the employee should be removed from employment under the applicable loyalty standards, the Department was to take prompt administrative action to that end. On the other hand, if the Board decided favorably to the employee, the Secretary was empowered (i) to restore the employee to duty and 'close the case'; (ii) to permit the employee to resign; or (iii) to terminate his employment under the authority conferred by the McCarran Rider 'or other appropriate authority.' [Footnote 34]"
From this survey, three things appear as to the handling of loyalty and security cases under the 1949 Regulations which are of significance in this case. First, following the decision of the Deputy Under Secretary upon a determination of the Department Loyalty Security Board, there was to be an appeal to the Secretary only if the Deputy's action had been adverse to the employee. In other words, under these Regulations, the action of the chanrobles.com-red
Deputy Under Secretary, if favorable to the employee, was to be final, the Secretary reserving to himself power to act further only if his Deputy's action was unfavorable to the employee. [Footnote 35] Second, there was likewise an appeal to the Loyalty Review Board from the Secretary's decision only if his action was adverse to the employee. Again, in other words, a decision of the Secretary favorable to the employee was to be final, and immune from further action by the Loyalty Review Board on post-audit, a rule since confirmed by our decision in Peters v. Hobby, supra. Third, the Secretary reserved the right to deal with such a case under his McCarran Rider authority, outside the Regulations, only in instances where, upon an employee's appeal to the Loyalty Review Board from an unfavorable decision by the Secretary, the decision of that body was favorable to the employee.
Granted, as the respondents argue, that these Regulations gave the petitioner (a) no right of appeal to the Secretary from the Deputy Under Secretary's favorable chanrobles.com-red
decision, and (b) no right of appeal at all from the action of the Loyalty Review Board, it does not follow, as the respondents then argue, that the Secretary was free to dismiss the petitioner. For, as has already been observed, the Regulations left the Secretary functus officio with respect to such cases once the Deputy Under Secretary had made a determination favorable to the employee. So here, when the Deputy Under Secretary approved the Loyalty Security Board's action of July 31, 1951, clearing the petitioner, under these Regulations, the case against Service was closed. [Footnote 36] Hence, Service's subsequent discharge by the Secretary must be deemed to have been in contravention of these 1949 Regulations. [Footnote 37] The situation under the 1949 Regulations was thus closely analogous to that which obtained in Accardi v. Shaughnessy, supra. There, the Attorney General bound himself not to exercise his discretion until he had received an impartial recommendation from a subordinate board. Here, the chanrobles.com-red
"The standard for removal from employment in the Department of State under the authority referred to in section 391.3 shall be that on all the evidence reasonable grounds exist for belief that the removal of the officer or employee involved is necessary or advisable in the interest of national security. The decision shall be reached after consideration of the complete file, arguments, briefs, and testimony presented."
(Emphasis added.) The "authority referred to in section 391.3," as we have already noted, included the McCarran Rider. [Footnote 38] In light of the former Secretary's affidavit, [Footnote 39] there is no room for dispute that no attempt was made to comply with this section of the Regulations, [Footnote 40] as indeed the respondents' brief virtually concedes.
the standard laid down in the Act of August 26, 1950, [Footnote 41] and that
the standard contained in the McCarran Rider. But since § 391.3, which is incorporated by reference into § 393.1, specifically subjected the exercise of the Secretary's McCarran Rider authority, in such cases as this, to the operation of the 1951 Regulations, it seems clear that the necessary effect of §393.1 was to subject the exercise of that authority to the substantive standards prescribed by that section, namely, those established by the Act of August 26, 1950, [Footnote 42] and also to the procedural requirements that such cases must be decided "on all the evidence" and "after consideration of the complete file, arguments, briefs, and testimony presented." The essential meaning of the section, in other words, was that the Secretary's decision was required to be on the merits. While it is, of course, true that, under the McCarran Rider, the Secretary was not obligated to impose upon himself these more rigorous substantive and procedural standards, neither was he prohibited from doing so, as we have already held, and, having done so, he could not, so long as the Regulations remained unchanged, proceed without regard to them.
It being clear that § 393.1 was not complied with by the Secretary in this instance, it follows that, under the Accardi doctrine, petitioner's dismissal cannot stand, chanrobles.com-red
regardless of whether the 1951, rather than the 1949, Regulations are deemed applicable in his case. [Footnote 43]
See Peters v. Hobby, 349 U. S. 331, 349 U. S. 339-348, for a discussion of the then-existing "post-audit" procedure.
See pp. 354 U. S. 382-386 and note 16 infra.
"The Opinion of the Loyalty Review Board stressed the points made above by the Chairman -- that is, it stated that the Board was not required to find, and did not find, Mr. Service guilty of disloyalty, but it did find that his intentional and unauthorized disclosure of confidential documents raised reasonable doubt as to his loyalty. The State Department Board while censoring [sic] Mr. Service for indiscretions, believed that the experience Mr. Service had been through as a result of his indiscretions in 1945 had served to make him far more than normally security conscious. It found also that no reasonable doubt existed as to his loyalty to the Government of the United States. On this point, the State Department Board was reversed."
The District Court's opinion is unreported. Actually, the Secretary could be considered to have power to discharge petitioner as he did only by virtue of the McCarran Rider. Petitioner was an officer in the Foreign Service of the United States, and, as such, was entitled to the protection of the Foreign Service Act of 1946, as amended. 22 U.S.C. § 801 et seq. That statute authorizes the Secretary of State to separate officers from the Foreign Service "for unsatisfactory performance of duty," id., § 1007, or for "misconduct or malfeasance," id., § 1008. However, under both sections, an officer may not be separated without a hearing before the Board of the Foreign Service established by § 211 of the Act, 22 U.S.C. § 826, and his unsatisfactory performance of duty or misconduct must be established at that hearing. No such hearing was ever afforded petitioner. Executive Order No. 9835 did not vest any additional authority in the heads of administrative agencies to discharge employees. It merely established new standards and procedures for effecting discharges under whatever independent legal authority existed for those discharges. Cf. Cole v. Young, 351 U. S. 536, 351 U. S. 543-544. The only statutory provision which could be deemed to authorize the Secretary to dismiss petitioner without observance of the provisions of the Foreign Service Act was therefore the McCarran Rider. The latter provision thus was an indispensable supplement to the Department's authority if it was to proceed against petitioner under the Loyalty-Security Regulations as it did. See p. 354 U. S. 376, infra.
See Peters v. Hobby, supra, at 349 U. S. 342-343.
This qualification is without significance here in view of the fact that the petitioner's case before the Department was handled, down to the time of his discharge by the Secretary, under these Regulations. See p. 354 U. S. 376, infra. Moreover, this phrase was deleted in the 1951 revision of the Regulations, as we note hereafter, p. 354 U. S. 376, infra, and the respondents have insisted here that the 1951 revision is controlling, see p. 354 U. S. 382, infra.
"391.1 Policy." For the Department's 1951 Regulations, see U.S. Department of State, Manual of Regulations and Procedures (1951), Vol. I, § 390 et seq.
"391.2 Loyalty Authority,' and '391.3 Security Authority."
This statute is referred to in the subsection as "Public Law 733, 81st Congress," being the Act of August 26, 1950, 64 Stat. 476, 5 U.S.C. §§ 22-1, 22-3, which gave to the State Department, among other departments and agencies of the Government, suspension and dismissal powers over their civilian employees when deemed necessary "in the interest of the national security of the United States." Cf. Cole v. Young, 351 U. S. 536.
98 U.S.App.D.C. 271, 235 F.2d 218.
See pp. 354 U. S. 368-369, supra.
The respondents argue that the proper rule to be applied is that of Vandenbark v. Owens-Illinois Glass Co., 311 U. S. 538, holding that a change in the applicable law after a case has been decided by a nisi prius court, but before decision on appeal, requires the appellate court to apply the changed law. And see Ziffrin, Inc. v. United States, 318 U. S. 73.
See pp. 354 U. S. 375-376, supra.