Panama Refining Co. v. Ryan
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| Panama Refining Co. v. Ryan | |
| Reference: 293 US 388 (1935) | |
| Term: 1934 | |
| Important Dates | |
| Argued: Dec 10 - 11, 1934 Decided: Jan 7, 1935 | |
| Outcome | |
| United States Court of Appeals for the 5th Circuit reversed | |
| Majority | |
| Charles E. Hughes • Willis Van Devanter • James Clark McReynolds • George Sutherland • Louis Brandeis • Pierce Butler • Harlan Fiske Stone • Owen Roberts | |
| Concurring | |
| None | |
| Dissenting | |
| Benjamin Cardozo | |
Panama Refining Co. v. Ryan is a case decided on January 7, 1935, by the United States Supreme Court. It involved the constitutionality of Section 9(c) of Title I of the National Industrial Recovery Act, which had authorized the President to "prohibit the transportation in interstate and foreign commerce of petroleum" in excess of state quotas, and to publish violators with fines and jail time.[1] The Supreme Court reversed the ruling of the United States Court of Appeals for the 5th Circuit and ruled that Section 9(c) represented an unconstitutional delegation of legislative power to the President. [2]
In brief: Section 9(c) of the National Industrial Recovery Act authorized the President to stop the interstate transportation of excess (or 'hot') oil. He then delegated that power to the Secretary of the Interior through a series of executive orders. Two Texas oil companies, Panama Refining Co. and Amazon Petroleum Corp. filed separate lawsuits challenging the Secretary of the Interior's regulations and Section 9(c) of the NIRA. The Supreme Court sided with the companies and found Section 9(c) to be an unconstitutional delegation of legislative power.
Why it matters: The case struck down Section 9(c) of the NIRA, which was a major component of Franklin D. Roosevelt's New Deal. The ruling in A.L.A. Schechter Poultry Corp. v. United States later the same year struck down Section 3 and effectively neutralized the entire act. Both Schechter and Panama were major cases in the development of the nondelegation doctrine and laid the groundwork for many subsequent rulings.
Background
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The National Industrial Recovery Act was passed in 1933 in response to the Great Depression and gave the President wide authority to regulate the economy. Section 9(c) of the act dealt with hot oil, which was oil produced in excess of state quotas, then sold in other states.
| “ | Sec. 9. ... (c) The President is authorized to prohibit the transportation in interstate and foreign commerce of petroleum and the products thereof produced or withdrawn from storage in excess of the amount permitted to be produced or withdrawn from storage by any State law or valid regulation or order prescribed thereunder, by any board, commission, officer, or other duly authorized agency of a State. Any violation of any order of the President issued under the provisions of this subsection shall be punishable by fine of not to exceed $1,000, or imprisonment for not to exceed six months, or both.[2][3] | ” |
President Franklin D. Roosevelt then delegated this power to the Secretary of the Interior, who issued regulations that required all petroleum companies to provide monthly statements under oath verifying details of their business practices and to retain all work-related documents for potential inspection by the Department of the Interior, among other things.
Panama Refining Company and Amazon Petroleum Corporation, both oil producing companies in Texas, launched their own respective lawsuits against the Department of Interior's regulations and the constitutionality of the NIRA. The District Judges in both cases sided with the companies against the government, but the Fifth Circuit Court of Appeals ruled in favor of the federal government and directed that both lawsuits be thrown out. The cases then appeared together before the Supreme Court under the name Panama Refining Co. v. Ryan.[2]
Oral argument
Oral arguments were held from Dec 10-11, 1934. The case was decided on Jan 7, 1935.[4]
Decision
The court ruled 8-1 that Section 9(c) of the National Industrial Recovery Act unconstitutionally delegated legislative power to the President, which also rendered the executive orders governing hot oil invalid. Chief Justice Charles E. Hughes wrote the majority opinion and was joined by Justices Willis Van Devanter, James Clark McReynolds, George Sutherland, Louis Brandeis, Pierce Butler, Harlan Fiske Stone, and Owen Roberts. Justice Benjamin Cardozo wrote a dissenting opinion.[2]
Opinions
Opinion of the court
Writing for the court, Chief Justice Charles E. Hughes pointed out that the validity of the Department of Interior's regulations rested on the constitutionality of Section 9(c) of the NIRA, which was the original source of their authority. He further argued that the allowance or prohibition of transportation of goods was "obviously one of legislative policy," meaning that a delegation of power had occurred.[2] The court's next step was to search for an intelligible principle in the legislation that guided and limited the President's power, though in this case none could be found.
| “ | Section 9(c) is brief and unambiguous...It does not qualify the President's authority by reference to the basis or extent of the state's limitation of production. Section 9(c) does not state whether or in what circumstances or under what conditions the President is to prohibit the transportation of the amount of petroleum or petroleum products produced in excess of the state's permission. It establishes no criterion to govern the President's course. It does not require any finding by the President as a condition of his action. The Congress in section 9(c) thus declares no policy as to the transportation of the excess production. So far as this section is concerned, it gives to the President an unlimited authority to determine the policy and to lay down the prohibition, or not to lay it down, as he may see fit. And disobedience to his order is made a crime punishable by fine and imprisonment.[3] | ” |
| “ | We find nothing in section 1 which limits or controls the authority conferred by section 9(c).[2][3] | ” |
The court thus ruled that Section 9(c) unconstitutionally delegated legislative power to the executive branch.
| “ | We see no escape from the conclusion that the Executive Orders of July 11, 1933, and July 14, 1933, Nos. 6199, 6204 (15 USCA 709 note), and the regulations issued by the Secretary of the Interior thereunder, are without constitutional authority.
|
” |
Concurring opinions
There were no concurring opinions.
Dissenting opinions
Justice Benjamin Cardozo wrote a dissenting opinion in which he argued that the NIRA had provided enough guidance to keep the President and Interior Secretary's actions within constitutional bounds.
| “ | I concede that to uphold the delegation there is need to discover in the terms of the act a standard reasonably clear whereby discretion must be governed. I deny that such a standard is lacking in respect of the prohibitions permitted by this section when the act with all its reasonable implications is considered as a whole. [2][3] | ” |
He also argued that the circumstances of the Great Depression necessitated Presidential action.
| “ | What can be done under cover of that permission is closely and clearly circumscribed both as to subject-matter and occasion. The statute was framed in the shadow of a national disaster. A host of unforeseen contingencies would have to be faced from day to day, and faced with a fullness of understanding unattainable by any one except the man upon the scene. The President was chosen to meet the instant need.[2][3] | ” |
Impact
In the majority opinion, Chief Justice Hughes placed Section 9(c) and its related executive orders in historical context to further explain the court's decision to declare them unconstitutional.
| “ | Both section 9(c) and the executive order are in notable contrast with historic practice (as shown by many statutes and proclamations we have cited in the margin) by which declarations of policy are made by the Congress and delegations are within the framework of that policy and have relation to facts and conditions to be found and stated by the President in the appropriate exercise of the delegated authority.[2][3] | ” |
The court's examination traced the history of delegated power and the evolution of the nondelegation doctrine. Field v. Clark (1892) had held that the idea that "Congress cannot delegate legislative power to the president' is 'universally recognized as vital to the integrity and maintenance of the system of government ordained by the constitution." In that case, the statute in question had been constitutional because the President had served as "the mere agent of the law-making department."[2] [5] The ruling in Field v. Clark had played an important part in J.W. Hampton Jr. & Company v. United States (1928), which established the intelligible principle test. This test remains an integral part in determining the constitutionality of a delegation of power (see Whitman v. American Trucking Associations (2001)).
Chief Justice Hughes then drew on Wayman v. Southard (1825), an even earlier case, to clarify the bounds of delegation.
| “ | Moreover the Congress may not only give such authorizations to determine specific facts, but may establish primary standards, devolving upon others the duty to carry out the declared legislative policy; that is, as Chief Justice Marshall expressed it, 'to fill up the details' under the general provisions made by the Legislature.[2] [6] [3] | ” |
The court concluded by reiterating that while delegation remained an important tool for Congress to manage the needs of a modern state, it required clear boundaries and constant monitoring.
| “ | Undoubtedly legislation must often be adapted to complex conditions involving a host of details with which the national Legislature cannot deal directly. The Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislature is to apply...But the constant recognition of the necessity and validity of such provisions and the wide range of administrative authority which has been developed by means of them cannot be allowed to obscure the limitations of the authority to delegate, if our constitutional system is to be maintained.[2] [3] | ” |
The Supreme Court chose not to examine the constitutionality of the Petroleum Code in Panama v. Ryan. A similar code for the poultry industry was the subject of A.L.A. Schechter Poultry Corp. v. United States later that year. That case found Section 3 of the NIRA to be unconstitutional. Panama and Schechter are the only two cases in which a law has been overturned for violating the nondelegation doctrine (see Mistretta v. United States and Whitman v. American Trucking Associations).
Following the decision in Panama Refining Co. v. Ryan, Congress passed the Connally Hot Oil Act of 1935, which contained many of the provisions from Section 9(c) of the NIRA.[7]
See also
- A.L.A. Schechter Poultry Corp. v. United States
- J.W. Hampton Jr. & Company v. United States
- Nondelegation doctrine
- Separation of powers
- Rulemaking
- Supreme Court of the United States
- History of the Supreme Court
External links
- Full Text of the Case via Justia
- Supreme Court of the United States
- Search Google News for this topic
Footnotes
- ↑ Our Documents.gov, National Industrial Recovery Act (1933), accessed November 2, 2017
- ↑ 2.00 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 2.12 FindLaw, Panama Refining Co. v. Ryan, accessed November 16, 2017
- ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Oyez, Panama Refining Co. v. Ryan, accessed November 16, 2017
- ↑ FindLaw, Field v. Clark, accessed November 16, 2017
- ↑ FindLaw, Wayman v. Southard, accessed November 16, 2017
- ↑ Government Publishing Office, Connally Hot Oil Act, accessed November 16, 2017
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