Campbell Fed. Prohibition Administrator v. Galeno Chemical Co.
Headline: Court limits the Prohibition Bureau’s power and blocks agency regulation that tried to cancel medicinal-alcohol permits without hearings, protecting manufacturers from summary revocation and requiring statutory procedures for cancellation.
Holding: The Court holds that the Prohibition Bureau may not cancel existing basic permits for making medicinal products containing alcohol by regulation alone; revocation requires the statute’s notice-and-hearing procedures.
- Stops agency from canceling existing medicinal-alcohol permits without statutory hearings.
- Requires notice and a formal hearing before revoking basic manufacture permits.
- Prevents retroactive permit cancellations by regulation while leaving future rules open.
Summary
Background
Several companies that made medicinal preparations containing whiskey held long-standing basic permits issued under the National Prohibition Act. The permits allowed use of whiskey in specific products and said they would remain in force until revoked, suspended, or renewed as provided by law or regulations. The Prohibition Bureau adopted a regulation declaring that all such permits would expire on December 31, 1928, and ordered hearings to determine whether whiskey was indispensable. The manufacturers sued to stop the regulation and the planned cancellations.
Reasoning
The central question was whether the Bureau could, by regulation, cancel existing permits without using the revocation process the statute requires. The Court explained that the permits at issue authorized the manufacture of specified “articles” unfit for beverage use and thus were not the same as permits governed by the one-year expiration rule in §6. The Court held that the statute gives permittees rights to revocation only after the notice-and-hearing procedures in §§5 and 9, and that a regulation cannot override or cancel existing permits in violation of the statute.
Real world impact
The decision protects manufacturers from sudden cancellation of their basic permits by agency fiat. Agencies must follow the statute’s required notice and hearing procedures before revoking these permits. The Court left open some future questions about how new permits should be written or limited, but it forbids retroactive cancellation of existing permits by regulation.
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