Facts
- A.L.A. Schechter Poultry Corp. and its principals operated a wholesale live-poultry business in Brooklyn, New York, buying chickens shipped from out of state and selling slaughtered poultry to local retailers within New York City.
- The federal government prosecuted them under the National Industrial Recovery Act of 1933 (NIRA) and the President-approved “Live Poultry Code,” which regulated wages, hours, and trade practices.
- The indictment (originally 60 counts, later narrowed) charged code violations including selling “unfit” poultry, violating wage-and-hour rules, and breaching trade-practice rules such as the “straight killing” requirement limiting customer selection of individual birds.
- The defendants argued (1) NIRA § 3 unconstitutionally delegated legislative power to the President and (2) the Code impermissibly regulated intrastate transactions beyond Congress’s commerce power; they also raised due process objections.
- The district court convicted the defendants on conspiracy and multiple substantive counts; the court of appeals largely affirmed, reversing two wage-and-hour counts as beyond federal power.
Issues
- Whether NIRA § 3 unconstitutionally delegated legislative power by authorizing the President to approve or prescribe “codes of fair competition” without adequate statutory standards.
- Whether applying the Live Poultry Code to the defendants’ in-state slaughter and sales transactions exceeded Congress’s power to regulate interstate commerce.
Decision
- The Supreme Court unanimously reversed the convictions.
- The Court held NIRA § 3 invalid because it delegated essential legislative power to the President without sufficient standards to guide discretion.
- The Court also held that, as applied, the Code regulated local transactions after the poultry had come to rest within the state and therefore exceeded Congress’s Commerce Clause authority.
- Justice Cardozo (joined by Justice Stone) concurred in the judgment and separately emphasized the excessive breadth of the delegation.
Legal Principles
- Congress may permit executive or administrative bodies to make subordinate rules and to determine facts for applying a declared policy, but Congress must set the governing policy and standards; it cannot transfer the essential legislative function.
- Statutory direction that the President act to “effectuate the policy” of a broadly stated program, coupled with authority to approve, condition, or create binding industry codes, provides inadequate constraints and violates the nondelegation doctrine.
- Economic emergency does not expand federal constitutional power.
- Congress may regulate interstate commerce directly, but regulation of local production, slaughtering, and retail sales that only indirectly affects interstate commerce falls outside the commerce power under the direct/indirect effects framework applied by the Court.
- Goods shipped in interstate commerce may cease to be in interstate commerce when they reach a permanent resting place and are commingled with in-state property; subsequent local transactions are not necessarily part of a continuing interstate “flow.”
Conclusion
The Court invalidated NIRA § 3 for conferring standardless code-making authority on the President and held that applying the Live Poultry Code to in-state slaughter and sales exceeded Congress’s commerce power because the regulated conduct was local and occurred after interstate shipments had ended.