In general, three of the bills-H.R. 947, H.R. 9591, and H.R. 9632-provide for the establishment of a special Court of Veterans' Appeals to review decisions of the Board of Veterans' Appeals. The other bills-H.R. 975, H.R. 1202, H.R. 3048, H.R. 4146, H.R. 5986, and H.R. 8375-would provide for judicial review of such decisions by U.S. district courts.

Decisions of the Administrator of Veterans' Affairs on any question of law or fact concerning a claim for benefits or payments under any law administered by the Veterans' Administration, with certain limited exceptions, are now final and conclusive and not subject to review by either the courts or the Comptroller General (38 U.S.. 211(a)). Judicial review of agency decisions under the Administrative Procedure Act is not authorized since (1) the above statute expressly precludes judicial review and (2) agency action is by this law committed to agency discretion (see 5 U.S.C. 1009). It may be recalled that provision as to benefit payments insuring the finality of decision by the Administrator of Veterans' Affairs, was for the avowed purpose of implementing the desire of Congress for more adequate and uniform administrative provisions in veterans' laws, and "for the uniform application of the rule which is now applicable in the case of most such claims" (S. Rept. 2198, 76th Cong., p. 12). In debate on the provision the sponsors of the legislation explained that the finality provision was based on the theory that "with respect to any pension, gratuity, compensation, or anything in the nature of a gratuity or pension, there is no right of action in the courts" (vol. 86, Congressional Record, p. 13383).

There are of course specific exceptions to the applicability of the finality statute. Thus suits upon war risk, U.S. Government life and national service life insurance policies may be brought against the United States pursuant to the special jurisdictional grant contained in 38 U.S.C. 784. Suits involving guarantee or insurance of home, farm and business loans may be brought pursuant to 38 U.S.C. 1820 (a)(1). Suits sounding in contract, aside from those covered by special jurisdictional statutes, may be brought against the United States in the U.S. Court of Claims (28 U.S.C. 1491) or in the U.S. district courts (28 U.S.C. 1346 (a) (2)). See also 28 U.S.C. 2410 as to the joinder of the United States in actions to quiet title or to foreclose a mortgage or other lien upon property on which the Veterans' Administration may have or claim a mortgage or other lien. The pattern which emerges from a survey of these statutes is clear. The policy heretofore adhered to involves the grant of permission to sue where vested contractual rights are involved but permission to sue is denied where gratuitous benefits are concerned. The Department of Justice consistently has opposed the waiver of sovereign immunity to suit where the recovery of gratuitous monetary benefits is sought. In view of the fact that the allowance of such claims is purely a matter of bounty or grace, as distinguished from the recognition of any legal obligation of the Government, it is believed that the existing policy of not making such determinations subject to judicial review should remain undisturbed. The adverse effect which judicial review of decisions of the Veterans' Administration would have would be the same whether judicial review would be afforded by a future court or by existing courts.

The decisions of the Veterans' Administration represent the action of a benevolent administrative organization upon claims for gratuities and gratuitous benefits by veterans and their dependents and beneficiaries. The presentation before the Veterans' Administration is not an adversary proceeding and the record my consist of the veteran's entire claim file, containing much irrelevant information and many self-serving and ex parte statements. Moreover, the review of physical disability ratings made in accordance with complex rating schedules and other determinations under regulations and other administrative precedents would seem properly subjects of administrative procedure.

The Annual Report of the Administrator of Veterans' Affairs for 1958 (H. Doc. 8, 86th Cong., 1st sess.), states (p. 94) that the Board of Veterans' Appeals entered a total of 50,063 appellate decisions in 39,419 cases during fiscal year 1958, and appeals to the Board were 10.1 percent greater in that year than in 1957. Over 42,000 of these decisions were adverse to claimants (p. 262). On the basis of existing denials by the Board of Veterans' Appeals, therefore, the proposals under consideration are potentially the source of a tremendous workload of cases for review by whatever court or courts might be given review authority. Also it seems clear that defending the resulting volume of litigation would require the employment of many additional attorneys. A substantial increase in expenditures would result, the amount of which cannot be accurately estimated. Your letter also expresses an interest in a comparison of the authority of the Administrator of Veterans' Affairs with other departments which deal

with claims against the Federal Government. It is assumed that reference is made to the freedom from judicial review of agency determinations. Insofar as vested contractual or property rights are concerned the Veterans' Administration stands on a parity with other agencies since suit can generally be brought under the Tucker Act or one of the special jurisdictional statutes. While we have not made an exhaustive survey with respect to the finality of administrative decisions where gratuitous benefits are involved, the War Claims Commission is an agency whose function, with respect to the disposition of gratuities as recompense for losses suffered during a period of war, is similar to that of the Veterans' Administration. Its decisions are specifically rendered final and conclusive and not subject to court review (22 U.S.C. 1623 (h) and 1641(m). First National City Bank of New York v. Gillilland (257 F. 2d 223 (C.A.D.C.), cert. denied ; 358 U.S. 833).

Similarly decisions of the Secretaries of the military departments with respect to (1) claims by members of the military services and civilian employees thereof for damage to or loss of personal property incident to the service, (2) claims for damage to or loss of property or for personal injury or death as an incident of the noncombat activities of the military departments. not otherwise cognizable under a specific jurisdictional statute and (3) claims for damage to or loss of property of a foreign country or for personal injury or death to an inhabitant of a foreign country if such occurred incident to the noncombat activities of the Armed Forces and outside the United States, its territories, Commonwealths, and possessions, all are final and conclusive and not subject to court review in the United States (10 U.S.C. pp. 2731-2735; Compare 14 U.S.C. 645; 31 U.S.C. 223 (h), 223(d), 224(d), and 224 (h)).

Also, perhaps claims for compensation for injuries to employees of the United States under the Federal Employees' Compensation Act (5 U.S.C. secs. 751-756, 757-781, 783-791, and 793), are in some respects analogous. The action of the Secretary of Labor in allowing or denying payment of claims under that act is "final and conclusive for all purposes and with respect to all questions of law and fact, and not subject to review by any other official of the United States, or by any court or by mandamus or otherwise" (5 U.S.C. sec. 793).

In view of the foregoing considerations the Department of Justice is opposed to legislation of the character herein discussed.

The Bureau of the Budget has advised that there is no objection to the submission of this report.

Sincerely yours,

LAWRENCE E. WALSH, Deputy Attorney General.

Mr. MITCHELL. Our next witness for this morning is Mr. Raoul Berger, who is representing the American Bar Association. He is chairman of the Special Committee on Courts of Special Jurisdiction of the American Bar Association.

We certainly are quite pleased, Mr. Berger, at your taking the time to appear and give us the benefit of your thoughts and the thinking of the American Bar Association.

Do you you?

have anyone else you

would like to have come around with

STATEMENT OF RAOUL BERGER, AMERICAN BAR ASSOCIATION

Mr. BERGER. Mr. Chairman and Mr. Saylor, I count it a special privilege to appear before you here; first because some three years ago the American Bar Association endorsed the principle of judicial review of the decisions of the Veterans' Administration. And I with some pride look back to the fact that I drafted the resolution for the chairman of the committee of the Administrative Law Section which led to the final endorsement by the association. So this is as to the broad principle. I also hope you will permit me to express my pleasure in the testimony of Congressman Devine.

Let me depart from my written statement to say at the outset that I agree that to put this into the district courts is to overload an already overloaded judiciary. That just does not make sense.

I think the major problem that he poses, to which I will address myself, is whether you can really have an appeal on a record of the kind of informal proceedings that you have here. Appeals of administrative proceedings usually proceed from formal judicial hearings; but I will address myself to that later.

Two things that your inquiry posed seemed to me deserving of comment at the outset.

One of them is that this provision insulating the decisions from review is, alas, not unique. There is similar provision under the Trading With the Enemy Act, which permits the Office of Alien Property to act with respect to American interests and foreclosures review. This is both in the field of freezing property and seizing property; so that Americans are placed in a very unhappy situation. Their property can either be immobilized by freezing or taken out of their control for as much as 10 years, because it has taken as much as that, or 12 years, through administrative proceedings, to try to get it back.

A similar condition exists with respect to the International Claims Commission. In my written statement, you have got the citations. And I am not going to burden you, here. I submit my written statement to you for the record. I have given copies to the clerk.

You will find on page 2 a citation to the International Claims Commission.

At the top of page 2, sir

Mr. MITCHELL. First, Mr. Berger, if there is no objection, your prepared statement will be filed and made a part of the record as if read. (The prepared statement of Mr. Berger follows:)

STATEMENT BY RAOUL BERGER RESPECTING FINALITY OF DECISIONS BY THE ADMINISTRATOR OF VETERANS' AFFAIRS

My name is Raoul Berger. I am an attorney engaged in private practice in Washington, D.C., and appear at your invitation on behalf of the American Bar Association. I am chairman of the ABA Special Committee on Courts of Special Jurisdiction, member of the ABA Special Committee on the Code of Administrative Procedure and of the Council of the ABA Section of Administrative Law. I formerly served with the SEC, the Department of Justice, and completed my 8-year spell with the Government as general counsel to the Alien Property Custodian. During the course of my practice, which is largely devoted to administrative law matters, I have published studies of various administrative law problems.

In your letter of March 16, 1960, to the ABA, you state, after adverting to the unreviewability of decisions by the Administration of Veterans' Affairs, that you "are not aware of any other agency of Government which is vested with such absolute authority ***." Unfortunately, there are other agencies whose actions are equally final and unreviewable, for example, certain decisions of the Office of Alien Property are unreviewable by virtue of 50 U.S.C. App. 7(c). So too, decisions of the International Claims Commission are unreviewable by the terms of 22 U.S.C. 1363 (h). Bear in mind that both of these agencies impinge on American rights. The Office of Alien Property is authorized to seize and freeze certain American property and has done so; the International Claims Commission adjudicates claims under international agreements whereunder the United States has surrendered claims of its citizens against certain foreign countries. The Agricultural Adjustment Act likewise bars review of the Commissioner's determination with respect to refund of certain processing taxes, 7 U.S.C. 641 (e). In Swift & Co. v. United States, 38 F. Supp. 435, 437, the Court of Claims said: "the Commissioner has denied to the plaintiff the right which in our opinion the statute creates, and to which the petitioner upon

the facts set out in its petition is entitled," but nevertheless held that his determination was not reviewable.

After studying insulation of agency action from judicial review, the ABA concluded that "the statutory preclusion of review can be justified in any instance only by the strongest arguments of policy." Report of the Special Committee on Legal Services and Procedure (1956), page 34. That conclusion found expression in section 1009 (b) of the ABA Proposed Code of Federal Administrative Procedure, now embodied in S. 1070, which would bar judicial review only "where expressly precluded by act of Congress hereafter enacted." The object of that provision is to impel Congress to take a fresh and hard look at how existing preclusory provisions have operated and to decide anew whether they deserve to be perpetuated.

You have asked us to comment on "the general philosophy involved." Let me begin by saying that certainly lawless action by an administrative official, i.e., action which is unauthorized by or contrary to statute, or that is arbitrary and capricious, has no place in our system of government. The Supreme Court has said that "there is no place in our constitutional system for the exercise of arbitrary power ** Garfield v. Goldsby, 211 U.S. 249, 262. To insure that it finds no place in our Government, illegal or arbitrary action must be subject to judicial review. We cannot leave an administrator to be the final judge of his own powers. And I may say parenthetically that the ABA endorsed a bill, S. 272, in the 85th Congress, which sought to provide judicial review for Veterans' Affairs decisions.

These are not novel concepts. Back in 1946, in the course of the enactment of the Administrative Procedure Act, both the Senate and House committees stated:

"It has never been the policy of Congress to prevent the administration of its own statutes from being judicially confined to the scope of authority granted or to the objectives specified. Its policy could not be otherwise, for in such a case statutes would in effect be blank checks drawn to the credit of some administrative officer or board." (S. Doc. 248, 79th Cong., 2d sess. (1946), pp.

212, 285. [Emphasis supplied throughout.]

Unfortunately provisions precluding review, such as the provision of 38 U.S.C. 211, which you have under consideration, inescapably thwart this policy.

You need scarcely to be reminded of Lord Acton's famous axiom: "Absolute power corrupts absolutely." My own experience has convinced me that insulation from judicial review inevitably breeds callousness, persistence in obvious error and arbitrariness. Instead of burdening you with my own exeperience, let me remind you of a beautiful, well-publicized recent example. In the course of oral argument before the Supreme Court in 1958, in Harmon v. Brucker, 355 U.S. 579, wherein a soldier sought relief against a discharge in form "other than honorable:"

"The Justice Department told the Supreme Court yesterday that its client, the Army, had acted illegally in issuing two less-than-honorable discharges but that the courts can do nothing about it." Washington Post & Times Herald, January 16, 1958, pp. A-15.

Is it not shocking that disclosure of administrative illegality should prompt not revision or reform, but a plea that the power of correction had been withheld from the courts.

To be sure, Harmon v. Brucker granted relief under the doctrine that an officer who acts illegally may be sued as a wrongdoer in his individual, rather than governmental, capacity. But that route is beclouded by uncertainities, and the books are strewn with cases holding that the suit is in truth against the Government and lacks its consent to suit. Moreover, it remains to be seen whether such a suit can surmount a flat prohibition of judicial review. Then too, the "individual" suit suffers from a grave infirmity; it does not foreclose the Government from reopening the matter. The proceedings in Land v. Dollar furnish a good example. There, claimants, after litigating for years against officials in their “individual" capacity for allegedly illegal action, obtained a judgment in Land v. Dollar, 188 F. (2d) 629, 631. Thereupon, the officials, relying upon a statement in United States v. Lee, 106 U.S. 196, 222, that such an adjudication is not res judicata against the United States, instituted an injunction proceeding on behalf of the United States against the claimants in California, and obtained an injunction which was sustained on appeal on the ground that the District of Columbia determinations "were not binding on the United States." Dollar v. United States, 190 F. (2d) 547, 548. An "individual" 54722-60- -3

suit which embarks a claimant on such a wild goose chase is no "remedy" at all. One who is affected by illegal official action ought to have an unmistakably plain and simple remedy in the courts.

As a practical matter, nothing is better calculated to promote reasoned, careful decision than the knowledge that it may be upset on review. Often the absence of such review actually heaps burdens on the Congress. In one case where a district court condemned administrative action as "appalling," where the court of appeals justly reversed because the statute foreclosed review, Congress was besieged with pleas for relief which eventuated in remedial legislation after a 3-year struggle. Had judicial review been available, both Congress and various constituents would have been spared the long travail. On this score, finally, to the extent that the veteran's claim has insurance aspects, we must ask ourselves whether we would like to have house counsel of a private insurance company finally decide our claim.

Let me now address myself to your query as to the advisability of establishing an independent appeals agency. Not long ago the Sir Oliver Franks Committee on Administrative Tribunals and Enquiries (1957), p. 5, reported to Parliament that:

"When Parliament sets up a tribunal (as differentiated from a court) to decide cases, the adjudication is placed outside the department concerned. The members of the tribunal are neutral and impartial in relation to the policy of the Minister, except insofar as that policy contained in the rules which the tribunal has been set up to apply. But the Minister (in cases left to him for determination) is committed to a policy which he has been charged by Parliament to carry out. In this sense he is not, and cannot be, impartial."

The Board of Tax Appeals, predecessor of our respected Tax Court, was "established entirely outside the Treasury Department" in part to meet the demand for "review by an impartial outside body." (H. Rept. No. 179, 68th Cong., 1st sess.) So too, the ABA now sponsors S. 1275, a bill to transfer the adjudicatory functions of the Federal Trade Commission to a trade court because it is our considered judgment that an independent adjudicatory tribunal will not be suspected of partiality and will acquire more expertise in consequence of judicial tenure than now obtains with respect to the FTC.

Although you have referred to the establishment of an independent appeals board, let me remind you that the Board of Tax Appeals was a misnomer, for in fact it was a trial court, and so the ABA proposes with respect to the trade court which is the subject of S. 1275. We would recommend a similar trial court or independent board for veterans' affairs. Such a court would not, of course, preclude existing procedures within the agency for the settlement of claims. Indeed, retention of administrative remedial proceedings remains highly desirable.

When the Committee on Judicial Review of the ABA Section of Administrative Law looked into the matter several years ago, it found approximately 2,600,000 claims for "compensation" for disability incurred in or aggravated by military service, and about 1 million pension claims for non-service-incurred disabilities provided the veteran meets certain war service requirements. Such claims are initially determined in the regional offices of the Veterans' Administration by a rating board, and the vast bulk of the claims are siphoned off at this stage by informal procedures. About 10 percent of the rating boards' decisions were appealed to the Board of Veterans Appeals in Washington, which may permit the appeal to be heard by the rating board or some other rating board. Four percent of these appeals were decided favorably to claimants, leaving 6 percent of the total claims as a possible subject of further consideration. Apparently both the rating boards and Board of Veterans Appeals proceed in informal fashion, though they afford the claimant a chance to tell his story. Whether a "record" so made up affords adequate basis for review on appeal is debatable.

What is important is that approximately 94 percent of the claims are disposed of through informal procedures to the satisfaction of claimants. To provide for formal hearings in 100 percent of the cases on the chance that 6 percent of them may be appealed scarcely makes sense. But if we resort to an administrative court or independent board, such as the Board of Tax Appeals was, which will try such portion of the remaining 6 percent as seeks judicial relief, we dispense with the need for formal administrative hearings and records, for the court will try the case and make its own record. Thus the existing informal administrative hearings will continue to play an important and useful part in handling the vast bulk of the claims.