Docket Nos. 854, 864
A. L. A. Schechter Poultry Corp. v. United States
DecidedMay 27, 1935
9-0unanimous decision
Source: CourtListener.
Supreme Court strikes down New Deal industry codes as an unconstitutional delegation of lawmaking power
What it does
The ruling voids the National Industrial Recovery Act's code-making system, holding that Congress gave the President open-ended authority to write binding criminal laws for entire industries without setting real legal standards. It also holds that Congress cannot use its power over interstate commerce to set wages, hours, and local sales rules for a business whose slaughtering and selling activities occur entirely within one state after goods have stopped moving across state lines.
Who benefits
The defendants, a Brooklyn poultry slaughterhouse business and its operators, have their convictions for violating the Live Poultry Code reversed. Businesses engaged in local, intrastate commerce more broadly gain protection from being regulated under a similar federal code scheme.
Who is affected
The federal government loses the code-based regulatory tool used to set industry-wide wages, hours, and trade rules across many sectors of the economy. Federal agencies and the President lose authority to prescribe binding industry-wide rules without specific congressional standards.
Practical impact
Federal agencies could no longer promulgate industry-wide "codes of fair competition" carrying criminal penalties under the National Industrial Recovery Act, effectively ending that New Deal program. Businesses whose operations, like slaughtering and local retail sales, occur wholly within one state after interstate shipment has ended remain subject to state rather than federal regulation of wages, hours, and trade practices.
Majority reasoning
The majority, led by Chief Justice Hughes, reasoned that the Constitution vests all legislative power in Congress and that Congress may not transfer that essential lawmaking function to the President or to trade groups. Section 3 of the Recovery Act set no real standard for what "codes of fair competition" could contain beyond vague policy goals like "rehabilitation" and "general welfare," leaving the President free to approve or write whatever rules he thought wise for an entire industry, which the Court called a code-making authority that was "virtually unfettered." Separately, the Court held that the defendants' slaughtering and local sales occurred after the interstate flow of poultry had ended, so any effect of their wages, hours, or sales practices on interstate commerce was only indirect; allowing federal regulation based on such indirect effects would erase the constitutional distinction between national and local commerce and effectively create a completely centralized government. The Court rejected the government's argument that the economic emergency justified this approach, stating that extraordinary conditions do not enlarge constitutional power.
Constitutional question
Did Congress unconstitutionally hand its lawmaking power to the President by letting him approve industry "codes of fair competition," and did Congress exceed its power to regulate interstate commerce by applying those codes to a company's local slaughterhouse business?