A-6161, MAY 2, 1925, 4 COMP. GEN. 908

A-6161, MAY 2, 1925, 4 COMP. GEN. 908

INTERNAL REVENUE HEARINGS - WITNESSES - STENOGRAPHIC REPORTERS THERE IS NO AUTHORITY OF LAW FOR REQUIRING THE ATTENDANCE OR PAYING THE EXPENSES OF WITNESSES, WHO ARE NOT GOVERNMENT EMPLOYEES, AT HEARINGS CONDUCTED BY THE BUREAU OF INTERNAL REVENUE UNDER SECTIONS 5, 6, AND 9, TITLE II, OF THE NATIONAL PROHIBITION ACT OF OCTOBER 28, 1919, 41 STAT. 310. THE EXPENSES OF GOVERNMENT EMPLOYEES REQUIRED TO ATTEND SUCH HEARINGS AS PART OF THEIR OFFICIAL DUTY MAY, HOWEVER, BE PAID FROM THE APPROPRIATION FOR ENFORCEMENT OF THE NARCOTIC AND NATIONAL PROHIBITION ACTS. 4 COMP. GEN. 499, AMPLIFIED AND ADHERED TO. THE RECORDING OR REPORTING OF ADMINISTRATIVE HEARINGS AS A GENERAL RULE IS FOR PERFORMANCE BY THE REGULAR STENOGRAPHIC FORCE OF THE SERVICE OR ESTABLISHMENT HOLDING SUCH HEARINGS. NECESSITY FOR THE HIRE OF A STENOGRAPHIC REPORTER IN PARTICULAR CASES, DUE TO THE INABILITY OF THE REGULAR STENOGRAPHERS TO PERFORM THAT SERVICE, MUST AFFIRMATIVELY APPEAR AND DUE COMPLIANCE SHOULD BE HAD WITH SECTION 3709, REVISED STATUTES, REGARDING ADVERTISEMENT.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, MAY 2, 1925:

THERE HAS BEEN RECEIVED YOUR REQUEST OF MARCH 27, 1925, FOR RECONSIDERATION OF MY DECISION OF NOVEMBER 29, 1924, 4 COMP. GEN. 499, IN WHICH IT WAS HELD THAT THERE IS NO AUTHORITY OF LAW FOR THE PAYMENT OF EXPENSES INCIDENT TO SECURING THE ATTENDANCE OF WITNESSES AT HEARINGS CONDUCTED BY THE BUREAU OF INTERNAL REVENUE FOR THE PURPOSE OF DETERMINING WHETHER PERMITS ISSUED UNDER SECTION 5, 6, AND 9, TITLE II, OF THE NATIONAL PROHIBITION ACT OF OCTOBER 28, 1919, 41 STAT. 310, SHOULD BE REVOKED OR REDUCED.

IN YOUR REQUEST FOR RECONSIDERATION IT IS STATED IN PART:

THIS DEPARTMENT IS NOW INFORMED THAT, IN VIEW OF THIS RULING, ACCOUNTING OFFICERS ARE CONTEMPLATING SUSPENDING THE PAYMENT OF EXPENSES OF GOVERNMENT AGENTS AND WITNESSES ATTENDING AND TESTIFYING AT SUCH HEARINGS, AND OF STENOGRAPHERS REPORTING TESTIMONY INTRODUCED ON BEHALF OF THE GOVERNMENT. IF THIS IS TRUE, AND IF THE RULING REFERRED TO IS NOT MODIFIED, THIS DEPARTMENT WILL BE COMPELLED TO DISCONTINUE ENTIRELY ITS PRESENT PROCEDURE AND ENTER UPON ONE WHICH, IT IS BELIEVED, FROM A FULL CONSIDERATION OF THE MATTER, YOU WILL AGREE IS NOT IN CONFORMITY WITH THE LAW AND REGULATIONS. IT IS FOR THE PURPOSE, THEREFORE, OF SECURING RECONSIDERATION OF YOUR RULING OF NOVEMBER 29, 1924, THAT THIS COMMUNICATION IS ADDRESSED TO YOU.

THE SECTIONS OF THE LAW TO WHICH YOU REFER IN YOUR OPINION ARE, OF COURSE, CONTROLLING, WITH THE EXCEPTION THAT SECTION 6, TITLE II, MUST ALSO BE CONSULTED IN DETERMINING THE AUTHORITY OF THE COMMISSIONER OF INTERNAL REVENUE TO ISSUE PERMITS. THE REGULATIONS QUOTED IN YOUR LETTER DEAL, HOWEVER, ONLY WITH THE RENEWAL OF BASIC PERMITS, AND REFER TO BUT TWO CLASSES, I.E., THOSE TO BE ISSUED TO RETAIL DRUGGISTS AND HOSPITALS, LEAVING ENTIRELY OUT OF CONSIDERATION (1) THE ISSUANCE OF ALL ORIGINAL PERMITS; (2) THE RENEWAL OF PERMITS OF MANUFACTURERS OF LIQUOR, WHOLESALE DRUGGISTS, TRANSPORTERS, IMPORTERS, PHYSICIANS, CONCENTRATION WAREHOUSEMEN, MANUFACTURERS OF DENATURED ALCOHOL AND OF CIDER AND VINEGAR AND OF CEREAL BEVERAGES AND DEALCOHOLIZED WINES; AND (3) THE REVOCATION OF PERMITS.

THE SECTIONS OF THE STATUTE GOVERNING THE REVOCATION OF PERMITS (5 AND 9, TITLE II), WITH WHICH THE DEPARTMENT IS PRIMARILY CONCERNED, AS IT IS HOLDING AT LEAST ONE HUNDRED HEARINGS THEREUNDER DAILY THROUGHOUT THE UNITED STATES, UNQUESTIONABLY CONTEMPLATE A LEGAL HEARING AT WHICH THE FACTS ARE ESTABLISHED AND MADE A MATTER OF RECORD, AND ON WHICH ARE BASED THE FINDINGS OF THE COMMISSIONER, WHICH THE COURTS ON REVIEW ARE TO "AFFIRM, MODIFY, OR REVERSE * * * AS THE FACTS AND LAW OF THE CASE MAY WARRANT.' (SEC. 5.) THE COURTS HAVE IN THE MAJORITY OF CASES SO FAR REVIEWED UNDER THESE PROVISIONS DETERMINED THE ISSUE OF WHETHER THE PERMIT SHOULD OR SHOULD NOT BE REVOKED ON THE RECORD SO PREPARED * * *.

THE REGULATIONS UNDER WHICH THE PROHIBITION UNIT IS CONDUCTING HEARINGS IN CASES INVOLVING THE REVOCATION OF PERMITS ARE NOT NOVEL. THEY WERE ADOPTED AFTER A VERY CAREFUL CONSIDERATION OF THE PROVISIONS OF LAW AUTHORIZING HEARINGS AND THE RULINGS OF COURTS AS TO WHAT CONSTITUTED A LEGAL HEARING. THEY ARE DESIGNED TO APPROXIMATE AS NEAR AS MAY BE A JUDICIAL HEARING, AND HAVE THUS FAR MET WITH ALMOST UNIVERSAL ACCEPTANCE BY THE COURTS.

SECTION 5 OF THE ACT OF OCTOBER 28, 1919, 41 STAT. 309, WITH REFERENCE TO THE PROCEDURE TO BE FOLLOWED IN THE REVOCATION OF PERMITS FOR THE MANUFACTURE OF PREPARATIONS PERMITTED BY SECTION 4 OF THE ACT AS NOT CONSTITUTING INTOXICATING LIQUORS, REQUIRES, FIRST, AN ANALYSIS OF THE ARTICLE MADE AND A FINDING BY THE COMMISSIONER, BASED UPON THE ANALYSIS, WHETHER THE PREPARATION IS AN INTOXICATING LIQUOR WITHIN THE MEANING OF THE ACT. IF SO DETERMINED, THE MANUFACTURER OR PERMITTEE IS THEN TO BE SERVED WITH NOTICE AND GIVEN AN OPPORTUNITY TO DISPROVE THE FINDING TO THE "SATISFACTION OF THE COMMISSIONER," HIS PERMIT TO BE REVOKED IF HE FAILS. THE PERMITTEE IS THEN GIVEN THE PRIVILEGE OF PROCEEDING IN COURT FOR A REVIEW OF THE ACTION OF THE COMMISSIONER. THE GOVERNMENT'S CASE, PRIOR TO THE PRESENTATION OF THE MATTER TO THE COURT, IS BASED UPON THE ANALYSIS, AND NO REASON IS SEEN FOR CALLING OUTSIDE WITNESSES TO SUPPORT IT. THE PERMITTEE IS PRIVILEGED TO SUBMIT SUCH A SHOWING BY AFFIDAVITS OR ORAL TESTIMONY AS HE MAY DESIRE, BUT NEITHER HE NOR THE COMMISSIONER IS GIVEN ANY RIGHT TO SUBPOENA WITNESSES.

SECTION 9 OF THE ACT, WITH REFERENCE TO THE REVOCATION OF PERMITS FOR DEALING IN INTOXICATING LIQUORS AS SUCH, PROVIDES FOR A HEARING, AFTER DUE NOTICE TO THE PERMITTEE, OF CHARGES BASED UPON ,A COMPLAINT UNDER OATH SETTING FORTH FACTS SHOWING, OR IF THE COMMISSIONER HAS REASON TO IEVE," THAT ANY PERSON WHO HAS A PERMIT IS NOT IN GOOD FAITH CONFORMING TO THE PROVISIONS OF THE ACT OR HAS VIOLATED THE PROHIBITION LAWS OF ANY STATE.

REGULATIONS 60, SECTIONS 1900 TO 1944, PROVIDE A PROCEDURE TO BE FOLLOWED WITH RESPECT TO HEARINGS. SUCH PROCEDURE, IN SO FAR AS IT DOES NOT INVOLVE UNAUTHORIZED EXPENDITURES OF PUBLIC FUNDS, IS PROPERLY FOR ADMINISTRATIVE REGULATION, AND THE ATTENDANCE AT SUCH HEARINGS OF AGENTS AND EMPLOYEES OF THE PROHIBITION FORCES MAY BE CONSIDERED IN THE LINE OF OFFICIAL DUTY, AND THEIR ACTUAL AND NECESSARY EXPENSES SO INCURRED ARE CHARGEABLE TO THE APPROPRIATION FOR "ENFORCEMENT OF NARCOTIC AND NATIONAL PROHIBITION ACTS.' AS SECTION 9 OF THE ACT PROVIDES FOR A "HEARING" WHICH IS TO FORM THE BASIS OF THE COMMISSIONER'S ACTION, WHICH ACTION IS SUBJECT TO REVIEW BY THE COURT, IT WOULD APPEAR PROPER THAT SOME RECORD BE MADE OF THE PROCEEDINGS. IT IS NOT APPARENT THAT THE PROCEEDINGS ARE NECESSARILY OF SUCH A FORMAL NATURE, HOWEVER, AS TO REQUIRE THE HIRING OF A STENOGRAPHIC REPORTER. AS A GENERAL RULE ADMINISTRATIVE HEARINGS ARE FOR RECORDING OR REPORTING BY THE REGULAR STENOGRAPHIC FORCE. SHOULD NECESSITY ARISE IN PARTICULAR CASES FOR THE HIRE OF A STENOGRAPHIC REPORTER, DUE TO THE INABILITY OF THE REGULAR STENOGRAPHERS TO PERFORM THAT SERVICE, SUCH NECESSITY MUST AFFIRMATIVELY APPEAR ON THE VOUCHER AND DUE COMPLIANCE SHOULD BE HAD WITH SECTION 3709, REVISED STATUTES, REGARDING ADVERTISEMENT.

AS POINTED OUT IN THE DECISION OF NOVEMBER 29, 1924, HOWEVER, UNDER THE SECTIONS OF THE LAW REFERRED TO, PERMITS ARE NOT TO BE REVOKED OR REDUCED OR DENIED UNLESS THE DIRECTOR IS IN POSSESSION OF PROOF TO INDICATE THE NECESSITY FOR SUCH ACTION. THE HEARING IS AUTHORIZED NOT FOR THE PURPOSE OF OBTAINING SUCH PROOF BUT TO ENABLE THE PERMITTEE TO OVERCOME SUCH PROOF IF HE CAN. THERE WOULD APPEAR TO BE NO NECESSITY FOR THE GOVERNMENT TO PRODUCE WITNESSES AT SUCH HEARING, ESPECIALLY WITNESSES OTHER THAN PROHIBITION AGENTS OR EMPLOYEES. THE ACT DOES NOT GIVE THE PROHIBITION OFFICERS AUTHORITY TO SUBPOENA WITNESSES OR TO ADMINISTER OATHS. SULLIVAN V. POTTER, FEDERAL PROHIBITION DIRECTOR, 290 FED.REP. 844. WHERE CONGRESS INTENDS SUCH POWER TO BE EXERCISED, IT HAS CONFERRED IT BY SPECIAL STATUTORY ENACTMENT AS INSTANCED IN THE CASES OF THE FEDERAL TRADE COMMISSION, ACT OF SEPTEMBER 26, 1914, 38 STAT. 722; THE EMPLOYEES' COMPENSATION COMMISSION, ACT OF SEPTEMBER 7, 1916, 39 STAT. 748; SECRETARY OF INTERIOR IN INDIAN HEIRSHIP CASES, ACT OF AUGUST 1, 1914, 38 STAT. 586; UNITED STATES TARIFF COMMISSION, ACT OF SEPTEMBER 8, 1916, 39 STAT. 797; REGISTERS AND RECEIVERS OF LOCAL LAND OFFICES, ACT OF JANUARY 31, 1903, 32 STAT. 790; BOARD OF TAX APPEALS, ACT OF JUNE 2, 1924, 43 STAT. 338.

THERE APPEARS NOTHING IN YOUR LETTER OF MARCH 27, 1925, TO REQUIRE OR JUSTIFY ANY MODIFICATION OF THE DECISION OF NOVEMBER 29, 1924, AND THE SAME IS ACCORDINGLY AFFIRMED.

IT MAY BE STATED FOR YOUR INFORMATION THAT SAID DECISION DENIED ONLY THE RIGHT OF THE PROHIBITION OFFICERS TO REQUIRE THE ATTENDANCE OF WITNESSES OTHER THAN GOVERNMENT EMPLOYEES AT THE HEARINGS HELD UNDERSECTIONS 5, 6, AND 9 OF THE PROHIBITION ACT, AND TO PAY THEIR EXPENSES FROM PUBLIC FUNDS. IT DID NOT AND WAS NOT INTENDED TO INTERFERE OTHERWISE IN THE PROCEDURE PRESCRIBED BY THE REGULATIONS IN CONDUCTING SUCH HEARINGS AS MAY BE CONSIDERED NECESSARY FROM AN ADMINISTRATIVE VIEWPOINT IN SO FAR AS THEY DO NOT CONTEMPLATE THE UNAUTHORIZED EXPENDITURE OF PUBLIC FUNDS.