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Panama Ref. Co. v. Ryan - 293 U.S. 388, 55 S. Ct. 241 (1935)

Rule:

All persons embraced within the terms of § 9(c) of the National Industrial Recovery Act of June 16, 1933, 15 U.S.C.S. § 709(c), and the Executive Orders and regulations issued thereunder, should keep available for inspection by the Division of Investigations of the Department of the Interior adequate books and records of all transactions involving the production and transportation of petroleum and the products thereof. Int. Reg. VII of July 15, 1933 (amended by orders of July 25, 1933).

Facts:

§ 9 (c) of Title I of the National Industrial Recovery Act of June 16, 1933 authorizes the President to prohibit the transportation in interstate and foreign commerce of petroleum and the products thereof produced or withdrawn from storage in excess of the amount permitted to be produced or withdrawn from storage by any state law or valid regulation or order prescribed thereunder, by any board, commission, officer, or other duly authorized agency of a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. Acting on this authority, the President issued an Executive Order on July 11, 1933, prohibited the transportation in interstate and foreign commerce of petroleum in accordance with the National Industrial Recovery Act. Subsequently, on July 15, 1933, the Secretary of the Interior issued regulations to carry out the President’s order. On August 19, 1933, the President issued another order alleged to be acted in accordance with the aforementioned Act. The said Executive Order approved a "Code of Fair Competition for the Petroleum Industry." Several petitions were thereafter filed by plaintiffs oil producers asserting that §9(c) is an unconstitutional delegation to the President of legislative power and as transcending the authority of the Congress under the commerce clause. The petitions also alleged that the said section of the Act and the consequent orders made under the Act violated the Fourth, Fifth and Fourteenth Amendments of the Constitution. The district court ruled in favor of the plaintiffs and enjoined defendants, federal officials, from enforcing the executive orders and their accompanying regulations. The Circuit Court of Appeals for the Fifth Circuit reversed the ruling of the district court.

Issue:

Were the executive orders and regulations made by the President under § 9 (c) of Title I of the National Industrial Recovery Act of June 16, 1933 constitutional?

Answer:

No.

Conclusion:

The Court reversed the decrees of the Circuit Court of Appeals for the Fifth Circuit and remanded causes with direction to modify the decrees so as to grant permanent injunctions restraining the federal officials from enforcing certain orders and regulations against the oil producers based on § 9(c) of Title I of the National Industrial Recovery Act of June 16, 1933, 15 U.S.C.S. § 709(c). The Court noted that there were limits of delegation for which there was no constitutional authority to transcend. Here, § 9(c) was found to go beyond those limits. As to the transportation of oil production in excess of state permission, Congress had declared no policy, had established no standard, and had laid down no rule. There was no requirement or definition of circumstances and conditions in which the transportation of petroleum was to be allowed or prohibited. Furthermore, the Court found another objection to the validity of the prohibition laid down by executive orders under § 9(c) in that the executive orders contained no finding or statement of the grounds of the President's action in enacting the prohibition. Accordingly, the executive orders and the regulations issued thereunder were without constitutional authority.

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