Opinion ID: 359862
Heading Depth: 3
Heading Rank: 3

Heading: Ex Parte Contacts and the Section 15 Hearing Requirement

Text: 53 Under the Shipping Act notice and a hearing are required prior to Commission approval of any agreement subject to Section 15. The Commission is charged by statute with enforcing the public interest, and it recognizes the right of the public be it carrier, exporters, or interested consumers to participate in the required hearing. 57 The public right to participate in a hearing, however, is effectively nullified when the agency decision is based not on the submissions and information known and available to all, but rather on the private conversations and secret points and arguments to which the public and the participating parties have no access. In such cases the exercise of permitting public comment and response by interested parties the hearing is nothing more than a sham. 54 The inconsistency of secret Ex parte contacts with the notion of a fair hearing and with the principles of fairness implicit in due process has long been recognized. In Morgan v. United States, 304 U.S. 1, 18, 58 S.Ct. 773, 776, 82 L.Ed. 1129 (1938), the Supreme Court stated: The right to a hearing embraces not only the right to present evidence but also a reasonable opportunity to know the claims of the opposing party and to meet them. The right to submit argument implies that opportunity; otherwise the right may be but a barren one. And in Sangamon Valley Television Corp. v. United States, 106 U.S.App.D.C. 30, 33, 269 F.2d 221, 224 (1959), we held that basic fairness required that a rulemaking proceeding to allocate television channels among communities be carried on in the open, without Ex parte contacts. Most recently, in Home Box Office, Inc. v. FCC, supra, we set aside FCC regulations relating to cable and subscription television in part because of prohibited Ex parte communications between industry leaders and the Commission during the rulemaking proceeding. In that case we noted that this is a time when all branches of government have taken steps 'designed to better assure fairness and to avoid suspicions of impropriety,'    and consequently we have no hesitation in concluding with Sangamon that due process requires us to set aside the Commission's rules here. 185 U.S.App.D.C. at 190, 567 F.2d at 57, Quoting White House Fact Sheet on Executive Order 11920 (June 10, 1976). 55 The instant case is not identical in all respects with either Sangamon Valley or Home Box Office. Sangamon Valley involved resolution of conflicting private claims to a valuable privilege, 106 U.S.App.D.C. at 33, 269 F.2d at 224, a description which is not entirely applicable to this case. For although this case involves a privilege in the sense of exemption from the antitrust laws, it is not one to which there are competing claims which must be resolved in favor of one applicant or another. Nor does this case, like Home Box Office, deal with notice and comment rulemaking governed by Section 553 of the APA. Rather, what is involved here appears quasi-adjudicatory in nature: the agency is required to adjudicate the rights of certain named parties to an exemption from the antitrust laws. But in doing so the FMC, like the FCC in Sangamon Valley and Home Box Office, is charged with enforcing and guarding the public interest, with the impact of its decision extending well beyond the immediate parties involved. Moreover, however we label the proceedings involved here and in our earlier cases, the common theme remains: that Ex parte communications and agency secrecy as to their substance and existence serve effectively to deprive the public of the right to participate meaningfully in the decisionmaking process. 58 56 Our earlier decisions dealing with Ex parte contacts, as well as prior cases requiring an agency to provide initial notices of proposed action, to disclose internal reports, and to state its reasons for acting as it did, 59 all rest on the fundamental proposition that the right to comment or the opportunity to be heard on questions relating to the public interest is of little or no significance when one is not apprised of the issues and positions to which argument is relevant. Only when the public is adequately informed can there be any exchange of views and any real dialogue as to the final decision. 60 And without such dialogue any notion of real public participation is necessarily an illusion. This basic principle, embodied in this case in the requirement of a hearing, was violated by the Commission's resort to Ex parte comments. 57 That the proceedings in this case did not, because of the Ex parte contacts, amount to the hearing guaranteed by statute is patently clear. While the Commission enjoys substantial flexibility in structuring its hearings in light of the issues involved, 61 the requirement of a hearing to determine the public interest means, at a very minimum, that an opportunity must be afforded for meaningful public participation. In this case there was no such opportunity. To be sure, USL and any other members of the public were free to submit arguments as to their positions on the agreement in question. But there was no opportunity for a real dialogue or exchange of views. USL was not informed of, let alone given the opportunity to respond to, the new arguments of Euro-Pacific or of the French and German governments as to the proposed agreement. Nor did USL know of or have the opportunity to respond to the arguments which Euro-Pacific conveyed secretly to the Commission in response to USL's protest. And it was after consideration of these Ex parte arguments and responses, with no opportunity for further rebuttal, that the Commission reversed its position on participation of ICT. 62 58 What we are confronted with, then, is an agency procedure denying meaningful participation to the public and an agency decision appearing to rest, at least in significant part, on communications never revealed to the protesting party or to the public. For a court to uphold this decision as satisfying the hearing required by statute would be to do violence not only to Section 15 but to the basic fairness concept of due process as well.