347 U.S. 535
74 S.Ct. 745
98 L.Ed. 933
ALLEN et al.
GRAND CENTRAL AIRCRAFT CO.
Argued May 11, 12, 1954.
Decided May 24, 1954.
[Syllabus from pages 535-536 intentionally omitted]
Mr. Robert L. Stern, Washington, D.C., for appellants.
Mr. Richard W. Lund, Beverly Hills, for appellee.
Mr. Justice BURTON delivered the opinion of the Court.
The principal question for decision is whether the Defense Production Act of 1950 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 Act have expired, provided the enforcement is limited to violations antedating such expiration. Our answer is in the affirmative.
Appellee further claims that the pending administrative proceeding should be enjoined because the mere conduct of that proceeding might cause it irreparable damage. For the reasons given below, we find that argument untenable.
Appellee, Grand Central Aircraft Company, is a California corporation which was engaged, in 1951, in the production and repair of aircraft equipment in Glendale, California, and Tucson, Arizona. November 4, 1952, the Wage Stabilization Board filed a complaint with the National Enforcement Commission alleging in substance that appellee, between January 26, 1951, and January 1, 1952, had paid wage increases in violations of an order freezing wages at the levels of January 25, 1951. Those payments consisted of wages totaling about $5,500,000, including about $750,000 alleged to have been in excess of the wage ceilings. January 14, 1953, the National Enforcement Commission appointed Phil C. Neal to hear the evidence as an Enforcement Commissioner and to recommend to the Commission a determination of the issues in the proceeding. He set the case for hearing on February 24 at Los Angeles, California, but further action was enjoined as, stated below, so that the proceeding is still pending at that stage.
February 13, 1953, appellee filed the instant suit in the United States District Court for the Northern District of California, Southern Division. Appellee asked the court to restrain the defendant members of the Wage Stabilization Board, the National Enforcement Commission, officials of the Twelfth Region Wage Stabilization Board, and the Enforcement Commissioner, from proceeding with the administrative hearing. Only the regional officials and the Enforcement Commissioner were served. In its complaint, appellee denied that it had violated the Defense Production Act or any regulation or order under it. Appellee claimed also that the administrative procedure then being followed was unauthorized by the Constitution or any statute and that, even if originally authorized, that authorization had now expired. Finally, appellee claimed the hearing should be enjoined because the mere conduct of the proceeding would inflict irreparable damage upon it. A three-judge District Court, convened under 28 U.S.C. (1952 ed.) § 2282, 28 U.S.C.A. § 2282, granted the restraining order and interlocutory injunction sought by appellee against further conduct of the administrative proceeding. After hearing and trial, the injunction was made permanent. 114 F.Supp. 389. The order was then appealed to this Court under 28 U.S.C. (1952 ed.) § 1253, 28 U.S.C.A § 1253. Stay of the injunction was denied, two Justices dissenting and one not participating. Norback v. Grand Central Aircraft Co., 345 U.S. 988, 73 S.Ct. 1128, 97 L.Ed. 1397. Probable jurisdiction of the appeal was noted. 346 U.S. 920, 74 S.Ct. 309.
A somewhat comparable case was decided by a three-judge United States District Court for the Northern District of Texas in favor of an employer June 14, 1953, in Jonco Aircraft Corp. v. Franklin, 114 F.Supp. 392, with Chief Circuit Judge Hutcheson dissenting. That judgment was reversed by this Court, per curiam, for failure of appellee to exhaust its administrative remedy. 346 U.S. 868, 74 S.Ct. 126.
We consider first the claim to injunctive relief which appellee made on the ground that the conduct of the proposed administrative hearings would cause it irreparable damage by weakening its bank credit and depriving it of essential working capital. On that basis, interlocutory relief was granted pending the court's determination of the ultimate issue of the validity of the administrative procedure. That injunction has been made permanent but the Government, on behalf of appellants, contends that appellee is acting prematurely in seeking such relief before carrying the prescribed administrative procedure at least to the point where it faces some immediate compulsion and greater probability of damage than it has established.
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.
It is appellee's principal claim that there is no properly authorized administrative procedure for it to exhaust and that the administrative authorities who seek to determine its case have no lawful right to do so. We, therefore, go directly to the heart of this controversy, which is the question whether the administrative enforcement of the 1950 wage stabilization program has been validly authorized.
The procedure in question is prescribed by General Procedural Regulation 1, Revised, issued by the Economic Stabilization Administrator, August 21, 1952, 17 Fed.Reg. 7737. The hearings are to be conducted regionally by an Enforcement Commissioner and provision is made for appeal to the National Enforcement Commission. That Commission (NEC) is authorized to issue a certificate of disallowance prescribing the amount of wages to be disregarded by the executive departments and other governmental agencies in determining the costs and expenses of appellee for the purposes of any other law or regulation. ESA Gen. Order No. 18, July 28, 1952, 17 Fed.Reg. 6925. Standards of action are prescribed by the Economic Stabilization Administrator in his General Order No. 15, April 3, 1952, 17 Fed.Reg. 2994. Appellee does not complain of noncompliance with these regulations. It complains rather that they are not authorized by statute or that, if purporting to be so authorized, the statute violates the Federal Constitution.
The Government finds authority for the creation of this administrative machinery in § 405(b) of the Defense Production Act of 1950, when read in connection with the entire Act. That section is derived from § 5(a) of the Stabilization Act of 1942, 56 Stat. 767, 50 U.S.C. Appendix, (1946 ed.) § 965(a), 50 U.S.C.A. Appendix, § 965(a). To read the Defense Production Act of 1950 without reference to this model is to read it out of the context in which Congress enacted it.
The Stabilization Act of 1942 was a vital wartime measure, adopted October 2, 1942, directing the President 'on or before November 1, 1942, to issue a general order stabilizing prices, wages, and salaries, affecting the cost of living'. In it, Congress relied upon presidential action geared to the critical necessity for speedy compliance. Its purpose was to check inflation. It subordinated individual convenience to nation-wide standards. Its sanctions were entrusted to administrative agencies capable of prompt action. Section 5(a) provided that—
'No employer shall pay, and no employee shall receive, wages or salaries in contravention of the regulations promulgated by the President under this Act. The President shall also prescribe the extent to which any wage or salary payment made in contravention of such regulations shall be disregarded by the executive departments and other governmental agencies in determining the costs or expenses of any employer for the purposes of any other law or regulation.' 56 Stat. 767, 50 U.S.C.Appendix (1946 ed.) § 965(a), 50 U.S.C.A.Appendix, § 965(a).
The Act granted the President broad powers to promulgate regulations. 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.
October 27, 1942, James F. Byrnes, the Economic Stabilization Director, with the personal approval of the President, issued the regulations which later were to serve as the model for the regulations now before us. They delegated to the National War Labor Board authority to certify, to all executive departments and other agencies of the Government, disallowances of payments of wages based upon the Board's determination of their violation of the Act.
July 30, 1943, the Board adopted rules to govern its procedures and those of Regional War Labor Boards in dealing with violation of the wage stabilization program. Those regulations likewise are comparable to the ones involved in this case. 9 Fed.Reg. 4681 et seq.
Nearly 100,000 proceedings were thus held and disallowances of nearly $30,000,000 were made up to February 24, 1947. Those proceedings were matters of general public knowledge and were well known to Congress. 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.
Under the Act of 1942, the President thus determined, through his administrative agencies, many specific violations of the prescribed wage ceilings. It was the practice of those administrative agencies to certify to other departments and agencies specific disallowances of the wages paid in violation of such ceilings. See Troy Laundry Co. v. Wirtz, 9 Cir., 155 F.2d 53; N. A. Woodworth Co. v. Kavanagh, D.C., 102 F.Supp. 9, affirmed, 6 Cir., 202 F.2d 154.
A comparison of the terms of the Act of 1942 with those of the Defense Production Act of September 8, 1950, and a comparison of the regulations and practice under those Acts is impressive.
Section 405(b) of the later Act is as follows:
'No employer shall pay, and no employee shall receive, any wage, salary, or other compensation in contravention of any regulation or order promulgated by the President under this title. The President shall also prescribe the extent to which any wage, salary, or compensation payment made in contravention of any such regulation or order shall be disregarded by the executive departments and other governmental agencies in determining the costs or expenses of any employer for the purposes of any other law or regulation.' 64 Stat. 807, 50 U.S.C.Appendix (1946 ed., Supp. V) § 2105(b), 50 U.S.C.A.Appendix, § 2105(b).
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. 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.
Enforcement under the Act of 1950 thus closely resembled enforcement under the Act of 1942. June 13, the Wage Stabilization Board established a National Enforcement Commission and authorized the establishment of Regional Enforcement Commissions. Such Commissions were authorized to make determinations of wage violations and the disallowances of specific wage payments under § 405(b). Those determinations were to be 'conclusive for the purpose therein stated. The executive departments and other agencies of the government which receive certifications of such determinations shall disregard and disallow the amount thus certified.' WSB Enforcement Resolution No. 1, § 1(c), 16 Fed.Reg. 6028, 6029. June 28, this procedure was further described in a resolution of the War Stabilization Board. 16 Fed.Reg. 7284.
April 3, 1952, the Economic Stabilization Administrator, in General Order No. 15, 17 Fed.Reg. 2994, prescribed the standards to be followed in making disallowances, including a recognition of extenuating and mitigating circumstances.
Effective July 30, 1952, § 403(b) of the Act was amended to establish a new Wage Stabilization Board. 66 Stat. 300—301. Its functions were defined by the Economic Stabilization Administrator in ESA General Order No. 16, 17 Fed.Reg. 6925. On the same day, he issued ESA General Order No. 18, 17 Fed.Reg. 6925, defining the functions of the National Enforcement Commission. The order covered the Commission's authority to determine and certify specific disallowances in accordance with the standards prescribed in General Order No. 15, supra. The language and substance is obviously reminiscent of that under the Act of 1942.
The legislative history confirms the parallel nature of the two programs. The occasion for the Act of 1950 was the recurring need to check inflation. The military demands in Korea and elsewhere in 1950 made it necessary to maintain a large production of military goods while seeking also to meet the long-denied and increasing needs of the Nation's civil economy. The 1950 Act expressly declared its purpose. Congress reenacted, on a temporary basis, the emergency powers of the President which had been effective during World War II.
The Senate Report on the 1950 bill expressly said:
'This subsection (405(b)) adopts the language of the Stabilization Act of October 2, 1942, respecting the penalties to be applied for violations of the wage and salary stabilization program. The committee finds that the disallowance of illegal wage payments as a cost of doing business, for purposes of computing taxes, Government contract payments, and for purposes of establishing price ceilings, was an effective deterrent.' S.Rep. No. 2250, 81st Cong., 2d Sess. 39.
The regulations, procedures and practices comparable to those under the Act of 1942 were fully reported to Congress.
Despite this history of administrative enforcement under the 1942 Act, appellee claims that, under the 1950 Act, the President had no authority to apply administrative action to the enforcement of wage stabilization. Appellee argues that § 706 of the later Act, as set forth in the margin, vested enforcement of the Act in the District Courts and thus left to the President only authority to promulgate general regulations. We do not agree. Section 706 appears in Title VII containing the so-called 'general provisions' of the Act. Appellee reads the section as sharply restricting the administrative procedure which we have just described. Such an interpretation, however, cannot be given to it in the face of § 405(b). Instead of sharply restricting the revival of administrative enforcement of wage ceilings under § 405(b), we read § 706 as primarily applicable to other activities under the Act. It applies naturally enough to price controls, credit controls and allocations of material. We hold that the specific language of § 405(b) should receive the same construction now that was placed on similar language in the Act of 1942. The 'general provisions' of § 706 do not restrict the specific provisions of § 405(b) now reenacted.
The correctness of the above interpretation was underscored July 31, 1951, when Congress inserted a new § 405(a). In language strikingly similar to § 405(b), that new section introduced administrative enforcement for price controls. Obviously it was not to be substantially eliminated by the existing provisions of § 706. As the specific language of § 405(a) is thus controlling over the general provisions of § 706, so the same specific language in § 405(b) is controlling over those same provisions.
We have noted the other arguments submitted by appellee concerning the interpretation and constitutionality of the statute but it would be premature action on our part to rule upon these until after the required administrative procedures have been exhausted.
Finally, appellee contends that, by the termination of the substantive provisions of the Defense Production Act of 1950, all authority has now expired for determining or disallowing past, as well as future, payments made in violation of wage ceilings.
As the Act is a temporary statute, the effect of its expiration is governed by the following general savings statute:
'The expiration of a temporary statute shall not have the effect to release or extinguish any penalty, forfeiture, or liability incurred under such statute, unless the temporary statute shall so expressly provide, and such statute shall be treated as still remaining in force for the purpose of sustaining any proper action or prosecution for the enforcement of such penalty, forfeiture, or liability.' (Emphasis supplied.) 1 U.S.C. (1952 ed.) § 109, 1 U.S.C.A. § 109.
We find no express, or even implied, provision in the Act contrary to the policy of the general savings statute. All of the alleged violations here involved occurred in 1951. The substantive provisions of Title IV relating to wage stabilization and the supporting orders fixing the wage ceilings here at issue did not expire until April 30, 1953. Neither that expiration date nor the six-month extension of it for liquidation purposes restricts the general provision of § 109 as to the survival of enforcement proceedings.
The precise object of the general savings statute is to prevent the expiration of a temporary statute from cutting off appropriate measures to enforce the expired statute in relation to violations of it, or of regulations issued under it, occurring before its expiration. United States v. Allied Oil Corp., 341 U.S. 1, 5, 71 S.Ct. 544, 546, 95 L.Ed. 697; Fleming v. Mohawk Wrecking & Lumber Co., 331 U.S. 111, 67 S.Ct. 1129, 91 L.Ed. 1375.
A similar situation followed the expiration, in 1946, of the substantive provisions of the Stabilization Act of 1942, 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.
The validity of the pending administrative proceeding being thus upheld, the judgment of the District Court enjoining that proceeding is reversed.