Panama Refining Co v. Ryan Flashcards
Background (1)
October 24, 1929
•Stock market loses 24% of its value
•Between September and November 1929, stock market down a total of 50%
Seven months into the administration of Herbert Hoover
•Republican committed to small government•Refused to create direct government assistance
•Asked businesses to continue to employ workers
•Cut taxes, provided some government support to charity, some public works funding, some low interest loans to businesses
Background (2)
Great Depression•
23% unemployment lasted for years (14.8% during COVID and recovered quickly)•GDP fell 30% (-3.5% during first year of COVID)
•Industrial production fell 47%
•Deflation•So little money in the economy that prices dropped
•If you cut the price of your goods by 50%, you need to sell twice as much to make the same amount of money
•Flooding markets with more cheap stuff drives prices down even more
Background (3)
Oil
-Overproduction was rampant•
Prices plummeted: in 1933 a barrel of oil cost the same as one can of Campbell’s soup ($.10)
•States try to limit production, but limits hard to enforce because oil companies engaged in bootlegging
•Similar problem to banning booze state-by-state –even if something is illegal in every state, if the federal government doesn’t
•Black market oil referred to as “hot oil”
Why isn’t cheap oil a good thing?
-Sure it’s good for consumers
•Some oil companies played by the rules and can’t make as much money as those who cheat
•If you can’t make a profit, it makes more sense to keep the oil in the ground until prices rise
Roosevelt + New Deal
New Deal most extensive set of economic reforms in history
•Expanded the scope of federal government, modern system of federal regulation
•Established first set of workers rights —forcing businesses to negotiate with labor unions, setting minimum wages
•Established first programs to support vulnerable people: unemployed, widowed mothers and children, the elderly
•Established first farm subsidies to help farmers struggling with deflation
•Created government funded jobs to reduce unemployment
What is the National Industrial Recovery Act
Passed Congress in 1933
•Included funding for Public Works Administration
•Permitted president to issue codes of fair competition
•President would get owners and labor groups from one industry into a room to negotiate business practices
•Once agreement was reached, president would ratify agreement and enforce it –no need to get Congress to enact these rules
Effect of these codes
•Eliminated child labor
•Created opportunities for unions to exercise power
•Set maximum work hours, minimum wages•Set prices and production quotas•Based on cartels, not competition
Issue at Hand
Whether a federal law permitting the president to prohibit the interstate transportation of a good when and if he/she sees fit violates the Legislative Vesting Clause of the Constitution?
Ruling
Held 8-1 (Hughes writing) YES. Congress cannot delegate legislative power to the president. Congress can give president discretion to act, but that discretion must accompany a set of criteria and findings set by Congress.
non-delegation doctrine defined
“All legislative Powers herein granted shall be vested in a Congress of the United States”•Legislative Vesting Clause, Article I, Section 1
- presidential power → executive vesting clause → all executive power is vested within the president of the united states
- have dispute over whether or not Roosevelt deciding to ban interstate transportation of oil means he is writing a new law or working within the discretion that Congress is allowed to give to the president
- Section 9 (c) → just says that the president may do this
Hughes’ reasoning (Majority)
Section 9 (c) is brief and unambiguous.” •Congress must guide the president with more instructions
“Establishes no criterion to govern the President’s course.”
•No rule telling the president when act
It does not require any finding by the President”
•Findings means a factual assessment of the situation
•Could have said, “Mr. President, within six months report to Congress on the number of companies that were overproducing, the number of barrels overproduced, the price impact, etc.”
•Gives Congress the opportunity to revise its rules in future
Hughes Rule
- congress must → lay down policies and establish standards → legislative power → vested to congress by vesting clause
- congress can get the executive to help
- assessment of how things are playing out on the ground + details → narrow understanding of secondary things = left to the executive
- everything else = congress
- Most difficult part of this rule → how specific must those policies and standards be
Cardozo dissent: Alternative Rule
- act needs reasonably clear standard governing pres standard → congress = not given away power to legislate
- more presidentially friendly test
- more lax rule
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.”
denies that such a standard is lacking
Cardozo dissent
Section 9c limits him to
•Oil, not other commodities
•Only oil produced above state rules
•Has discretion over “occasion” but not “means” –punishment laid out by Congress
Cardozo dissent (2)
Other principles governing FDR’s discretion found outside Section 9c –read the law as a whole, including broad goals stated in Section 1
-If we look to the whole structure of the statute,…the President is to forbid the transportation of the oil when he believes, in the light of the conditions of the industry as disclosed from time to time, that the prohibition will tend to effectuate the declared policies of the act, —not merely his own conception of its policies, undirected by any extrinsic guide.
NIRA Sec. 1
-section 1 declares national economic emergency + then outlines all the goals → big picture ideas existing in constitution followed by specifics in the body → what this does section 1 in comparison to the whole thing
to remove obstructions to the free flow of interstate and foreign commerce•and to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups,
