On Motion for Rehearing
The defendants claim that the Suspension Order imposed upon the plaintiffs was not a penalty but is an exercise of the allocation and priority powers. The regulation of the defendants No. 944.18 is entitled "Violations and Penalties", which provides that any person violating the provisions of the regulations may be prohibited by the Director of Industry Operations from making or obtaining further deliveries of material under priority control and may be deprived of further priorities assistance. The Director of Industry Operations may also take any other action deemed appropriate, including the making of a recommendation for prosecution under Section 35(A) of the Criminal Code, 18 U.S.C.A. § 80.
The notice given by the defendants to the plaintiffs of its proposed action contains this statement: "You are hereby notified that this matter will be presented to a Compliance Commissioner of the War Production Board for his recommendations as to the imposition of administrative penalties against you."
Pursuant to hearing based upon this notice the Suspension Order involving this case was issued.
No question has been raised as to the constitutional power of the defendants to allocate and reallocate materials or to discontinue or establish or disestablish priorities under the powers given them by the Act of Congress. On the other hand, nothing can be found in the Act justifying the imposition of penalties as a punishment for prior conduct, and the use by the defendants of the word "penalties" both in its regulations and in the notice given to the plaintiffs necessarily involves the idea of punishment. The fact that Congress has given such a power to the Secretary of Agriculture in the Commodity Exchange Act, 7 U.S.C.A. § 1 et seq., rather gives rise to the implication that it failed to give such power to the defendants was intentional.
I am still of the opinion that no power has been given to the defendants to impose penalties. It is true that the power given to allocate and to reallocate materials may frequently bring about a like result, but where this power is used expressly for the purpose of imposing a penalty, I think that there is no justification for such action under the Act of Congress.
The motion for rehearing will be overruled.
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