ArtI.S1.5.3 Origin of Intelligible Principle Standard

Article I, Section 1:

All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.

As the primary means to enforce the nondelegation doctrine, the Supreme Court has required that Congress lays out an “intelligible principle” to govern and guide its delegee.1 The “intelligible principle” standard requires that Congress delineate a legal framework to constrain the authority of the delegee, such as an administrative agency.2 The principle was explicitly set forth in the 1928 case, J. W. Hampton, Jr. & Co. v. United States, in which the Supreme Court upheld Congress’s delegation of authority to the President to set tariff rates that would equalize production costs in the United States and competing countries.3 The Court’s opinion, written by Chief Justice William Howard Taft, emphasized that Congress was restrained only according to “common sense and the inherent necessities” of governmental cooperation in seeking the assistance of another branch.4 The Court explained that Congress could delegate discretion to other entities to “secure the exact effect” of legislation if it provides an “intelligible principle” to which the President or other entity must conform.5 The Court further noted: “Such legislative action is not a forbidden delegation of legislative power” if “nothing involving the expediency or just operation of such legislation was left to [delegee’s] determination.” 6 The Court concluded that, with respect to the tariff law at issue in the case, the President acted only as “the mere agent of the law-making department” because the President was guided by an “intelligible principle” laid out by Congress.7 Hence, the “intelligible principle” standard, as imposed by the Supreme Court, seeks to ensure that Congress has laid down the “boundaries” and limits of Congress’s delegations.8

In 1929, the year after the J.W. Hampton decision, the stock market crashed, precipitating the Great Depression of the 1930s.9 After his election in 1932,10 President Franklin Delano Roosevelt, in conjunction with Congress, began to implement his “New Deal” 11 of economic and labor reforms that greatly expanded the power of the Federal Government during his presidency.12 The expansion of governmental power to combat the Great Depression and spur economic recovery during the New Deal era13 led to several judicial challenges that, among other issues, questioned the scope of Congress’s authority to delegate broad power to the Executive Branch under the nondelegation doctrine.

In 1935, in the midst of the New Deal era, the Supreme Court struck down legislation that granted the President extensive and “unfettered” powers to regulate economic activity. As characterized by the Court, the delegations to the President challenged in Panama Refining Co. v. Ryan14 and A.L.A. Schechter Poultry Corp. v. United States15 were not only broad but unprecedented delegation of legislative power to the President. Both cases involved provisions of the National Industrial Recovery Act. At issue in Panama Refining was a delegation to the President of authority to prohibit interstate transportation of petroleum produced in excess of quotas set by state law.16 The Supreme Court held that the Act provided no guidance to the President in determining whether or when to exercise this authority, requiring no finding by the President as a condition before exercising the authority.17 As the Court noted, Congress “declared no policy, . . . established no standard, [and] laid down no rule” with respect to the so-called “hot oil” law at issue, but rather “left the matter to the President without standard or rule, to be dealt with as he pleased,” resulting in the law’s invalidation.18

Similarly, the Supreme Court in Schechter Poultry reviewed a delegation to the President of authority to promulgate codes of fair competition that industry groups or the President, on his own initiative, could propose and adopt.19 The Court determined that the codes were required to implement the National Industrial Recovery Act, but the President’s authority to approve, condition, or adopt codes on his own initiative was similarly devoid of meaningful standards and “virtually unfettered.” 20 The Court noted that this broad delegation was “without precedent.” 21 The Act supplied “no standards” for any trade or industry association for proposing codes and, unlike other broad delegations that the Court had upheld, did not set policies that an administrative agency could implement by following “appropriate administrative procedure.” 22 The Court rejected the government’s argument that such economic measures must take into consideration the “grave national crisis” caused by the Great Depression, stating that “[e]xtraordinary conditions do not create or enlarge constitutional power.” 23

The Supreme Court’s decisions in Panama Refining and Schechter Poultry represent the “high-water mark” for the nondelegation doctrine.24 A decline of judicial reliance on the nondelegation doctrine soon followed in the years after the Court issued its decisions in Panama Refining and Schechter.25 This shift in the Court’s approach to the nondelegation doctrine coincided with a broader “constitutional revolution” at the Supreme Court that largely affirmed the Federal Government’s broad powers to guide the nation’s social and economic development.26 With respect to the nondelegation doctrine, the Court’s use of the “intelligible principle” standard afforded the Executive Branch “substantial discretion” over regulatory policy.27 As noted by legal scholars, “the federal judiciary [took] a hands-off approach to assessing the congressional assignment of policy responsibility to other government officials.” 28

Under the “intelligible principle” standard, the Court has not struck down legislation as an impermissible delegation of authority to other branches of government since its Panama Refining and Schechter decisions in 1935. Since 1935, the Court has not struck down a delegation to an administrative agency.29 Rather, the Court has approved, “without deviation, Congress’s ability to delegate power under broad standards.” 30 The Court has upheld, for example, delegations to administrative agencies to determine “excessive profits” during wartime,31 to determine “unfair and inequitable distribution of voting power” among securities holders,32 to fix “fair and equitable” commodities prices,33 to determine “just and reasonable” rates,34 and to regulate broadcast licensing as the “public interest, convenience, or necessity require.” 35 During all this time the Court “has not seen fit . . . to enlarge in the slightest [the] relatively narrow holdings” of Panama Refining and Schechter.36 Again and again, the Court has distinguished the two cases, sometimes by finding adequate standards in the challenged statute,37 sometimes by contrasting the vast scope of the power delegated by the National Industrial Recovery Act (NIRA),38 and sometimes by pointing to required administrative findings and procedures that were absent in the NIRA.39 The Court has also relied on the constitutional doubt principle of statutory construction to narrow interpretations of statutes that, interpreted broadly, might have presented delegation issues.40

276 U.S. 394, 409 (1928) ( “If Congress shall lay down by legislative act an intelligible principle to which the person or body authorized [ ] is directed to conform, such legislative action is not a forbidden delegation of legislative power.” ). See also Gundy v. United States, No. 17-6086, slip op. at 5 (U.S. June 20, 2019) (plurality opinion) ( “The constitutional question is whether Congress has supplied an intelligible principle to guide the delegee’s use of discretion.” ); Loving v. United States, 517 U.S. 748, 771 (1996) ( “The intelligible-principle rule seeks to enforce the understanding that Congress may not delegate the power to make laws and so may delegate no more than the authority to make policies and rules that implement its statutes.” ). back
See, e.g., Panama Ref. Co. v. Ryan, 293 U.S. 388, 421 (1935) ( “The Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the legislature is to apply.” ). back
276 U.S. 394 (1928). back
Id. at 406. back
Id. at 409. back
Id. at 410. back
Id. at 411. back
Am. Power & Light Co. v. Sec. & Exch. Comm’n, 329 U.S. 90, 105 (1946). back
See generally John K. Galbreth, The Great Crash 1929 (2009) (describing the events that led to the crash of the stock market in 1929 and subsequent impacts on the economy during the Great Depression). back
See generally William E. Leuchtenburg, The FDR Years: On Roosevelt and His Legacy 209–35 (1995) (discussing the political forces in play during the Great Depression and the election of Franklin Roosevelt). back
Franklin D. Roosevelt, Address Accepting the Presidential Nomination at the Democratic National Convention in Chicago (July 2, 1932) ( “I pledge you, I pledge myself, to a new deal for the American people.” ). back
See William E. Leuchtenburg, Franklin D. Roosevelt and the New Deal 1932–1940, at 41–62 (Henry S. Commanger & Richard B. Morris eds., 1963) (describing the economic and labor reforms of Franklin Roosevelt’s presidency). back
Historians note that the New Deal era under Franklin Delano Roosevelt began in 1933 and ended in 1938. See generally William E. Leuchtenburg, Franklin D. Roosevelt and the New Deal 1932–1940, at xv (Henry S. Commanger & Richard B. Morris eds., 1963) (describing the New Deal era as the “six years from 1933 to 1938 marked a greater upheaval in American institutions than in any similar period in our history” ). See also Leuchtenburg, supra note 12, at 280 ( “Conventionally the end of the New Deal is dated with the enactment of the Wages and Hours Act of 1938.” ) (quoting historian Carl Degler). back
293 U.S. 388 (1935). back
295 U.S. 495 (1935). back
293 U.S. at 417–19. back
Id. at 415–18. back
Id. at 418, 430. Similarly, the Supreme Court explained that executive order exercising the authority contained no finding or other explanation by which the legality of the action could be tested. Id. at 431–33. back
A.L.A. Schechter Poultry Corp., 295 U.S. at 521–27. back
Id. at 542. back
Id. at 541. The Court was also concerned that the industrial codes were backed by criminal sanction and that the power to develop codes of fair competition was delegated to private individuals such as industry trade associations. See generally Mistretta v. United States, 488 U.S. 361, 373 n.7 (1989) (interpreting Schechter and Panama Refining cases). back
A.L.A. Schechter Poultry Corp., 295 U.S. at 541. back
Id. at 528. back
Lisa Schultz Bressman, Schechter Poultry at the Millennium: A Delegation Doctrine for the Administrative State, 109 Yale L.J. 1399, 1405 (2000). back
Id. back
See, e.g., W. Coast Hotel Co. v. Parrish, 300 U.S. 379 (1937) (rejecting the view that the Fourteenth Amendment’s Due Process Clause protected liberty of contract); NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937) (adopting a broader view of the Commerce Clause). For discussion of New Deal Court, see ArtVI.C2.3.3 New Deal and Presumption Against Preemption. See generally Edward S. Corwin, Constitutional Revolution, LTD. 64–79, 112–14 (1941) (analyzing Supreme Court decisions during the New Deal era). See also Keith E. Whittington & Jason Iuliano, The Myth of the Nondelegation Doctrine, 165 U. Pa. L. Rev. 379, 420–21 (2017) (discussing the expansion of the federal government’s role in regulating industry and interstate commerce). back
Keith E. Whittington & Jason Iuliano, The Myth of the Nondelegation Doctrine, 165 U. Pa. L. Rev. 379, 382 (2017) (citing Cass R. Sunstein, Constitutionalism After the New Deal, 101 Harv. L. Rev. 421, 447–48 (1987)). back
Id. back
A year later, the Court invalidated the Bituminous Coal Conservation Act on delegation grounds, but that delegation was to private entities. Carter v. Carter Coal Co., 298 U.S. 238 (1936). back
Mistretta v. United States, 488 U.S. 361, 373 (1989). back
Lichter v. United States, 334 U.S. 742 (1948). back
American Power & Light Co. v. SEC, 329 U.S. 90 (1946). back
Yakus v. United States, 321 U.S. 414 (1944). back
FPC v. Hope Natural Gas Co., 320 U.S. 591 (1944). back
National Broadcasting Co. v. United States, 319 U.S. 190 (1943). back
Hampton v. Mow Sun Wong, 426 U.S. 88, 122 (1976) (Rehnquist, J., dissenting). back
Mistretta v. United States, 488 U.S. 361, 373–79 (1989). back
See, e.g., Fahey v. Mallonee, 332 U.S. 245, 250 (1947) (contrasting the delegation to deal with “unprecedented economic problems of varied industries” with the delegation of authority to deal with problems of the banking industry, where there was “accumulated experience” derived from long regulation and close supervision); Whitman v. American Trucking Ass’ns, 531 U.S. 457, 474 (2001) (the NIRA “conferred authority to regulate the entire economy on the basis of no more precise a standard than stimulating the economy by assuring ‘fair competition’” ). back
See, e.g., Yakus v. United States, 321 U.S. 414, 424–25 (1944) (Schechter involved delegation “not to a public official . . . but to private individuals” ; it suffices if Congress has sufficiently marked the field within which an administrator may act “so it may be known whether he has kept within it in compliance with the legislative will.” ) back
See, e.g., Industrial Union Dep’t v. American Petroleum Inst., 448 U.S. 607, 645–46 (1980) (plurality opinion) (invalidating an occupational safety and health regulation, and observing that the statute should not be interpreted to authorize enforcement of a standard that is not based on an “understandable” quantification of risk); National Cable Television Ass’n v. United States, 415 U.S. 336, 342 (1974) ( “hurdles revealed in [Schechter and J. W. Hampton, Jr. & Co. v. United States] lead us to read the Act narrowly to avoid constitutional problems” ). back