On Petitions for Rehearing

The various parties hereto, other than the petitioners, have filed petitions for rehearing which indicate so much misunderstanding of the import of this court’s decision that we deem it appropriate to file this opinion in connection with our action upon these petitions.

The petitions assume that our decision requires the Commission to consider separately the rules of each Conference with respect to the payment of brokerage; and that the Commission was prohibited from issuing an order applicable to all Conferences based on evidence and findings with respect to the forwarding industry generally. 1 There is no basis in the decision of this court for any such assumption as that made by these petitioners. We know of no reason why the Commission could not proceed simultaneously, as it did in this case, against conferences, or against all persons interested in the proceedings, or likely to be affected thereby. We found no fault with the fact that some sixty conferences were named as respondents in the Commission’s proceedings; that circumstance constituted no part of the reasons found by us for our decision.

It is true that we gave particular attention to Rule 21 of the Pacific Coast European Conference, but that was solely because that Conference was the petitioner seeking review. The presentation of its rights in this court necessarily required consideration of Rule 21 since that Conference was the only petitioner here. Obviously it would have been impermissible for the petitioner to argue as to the impact of the Commission’s order upon other conferences which had not petitioned for review.

What petitioners have overlooked is the mandatory requirement of § 8(b) of the Administrative Procedure Act, (Title 5, § 1007(b)), which provides among other things as follows: “Prior to each recommended, initial, or tentative decision, or decision upon agency review of the decision of subordinate officers the parties shall be afforded a reasonable opportunity to submit for the consideration of the officers participating in such decisions (1) proposed findings and conelu- *615 sions, or (2) exceptions to the decisions or recommended decisions of subordinate officers or to tentative agency decisions, and (3) supporting reasons for such exceptions or proposed findings or conclusions. The record shall show the ruling upon each such finding, conclusion, or exception presented.”

The provisions of § 8 are by its terms made applicable “in cases in which a hearing is required to be conducted in conformity with § 1006 of this title.” This is such a case. 2 The section last mentioned in turn refers to hearings in cases of adjudication.

Whether the number of respondents in a proceeding for adjudication before the Commission be one or sixty or one thousand there is ño exception to the requirement of § 8(b) for findings sufficient to support the Commission’s order. Those findings are completely lacking in this record. The cases holding that such findings are essential in an administrative proceeding such as this are legion. 3 The general conclusion stated in the Board’s final order and supplemental report, phrased in the language of the statute, does not conform to the requirements of the Administrative Procedure Act, nor does it satisfy the rule respecting the necessity of findings. The requirement of specific, definite and basic findings, other than mere ultimate findings or conclusions, is well settled. Thus in Florida v. United States, 282 U.S. 194, 213 , 51 S.Ct. 119, 124 , 75 L.Ed. 291 , the Court said: “In the paragraph, which we have quoted, containing the ultimate finding of the Commission with respect to the unjust discrimination caused by the existing intrastate rates as between persons and localities, there is a concluding clause that the intrastate rates result ‘in unjust discrimination against interstate commerce.’ This general statement in the language of the statute, neither standing alone nor taken in its context, could be regarded as sufficient to support a statewide order from the standpoint of income, in the absence of supporting findings of fact as to the revenue from the traffic in question.” 4

What was said in the Florida case, supra, has become settled doctrine in the federal courts. Thus in Colorado-Wyoming Co. v. Comm’n, 324 U.S. 626, 634 , 65 S.Ct. 850, 854 , 89 L.Ed. 1235 , the Court said: “But we must first know what the ‘finding’ is before we can give it that conclusive weight. We have repeatedly emphasized the need for clarity and completeness in the basic or essential findings on which administrative orders rest,” citing the Florida and other cases.

What the Commission here and apparently counsel for the Commission and for the intervenors, as well, have forgotten is this requirement of basic findings. What this involves was spelled out in clear language in Saginaw Broadcasting Co. v. Federal C. Com’n, 68 App.D.C. 282 , 96 F.2d 554, 559 . There after noting the necessity for findings of fact by administrative boards, and Commissions, and the reasons for that requirement, the *616 court said: “In discussing the necessary content of findings of fact, it will be helpful to spell out the process which a commission properly follows in reaching a decision. The process necessarily includes at least four parts: (1) evidence must be taken and weighed, both as to its accuracy and credibility; (2) from attentive consideration of this evidence a determination of facts of a basic or underlying nature must be reached; (3) from these basic facts the ultimate facts, usually in the language of the statute, are to be inferred, or not, as the case may be; (4) from this finding the decision will follow by the application of the statutory criterion.” 5 See also United States v. Chicago, M. St. P. & P. R. Co., 294 U.S. 499, 510 , 55 S.Ct. 462 , 79 L.Ed. 1023 .

It will be noticed also that § 8(b) of the Administrative Procedure Act requires not only findings, but “supporting reasons” for such findings. These are wholly lacking here. That section also requires that prior to the decision the parties shall be given an opportunity to except to the proposed decision and findings. There is complete absence of any attempt to comply with that requirement here. Indeed, in the light of findings which had previously been made by the examiner and by the Commission in this same matter, the failure to comply in any manner with the requirements of § 8(b) is unaccountable. Just prior to the issuance of the final decision in this case the parties to the proceedings had available to them only the recommended decision of the examiner dated March 7, 1960, and the decision and findings of the Federal Maritime Board dated June 30, 1961. 6 In its previous decision the Board found as follows: “The record has been *617 searched in vain for any probative evidence indicating that the prohibition of brokerage payments would have any adverse or detrimental effect upon the foreign commerce of the United States, limiting the definition of ‘foreign commerce’ to the actual movement of goods in the export trades, and the promotion and development of such trades. There are numerous general assertions in the record, by forwarders and others, that if brokerage is eliminated entirely the forwarders will perforce need to increase their charges to shippers in order to recoup the lost revenues, that numerous commodities move in export on which the profit margins are narrow which could not stand the imposition of increased forwarding charges, and that the movement of such commodities would thus be adversely affected. No shipper testimony to this effect was adduced, and the shipper testimony of record, from shippers who perform their own forwarding services and do not receive brokerage, indicates to the contrary.”

For the Commission, without any attempt whatever to comply with the requirements of § 8(b), to issue its eonclusory order of January 23, 1962, merely in the language of the statute, was an egregious error.

As noted in the Saginaw case, 96 F.2d at p. 563 , the absence of required findings is fatal to the validity of an administrative decision regardless of whether there may be in the record evidence to support proper findings. We were not required therefore to inquire as to what evidence there was which might have supported adequate findings, but we think that the Board was right in its first decision when it said the record would be searched in vain for any probative evidence indicating that the prohibition of brokerage payments wouldi have an adverse or detrimental effect upon the commerce of the United States, |

Some of the forwarding agents’ witnesses before the Board testified that they should receive brokerage of 1%, percent of freight charges. On the other hand, witnesses interested in the steamship lines testified that in their opinion the provisions of the respondent’s Rule 21 were reasonable and justifiable. 7

It would appear that all that the Commission had before it in the record were mere expressions of opinion as to the desirability of various limitations on brokerage. These could hardly form the bases for a finding as to the precise point at which a limitation would be detrimental to the commei’ce of the United States. It seems to us that there is a complete absence of any evidence which would show that harm begins at limitations below 1^4 percent rather than say 1% percent or 1 percent or % percent or % percent.

It is true that 1% percent had been paid customarily for many years but that proves nothing for as the examiner and the Board itself pointed out, the payment was not generally speaking for services rendered, but rather “as voluntary payments, made by the carriers as a competitive device to attract traffic over which the forwarders have control of routing.” As the Board noted in its first decision, many payments of brokerage are made to forwarders who have done little or no work. Where shippers have performed all their own forwarding services brokerage is nevertheless paid by carriers. Despite the very tenuous basis for a claim by forwarders that they are entitled to *618 brokerage, see American Union Transport v. United States, 103 U.S.App.D.C. 229 , 257 F.2d 607 , we raise no question as to the right of the Commission to make a determination that a complete prohibition of payment of brokerage to freight forwarders would be detrimental to the commerce of the United States; but when it comes to placing a precise and definite limitation upon the power of a conference to fix a maximum for its members, we think that such determination must be based upon facts and findings.

An attempt is made to argue that the petitioner here failed to exhaust its administrative remedy because it failed to petition the Commission for rehearing. Section 10 of the Administrative. Procedure Act, (Title 5 U.S.C. § 1009 ), expressly provides that “Agency action otherwise final shall be final for the purposes of this subsection whether or not there has been presented or determined any application * * * for any form of reconsideration.” We think it would be absurd to say that an application for reconsideration does not affect the finality of orders made, and at the same time say that an application for reconsideration is a prerequisite to a petition for review.

Our decision did not require that the Commission dismiss the proceeding under its docket No. 831. It merely vacated and set aside the order under review. We see no reason why the Commission is not empowered to hold further hearings in its docket No. 831 providing such hearings if they resulted in an order of the kind here in issue provide for evidence and findings as required by law. Accordingly our decision is amended by adding to the next to the last paragraph of our opinion, following the word “concerned”: “The cause is remanded to the Commission for the taking of evidence and making of findings as required and directed by this decision. Nothing herein is intended to limit the right of the Commission, if it chooses to do so, to simplify its proceedings by initiating a new proceeding directed simply to an adjudication of the validity of Rule 21.”

The petitions for rehearing are denied.

. Thus in one petition an assertion is made as follows: “The effect of the Court’s decision is to preclude the Commission from issuing an order applicable to all conferences based on evidence and findings with respect to the forwarding and carrier industries as a whole, and to require it to have a separate hearing every time when a new conference rule is issued prohibiting or so limiting the payment of brokerage, thus resulting in endless proceedings and controversies.”

In another petition the following is stated: “The Court erred in concluding that the Federal Maritime Commission’s general determination as to the unlawfulness of conference prohibitions and Iimita-tions on brokerage was invalid as to the Petitioner conference because of failure to make specific findings with respect to that conference. In dealing with general investigations by administrative agencies, the Supreme Court has held that the requirements of the regulatory statute would be nullified and the administrative agency paralyzed, if, instead of adjudicating comprehensively with respect to the entire administrative problem involved, the agency were obliged to consider each individual situation before reaching its decision. * * * ”

Other petitions contained similar complaints.

. After this case had been first argued before ns, we called for additional briefs from the parties upon certain questions propounded by us for answer including the question whether the proceeding before the Commission was instituted as a proceeding for rule making, as contemplated by § 4 of the Administrative Procedure Act, rather than a proceeding for adjudication as contemplated by § 5 of the same Act, ( 5 U.S.C. § 1004 ). Supplemental briefs were filed in which all parties unanimously agreed that this was a proceeding for adjudication.

. Many of them are collected in Davis, Administrative Law Treatise, Chap. 16, §§ 16.01 to 16.14.

. This decision was alluded to in the later case of United States v. Pierce Auto Lines, 327 U.S. 515, 533 , 66 S.Ct. 687, 696 , 90 L.Ed. 821 : “The court undoubtedly did not mean that there was no finding whatever as to fitness, willingness and ability, for the Commission did make such a finding in the statutory language. What was obviously meant was that such an ultimate finding was not enough, as of course it was not, see Florida v. United States, supra, in the absence of a basic finding to support it; and that there was no such basic finding.”

. This case is discussed in a note on “Necessity, form, and contents of express finding of fact to support administrative determinations” in 146 A.L.R. 209 , at pp. 220, if., ■where it is referred to as a leading case.

- The recommended decision of the examiner was as follows: “The principal basis for the prior decisions in holding that conference prohibitions against the payment of brokerage, or limiting brokerage to less than 1% percent of ocean freight charges, would be detrimental to the commerce of the United States, is found in the finding in Agreements and Practices Re Brokerage, supra, at p. 177 that such conference actions have had and will have a serious effect upon tlie forwarding industry. This finding can be supported on this record, as urged by the forwarders and a number of other parties, but only if it is assumed that forwarding fees must remain at unremunerative levels with resulting indirect rebates to shippers and general disregard of the requirements of § 16 of the Act prohibiting rebates, discrimination, preference, and prejudice. On tlie other hand, the unregulated payment of brokerage has resulted in substantial payment by the carriers of unearned brokerage, as disclosed on this record, with consequent unnecessary dissipation of carrier revenues creating upward pressures upon ocean freight charges to the detriment of the commerce of the nation.

“In addition the prior decision failed to recognize the true nature of brokerage of the type here involved as voluntary payments, made by the carriers as a competitive device to attract traffic over which the forwarders have control of routing, which the carriers should be free to regulate or prohibit as they see fit, and which should be safeguarded against the continuance and recurrence of the widespread rebating resulting therefrom which this record shows to exist. As seen, the safeguards included in the prior decisions to insure that an individual carrier should be free to pay or not to pay brokerage as it sees fit are generally of no avail, in view of the competitive pressures which prevail in the event that brokerage is paid in any trade. There is in logic no sound reason why carriers acting in concert should be free to limit or regulate competition among themselves by imposing upper limits upon rates of brokerage, but at the same time be prevented from limiting or regulating competition among themselves by prohibiting in its entirety the payment of brokerage in any event, or by limiting the payment of brokerage to any extent they deem desirable.

“This record discloses with certainty that brokerage payments lead indirectly, through the forwarder recipients, to undesirable and unlawful practices. It must be concluded, therefore, that the prior findings under reconsideration in No. 831 are no longer valid, and that any orders entered as a result thereof should be vacated and set aside.”

. The witness Schorer, Pacific Coast Manager of the Holland-America Line, San Francisco, testified with respect to Rule 21 provision for payment of three-quarters of one percent for brokerage on grain products, that he thought it advisable for steamship companies to have the right to have such a provision. When asked if he could justify that percent he replied: “I would say that in general grain products move in such large volumes, that is, volume bill of lading shipments, that that in its reduced percentage would produce sufficient compensation for any broker or forwarder, or broker-forwarder who might be mediating in that shipment to be adequately rewarded.”

He similarly testified concerning the other limitations of Rule 21.