Panama Refining Co. v. Ryan
Citation: 293 U.S. 388 (U.S. Supreme Court, 1935)
Facts
Section 9(c) of the National Industrial Recovery Act (NIRA) authorized the President to prohibit interstate transportation of oil produced in excess of state quotas (so-called “hot oil”). The statute provided no standard or policy to guide the President’s decision about when or whether to exercise this authority. Panama Refining Co. challenged an executive order issued under this provision.
Issue
Does a congressional delegation of authority to the President to prohibit interstate commerce in “hot oil” violate the non-delegation doctrine when Congress provides no intelligible principle or standard to guide that authority?
Holding
The Supreme Court struck down Section 9(c) as an unconstitutional delegation of legislative power. Congress had supplied no policy, standard, or rule to guide the President’s discretion — the statute simply handed the executive a blank check to act or not act as it saw fit.
Rule
A congressional delegation is unconstitutional under the non-delegation doctrine if Congress fails to provide any intelligible principle, policy, or standard to define the limits and guide the exercise of the delegated authority.
Significance
Panama Refining is one of only two cases in which the Supreme Court has struck down an act of Congress on non-delegation grounds (the other is Schechter Poultry Corp. v. United States). Both were decided in 1935 during the early New Deal period. The case illustrates what an unconstitutional delegation looks like — an open-ended grant with no limiting standard — and remains an important reference point for understanding the outer boundary of the intelligible principle test established in J.W. Hampton Jr. & Co. v. United States.