288 U.S. 294 (1933), 272, Norwegian Nitrogen Products Co. v. United States

Docket Nº:No. 272
Citation:288 U.S. 294, 53 S.Ct. 350, 77 L.Ed. 796
Party Name:Norwegian Nitrogen Products Co. v. United States
Case Date:February 06, 1933
Court:United States Supreme Court

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288 U.S. 294 (1933)

53 S.Ct. 350, 77 L.Ed. 796

Norwegian Nitrogen Products Co.


United States

No. 272

United States Supreme Court

Feb. 6, 1933

Argued January 10, 11, 1933




The Tariff Act of 1922 empowers the President to change rates of duty in order to equalize differences in costs of production in this country and abroad, but provides -- § 315(c) -- that, before he acts, there shall have been an investigation of such differences by the

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Tariff Commission, in the making of which the Commission shall give reasonable public notice of its hearings, and shall give "reasonable opportunity to parties interested to be present, to produce evidence, and to be heard." The Commission is authorized "to adopt such reasonable procedure, rules, and regulations as it may deem necessary."


1. The right of hearing, in the case of a foreign producer which refused to reveal its cost of production although its domestic competitor offered to reveal its own costs if the disclosure were mutual, did not include the right to examine the statement of costs which the domestic producer furnished the Commission in confidence, or the right to inspect data, gathered confidentially by the Commission, upon which it was obliged to base its estimate of the foreign costs, or the right to elicit such information by examination of the domestic producer's officers and the Commission's agents, such confidential information being withheld in accordance with the practice of the Commission in like cases. Pp. 303 et seq.

2. Generally speaking, the kind of hearing assured by the statute to parties interested is one of the same order as has customarily, but optionally, been allowed by congressional committees in the tariff-making process. Pp. 305, 319.

3. That the "hearing" assured does not include a privilege to ransack the records of the Commission and to subject its confidential agents to an examination of all that they have learned is demonstrated by the tariff-making practice of Congress, the history of the passing of this statute, the history of the Commission's predecessors, and of the Commission itself, and its practice under the statute with the implied approval of both the President and Congress, and also by the contrast between the generality of § 315(c) and the explicit provision for cross-examination and for inspection of papers, found in § 381, relating to matters of appraisal before the Board of General Appraisers. Pp. 303-319.

4. The word "hearing," applied to administrative proceedings, may have one meaning or another according to the context and subject matter. An administrative hearing that may result in an order impinging on legal rights, such as those affecting the rates and conduct of public service corporations, is very different from a hearing before the Tariff Commission, which merely reports and recommends. P. 317.

5. No one has a legal right to the maintenance of an existing tariff rate. P. 318.

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6. An applicant for increase of duty is not required by the statute or by the Commission's rules to include a statement of his costs of production in his application. P. 320.

7. The Commission, in conducting an investigation, is free to act on its own motion, and the function of an application, when filed, is not that of a pleading in a lawsuit. P. 319.

8. The function of the Commission is that of an adviser of the President or Congress, not that of an arbiter between adverse litigants. P. 321.

9. If the Commission is under any duty to make disclosure of costs, the origin and measure of the duty are to be found in the implied duty to do whatever may be necessary to make the hearing fair. P. 321.

10. Refusal to make such disclosure is an exercise of discretionary power, and could not be impeached if not shown to be arbitrary. P. 321.

11. Such a refusal was not arbitrary when actuated by the Commission's settled policy of withholding the confidential information when its publication might work hardship or injustice or hamper the work of the Commission in the case of an importer who insisted that all the confidential data be disclosed without defining or seeking anything less, and who was unwilling to use reasonable effort to make disclosure of the costs of his principal abroad. Pp. 321-323.

12. The Commission has power to interpret its own rules by administrative practice. P. 325.

13. That part of its rules which excepts from examination by the parties before it such portions of its records as relate to "trade secrets and processes" has been interpreted by the Commission as keeping costs secret for the protection of producers, both foreign and domestic, unless disclosure is so cloaked that the identity of the producers will be effectively disguised. P. 324.

20 C.C.P.A. (Cust.) 27; T.D. 45,674, affirmed.

Certiorari, 287 U.S. 586, to review the affirmance of a judgment of the United States Customs Court sustaining certain duties over the protests of the importer. For earlier phases of the same dispute, see 274 U.S. 106.

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CARDOZO, J., lead opinion

MR. JUSTICE CARDOZO delivered the opinion of the Court.

On May 6, 1924, the President of the United States determined and proclaimed that an increase in the rate of duty on sodium nitrite was necessary to equalize the differences in the costs of production in the United States and the principal competing country, Norway, and that, to that end, the duty should be increased from 3 cents per pound to 4 1/2 cents per pound. The proclamation was made after an investigation and report by the United States Tariff [53 S.Ct. 352] Commission under the flexible tariff provisions of the Tariff Act of 1922. Tariff Act of September 21, 1922, c. 356, § 315, 42 Stat. 858, 941-943. After the new rate of duty had thus gone into effect, there were new importations of sodium nitrite at the Port of New York. The duty was assessed by the customs officers in accordance with the proclamation, and protests were filed by the petitioner, which is the exclusive agent within the United States of the leading exporter to this country of the commodity affected. The protests were made upon the ground that the Tariff Commission, in investigating the costs of production in the United States and Norway, had not given the petitioner the hearing prescribed by the statute, and that all that followed was of no validity. A judgment of the Customs Court overruling the protests (T.D. 44,824, 59 Treas.Dec. 921) was affirmed by the Court of Customs and Patent Appeals, 20 C.C.P.A. (Customs) 27; T.D. 45,674. A writ of certiorari brings the case here.

In October, 1922, the American Nitrogen Products Company submitted to the Tariff Commission a request for a report and recommendation to the President that the duty on sodium nitrite be increased 50 percent. It

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stated in this request that, with every reasonable effort to economize, it had been unable to compete with the foreign manufacturers, and had been forced to close its plant. In response to this request, the Commission, on March 27, 1923, ordered that an investigation be made, declared that a public hearing would be held on a date thereafter to be fixed, and gave public notice of its order. The Commission then proceeded to the business of investigation. From the chief producers of sodium nitrite in the United States (the American Nitrogen Products Company and another), the agents of the Commission received the fullest measure of disclosure as to the costs of production and other details of the business. The information as to costs was subject to a pledge of secrecy, the manufacturers taking the position, to which the Commission acceded, that costs were trade secrets, to be withheld from competitors. The chief foreign producers were two -- the Norsk-Hydro, a Norwegian company, represented by the petitioner, and the Badische-Anilin of Germany. Both foreign producers refused to supply the investigators for the Commission with any statement of costs, or to permit access to their records. The Norwegian company wrote afterwards in a cablegram to the petitioner: "On principle, we always refuse publish cost price, consequently did not furnish investigators any information enabling them calculate cost price." The Commission was hindered, but not baffled. Its investigators went to Norway, and, consulting other sources of information, made an estimate of cost as best they could. By July 20, 1923, the preliminary investigation was over, and the Commission was ready for a public hearing. It gave public notice on that date that, on September 10, 1923, all parties interested would be given an opportunity to appear before the Commission, to produce evidence, and to be heard with regard to differences in the cost of sodium nitrite and any other facts and conditions affecting the inquiry.

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At the time thus appointed, the petitioner appeared, represented by its counsel. It made a motion at the beginning that it receive a complete copy of the request or application for an increase of rates. The copy already furnished to it was not complete, in that the details of the costs of production at the applicant's factory had been left out. The president of the applicant protested that the information as to costs had been given under a promise to hold it confidential, and the chairman of the Commission thereupon assured him that the promise would be kept. The request of the importer was accordingly refused. The hearing then proceeded; the president of the American Nitrogen Products Company appearing as a witness. He gave general information as to the state of the industry, showing by his testimony that the foreign producers were selling their...

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