Authored By: Shagufta Chowdhury Adrita
East West University
Case Name: Panama Refining Co. v. Ryan 293 U.S. 388 (1935)
Summary of the Facts
Under the guidance of President Roosevelt’s new deal, congress passed the National Industrial Recovery Act (NIRA) of 1933. Under section 9 (c), the President was authorized to prohibit the interstate transportation of petroleum produced in excess of state quotas. Then President issued an executive order forbidding shipment. Panama Refining Company challenged the order that congress had unconstitutionally delegated legislative power to the President without clear standards.
Court Name
Supreme Court of the United States
Parties Involved
Petitioner: Panama Refining Company and others
Respondent: Edward C. Ryan, Administrator of the Petroleum Code Under the National Industrial Recovery Act (NIRA)
Issues
- Did congress through Section 9 (c) of NIRA, unconstitutionally delegate its lawmaking power to the President?
- Was there any intelligible principle guiding the President’s discretion? Can the President effectively decide policy without limits?
Arguments of Parties
Petitioner
On basis of Article 1, section 1 of the US constitution- no clear guidelines were given of the Presidents power. Congress gave the President unlimited power to decide about prohibiting the transportation of oil. Even non delegation doctrine was violated. It was an arbitrary and unjust application as the order was given without due process.
Respondent
In the emergency times president can be given authority as administrative discretion. The Act’s preamble and structure expressed its purpose to eliminate unfair competition and conserve natural resources. Prohibiting the oil was to prevent market disruption and unfair competition. President’s actions were consistent with congress’s intent and supported by the nation interest.
Judgement
The U.S. Supreme Court held that, congress violated the non- delegation doctrine because it gave the President unrestricted and undefined power to decide policy. Section 9 (c ) of the National Industrial Recovery Act 1933, authorized the President of U.S. to prohibit the interstate and foreign transportation of petroleum produced in violation of state laws. The Court invalidated a law on the ground of unconstitutional delegation of legislative power. It was in Article 1, section 1 of the U.S. Constitution where it says legislative powers will be granted by the Congress of the United States. The Congress had not established any clear standard to guide the President, rather it granted authority to decide on whether the prohibition should apply, to what extent it should apply and when it should come into effect. Justice explained Congress cannot transfer essential legislative essential function policies to President. It should clear the guidance and give limits for the executive.
Analysis of the Judgement
The Court emphasized that Congress cannot give law making power to the President without setting clear guidelines. From the majority, it was stated that congress must define policy and set boundaries, President can only execute within those limits. Court distinguished between delegating power, which are allowed versus delegating fundamental policy decisions, which are unconstitutional. It was the Court’s resistance to the President’s new deal.
Reasoning
The Decision was based on the principle of separation of powers. Congress could avoid its responsibility and give unchecked authority to the President. In complex economic regulation, some flexibility are necessary for the executive. The court’s approach was very formal. Though for political reasons, there was later ‘intelligible principle’ existed. This case was a temporary decision for resisting New Deal Legislation than a permanent restriction.
