Facts
- Petroleum producers and shippers sought to transport oil produced in excess of state production limits (“hot oil”) in interstate and foreign commerce.
- Section 9(c) of the National Industrial Recovery Act of 1933 authorized the President to prohibit interstate and foreign transportation of petroleum produced beyond amounts allowed by state law or state regulatory orders.
- Violations of presidential orders issued under § 9(c) were punishable by fine, imprisonment, or both.
- The President issued an executive order prohibiting interstate shipment of “hot oil,” delegated enforcement to the Secretary of the Interior, and regulations required compliance measures including monthly sworn statements.
- The producers filed suit to enjoin enforcement, arguing § 9(c) unconstitutionally delegated legislative power to the President.
- After the district court granted relief, an appellate court dissolved the injunction and sustained the regulation.
- During litigation, the government withdrew and later reenacted amended regulations that continued the same basic requirements; the producers maintained the controversy remained live due to ongoing enforcement risk and criminal penalties.
Issues
- Whether the case was moot, or otherwise improper for equitable relief, because challenged regulations were withdrawn and amended during litigation.
- Whether NIRA § 9(c) unconstitutionally delegated legislative power to the President by authorizing prohibitions on interstate petroleum transportation without an adequate congressional policy or standard.
Decision
- The Supreme Court held the controversy was not moot because the amended regulations continued the complained-of requirements and presented the same constitutional question.
- The Court held equitable jurisdiction was proper because regulated businesses facing repeated criminal penalties could seek an injunction against enforcement of an allegedly unconstitutional order.
- The Court held § 9(c) was an unconstitutional delegation of legislative power because Congress supplied no policy or standard guiding the President’s decision to impose, and the circumstances for imposing, the transportation prohibition.
- The executive orders and regulations issued under § 9(c) were declared void.
Legal Principles
- A challenge to executive regulations is not mooted by withdrawal and reinstatement, or amendment, when the government continues the same operative requirements and intends enforcement.
- Equity may enjoin enforcement of an allegedly unconstitutional regulatory regime where ongoing business activity would expose regulated parties to repeated criminal penalties.
- Congress may confer authority to execute a declared legislative policy and to determine facts triggering statutory operation, but it may not transfer essential legislative choices to the President without a guiding policy or standard.
- Broad statutory purpose clauses do not supply a sufficient standard when the specific delegation leaves the President free to decide whether and when a prohibition will exist.
Conclusion
The Court invalidated NIRA § 9(c) because it gave the President unchecked discretion to criminalize interstate shipment of “hot oil” without a congressionally stated policy or limiting standard, and it allowed regulated businesses to seek injunctive relief despite intervening regulatory amendments.