Opinion ID: 359862
Heading Depth: 3
Heading Rank: 1

Heading: The Application of Sections 556 and 557 of the Administrative Procedure Act

Text: 42 The Shipping Act does not itself specify the type of hearing required prior to approval under Section 15; it states only that the Commission decision is to be made after notice and hearing. 46 U.S.C. § 814 (1970). Petitioner has argued that the hearing provided by the FMC must comply with the procedural requirements of Sections 556 and 557 of the Administrative Procedure Act governing formal agency hearings. These provisions apply, by the terms of the APA, when a hearing on the record is required by statute. 5 U.S.C. §§ 553(c), 554(c)(2) (1976). While the exact phrase on the record is not an absolute prerequisite to application of the formal hearing requirements, the Supreme Court has made clear that these provisions do not apply unless Congress has clearly indicated that the hearing required by statute must be a trial-type hearing on the record. See United States v. Florida East Coast R. Co., 410 U.S. 224, 234-238, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973); United States v. Allegheny-Ludlum Steel Co., 406 U.S. 742, 756-758, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972). 43 In this case the Shipping Act itself does not provide for a hearing on the record, and nothing in the terms of the statute or its legislative history indicates that a trial-type hearing, complete with all of the procedures specified in Sections 556 and 557, was intended in all Section 15 cases. 50 Indeed, we have held before that there is room for agency flexibility in structuring Section 15 hearings in light of the circumstances of the case and the nature of the issues involved. The requirement of a hearing in a proceeding before an administrative agency may be satisfied by something less time-consuming than courtroom drama. Marine Space Enclosures, Inc. v. FMC, supra, 137 U.S.App.D.C. at 21, 420 F.2d at 589. Such flexibility is particularly important where, as is the case with Agreement 9902-5, the Commission sets certain issues for further investigation and trial-type hearing while granting approval of the agreement Pendente lite. Clearly, if such approval could not be granted by the Commission on the basis of something less than a full trial-type hearing, the Pendente lite authority would effectively be paralyzed. 44 We conclude, therefore, that Section 15 hearings are not required by statute to be conducted in accordance with Sections 556 and 557 of the APA. The Commission thus enjoys substantial flexibility to structure the hearings it must provide depending on the nature of the case and the issues requiring resolution. But that freedom is not absolute. The Shipping Act does require that there be a hearing, and that statutory requirement, like the requirement of comment in notice and comment rulemaking, 51 imposes certain minimum constraints on the procedure followed by the agency. One of these constraints, we think, was clearly violated by the FMC's recourse to secret Ex parte contacts prior to its approval of Agreement 9902-3.