COMPLIANCE PROCEDURE

SOURCE: $ 904.501 to 904.515, inclusive, contained in Procedural Document 5, Civilian Production Administration, Aug. 28, 1946, effective Sept. 11, 1946, 11 F.R. 177A-383, except as noted following provision affected.

§ 904.501 Investigations and action thereon. (a) The Compliance Division has sole authortiy within the Civilian Production Administration for authorizing and conducting investigations and surveys relating to compliance with CPA orders and regulations.

(b) Systematic surveys are undertaken by the compliance field staff under all major programs of the Civilian Production Administration to determine violations. These surveys are planned and directed by the Washington compliance staff and are conducted through audit and examination of documents and records of firms subject to the orders and regulations of the agency. When completed the surveys are analyzed and evalulated by the Washington compliance staff and, where necessary, referred to the field for further action. Investigations are also made by the compliance staff of specific complaints of violations which are received by the Agency.

(c) After completion of an investigation which has disclosed a violation, the Director of the Compliance Division may either close the case, issue a warning letter, effect a quota adjustment if the violator admits the violation and agrees to the adjustment, or refer the case to the Office of the General Counsel or Regional Attorney for legal action. The Office of the General Counsel or the Regional Attorney may refer the case to the Department of Justice for criminal or civil action or institute administrative proceedings. In the latter event a charging letter or telegram is prepared for the signature of the Director of the Compliance Division or the Regional Branch Manager advising the respondent of the specific violations charged and the administrative action that may be taken against him.

§ 904.502. Charging letter. When a letter charging specific violations has been issued by a Regional Compliance Manager, the respondent is advised that the matter will be presented to a Compliance Commissioner at a hearing. The respondent should write or phone the Regional Compliance Manager to arrange a date for the hearing. In the event the respondent does not commu

nicate with the Regional Compliance Manager prior to the date specified in the letter, the Regional Compliance Manager will set the date and the respondent will be advised.

§ 904.503 Compliance Commissioners. The Compliance Commissioners of the Civilian Production Administration are appointed by the Administrator, are attached to his office, and are responsible solely to him. They are not a part of the Office of the General Counsel or the Compliance Division. The duty of Compliance Commissioners is to hear and determine charges of violation of orders and regulations of the Civilian Production Administration which have been brought by the Compliance Division against persons or corporations, who are referred to as respondents.

§ 904.504 Hearings. Hearings before Compliance Commissioners are held for the purpose of bringing forth all of the facts and circumstances relevant to the charges which have been made. These hearings are purely voluntary and no respondent is required either to attend or to testify. Violations of Civilian Production Administration regulations and orders are criminal offenses, punishable by imprisonment or a fine under the Second War Powers Act, and respondent is entitled to his constitutional privileges against self-incrimination. The Compliance Division is represented by its attorneys and such investigators or analysts as are necessary to present its side of the case. The respondent may be represented by counsel and should bring to the hearing such other persons as are necessary to present its defense or explanation of the charges. The respondent should be represented by persons thoroughly familiar with its operations and the controls it has established to comply with applicable orders and regulations. If records or reports are to be offered in support of the respondent's explanation or defense, the person offering such records or reports should be familiar with their preparation and factual background. Two copies of any explanatory statement which has been prepared and one copy of every other document to be offered for the Commissioner's consideration should be submitted at the hearing.

§ 904.505 Witnesses; admissions and denials by respondent. Witnesses at hearings are not placed under oath unless the Commissioner deems it neces

sary. At the beginning of each hearing the Commissioner will attempt to determine what facts are in issue. If the respondent admits the facts which constitute the violations charged, the Commissioner will request the respondent to present whatever explanation or defense he has to offer respecting the charges. If, on the other hand, respondent denies any or all of the facts set. forth in the charges, the Compliance Division will be called upon to produce proof of the charges. A transcript of the proceedingsis made by a court reporter, and a copy of it may be obtained by respondent at his own expense.

§ 904.506 Matters of defense. Respondent's explanation or defense should in general be restricted to matters which may excuse, explain, or disprove the violations charged. Respondent will, however, be afforded an opportunity to state by way of explanation any operational difficulties or problems which may have caused or contributed to the violations, including problems of accounting, bookkeeping, production or purchasing, or any other practical difficulties experienced in conforming or attempting to conform to the applicable regulations or orders. The Commissioner may also call upon production or priority experts of the Civilian Production Administration for advice or assistance during the course of the proceeding.

904.507 Recommendations and directives by Compliance Commissioners. Compliance proceedings are instituted for the purpose of ascertaining whether or not violations have occurred and, if violations are found, what action, administrative or otherwise, shall be taken, and for the further purpose of determining the reason for the violations and how they can be prevented in the future. After considering the case, the Compliance Commissioner may recommend: (a) That a suspension order be issued against the respondent, withdrawing or withholding priorities assistance and allocations or allotments of scarce materials or otherwise restricting the respondent in the acquisition, production, use or disposition of scarce materials or items containing scarce materials, or otherwise regulating the business conducted by respondent in order to assure future compliance; (b) that the case be referred to the Department of Justice with a recommendation for the institution of civil

jor criminal proceedings; (c) or the Commissioner may direct: (1) that no final disposition be made of the case for a specified period of time pending a determination of the possibility of continuing violations in the future; (2) that the case be closed.

§ 904.508 Review by Director of the Compliance Division and General Counsel. Upon the basis of the facts brought forth at the hearing, the Compliance Commissioner will make a report containing findings of fact and recommendations. In the event the Commissioner recommends the issuance of a suspension order, the report will be forwarded to Washington, where the recommendation will be subject to review by the Director of the Compliance Division and by the General Counsel of the Civilian Production Administration, but only in the following respects:

(a) If either the Director of the Compliance Division or the General Counsel do not concur, no suspension order may be issued, and

(b) The Director of the Compliance Division and the General Counsel may jointly revise the recommended order by reducing the period of suspension or otherwise mitigating the effect of the order, but may not prescribe a more severe order than has been recommended.

§ 904.509 Suspension orders. Suspension orders are not ordinarily issued unless the Commissioner finds that the violations were wilful or caused by gross negligence, but where the suspension order is designed to affect a readjustment in cases where the respondent has exceeded his allowable quota or allocation of receipts, use, production or delivery of materials, or to reduce an excessive inventory, or to put a stop to violations, no finding of wilfulness or gross negligence is required.

§ 904.510 Consent orders; exceptions and authorizations under suspension orders. The Director or Deputy Director of the Compliance Division may at any time, with the approval of the Office of the General Counsel and a Compliance Commissioner, direct the issuance of a suspension order upon the consent of the respondent and the issuance of specific exceptions or authorizations under suspension orders; this authority may be delegated by the Director to other officials of the Civilian Production Administration.

§ 904.511 Authority of Chief Compliance Commissioner where no appeal is made. The Chief Compliance Commissioner may also at any time, with the consent of the Office of the General Counsel, revoke or modify any suspension order by diminishing the period of suspension or the restrictions imposed though no appeal from the order has been taken by the respondent.

§ 904.512 Appeal. If the respondent objects to the action taken against him, he may appeal in writing to the Chief Compliance Commissioner, Civilian Production Administration, Washington, D. C., whose decision in the case shall be final. A copy of the "Rules and Procedure Governing Appeals from Suspension Orders" will be given the respondent or his attorney at the time of the Compliance hearing. In all cases in which a suspension order is issued, a copy of the Compliance Commissioner's Report and Final Recommendations will be sent to the respondent with a copy of the suspension order. [Preceding section, in small type, superseded by following section during period covered by this Supplement]

§ 904.512 Appeal. If the respondent objects to the action taken against him, he may appeal in writing to the Chief Compliance Commissioner, Civilian Production Administraton, Washington, D. C., whose decision in the case shall be final. A copy of the "Rules and Procedure Governing Appeals from Suspension Orders" will be given the respondent or his attorney at the time of the Compliance hearing. In all cases in which a suspension order is issued, a copy of the Compliance Commissioner's report and final recommendations will -be sent to the respondent with a copy of the suspension order. If the Director of the Compliance Division objects to the action of the Compliance Commissioner in directing a closing of a case, or his recommendation for administrative action, he may appeal in writing to the Chief Compliance Commissioner, Civilian Production Administration, Washington, D. C., whose decision in the case shall be final. The appeal shall conform to the rules and procedure prescribed by the Chief Compliance Commissioner. [Amdt. 1, Oct. 22, 1946, 11 F.R. 12382]

§ 904.513 Investigatory proceedings. In order to secure evidence which investigators have been unable to obtain, the Regional Attorney and the Regional Compliance Manager may institute investigatory proceedings before a Com

pliance Commissioner, and subpoenas may be issued by the Commissioner requiring the presence of witnesses or production of documents. Such hearings should never be used as "fishing expeditions", and the evidence sought to be obtained should always be material to the subject of the investigation. No report or recommendation shall be made by the Compliance Commissioner who acts solely as a presiding officer.

§ 904.514 Temporary suspension order; special hearing. Subject to the approval of the Office of the General Counsel, the Director or Deputy Director of the Compliance Division may, at any time, direct the issuance of a temporary suspension order with or without notice. In such cases the alleged violator may request a special hearing without the issuance of a formal charging letter and arrangements for such hearing shall be made by the Regional Compliance Manager as speedily as possible. If the alleged violator consents in writing to the terms of the temporary suspension order or waives a hearing, the order will then be made permanent. In all other cases the Regional Compliance Manager shall issue a charging letter as soon as possible in order that the respondent may be informed of the charges against him and a hearing held as soon as practical.

§ 904.515 Appearances by former WPB or CPA employees. No person shall represent, or be permitted to represent, a respondent in any hearing before a Compliance Commissioner, or act, or be permitted to act, as agent or attorney for, or representative of, any person, corporation, partnership, association, or organized group of persons in any compliance proceedings in the Civilian Production Administration, if such person (1) is or has been at any time associated with the specific matter involved as an officer or employee of the War Production Board or the Civilian Production Administration or (2) has been within one year an officer or employee of the War Production Board or the Civilian Production Administration.

RULES AND PROCEDURES GOVERNING APPEALS FROM SUSPENSION ORDERS

CODIFICATION: The regulations under this center head were added and amended during the period covered by this Supplement, as set forth below in chronological order:

SOURCE: 904.601 to 904.603, inclusive, set forth below in small type, contained in Procedural Document 6, Civilian Production Administration, Aug. 28, 1946, effective Sept. 11, 1946, 11 F.R. 177A-384.

(a)

§ 904.601 Appeals by respondents. Any person or corporation affected by the provisions of a suspension order may appeal from any or all of the provisions of such order to the Chief Compliance Commissioner of the Civilian Production Administration.

(b) The appeal shall be made in writing and must be submitted within thirty days from the date of issuance of the suspension order, Provided, however, The Chief Compliance Commissioner may in his discretion permit the filing of an appeal at any time during the effective period of the Suspension Order.

(c) The respondent will file a signed original and three copies of the appeal with the Chief Compliance Commissioner, Rm. 4062, Social Security Building, Civilian Production Administration, Washington D. C. The Chief Compliance Commissioner will furnish copies of the appeal to the Director of the Compliance Division and the appropriate Regional Compliance Manager.

25,

(d) The appeal shall set forth the points relied upon by the respondent for relief from the provisions of the Suspension Order together with the arguments advanced in opposition to the findings. The appeal may also set forth the effect of the Suspension Order upon the respondent's operations. The Chief Compliance Commissioner will not consider arguments bearing on the policy embodied in the orders or regulations which the respondent has been found to have violated.

(e) The Director of the Compliance Division or the Regional Compliance Manager who issued the letter charging the violation upon which the suspension order was based may within fifteen days from the receipt of an appeal file with the Chief Compliance Commissioner an original and three copies of an answer to the appeal. A copy of any such answer shall be furnished the respondent, and within five days from the receipt of the answer, respondent may file with the Chief Compliance Commissioner an original and three copies of a reply. The Chief Compliance Commissioner may in his discretion require the filing of an answer within a shorter period of time.

(f) The Chief Compliance Commissioner may, after the filing of an appeal, permit the respondent to appear before him and make an oral presentation of his appeal. The Director of the Compliance Division will be notified of any meeting and a representative of the Compliance Division will be permitted to attend and present the views of the Division.

(g) The Chief Compliance Commissioner, after a review of the record in the case in the light of the appeal, the answer and the reply, will either grant or deny the appeal

in whole or in part. and his decision thereon shall be final.

(h) No person shall represent, or be permitted to represent, a respondent in any appeal if such person

(1) Is or has been at any time associated with the specific matter involved as an officer or employee of the War Production Board or the Civilian Production Administration; or

(2) Has been, within one year, an officer or employee of the War Production Board or the Civilian Production Administration.

§ 904.602 Stays pending appeal. Pending the determination of an appeal, the Chief Compliance Commissioner, upon a showing of irreparable harm, may in his discretion stay the provisions of a Suspension Order. An application for a stay must be made in writing to the Chief Compliance Commissioner. § 904.603 Deputy Chief Compliance Commissioner. The Chief Compliance Commissioner may assign cases to his Deputy who shall be authorized to exercise any and all of the powers of the Chief Compliance Commissioner with respect to the cases so assigned.

[Preceding sections, in small twye, superseded by following sections during period covered by this Supplement]

SOURCE: §§ 904.601 to 904.604, inclusive, contained in Procedural Document 6, as amended Oct. 22, 1946, 11 F.R. 12382.

§ 904.601 Appeals by respondents. (a) Any person or corporation affected by the provisions of a suspension order may appeal from any or all of the provisions of such order to the Chief Compliance Commissioner of the Civilian Production Administration.

(b) The appeal shall be made in writing and must be submitted within thirty days from the date of issuance of the suspension order: Provided, however, The Chief Compliance Commissioner may in his discretion permit the filing of an appeal at any time during the effective period of the Suspension Order.

(c) The respondent will file a signed original and three copies of the appeal with the Chief Compliance Commissioner, Room 4062, Social Security Building, Civilian Production Administration, Washington 25, D. C. The Chief Compliance Commissioner will furnish copies of the appeal to the Director of the Compliance Division and the appropriate Regional Compliance Manager.

(d) The appeal shall set forth the points relied upon by the respondent for relief from the provisions of the suspension order together with the arguments advanced in opposition to the findings.