[Twenty-Second Quarterly Report for the Period Ended May 31, 1947] [From the U.S. Government Publishing Office, www.gpo.gov] OFFICE OF PRICE ADMINISTRATION EARL W. CLARK, Commissioner TWENTY-SECOND QUARTERLY REPORT FOR THE PERIOD ENDED MAY 31, 1947 UNITED STATES GOVERNMENT PRINTING OFFICE • WASHINGTON . 1947 LETTER OF TRANSMITTAL Office of Temporary Controls, Washington 25, D. C., May 31,19^7. Sirs : I have the honor to submit herewith the twenty-second report of the Office of Price Administration, covering the 2-month period ended May 31,1947. During the first half of this period Max McCullough continued as Commissioner of Price Administration. During the latter part of the period Earl W. Clark, Liquidation Officer for the Office of Temporary Controls, acted as Commissioner. This report completes the series of quarterly reports filed under the requirements of Title 3, Section 301, of the Emergency Price Control Act. Sincerely yours, Philip B. Fleming, Major General, U. 8. A., Administrator. The President Pro Tempore of the Senate. The Speaker of the House of Representatives. iii TABLE OF CONTENTS Chapter Page I . Termination of Agency. ____________________________ 1 Disposition of Functions_________________________________ 1 Completed Obligations______________________________.----- 2 IL Rent Control_________________________________________ 4 Decontrol Actions________________3_______________________ 4 Amendments and Interpretations_______________________________ 4 Veterans’ Housing Sales Control___________i _ ___________ 5 III. Emergency Court of Appeals______________________________ 6 Price Control Cases. ________________________________________ 6 Rent Control Cases__________________________________________ 12 IV. Enforcement____________________________________________ 14 Transfer of Operations____________________________________ 14 Litigation ____________________________________________ 14 Statistical Summary_______________________________________ 16 iv . I. TERMINATION OF AGENCY The Office of Price Administration was officially ended May 31, 1947, after some 5 years of statutory authority to stabilize prices of goods and services as well as residential rentals. At the height of its wartime activity, OPA set ceiling prices on more than 80 percent of goods and services in the Nation’s private economy and controlled residential rentals in areas where over three-fourths of the American population lived. In addition the Office administered 13 rationing programs under delegation of authority from the President. Scheduled to end June 30, 1947, with the expiration of the Price Control Extension Act of 1946, the earlier liquidation date was made possible by a Presidential order which provided for remaining fun’c-tions to be taken over by other Government agencies.1 Control over prices of most goods and services had been lifted in November 1946.2 Price control over sugar, certain sugar products, and rice and control over residential rentals had been continued, however, along with sugar rationing. Besides the responsibility for carrying on these surviving programs, the Office had the obligation of completing certain record, auditing, and subsidy tasks3 and of winding up its affairs in an orderly way. Both sugar price control and sugar rationing were made the responsibility of the Secretary of Agriculture under the Sugar Control Extension Act, Signed by the President March 31, 1947. These programs, together with a number of Office employees who had worked on them, were transferred to the Department of Agriculture as of April l.4 DISPOSITION OF FUNCTIONS Under the President’s Executive order, remaining OPA obligations were disposed of as follows : Effective May 4, 1947, rent control was transferred to the Housing Expediter; control over the price of rice to the Department of Agriculture; and determination of subsidy Claims, except as'otherwise specified, to the Reconstruction Finance Corporation. Effective June 1, 1947, the program for premium pay- 1 Executive Orders 9841 and 9842, issued April 23, 1947. 2 See Twentieth Quarterly Report, pp. 13-14. 3 See Twentieth Quarterly Report, pp. 14-17, and Twenty-first Quarterly Report, pp. 1-3. 4 The Secretary discontinued sugar rationing, except to industrial users, as of 1 minute after midnight of June 11, 1947, on the grounds of sufficient supply. 1 2 • Twenty-Second Quarterly Report ments on copper, lead, and zinc ores and the auditing of the Government industrial alcohol purchase program were transferred to the Secretary of Commerce, as was the responsibility for the final liquidation of the Office of Temporary Controls, including the Office of Price Administration. The order authorized shifting-of related records, property, and personnel along with each function. Officers to whom functions were transferred under the order were specifically given authority to institute, maintain, or defend civil proceedings relating to these matters in any court, including the Emergency Court of Appeals. The Attorney General was directed to coordinate, conduct, initiate, maintain, or defend litigation before the Emergency Court of Appeals for or on behalf of the Secretary of Agriculture, the Secretary of Commerce, and the Reconstruction Finance Corporation, and litigation against violators of regulations or orders pertaining to prices of commodities no longer under control. He was also charged with all litigation arising out of Directive 41 of the Office of Economic Stabilization relating to the withholding of subsidies because of noncompliance with or violations of control orders. Thus all pending litigation was taken over by the Department of Justice. In the reorganization following issuance of the President’s order, all save a small number of OPA employees were grouped into a division of liquidation in the Office of Temporary Controls.5 The excepted personnel, those in the immediate offices of the Commissioner and the General Counsel and the enforcement staff which was to be later transferred to the Housing Expediter, constituted the remaining Office of Price Administration which was to end as an agency on May 28. Regional liquidation officers, usually former regional administrators^ were charged with wind-up of the field organization.6 COMPLETED OBLIGATIOHS During the period under review the policy-analysis program was brought to a conclusion. This program had served to record and interpret the experience of the Office of Price Administration for current and historical use. These interpretations were incorporated into a number of published volumes which were to be made available to the public through the Government Printing Office.7 In addition to the 8 Transferred to the Department of Commerce June 1, 1947, and scheduled for termination as of June 28, 1947. 8 The bulk of this work was completed by June 15,1947. T Already printed or in the process of printing at the time of this report were the following : OPA Chronology ; Minutes of the Price Administration Committee; Beginnings of OPA; History of Ration Banking; Wartime Apparel Price Control; Field Administration of Wartime Rationing; OPA Bibliography, 1940-47; OPA and the Public Utility Commissions; Studies in Industrial Price Controls. Also scheduled for printing were 1 Termination of Agency • 3 printed work, a considerable number of manuscripts were prepared and filed with the National Archives, where they will be available for scholarly reference.8 A considerable number of these are individual narratives, analyzing price actions taken in connection with specific commodities or commodity groups or describing the experience of various organizational units in the OPA national or field offices. Also completed was the analysis of economic data records gathered by the Office, summaries of which, known as OPA Economic Data Series, are also available through the Government Printing Office.9 Only 619 OPA employees remained at the end of May to complete the liquidation process in the Department of Commerce.10 This figure included both field and national office staff. The number of employees transferred to the Sugar Rationing Administration in the Department of Agriculture on April 1 amounted to 2,491, with 194 additional administrative employees transferred at the end of May. Transferred with rent control to the Housing Expediter May 4, 1947, were 5,972 employees; 388 additional administrative personnel was transferred at the end of May. Studies in Food Rationing; Volunteers in OPA; Problems in Price Control: Changing Production Patterns; Problems in Price Control: National Office Organization and Management4; Problems in Price Control: Legal Phases; Problems in Price Control: Pricing Standards; Problems in Price Control: Pricing Techhiques; Problems in Price Control: Stabilization Subsidies; OPA : A Summary. 8 These are listed and classified with key reference numbers in the printed volume^ OPA Bibliography 1940-47. 9 Studies either in print or process of printing at the time of this report were: No. 1. Civilian Meat Distribution, January—March 1944; No. 2. Preliminary Survey of Operating Data for Commercial Bituminous Coal Mines 1943, 1944, and 1945; No. 3. Survey of Production, Costs, Realization, and Margins of Pennsylvania Anthracite Operators, Annually 1940—45 and the First Nine Months of 1946; No. 4. Survey of Electrical Appliance Retailers: Combined Income Statement, by Type of Store and Type of Ownership, for the United States and by OPA Regions, 1939, 1941, and 1944 ; No. 5. Survey of Shirts, Shorts, and Pajama Manufacturers: Detailed Cost Data 1944, Financial Data 1936-44 and Production and Sales Distribution Data 1942, 1943, and 1944; No. 6. Survey of Building Materials and Mechanical Building Equipment Manufacturers: Summary of Operating Data for Various Periods From 1936 to 1946; No. 7. Survey of Retail Furniture Stores: Operating Statements, Sales Distribution Analyses, for the United States and-OPA Regions, for Specified Years 1936 through 1945; No. 8. Survey of Consumer Durable Goods Manufacturing Industries: Operating Data Summaries and Materials Cost Analyses, 1941; No. 9. Survey of Retail Sellers of Apparel and House Furnishings: Percentage Mark-ups by Merchandise Category, Cost Line, and Size and Type of Seller’, March 1945; and Percentage Margins by Merchandise Classification, September 1942; No. 10. Survey of Rubber Tire and Tube Manufacturers : Operating and Cost Data for Passenger, Truck, and Airplane Tires and Tubes, for Various Periods, 1941-45 ; No. 11. Survey of Selected Machinery and Related Equipment Manufacturers: Financial Data for Various Periods, 1936 to 1946 ; No. 12. Survey of Fresh Fruits and Vegetable Wholesale Distribution : Summary of Operating Data, 1941; No. 13. Survey of Manufacturers of Women’s, Children’s and Infants’ Underwear and Nightwear, and of Corsets and Allied Garments, Financial Data, 1936-42 ; and Unit Direct Cost and Gross Margin and Price Distribution Data 1942 ; No. 14. Survey of Leather Tanners, Shoe Manufacturers, and Wholesale and Retail Shoe Distributors: Financial Data for Specified Years 1936-45 ; No. 16. Survey of Retail Lumber Dealers, Wholesale Stock Millwork Distributors, anc| Plumbing and Heating Jobbers and Dealers: Summary of Mark-ups and Operating Data for Various Periods, 1936-46. 19 As of June 15 the total liquidation group was further reduced to 300. All were placed on notice on or before May 28 in order to be in safe compliance with the provisions of the law requiring liquidation of the agency by June 30, 1947. 753424—47---------2 . II. RENT CONTROL Control over residential rentals was transferred to the Housing Expediter by Executive Order 9841 as of May 4, 1947.1 On that date Federal rent regulations were in effect in 620 defense-rental areas, including Alaska and Puerto Rico. Areas in the continental United States contained 7^.5 percent of the total 1940 population and 86.5 percent of the 1940 nonfarm rental dwellings. The following pages describe rent-control actions taken by the Office after the first quarter of the year and prior to the date of transfer.2 Statistics for area office operations, given in previous reports, are not available for this period. DECONTROL ACTIONS From April 1 through May 3, 29 areas and portions of 16 additional areas were decontrolled. One area and portions of 5 areas were decontrolled April 1, and 28 areas and portions of 11 areas were decontrolled May 1. The decontrol actions of April 1 and some of those of May 1 were taken because control was no longer necessary in these localities to safeguard tenants from rising rents and widespread evictions. Most of the May 1 actions, however, were necessitated by limitation of funds, and the Office attempted to select those areas which would suffer the least hardship as a,result of decontrol. AMENDMENTS AND INTERPRETATIONS Tire Rent Regulation for Transient Hotels, Residential Hotels, Rooming Houses and Motor Courts was amended to provide for separate classification of tourist homes and to permit establishments so classified to apply for decontrol of daily rates.3 This change was made to give tourist homes the same treatment under the regulation as that given other transient establishments. At the same time, the definition of transient hotel was revised to bring within the scope of the term establishments having the charac 1 Issued April 23, 1947. 2 For actions taken in the January-March quarter see Twenty-first Quarterly Report, pp. 11—15. 3 Amendment 105, Rent Regulation for Transient Hotels, Residential Hotels, Rooming Houses and Motor Courts, effective April 10, 1947. 4 Rent Control • 5 teristics of a transient hotel but containing only 15 to 25 dwelling units. Formerly, only establishments containing more than 25 dwelling units could be classified as transient hotels. This change permitted small hotels, renting primarily to transients, to take advantage of the decontrol provisions of the hotel regulation. The amendment also permitted the operator of a hotel, motor court, or tourist home, eligible for decontrol of daily rates, at his option to determine the number of rooms that must be rented for weekly or monthly occupancy in accordance with the number of rooms rented on that basis on December 31, 1946, rather than during an earlier period as previously required. This change was intended to relieve establishments in areas where the demand for permanent rooms in hotels had decreased from setting aside as permanent more rooms, than were needed to meet current demand, as indicated by actual rentals on December 31,1946. The housing regulation in the Atlantic County defense-rental area was amended to exempt from control, during the summer season, housing accommodations sublet for the season by a tenant who had occupied the accommodations as his home during the winter months.4 An interpretation was issued setting out exceptions to the general rule that a certificate permitting eviction of a tenant for occupancy by one of the joint purchasers of a multiple unit building may not be granted. The exceptions allowed certificates to be granted in three instances: (1) For occupancy of the individual units where two persons buy a duplex. (2) For occupancy by the purchasers of a multiple unit structure where the property is jointly purchased by a parent and his children. (3) For occupancy of one unit by one of the joint purchasers for the purpose of supervision of the structure, provided no one of the joint purchasers is already in occupancy. VETERAN’S HOUSING SALES CONTROL The role of the Office of Price Administration in the veterans’ housing sales control program was officially terminated April 5, 1947. On that date the Housing Expediter transferred the functions formerly delegated to the Office to the compliance division of the Office of the Housing Expediter.5 All files on cases where compliance investigations had been initiated but not completed, and all complaints which had been received but not yet processed were transmitted along with the transfer. 4 Amendment 28, Rent Regulation for Housing, Atlantic County, effective April 16, 1947. 5 See also Twenty-first Quarterly Report, pp. 14—15, 28. . Ill. EMERGENCY COURT OF APPEALS The Emergency Court of Appeals was established by the Emergency Price Control Act of 1942 to pass upon the validity of regulations or orders issued under section 2 of the act. In the period April 1 through May 31, 1947, 9 complaints were filed with the court, 5 of which affected price control and 4, rent control. At the end of May, 35 complaints were pending in the court. Since the effective date of the act through May 31, 1947, a total of 409 complaints had been filed against the Price Administrator or the Temporary Controls Administrator. Of this number, 293 involved price regulations or orders, and 116, rent regulations or orders.1 During this period 376 cases were disposed of by decision of the court or by agreement of the parties: 316 cases were decided in favor of the Administrator and 60 decisions were adverse in whole or in part. PRICE CONTROL CASES Twelve cases affecting maximum price regulations or orders were disposed of by the court during April and May 1947, 7 favorably to the Administrator. The more important opinions rendered during this 2-month period are described below. Modern Manufacturing Co. The court in this case2 sustained the validity of the highest price line limitation provisions in Revised Maximum Price Regulation 287 (covering manufacturers’ prices of women’s and children’s outerwear). These provisions forbade a manufacturer to sell or deliver during the spring selling season, garments falling in a specified category at a price higher than the highest price established in that category during March 1942. To establish a “highest selling price line,” the regulation required the showing of a delivery of a garment in that price line during March 1942, and the delivery at any time in the selling season of a number of garments equal to 5 percent of the first cutting of the style at the price sought to be established. 'Two additional rent control complaints were filed after May 4, 1947, when rent control was transferred to the Office of Housing Expediter. * Modern Manufacturing Co., Inc. v. Fleming (No. 254, E. C. A.), 160 F. (2d) 892 (1947), petition for rehearing denied April 30, 1947. 6 Emergency Court of Appeals • 7 Complainant’s principal objection was that the provisions in question were arbitrary and capricious because they precluded a seller such as complainant, who only offered garments for sale in a particular price line during the base period, from using that price line as his highest price. Complainant asserted that the delivery requirement for establishing a given price line was unreasonable and discriminatory and should be held invalid upon the authority and reasoning of the court in the Montgomery-"Ward case.3 In that case the court had held that the delivery test of Maximum Price Regulation 330, applicable to retailers of outerwear garments, arbitrarily discriminated against any retailer who might have failed to make a single delivery in a particular price line during the March 1942 base period even though he was “actually engaged in selling” that price line during that month. The court sustained the reasonableness of the delivery test in the regulation. It held that in the light of the differences between the tests of Maximum Price Regulation 330 and Revised Maximum Price Regulation 287, and the differences between the practices of manufacturers and retailers, the Montgomery-"Ward decision was not determinative of the issue raised in this case. The court found that offerings by manufacturers were not indicative of being “engaged in selling” and that the regulation therefore did not require complainant to abandon a price line in which it had been selling during the base period. . The court also rejected complainant’s contention that the regulation was unlawfully discriminatory because complainant and other established sellers’ price lines were determined on the basis of their March 1942 deliveries, whereas the price lines of certain new sellers who entered business subsequently were determined by a later base period. The court found that the classification adopted by the Administrator was based upon a substantial factual difference and was reasonable. The Suwannee Cases * These consolidated proceedings raised a number of legal and economic questions which were briefed and argued on three occasions. In the final opinion deciding the cases on the merits, however, the Emergency Court of Appeals found it necessary to discuss but one of these issues, namely, whether the banana regulation (Revised Maximum Price Regulation 285) required the prior approval of the Secretary of Agriculture. The court held that the regulation was invalid under section 3 (e) of the Emergency Price Control Act relating to approval by the Secretary of price regulations governing agricultural commodities, since no approval had been secured.4 3 Montgomery-Ward and Company v. Bowles, 147 F. (2d) 858 (E. C. A. 1945); see Thirteenth Quarterly Report, pp. 40—42. 4 Suwannee Fruit Steamship Co. v. Fleming (Nos. 116 and 317, Consolidated, E. C. A., decided April 9, 1947). 8 • Twenty-Second Quarterly Report The opinion of the court turned upon its construction of the term “any agricultural commodity” as employed in section 3 (e) of the act. The Administrator took the position that the Congress, in referring to agricultural commodities, had in mind those commodities for which the Secretary of Agriculture determines and publishes parity or comparable prices. Both the Department of Agriculture and the Administrator had placed this construction upon the terminology of the section from its inception. The regulation in question had therefore not been submitted to the Secretary since bananas are not one of the commodities for which such determinations are made. The Administrator further urged that the term should be given the same meaning throughout section 3 of the Emergency Price Control Act and the Stabilization Act, providing special guarantees in the case of maximum prices for farm products. The court conceded that the term “any agricultural commodity” should be limited to those particular agricultural commodities for which the Secretary of Agriculture determines parity prices when reference is made to sections 3 (a) arid 3 (c) of the act, as amended. These are the sections prohibiting the Administrator from establishing ceilings on farm commodities and products processed therefrom below a price which would reflect parity to producers. The court disagreed with the Administrator, however, as to the meaning of the term in section 3 (e) of the act, holding that regulatory action taken by the Administrator “with respect to any commodity which is a product of the soil” must have the prior approval of the Secretary of Agriculture. For this reason the banana regulation was declared invalid. The Administrator then filed a petition for reconsideration, and the Secretary of Agriculture filed a memorandum as amicus curiae supporting the Administrator’s position. The petition for reconsideration was nevertheless denied. Ralph P. Counselman This complainant entered a plea of guilty in the United States District Court for the District of Columbia to a charge of overceiling sales of grade A wholesale cuts of dressed veal during a period extending from December 23, 1942, to February 1, 1943, and was sentenced to pay a fine. Thereafter, pursuant to leave extended by the District Court, a complaint to test the validity of Revised Maximum Price Regulation 169 with respect to veal was filed with the Emergency Court of Appeals.5 Although they were. subsequently replaced by specific dollar-and-cent ceilings, the maximum prices placed in issue by this proceeding 6 Ralph P. Counselman v. Fleming (No. 322, E. C. A., decided April 23, 1947). Emergency Court of Appeals • 9 were the “freeze” prices determined by the individual experience of each slaughterer during the base period March 16-28, 1942. Complainant, a nonprocessing slaughterer engaged exclusively in the slaughter and sale of veal calves, contended that these freeze prices were invalid for two principal reasons. First of all, it was alleged that the ceilings were arbitrary because the lack of special price treatment for nonprocessing veal slaughterers caused these persons to operate at a loss. After examination of all the evidence, the court concluded that the complainant had failed to sustain the burden of proof resting upon him in this matter. The complainant had shown high costs for live calves during the first quarter of the year 1943, during which quarter costs of live animals normally are high. The court held, however, that the reasonableness of the maximum prices under attack must be viewed by reference to the complete cycle of cost fluctuations. Secondly, the complainant urged the invalidity of the regulation during the particular period on the ground that the Administrator had moved rapidly to provide for specific ceilings on beef, but that veal prices did not receive such immediate administrative attention. The court held that it was entirely reasonable for the Administrator to set dollar-and-cent ceilings on beef at an early date, while leaving to the future similar action on veal. The court noted that in any event, regulatory action establishing specific veal ceilings followed shortly, and that in the meantime the complainant’s “freeze” price ceiling for grade A wholesale cuts of dressed veal compared favorably with those of its competitors. Hickok Oil Corporation A distributor of gasoline in this, case6 challenged the validity of Amendment 16 to Maximum Price Regulation 88, covering fuel oil gasoline. That amendment required all refiners to reduce their maximum prices for regular grade gasoline by one-eighth of a cent to compensate for savings in the cost of producing such gasoline. Inasmuch as this reduction would usually be reflected in the cost of intermediate sellers, the amendment further provided for an equivalent reduction in distributors’ maximum prices. An exception was made with respect to sellers at the tank wagon level, for whom an increase in margins had been found necessary by the Administrator so that they could operate satisfactorily under the regulation. The amendment also left unchanged the maximum prices at the service station and consumer levels, the next succeeding levels in this industry. Complainant did not dispute the reasonableness of the one-eighthcent reduction requirement at the refinery level. He contended that * Hickok Oil Corporation v. Fleming (No. 385, E. C. A., decided May 1, 1947). 10 • * Twenty-Second Quarterly Report the amendment did not effectuate the purposes of the Price Control Act in that the benefit of price reduction was not passed down to the consumer; that the amendment was unlawfully discriminatory because it benefited only one class of seller—the tank wagon resellers; and that it was arbitrary and capricious because complainant was not reimbursed for the reduction in its own maximum prices since complainant’s supplier was not required to lower its selling price to complainant. The latter followed from the fact that subsequent to the promulgation of Amendment 16 the Administrator, upon the joint application of complainant and its supplier, issued an order increasing the maximum prices of complainant’s supplier, the effect of which was to permit the supplier to sell to complainant without the one-eighth-cent reduction enjoyed by other distributors on the same level as complainant. The court rejected all of complainant’s contentions, sustaining the Administrator’s position that the increases in margins provided for tank wagon resellers effectuated the purposes of the act in preventing disruption in the normal preprice control distribution pattern of the industry; that the difference in treatment of such sellers was reasonable because their situation differed substantially from that of other sellers; and that complainant could not now complain that its maximum price was reduced without a compensatory reduction in its cost price because complainant had joined in the application for the order fixing higher prices for its supplier. Adrian, Inc. The validity of Supplementary Order 108 (establishing maximum average prices for apparel), as well as certain special orders issued thereunder, was challenged by this complainant.7 The court held that these orders were beyond the authority conferred upon the Administrator by the Emergency Price Control Act of 1942, as amended, and were consequently invalid. The maximum average price regulations (MAP) were originally issued in a joint OPA-WPB program to restore low-end goods to the market. War Production Board (and later the Civilian Production Agency) had channeled production into low-priced-garments and the Office had required producers covered by the orders to maintain, in each category of goods, an average price for deliveries during each quarter at or below its average price in the base period (ordinarily 1943). In the court’s view, MAP was an effort to control production rather than prices, a function which the court determined was not within the Administrator’s power. T Adrian Ine. V. Fleming (No. 394, E. C. A.., decided May 1,1947). Emergency Court of Appeals • 11 Belkin Complainant, under indictment for having charged more than the ceiling prices for certain dry cleaning services during the period July 12,1943, through May 9,1944, was allowed a stay of proceedings with leave to file a direct complaint in the Emergency Court of Appeals, under section 204 (e) of the act.8 Maximum prices were established by Maximum Price Regulation 165 (Services) at the highest prices charged for such services during March 1942. Prices charged by the complainant during March 1942 were in dispute. The complaint in the Emergency Court of Appeals sought to attack orders issued by the Administrator in January, March, and May 1945, specifically regulating the complainant’s maximum prices. One of these orders had contained a finding that complainant’s filing of March 1942 prices was incorrect. Complainant sought to have the court make a determination as to the prices he actually charged during the base period. The court dismissed the complaint on the Administrator’s motion. It pointed out that since the orders attacked were all issued and effective after the dates of the alleged overceiling sales, they could not be in issue in the enforcement action. Since the complaint in the Emer-gency Court of Appeals was purely ancillary to the enforcement action, the complainant could not attack the validity of these orders in this proceeding. The issue basically was purely the factual issue of what prices had actually been charged during March 1942, and in no manner involved the validity of the regulation or the orders issued thereunder. The case was therefore properly within the jurisdiction of the enforcement court rather than the Emergency Court of Appeals. Publicker Industries The Emergency Court of Appeals in this case9 sustained provisions of Maximum Price Regulation 28 which established a graduated pricing formula for the determination of maximum prices for sales of industrial alcohol to Defense Supplies Corporation. The graduated scale had been incorporated into the regulation by Amendment 3, issued June 28, 1943, which also made a cost-plus pricing formula available to certain producers who had theretofore been subject to dol-lar-and-cent maximum prices. The amendment also introduced a fixed allowance of 3 cents per gallon to cover general and administrative expenses, which resulted in supplemental profits for producers whose actual expenses were less than 3 cents. Amendment 10 to the regulation, 8 Belkin v. Fleming (No. 407, E. C. A., decided May 1, 1947). 9 Publicker Industries, Inc. v. Fleming (No. 252, E. C. A., decided May 31, 1947). 12 • Twenty-Second Quarterly Report issued November 6,1944, modified the allowance, providing for actual general and administrative expenses but not in excess of 3 cents per gallon. Complainant challenged amendment 10 on the grounds that the pricing formula, as so modified, was not generally fair and equitable, and unlawfully discriminated against the complainant. It was the largest producer of industrial alcohol and, together with its subsidiaries, operated the four plants with the largest output. Its principal competitors operated a larger number of plants with smaller individual capacities. The new pricing formula reduced net prices for large producers (by 1 cent per gallon for production over 750,000 gallons in any given quarter, and by 1% cents per gallon for all production over 1,500,000 gallons in any given quarter) and since it was applied on a plant basis, the complainant’s net profit per gallon produced was lower than that of its competitors. The court, however, found adequate support for the Administrator’s position that this was balanced by the economies of mass production. With a voluminous record before it, the court held that the complainant had not established that the regulation denied to it a rate of return on its investment comparable to that if its competitive, smaller-scale producers. The complaint was dismissed. RENT CONTROL CASES Five cases10 involving rent regulations or orders were disposed of by the court during the months of April and May 1947. Jacob Louis Auerbach This case11 involved a complaint by a real-estate broker who had charged prospective tenants a fee to locate housing accommodations for them, remitting 25 percent of the fee to landlords who advised him of vacancies. The court held that the definition of “rent” and “person” and the provisions of the housing regulation as to evasion were not uncertain or ambiguous, and that the split-fee arrangement caused a tenant to pay a sum over and above the maximum rental, thereby constituting an evasion of the regulation. The court also held that complainant’s violation of the regulation by contributing an additional bonus to the landlord over and above the maximum rent did not involve an interference with his constitutional rights. George Fury The Administrator had upheld an order of the area rent director which reduced the maximum rental for an apartment on the ground 10 Included are two cases decided by the court since May 4, 1947, when rent control passed to the Office of Housing Expediter. 11 Jacob Louis Auerbach v. Fleming (No. 397, E. C. A., decided May 1, 1947). Petition for certiorari filed May 29, 1947 (No. 1432, S. Ct.). Emergency Court of Appeals • 13 that the landlord had failed to furnish an adequate supply of hot water and had failed to decorate and paint the premises according to his customary practice. The court set aside the order insofar as it related to the failure to furnish hot water because the landlord had been informed of the grounds for the reduction in rent and the Administrator had not made an express finding on the point, thus denying him due process of law?2 As to the painting and decorating service, thp court found that the landlord and tenant had agreed prior to the maximum rent date that the tenant would perform his own painting and decorating and that the Administrator’s finding to the contrary was not supported by substantial evidence. The order decreasing the complainant’s rent was set aside retroactively to the effective date of the area rent director’s order. Hampshire Holding Corporation The court in this case,13 held as “fully authorized by law” the provision in the rent regulation limiting rent adjustments in hardship situations (resulting from increased costs and other factors) to the level of rents for comparable accommodations. This limitation in the regulation, the court observed, is substantially similar to one written by Congress itself into the District of Columbia Emergency Kent Act. The court upheld the determination of the Administrator that the maximum rents for the accommodations involved in this proceeding were not below the level of comparable rents. 12 George Fury v. Fleming (No. 380, E. C. A., decided April 2,1947). 33 Hampshire Holding Corp. n. Creedon (No. 393, E. C. A., decided May 22, 1947). . IV . ENFORCEMENT The Office completed its enforcement activities during the 2 months under review, transferring its rent and sugar operations early in the period to the agencies charged with continuance of those functions,, and unfinished litigation relating to decontrolled commodities to the Department of Justice. Prior to the transfer of litigation the Office brought to successful conclusion several Supreme Court cases as well as a nuinber of appellate cases. TRANSFER OF OPERATIONS Responsibility for enforcement of the sugar program was taken over by the Department of Agriculture April 1, and rent control enforcement by the Housing* Expedite^ May 4. The rent and sugar enforcement staffs, previously set up as separate units,1 were transferred at the same time. Transfer to the Department of Justice of litigation arising out of violations of regulations covering currently decontrolled commodities was begun early in May with cases not requiring action until June. By the end of the month all cases had been transferred regardless of their stage of completion. Thé total of approximately 6,000 cases transferred involved Government claims under section 205 (e) of the Emergency Price Control Act amounting to more than 50 million dollars, and the payment of additional millions of dollars in meat subsidies. Full responsibility for completing these cases was assumed by the Department of Justice. Before transfer the cases were prepared by OPA enforcement attorneys ; each case was accompanied by a memorandum stating what it was about, its status, and what would have to be done to complete it. LITIGATION Prior to the transfer of litigation, the Supreme Court rendered several outstanding decisions upholding delegation of the Administrator’s powers, and the legality of certain actions taken by the Administrator after the expiration of the Emergency Price Control Act on June 30, 1946. 1 See Twenty-first Quarterly Report, pp. 5, 25. 14 Enforcement • 15 In the Mohawk case 2 the Supreme Court finally determined two questions which had for some time been involved in a large number of cases in the lower courts: (1) Whether the Administrator had statutory authority to delegate the subpoena power to regional administrators and district directors; (2) whether it was proper to substitute Temporary Controls Administrator Fleming for Administrator Paul Porter in enforcement cases after the Presidential order transferring the Price Administrator’s functions to the Temporary Controls Administrator,3 that is whether there was statutory authority for the order and whether there was “substantial need” within the meaning of Federal Rule 25 for continuing enforcement actions based on violations prior to the lifting of controls. These questions were answered by the Supreme Court unanimously in the affirmative. The Dusty Rhodes case4 favorably decided the validity of the Price Control Extension Act of 1946 insofar as it permitted the Administrator to obtain a Federal court injunction restraining execution of a State court eviction judgment obtained by a landlord during the temporary suspension of controls from June 30 to July 25, 1946. Upholding the act, the Court ruled that “immunity from Federal regulation is not gained through forehanded contracts * * * The rights acquired by judgments have no different standing.” Mr. Justice Frankfurter dissented on jurisdictional grounds only. Acting on the basis of the “jurisdictional statement” filed by the Government in its appeal on the Pcdletz and Kromer cases, the Supreme Court reversed the district court for the Eastern District of Pennsylvania, which had held that violations prior to expiration of the Price Control Act on June 30, 1946, could not be prosecuted by suits filed thereafter.5 On the same day the Supreme Court denied certiorari in the Collins, Martini, and Senderowitz cases. The Collins6 decision by the Emergency Court of Appeals had invalidated an administrative retroactive price order issued under the liquor regulation after a damage suit had been filed by the Administrator. The Martini decision by the Ninth Circuit Court of Appeals had upheld the application of such an order in a damage suit, partly on the ground that its validity was a matter exclusively for the Emergency Court of Appeals; and the Senderowitz decision was analogous to that in the Martini case.7 During the April-May period the Sixth Circuit Court of Appeals rendered a decision similar to the Rhodes case and ruled further that 2 Fleming v. Mohawk Wrecking and Lumber Co., decided April 7,1947. 3 Executive Order 9809, see Twentieth Quarterly Report, pp. 19-20. 4 Fleming v. Rhodes, decided April 7, 1947. 8 United States v. Pallets and United States v. Kromer, decided April 7, 1947. 6 Fleming v. Collins; see 159 F. (2d) 431, and Twenty-first Quarterly Report, pp. 16-17. i Martini v. Fleming and Sender owitz v. Fleming; see 157 F. (2d) 35 and 158 F. (2d). 435 ; also Nineteenth Quarterly Report, pp. 93-94. 16 • Twenty-Second Quarterly Report tenant’s eviction contrary to a temporary injunction pending appeal (issued by a single judge of the circuit court after the district court’s denial of an injunction to the Administrator) did not render the Administrator’s appeal moot, and made the landlord’s conduct punishable as contempt. The* Ninth Circuit Court of Appeals ruled on April 17, 1947, in Fleming n. Sebastiani that Federal Rule 25 (a) (1) prevented substitution of an executor for a deceased party defendant more than 2 years after the latter’s death, although the Administrator’s motion to substitute had been filed within the 2-year period. STATISTICAL SUMMARY The more than 5 years of OPA enforcement activity produced a grand total of more than 280,000 enforcement sanctions against violators of price, rent, and rationing regulations. This activity, translated into dollars for the Treasury, resulted in collection of more than 73 million dollars for the United States Government. The type of sanction instituted and data on the administrative, civil, and criminal proceedings closed for the entire period, from the beginning of OPA enforcement activity in 1942 through the dissolution of the agency May 31,1947, are shown in the table below. Sanctions Instituted Total sanctions instituted-----------------------------s.------------ 280, 724 District office revocation----------------a--------------------------— 20, 758 Suspension order proceedings-------------------------------------,— 52, 297 Determination proceedings--------------------------------------------- 165 Recission of veterans’ housing sale—-----------------—rJ------------- 1 Restitution of sales control overcharges----------------------------- 10 Revocation of dealers’ authorization---------—:---------------------- 27 Voluntary contribution—----------------------------_■—--------------- 8, 213 Administrator’s consumer treble damage claim: Settlement: Refund_________________________________i----------------- 4, 016 Payment to U. S. Treasury-------------------------------- 29, 596 Suit filed_______________,____________________________________________ 26,094 Administrator’s own treble damage claim: Settlement-^.-----------------------------------------—---------------- 28,125 Suit filed-------------------------—---------------------—-—-—— 12, 638 Injunction suit__—-------------—------------------------------------- 78,081 License suspension suit______________________________________________ 1,013 Local crirnffial“-prosecution-------------:-------------------------- 5,127 Federal criminal prosecution_______________________1----------—------ 13,999 Contempt proceedings------------------------------------------------- 564 Total, proceedings closed---------------------------------------------- 167, 774 Enforcement • 17 Administrative, Civil, and Criminal Proceedings Closed Suspension order proceedings: Won_____________________________________________________ 41,784 Lost____________________________________________________ 4, 748 Withdrawn_______________________________________________ 5, 864 Determination proceedings: Won_______________________t-I___________________________ 112 Lost ।__________________________________________________' 7 Withdrawn_________________________________________________ 14 Administrator’s consumer treble damage suit: Won__________________________________________________— 13, 860 Lost ____________________________________-_______________ 605 Withdrawn_______________________________________________ 4,896 Administrator’s own treble damage suit: Won__________________________________________________6,303 Lost______________________-_____________________________ 334 Withdrawn_______________________________________________ 1, 900 Injunction suit: Preliminary .__________-______________________._________ 2, 970 Won (permanent)_________________________________________ 48, 899 Lost____________________________________________________ 1, 606 Withdrawn_______________________________________________ 16,389 License suspension suit: Won ______________________________________________________ 328 Lost ---------------------------------------------------- 66 Withdrawn________।-----------------------:-------------- 442 Local criminal prosecution: Won_______________________________________________—----- 4, 553 Lost ______________________________’____________________ 216 Withdrawn--------------------------------------------— 392 Federal criminal prosecution: Convicted and sentenced Imprisonnjent only---------------------------------- 1, 629 Imprisonment and fine_______________________________ 1, 341 Fine only------------------------------------------- 5, 312 Probation or suspended sentence--------------------- 3,318 Lost______________________________________________________ 315 Withdrawn_______________________________________________ 1, 500 Contempt proceedings: Won_____________________________________________________- 358 Lost____'----------------------------------------------- 73 Withdrawn----------------------------------------------- 72 160908