Carter v. Carter Coal Company
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| 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 the United 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 the United States Supreme Court in which the court held that Congress could not delegate legislative authority to private entities in violation of the nondelegation doctrine. The ruling also clarified that the intrastate production of goods was separate from interstate commerce and could not be regulated under the Commerce 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 the United 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 until United 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
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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 and Helvering v. Carter, were jointly heard by the Supreme Court for the District of Columbia (later renamed the United 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 the United States Court of Appeals for the District of Columbia Circuit. At the same time, he petitioned the United 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 and R.C. Tway Coal Co. v. Glenn, had been appealed to the United States Court of Appeals for the 6th Circuit during the same period. The United States Supreme Court granted certiorari to hear all of the cases together prior to their respective appellate reviews.[1][3]
Oral argument
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Oral arguments were held from March 10 to March 11, 1936. The case was decided on May 18, 1936.[1]
Decision
The United 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 Justice George Sutherland and joined by Justices Pierce Butler, James Clark McReynolds, Owen Roberts, and Willis Van Devanter. Chief Justice Charles Evans Hughes filed an opinion concurring in part and dissenting in part. Justice Benjamin Cardozo, joined by Justices Louis Brandeis and Harlan F. Stone, filed a dissenting opinion.[2][3]
Opinions
Opinion of the court
In an opinion by Justice George 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]
| “ | It is very clear that the 'excise tax' is not imposed for revenue, but exacted as a penalty to compel compliance with the regulatory provisions of the act. The whole purpose of the exaction is to coerce what is called an agreement—which, of course, it is not, for it lacks the essential element of consent. One who does a thing in order to avoid a monetary penalty does not agree; he yields to compulsion precisely the same as though he did so to avoid a term in jail.[3][5] | ” |
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]
| “ | We have seen that the word 'commerce' is the equivalent of the phrase 'intercourse for the purposes of trade.' Plainly, the incidents leading up to and culminating in the mining of coal do not constitute such intercourse. The employment of men, the fixing of their wages, hours of labor and working conditions, the bargaining in respect of these things -- whether carried on separately or collectively each and all constitute intercourse for the purposes of production, not of trade. The latter is a thing apart from the relation of employer and employee, which, in all producing occupations, is purely local in character. Extraction of coal from the mine is the aim and the completed result of local activities. Commerce in the coal mined is not brought into being by force of these activities, but by negotiations, agreements, and circumstances entirely apart from production. Mining brings the subject matter of commerce into existence. Commerce disposes of it.[3][5] | ” |
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
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Oyez, "Carter v. Carter Coal Company," accessed October 30, 2018
- ↑ 2.0 2.1 Georgia State University, "CARTER V. CARTER COAL COMPANY (1936)," accessed October 31, 2018
- ↑ 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 Justia, "Carter v. Carter Coal Co., 298 U.S. 238 (1936)," accessed October 30, 2018
- ↑ 4.0 4.1 4.2 Case Briefs, "Carter v. Carter Coal Co," accessed October 30, 2018
- ↑ 5.0 5.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
