Panama Refining Co. v. Ryan, 293 U.S. 388; 55 S. Ct. 241; 79 L. Ed. 446 (1935)

Facts—Section 9 (c) of the National Industrial Recovery Act (NIRA) had given the president the power to forbid the transportation in interstate commerce of oil produced or withdrawn from storage in violation of state law. The Panama Refining Company, as owner of an oil refining plant in Texas, sued to restrain the defendants, who were federal officials, from enforcing regulations from the Department of Interior based on the National Industrial Recovery Act, on the grounds that Section 9 (c) of the act was unconstitutional.

Question—Does Section 9 (c) of the National Industrial Recovery Act unconstitutionally delegate legislative power to the president?

Decision—Yes.

Reasons—C.J. Hughes (8–1). The statute did not contain any definition of the circumstances or conditions in which the transportation was to be permitted or prohibited. In other words, the power of the president was purely discretionary. He was not merely filling in the details of a legislative policy, since no legislative policy was outlined to guide or control him. While very broad powers of administrative regulation may be delegated to the president, a legislative statement of policy must be sufficiently definite to prevent the exercise upon his part of pure discretion. Section 9 (c) of the NIRA in essence delegates the power to legislate to the president and is therefore unconstitutional and void.

Note—This is known as the “Hot Oil Case” in reference to oil produced or withdrawn from storage in violation of state law. It was the first New Deal statute declared void as an unconstitutional delegation of power. The wellknown maxim delegata potestas non potest delegari (delegated power cannot be redelegated) is the basis of the decision. Delegated power to the president in foreign affairs has escaped Court censure, as in United States v. Curtiss Wright Export Corp., 299 U.S. 304 (1936), but is still denied to the states, as decided in Knickerbocker Ice Co. v. Stewart, 253 U.S. 149 (1920).