Source: https://en.m.wikisource.org/wiki/Panama_Refining_Co._v._Ryan/Opinion_of_the_Court
Timestamp: 2019-04-23 13:05:21+00:00

Document:
The Circuit Court of Appeals reversed the decrees against the federal officials and directed that the bills be dismissed. Ryan v. Amazon Petroleum Corp., 71 F.(2d) 1; Ryan v. Panama Refining Co., 71 F.(2d) 8. The cases come here on writs of certiorari granted on October 8, 1934, 293 U.S. 539, 55 S.Ct. 102, 79 L.Ed. -; 293 U.S. 539, 55 S.Ct. 83, 79 L.Ed. --.
First. The controversy with respect to the provision of section 4 of article III of the Petroleum Code was initiated and proceeded in the courts below upon a false assumption. That assumption was that this section still contained the paragraph (eliminated by the Executive Order of September 13, 1933) by which production in excess of assigned quotas was made an unfair practice and a violation of the code. Whatever the cause of the failure to give appropriate public notice of the change in the section, with the result that the persons affected, the prosecuting authorities, and the courts, were alike ignorant of the alteration, the fact is that the attack in this respect was upon a provision which did not exist. The government's announcement that, by reason of the elimination of this paragraph, the government 'cannot, and therefore it does not intend to, prosecute petitioners or other producers of oil in Texas, criminally or otherwise, for exceeding, at any time prior to September 25, 1934, the quotas of production assigned to them under the laws of Texas,' but that, if 'petitioners, or other producers, produce in excess of such quotas after September 25, 1934, the government intends to prosecute them,' cannot avail to import into the present case the amended provision of that date.  The case is not one where a subsequent law is applicable to a pending suit and controls its disposition.  When this suit was brought and when it was heard, there was no cause of action for the injunction sought with respect to the provision of section 4 of article III of the code; as to that, there was no basis for real controversy. See California v. San Pablo & T.R. Co., 149 U.S. 308, 314, 13 S.Ct. 876, 37 L.Ed. 747; United States v. Alaska Steamship Co., 253 U.S. 113, 116, 40 S.Ct. 448, 64 L.Ed. 808; Barker Painting Co. v. Local No. 734, Brotherhood of Painters, etc., 281 U.S. 462, 50 S.Ct. 356, 74 L.Ed. 967. If the government undertakes to enforce the new provision, the petitioners, as well as others, will have an opportunity to present their grievance, which can then be considered, as it should be, in the light of the facts as they will then appear.
Second. Regulations IV, V, and VII, issued by the Secretary of the Interior prior to these suits, have since been amended. But the amended regulations continue substantially the earlier requirements and expand them. They present the same constitutional questions, and the cases as to these are not moot. Southern Pacific Company v. Interstate Commerce Commission, 219 U.S. 433, 452, 31 S.Ct. 288, 55 L.Ed. 283; Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498, 514-516, 31 S.Ct. 279, 55 L.Ed. 310; McGrain v. Daugherty, 273 U.S. 135, 181, 182, 47 S.Ct. 319, 71 L.Ed. 580, 50 A.L.R. 1.
Third. The statute provides that any violation of any order of the President issued under section 9(c) shall be punishable by fine of not to exceed $1,000, or imprisonment for not to exceed six months, or both. We think that these penalties would attach to each violation, and in this view the plaintiffs were entitled to invoke the equitable jurisdiction to restrain enforcement, if the statute and the executive orders were found to be invalid. Philadelphia Company v. Stimson, 223 U.S. 605, 620, 621, 32 S.Ct. 340, 56 L.Ed. 570; Terrace v. Thompson, 263 U.S. 197, 214-216, 44 S.Ct. 15, 68 L.Ed. 255; Hygrade Provision Company v. Sherman, 266 U.S. 497, 499, 500, 45 S.Ct. 141, 69 L.Ed. 402.
We examine the context to ascertain if it furnishes a declaration of policy or a standard of action, which can be deemed to relate to the subject of section 9(c) and thus to imply what is not there expressed. It is important to note that section 9 (15 USCA § 709) is headed 'Oil Regulation'-that is, section 9 is the part of the National Industrial Recovery Act which particularly deals with that subject-matter. But the other provisions of section 9 afford no ground for implying a limitation of the broad grant of authority in section 9(c). Thus section 9(a) authorizes the President to initiate before the Interstate Commerce Commission 'proceedings necessary to prescribe regulations to control the operations of oil pipe lines and to fix reasonable, compensatory rates for the transportation of petroleum and its products by pipe lines,' and the Interstate Commerce Commission is to grant preference 'to the hearings and determination of such cases.' Section 9(b) authorizes the President to institute proceedings 'to divorce from any holding company any pipe-line company controlled by such holding company which pipeline company by unfair practices or by exorbitant rates in the transportation of petroleum or its products tends to create a monopoly.' It will be observed that each of these provisions contains restrictive clauses as to their respective subjects. Neither relates to the subject of section 9(c).
This general outline of policy contains nothing as to the circumstances or conditions in which transportation of petroleum or petroleum products should be prohibited-nothing as to the policy of prohibiting or not prohibiting the transportation of production exceeding what the states allow. The general policy declared is 'to remove obstructions to the free flow of interstate and foreign commerce.' As to production, the section lays down no policy of limitation. It favors the fullest possible utilization of the present productive capacity of industries. It speaks, parenthetically, of a possible temporary restriction of production, but of what, or in what circumstances, it gives no suggestion. The section also speaks in general terms of the conservation of natural resources, but it prescribes no policy for the achievement of that end. It is manifest that this broad outline is simply an introduction of the act, leaving the legislative policy as to particular subjects to be declared and defined, if at all, by the subsequent sections.
It is no answer to insist that deleterious consequences follow the transportation of 'hot oil'-oil exceeding state allowances. The Congress did not prohibit that transportation. The Congress did not undertake to say that the transportation of 'hot oil' was injurious. The Congress did not say that transportation of that oil was 'unfair competition.' The Congress did not declare in what circumstances that transportation should be forbidden, or require the President to make any determination as to any facts or circumstances. Among the numerous and diverse objectives broadly stated, the President was not required to choose. The President was not required to ascertain and proclaim the conditions prevailing in the industry which made the prohibition necessary. The Congress left the matter to the President without standard or rule, to be dealt with as he pleased. The effort by ingenious and diligent construction to supply a criterion still permits such a breadth of authorized action as essentially to commit to the President the functions of a Legislature rather than those of an executive or administrative officer executing a declared legislative policy. We find nothing in section 1 which limits or controls the authority conferred by section 9(c).
The provisions of the Radio Act of 1927 (44 Stat. 1162, 1163), providing for assignments of frequencies or wave lengths to various stations, afford another instance. In granting licenses, the Radio Commission is required to act 'as public convenience, interest, or necessity requires.' Section 4. In construing this provision, the Court found that the statute itself declared the policy as to 'equality of radio broadcasting service, both of transmission and of reception,' and that it conferred authority to make allocations and assignments in order to secure, according to stated criteria, an equitable adjustment in the distribution of facilities.  The standard set up was not so indefinite 'as to confer an unlimited power.' Federal Radio Commission v. Nelson Brothers Co., 289 U.S. 266, 279, 285, 53 S.Ct. 627, 634, 77 L.Ed. 1166.
So also, from the beginning of the government, the Congress has conferred upon executive officers the power to make regulations-'not for the government of their departments, but for administering the laws which did govern.' United States v. Grimaud, 220 U.S. 506, 517, 31 S.Ct. 480, 483, 55 L.Ed. 563. Such regulations become, indeed, binding rules of conduct, but they are valid only as subordinate rules and when found to be within the framework of the policy which the Legislature has sufficiently defined. In the case of Grimaud, supra, a regulation made by the Secretary of Agriculture requiring permits for grazing sheep on a forest reserve of lands belonging to the United States was involved. The Court referred to the various acts for the establishment and management of forest reservations and the authorization of rules which would 'insure the objects of such reservations,' that is, 'to regulate their occupancy and use, and to preserve the forests thereon from destruction.' The Court observed that 'it was impracticable for Congress to provide general regulations for these various and varying details of management,' and that, in authorizing the Secretary of Agriculture to meet local conditions, Congress 'was merely conferring administrative functions upon an agent, and not delegating to him legislative power.' Id., pages 515, 516 of 220 U.S., 31 S.Ct. 480, 482. The Court quoted with approval the statement of the principle in Field v. Clark, supra, that the Congress cannot delegate legislative power, and upheld the regulation in question as an administrative rule for the appropriate execution of the policy laid down in the statute. See Wayman v. Southard, supra; Interstate Commerce Commission v. Goodrich Transit Co., 224 U.S. 194, 214, 215, 32 S.Ct. 436, 56 L.Ed. 729; Selective Draft Law Cases, 245 U.S. 366, 389, 38 S.Ct. 159, 62 L.Ed. 349, L.R.A. 1918C, 361, Ann.Cas. 1918B, 856; McKinley v. United States, 249 U.S. 397, 39 S.Ct. 324, 63 L.Ed. 668.
The applicable considerations were reviewed in Hampton, Jr., & Co. v. United States, 276 U.S. 394, 48 S.Ct. 348, 352, 72 L.Ed. 624, where the Court dealt with the so-called 'flexible tariff provision' of the Act of September 21, 1922 (42 Stat. 858, 941, 942, § 315 (19 USCA §§ 154-159)), and with the authority which it conferred upon the President. The Court applied the same principle that permitted the Congress to exercise its ratemaking power in interstate commerce, and found that a similar provision was justified for the fixing of customs duties; that is, as the Court said: 'If Congress shall lay down by legislative act an intelligible principle to which the person or body authorized to fix such rates is directed to conform, such legislative action is not a forbidden delegation of legislative power. If it is thought wise to vary the customs duties according to changing conditions of production at home and abroad, it may authorize the Chief Executive to carry out this purpose, with the advisory assistance of a Tariff Commission appointed under congressional authority.' The Court sustained the provision upon the authority of Field v. Clark, supra, repeating with approval what was there said, that 'What the President was required to do was merely in execution of the act of Congress.' Id., pages 409 411 of 276 U.S., 48 S.Ct. 348, 352.
Sixth. There is another objection to the validity of the prohibition laid down by the executive order under section 9(c). The executive order contains no finding, no statement of the grounds of the President's action in enacting the prohibition. Both section 9(c) and the executive order are in notable contrast with historic practice (as shown by many statutes and proclamations we have cited in the margin ) by which declarations of policy are made by the Congress and delegations are within the framework of that policy and have relation to facts and conditions to be found and stated by the President in the appropriate exercise of the delegated authority. If it could be said that from the four corners of the statute any possible inference could be drawn of particular circumstances or conditions which were to govern the exercise of the authority conferred, the President could not act validly without having regard to those circumstances and conditions. And findings by him as to the existence of the required basis of his action would be necessary to sustain that action, for otherwise the case would still be one of an unfettered discretion as the qualification of authority would be ineffectual. The point is pertinent in relation to the first section of the National Industrial Recovery Act. We have said that the first section is but a general introduction, that it declares no policy and defines no standard with respect to the transportation which is the subject of section 9(c). But if from the extremely broad description contained in that section and the widely different matters to which the section refers, it were possible to derive a statement of prerequisites to the President's action under section 9(c), it would still be necessary for the President to comply with those conditions and to show that compliance as the ground of his prohibition. To hold that he is free to select as he chooses from the many and various objects generally described in the first section, and then to act without making any finding with respect to any object that he does select, and the circumstances properly related to that object, would be in effect to make the conditions inoperative and to invest him with an uncontrolled legislative power.
We are not dealing with action which, appropriately belonging to the executive province, is not the subject of judicial review or with the presumptions attaching to executive action.  To repeat, we are concerned with the question of the delegation of legislative power. If the citizen is to be punished for the crime of violating a legislative order of an executive officer, or of a board or commission, due process of law requires that it shall appear that the order is within the authority of the officer, board, or commission, and, if that authority depends on determinations of fact, those determinations must be shown. As the Court said in Wichita Railroad & Light Co. v. Public Utilities Commission, 260 U.S. 48, 59, 43 S.Ct. 51, 55, 67 L.Ed. 124: 'In creating such an administrative agency, the Legislature, to prevent its being a pure delegation of legislative power, must enjoin upon it a certain course of procedure and certain rules of decision in the performance of its function. It is a wholesome and necessary principle that such an agency must pursue the procedure and rules enjoined, and show a substantial compliance therewith to give validity to its action. When, therefore, such an administrative agency is required as a condition precedent to an order, to make a finding of facts, the validity of the order must rest upon the needed finding. If it is lacking, the order is ineffective. It is pressed on us that the lack of an express finding may be supplied by implication and by reference to the averments of the petition invoking the action of the Commission. We cannot agree to this.' Referring to the ruling in the Wichita Case, the Court said in Mahler v. Eby, 264 U.S. 32, 44, 44 S.Ct. 283, 288, 68 L.Ed. 549: 'We held that the order in that case, made after a hearing and ordering a reduction, was void for lack of the express finding in the order. We put this conclusion, not only on the language of the statute, but also on general principles of constitutional government.' We cannot regard the President as immune from the application of these constitutional principles. When the President is invested with legislative authority as the delegate of Congress in carrying out a declared policy, he necessarily acts under the constitutional restriction applicable to such a delegation.
^4 The government states that, although the second paragraph of section 4 of article III was a part of the code for a short period prior to September 13, 1933, no legal basis exists for prosecution for production in Texas during that period.
^5 See United States v. The Schooner Peggy, 1 Cranch, 103, 109, 110, 2 L.Ed. 49; Dinsmore v. Southern Express Co., 183 U.S. 115;, 120, 22 S.Ct. 45, 46 L.Ed. 111; Crozier v. Fried Krupp Aktiengesellschaft, 224 U.S. 290, 302, 32 S.Ct. 488, 56 L.Ed. 771; Gulf, Colorado & Santa Fe R. Co. v. Dennis, 224 U.S. 503, 507, 32 S.Ct. 542, 56 L.Ed. 860; Watts, Watts & Co. v. Unione Austriaca, 248 U.S. 9, 21, 39 S.Ct. 1, 63 L.Ed. 100, 3 A.L.R. 323; Duplex Printing Press Co. v. Deering, 254 U.S. 443, 464, 41 S.Ct. 172, 65 L.Ed. 349, 16 A.L.R. 196; American Steel Foundries v. Tri-City Council, 257 U.S. 184, 201, 42 S.Ct. 72, 66 L.Ed. 189, 27 A.L.R. 360; Texas Company v. Brown, 258 U.S. 466, 474, 42 S.Ct. 375, 66 L.Ed. 721.
^7 Acts of June 4, 1794, 1 Stat. 372; March 3, 1795, 1 Stat. 444; June 13, 1798, 1 Stat. 565, 566; February 9, 1799, 1 Stat. 613, 615; February 27, 1800, 2 Stat. 7, 9, 10; March 3, 1805, 2 Stat. 339, 341, 342; February 28, 1806, 2 Stat. 351, 352; April 22, 1808, 2 Stat. 490.
^8 Marshall's Life of Washington, vol. 2, p. 319 et seq.
^10 See Act of June 28, 1809, 2 Stat. 550.
^11 Acts of March 3, 1815, 3 Stat. 224; March 3, 1817, 3 Stat. 361; January 7, 1824, 4 Stat. 2; May 24, 1828, 4 Stat. 308; May 31, 1830, 4 Stat. 425; March 6, 1866, 14 Stat. 3; March 3, 1883, 22 Stat. 490; June 26, 1884, 23 Stat. 57; October 1, 1890, 26 Stat. 616; R.S. §§ 2493, 2494, 4219, 4228. Proclamations of Presidents: 3 Stat.App. 1; 4 Stat.App. 3, pp. 814-818; 9 Stat.App. 1001, 1004; 11 Stat.App. 795; 13 Stat.App. 739; 14 Stat.App. 818, 819; 16 Stat.App. 1127; 17 Stat.App. 954, 956, 957; 21 Stat. 800; 23 Stat. 841, 842, 844.
For other analogous statutes, see Acts of December 17, 1813, 3 Stat. 88, 93; June 19, 1886, 24 Stat. 79, 82 (section 17 (46 USCA § 142)); March 3, 1887, 24 Stat. 475 (46 USCA § 143); August 30, 1890, 26 Stat. 414, 415 (sections 4, 5 (21 USCA § 18; 19 USCA § 181)); February 15, 1893, 27 Stat. 449, 452 (section 7 (42 USCA § 111)); March 2, 1895, 28 Stat. 727, 733; September 8, 1916, 39 Stat. 756, 799 (15 USCA §§ 75-77); June 15, 1917, 40 Stat. 217, 225; August 10, 1917, 40 Stat. 276; October 6, 1917, 40 Stat. 411, 422 (section 11 (50 USCA Appendix, § 11)); March 4, 1919, 40 Stat. 1348, 1350; June 17, 1930, 46 Stat. 590, 704 (section 338 (19 USCA § 1338)). Resolutions of March 14, 1912, 37 Stat. 630; January 31, 1922, 42 Stat. 361 (22 USCA §§ 236, 237). Proclamations: 24 Stat. 1024, 1025, 1028, 1030; 27 Stat. 995, 1011; 38 Stat. 1960; 39 Stat. 1756; 40 Stat. 1683, 1689, et seq.
^12 See, also, sections 4(b) and 5(a) of the Trading with the Enemy Act, 40 Stat. 411, 414, 415, 50 USCA Appendix §§ 4(b), 5(a).
^13 Act of March 28, 1928, § 5 (amending section 9 of the Radio Act of 1927) 45 Stat. 373.
^14 See Acts and Proclamations cited in note 11, supra.
^15 See Philadelphia & T.R.R. Co. v. Stimpson, 14 Pet. 448, 458, 10 L.Ed. 535; Martin v. Mott, 12 Wheat. 19, 30, 32, 6 L.Ed. 537; Dakota Central Telephone Co. v. South Dakota, 250 U.S. 163, 182, 184, 39 S.Ct. 507, 63 L.Ed. 910, 4 A.L.R. 1623; United States v. Chemical Foundation, 272 U.S. 1, 14, 15, 47 S.Ct. 1, 71 L.Ed. 131; Sterling v. Constantin, 287 U.S. 378, 399, 53 S.Ct. 190, 77 L.Ed. 375.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 709
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 315
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 142
 § 143
 § 18
 § 181
 § 111
 § 11
 § 1338
 § 5
 v. 
 v. 
 v. 
 v. 
 v.