Carter v. Carter Coal Company
Reference: 298 US 238 (1936)
Term: 1935-1936
Important Dates
Argued: March 10 - March 11, 1936 Decided: May 18, 1936
Outcome
United States Court of Appeals for the District of Columbia Circuit and theUnited States Court of Appeals for the 6th Circuit; affirmed in part and reversed in part
Majority
George Sutherland •Pierce Butler •James Clark McReynolds •Owen Roberts •Willis Van Devanter
Dissenting
Charles Evans Hughes •Benjamin Cardozo •Louis Brandeis •Harlan F. Stone

Carter v. Carter Coal Company is a case decided on May 18, 1936, by theUnited States Supreme Court in which the court held that Congress could not delegate legislative authority to private entities in violation of thenondelegation doctrine. The ruling also clarified that the intrastate production of goods was separate from interstate commerce and could not be regulated under theCommerce Clause.^[1]

The case concerned the Bituminous Coal Conservation Act of 1935, which coal producers claimed overstepped congressional regulatory authority under the Commerce Clause by regulating the production of goods before the goods entered interstate commerce.^[1]

Why it matters:Carter v. Carter Coal Company is one of the few cases in which theUnited States Supreme Court has declared an act of Congress unconstitutional under the Commerce Clause. The court did not revisit the question of federal regulation under the Commerce Clause untilUnited States v. Lopez in 1995. Moreover, though the court struck down the act's price and wage control provisions because they were inseparable from the act's unconstitutional labor provisions, Justice Sutherland also stated that the price and wage control provisions violated the due process clause of the Fifth Amendment by delegating legislative authority to private industry. "This is legislative delegation in its most obnoxious form," wrote Sutherland in the opinion, "for it is not even delegation to an official or an official body, presumptively disinterested, but to private persons whose interests may be and often are adverse to the interests of others in the same business."^[2][3]

Background

Five Pillars of the Administrative State
Legislative control
•Court cases •Major arguments •Reform proposals •Scholarly work •Timeline
More pillars
•Agency control •Executive control •Judicial control •Public control
Click here for more coverage of theadministrative state on Ballotpedia.
Click here to accessBallotpedia's administrative state legislation tracker.

The Bituminous Coal Conservation Act of 1935, also known as the Guffey Coal Act, aimed to regulate coal industry practices in order to stabilize the industry and promote interstate commerce. Though the provisions of the act were not mandatory, the system of tax incentives put forth in the legislation was designed to encourage voluntary compliance across the industry. The act featured the following central provisions:^[1][4][3]

• Established price controls, minimum wages, and maximum worker hours to be determined by a majority of producers and miners.
• Called for collective bargaining among industry employees.
• Defined unfair trade practices.
• Created a 15 percent excise tax on coal production that could be recouped up to 90 percent by businesses in compliance with the act.
• Established the National Bituminous Coal Commission to administer the act and adjudicate disputes.^[1][4][3]

Carter, a stockholder in Carter Coal Company, took legal action against the company and certain stockholders in order to prevent the organization from paying the tax for noncompliance with the act. Carter argued that coal production was a local activity within state borders and, therefore, could not be regulated under the Commerce Clause. The resulting cases,Carter v. Carter Coal Company andHelvering v. Carter, were jointly heard by the Supreme Court for the District of Columbia (later renamed theUnited States District Court for the District of Columbia). The court found that compliance with the act would have required the company to cancel existing contracts in order to pay the excise tax; that the general public at the time relied on coal as its primary source of energy and, therefore, depended on its production and distribution with minimal interference; and that the labor provisions of the act were unconstitutional. However, the court upheld the price and wage controls and taxing authority on the grounds that intrastate coal regulation would increase the efficiency of interstate coal distribution.^[1][4]

Carter appealed the court's decision to theUnited States Court of Appeals for the District of Columbia Circuit. At the same time, he petitioned theUnited States Supreme Court to review the lower court's ruling prior to the appellate review. Two similar cases concerning the Bituminous Coal Conservation Act of 1935,R.C. Tway Coal Co. v. Clark andR.C. Tway Coal Co. v. Glenn, had been appealed to theUnited States Court of Appeals for the 6th Circuit during the same period. TheUnited States Supreme Court granted certiorari to hear all of the cases together prior to their respective appellate reviews.^[1][3]

Oral argument

Federalism
•Key terms •Court cases •Major arguments •State responses to federal mandates •State oversight of federal grants •Federalism by the numbers •Index

Oral arguments were held from March 10 to March 11, 1936. The case was decided on May 18, 1936.^[1]

Decision

TheUnited States Supreme Court held 5-4 to affirm in part and reverse in part the decisions from the lower courts. The majority opinion was written by JusticeGeorge Sutherland and joined by JusticesPierce Butler,James Clark McReynolds,Owen Roberts, andWillis Van Devanter. Chief JusticeCharles Evans Hughes filed an opinion concurring in part and dissenting in part. JusticeBenjamin Cardozo, joined by JusticesLouis Brandeis andHarlan F. Stone, filed a dissenting opinion.^[2][3]

Opinions

Opinion of the court

In an opinion by JusticeGeorge Sutherland, the court held that the excise tax was designed to coerce companies into compliance with the law and was not a lawful application of congressional taxing authority. Sutherland observed that the provisions of the law were compulsory rather than voluntary because they required coal producers to comply or face a penalty:^[3]

The court also held that the Congress was not authorized to regulate the intrastate production of goods before the goods entered interstate commerce under the Commerce Clause. Sutherland offered the following distinction between production and commerce:^[3]

The court further struck down the collective bargaining provisions of the law, arguing that since labor directly contributes to production, it was a local activity that could not be regulated under the Commerce Clause. Moreover, the court found that the price fixing and wage control provisions of the law were inseparable from the labor provisions and could not be independently upheld. Sutherland also observed that the price and wage controls constituted broad delegations of legislative authority to private industry without appropriate standards or limitations in violation of the due process clause of the Fifth Amendment.^[3]

Dissenting opinion

Justice Cardozo's dissent, joined by Justice Brandeis and Justice Stone, argued that intrastate commerce could be regulated under the Commerce Clause if it had an immediate impact on interstate commerce. Cardozo also argued that the price fixing provisions could have been considered separately from the labor provisions and should have been upheld since they concerned interstate commerce—a position that Justice Hughes also supported in a separate opinion. Cardozo further contended that the price and wage control provisions did not constitute an unlawful delegation of legislative power to a federal agency since the act established adequate standards to guide agency actions.^[3]

See also

• Due process
• Nondelegation doctrine
• United States v. Lopez
• Supreme Court of the United States
• Ballotpedia's administrative state coverage

External links

• Full text of case syllabus and opinions (Justia)
• Supreme Court of the United States
• Search Google News for this topic

Footnotes

v • e The Administrative State Main The Administrative State Project main page •Administrative State Project Index •Glossary of administrative state terms •Quotes about the administrative state •Administrative state •Rulemaking •Deference •Adjudication •Nondelegation doctrine •Ballotpedia's administrative state legislation tracker Pillars Agency control •Executive control •Judicial control •Legislative control •Public control Reporting Changes to the Federal Register •Completed OIRA review of federal administrative agency rules •Federal agency rules repealed under the Congressional Review Act •Historical additions to the Federal Register, 1936-2016 Laws Administrative Procedure Act •Antiquities Act •Civil Service Reform Act •Clayton Antitrust Act •Communications Act of 1934 •Congressional Review Act •Electronic Freedom of Information Act •Federal Food, Drug, and Cosmetic Act of 1938 •Federal Housekeeping Statute •Federal Reserve Act •Federal Trade Commission Act of 1914 •Freedom of Information Act •Government in the Sunshine Act •Independent Offices Appropriations Act of 1952 •Information Quality Act •Interstate Commerce Act •National Labor Relations Act •Paperwork Reduction Act •Pendleton Act •Privacy Act of 1974 •Regulatory Flexibility Act •REINS Act •REINS Act (Wisconsin) •Securities Act of 1933 •Securities Exchange Act of 1934 •Sherman Antitrust Act •Small Business Regulatory Enforcement Fairness Act •Truth in Regulating Act •Unfunded Mandates Reform Act Cases Abbott Laboratories v. Gardner •A.L.A. Schechter Poultry Corp. v. United States •Association of Data Processing Service Organizations v. Camp •Auer v. Robbins •Chevron v. Natural Resources Defense Council •Citizens to Preserve Overton Park v. Volpe •Federal Trade Commission (FTC) v. Standard Oil Company of California •Field v. Clark •Food and Drug Administration v. Brown and Williamson Tobacco Corporation •Humphrey's Executor v. United States •Immigration and Naturalization Service (INS) v. Chadha •J.W. Hampton Jr. & Company v. United States •Lucia v. SEC •Marshall v. Barlow's •Massachusetts v. Environmental Protection Agency •Mistretta v. United States •National Federation of Independent Business (NFIB) v. Sebelius •National Labor Relations Board v. Noel Canning Company •National Labor Relations Board v. Sears, Roebuck & Co. •Panama Refining Co. v. Ryan •Securities and Exchange Commission v. Chenery Corporation •Skidmore v. Swift & Co. •United States v. Lopez •United States v. Western Pacific Railroad Co. •Universal Camera Corporation v. National Labor Relations Board •Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council •Wayman v. Southard •Weyerhaeuser Company v. United States Fish and Wildlife Service •Whitman v. American Trucking Associations •Wickard v. Filburn •Wiener v. United States Terms Adjudication (administrative state) •Administrative judge •Administrative law •Administrative law judge •Administrative state •Arbitrary-or-capricious test •Auer deference •Barrier to entry •Bootleggers and Baptists •Chevron deference (doctrine) •Civil servant •Civil service •Code of Federal Regulations •Codify (administrative state) •Comment period •Compliance costs •Congressional Record •Coordination (administrative state) •Deference (administrative state) •Direct and indirect costs (administrative state) •Enabling statute •Ex parte communication (administrative state) •Executive agency •Federal law •Federal Register •Federalism •Final rule •Formal rulemaking •Formalism (law) •Functionalism (law) •Guidance (administrative state) •Hybrid rulemaking •Incorporation by reference •Independent federal agency •Informal rulemaking •Joint resolution of disapproval (administrative state) •Major rule •Negotiated rulemaking •Nondelegation doctrine •OIRA prompt letter •Organic statute •Pragmatism (law) •Precautionary principle •Promulgate •Proposed rule •Publication rulemaking •Regulatory budget •Regulatory capture •Regulatory dark matter •Regulatory impact analysis •Regulatory policy officer •Regulatory reform officer •Regulatory review •Rent seeking •Retrospective regulatory review •Risk assessment (administrative state) •Rulemaking •Separation of powers •Significant regulatory action •Skidmore deference •Statutory authority •Substantive law and procedural law •Sue and settle •Sunset provision •Unified Agenda of Federal Regulatory and Deregulatory Actions •United States Code •United States Statutes at Large Bibliography "Administrative Law - The 20th Century Bequeaths an 'Illegitimate Exotic' in Full and Terrifying Flower" by Stephen P. Dresch (2000) "Confronting the Administrative Threat" by Philip Hamburger and Tony Mills (2017) "Constitutionalism after the New Deal" by Cass R. Sunstein (1987) Federalist No. 23 by Alexander Hamilton (1787) "From Administrative State to Constitutional Government" by Joseph Postell (2012) "Interring the Nondelegation Doctrine" by Eric A. Posner and Adrian Vermeule (2002) "Rulemaking as Legislating" by Kathryn Watts (2015) "The Checks & Balances of the Regulatory State" by Paul R. Verkuil (2016) "The Myth of the Nondelegation Doctrine" by Keith E. Whittington and Jason Iuliano (2017) "The Progressive Origins of the Administrative State: Wilson, Goodnow, and Landis" by Ronald J. Pestritto (2007) "The Rise and Rise of the Administrative State" by Gary Lawson (1994) "The Study of Administration" by Woodrow Wilson (1887) "The Threat to Liberty" by Steven F. Hayward (2017) "Why the Modern Administrative State Is Inconsistent with the Rule of Law" by Richard A. Epstein (2008) Agencies Administrative Conference of the United States •United States Civil Service Commission •U.S. Government Accountability Office •U.S. Office of Information and Regulatory Affairs •U.S. Office of Management and Budget