A Brooklyn Poultry Firm Beat the New Deal Nine to Nothing in 1935

Nine justices. Nine votes. A Democratic administration with a landslide mandate, a Congress that did what it was told, and a program with a blue eagle for a logo. And on the other side, four brothers from Brooklyn who sold chickens.

The brothers won. Not by a squeaker, and not on a technicality, but unanimously, and the liberal justices joined the conservatives to do it. When people ask whether the Constitution has ever stopped a popular government from doing a popular thing, here is the answer, and it has a feather on it. This is the story of A.L.A. Schechter Poultry Corp. v. United States, decided on May 27, 1935, and of the doctrine it left behind, which the Court has been tiptoeing around ever since.

The world the case came from

By 1933 the country was in the fourth year of the Depression. Franklin Roosevelt took office in March, and in June Congress passed the National Industrial Recovery Act. It was the centerpiece of the early New Deal, and its theory was that falling prices and wages were feeding on each other. The cure was to let each industry organize itself, agree on minimum wages, maximum hours and "fair" prices, and have those agreements become law.

Here is how the statute worked. Section 3 authorized the President to approve "codes of fair competition" for trades and industries. Trade groups would draft a code and submit it. If the President approved it, the code had the force of law, and violating it was a crime. The President could also prescribe codes himself. The administration created the National Recovery Administration to run the program, headed by General Hugh Johnson, and businesses that complied displayed the Blue Eagle emblem in their windows. Many codes were approved, covering a wide range of industries.

Hold the structure in mind, because it is the constitutional problem in miniature. Congress wrote a short statute declaring a goal. The industries wrote the actual rules. The President signed them. The result was binding criminal law written by groups with a direct financial interest in its content, and approved by one official.

The Schechters and the live poultry code

The case concerned the Live Poultry Code for the New York metropolitan area, approved by the President in 1933. The Schechter family ran two kosher slaughterhouses in Brooklyn. They bought chickens that had come by rail from other states, held them for a short time, slaughtered them, and sold them to local butchers and retailers, who in turn sold to local customers.

The government charged the company with violating the code and convicted it on a number of counts. Some of the counts were about wage and hours requirements for employees. Others were about the code's "straight killing" rule, which required that a customer buying a part of a coop of chickens take whatever chickens came out of it, rather than pick the best birds and leave the rest. There was also a count about selling an unfit chicken, which is where the case acquired the nickname "the sick chicken case." The post on The Sick Chicken Case of 1935 and the Doctrine That Could Rein In Agencies takes up the nondelegation point from the court-watchers' side. The nickname is a little unfair to the brothers, since most of the counts were about the code's trade rules and not about disease.

The Schechters argued that the law under which they were convicted was unconstitutional on two grounds. First, Congress had unlawfully delegated its legislative power to the President and, through him, to private trade groups. Second, Congress had no power under the Commerce Clause to regulate a local business whose chickens had finished their journey in New York.

What Chief Justice Hughes held

Chief Justice Charles Evans Hughes wrote the opinion for the Court. He found against the government on both questions, and the opinion is worth reading closely because it works on two levels.

The delegation holding. Hughes began with the premise that Article I, Section 1 vests "All legislative Powers herein granted" in Congress. Congress, he said, is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested. He conceded that Congress may, in practice, leave details to others, and that the question is where the line falls. Then he examined what Section 3 of the NIRA actually told the President to do.

The answer was: almost nothing. The statute told the President to approve codes if he found they would not promote monopoly and that the group proposing them truly represented the trade, and it set out broad aims such as removing obstructions to commerce and promoting the "policy" of the act. Hughes concluded that this was not a standard but a license. The President could approve or prescribe any code he considered to advance those general aims, in any trade, for any term. In a line the opinion is remembered for, Hughes wrote that extraordinary conditions do not create or enlarge constitutional power. The Depression was an emergency, and the emergency was real, but the Constitution does not have an emergency exception to its own structure.

The commerce holding. Hughes then turned to the Commerce Clause. The government argued that the poultry trade was a national market and that what happened in Brooklyn affected prices elsewhere. The Court drew a distinction between direct and indirect effects on interstate commerce. The chickens had come to rest in New York, where the "flow" of interstate commerce had ended. The wages and hours of Schechter's employees affected the local business, and any effect on interstate commerce was indirect. If that kind of effect were enough, Hughes reasoned, then the federal government could regulate every local business, and the Constitution's distinction between what is national and what is local would disappear.

A modern reader should note that this second holding did not last. In the years after 1937 the Court broadened the commerce power sharply, and the direct-and-indirect test faded. The nondelegation holding is the part that survives as a live principle, and it is the part that matters for this post. The commerce question is explored in Can Congress Do That, Ten Questions About Federal Power Answered.

Cardozo and the phrase that stuck

Justice Benjamin Cardozo wrote a concurrence, joined by Justice Harlan Stone. Both men were part of the Court's liberal wing and were generally sympathetic to the New Deal. Cardozo had, in fact, dissented in the earlier hot oil case in January 1935, where he thought the delegation was acceptable. In Schechter he saw the difference.

Where the earlier statute had at least addressed a defined evil, the NIRA, he said, delegated discretion that was virtually unbounded. He wrote that it gave the President power to enact whatever codes he thought would stimulate trade and industry, in any trade, and he called the result "delegation running riot." It is a short phrase, and it explains the whole problem. He also found the reach of the code beyond the commerce power. He did not need to say more, and the fact that he joined the result reflects how extreme the statute looked even to its friends.

Notice what the unanimity means. Hughes, Brandeis, Cardozo and Stone were not enemies of Roosevelt, and Brandeis in particular was a hero to progressives. When Brandeis and Cardozo vote against a New Deal program, the argument that it was merely conservative judges protecting the rich collapses. The statute had a structural flaw that any honest reader could see.

The same day: Black Monday

May 27, 1935 was a bad day for the administration, and it became known as "Black Monday." The Court decided three cases that morning, all unanimously.

1. Schechter Poultry, ending the NIRA codes.
2. Humphrey's Executor v. United States, holding that Roosevelt could not fire a Federal Trade Commissioner at will, which is the subject of the post on Humphrey's Executor Created a Fourth Branch the Constitution Never Mentions.
3. Louisville Joint Stock Land Bank v. Radford, striking down the Frazier-Lemke Act, a farm-mortgage relief law, on the ground that it took the property of creditors without due process.

Roosevelt was furious. At a press conference on May 31, he complained that the decision gave the country a "horse-and-buggy definition of interstate commerce." He was right that the commerce holding was narrow. But he said nothing about the delegation holding, which had been signed by his own friends on the Court. In 1937 he would propose adding justices to the Court. That plan failed, though the Court's commerce jurisprudence shifted anyway.

The NIRA itself was due to expire in June 1935, which means the decision came only a few weeks before the program would have ended in any case. That was a convenient fact for those who wanted to say the Court had not wrecked anything essential. It was also a reminder that the program had never been the miracle its promoters claimed.

The hot oil case, five months earlier

Schechter was not the first nondelegation victory of that year. On January 7, 1935 the Court decided Panama Refining Co. v. Ryan by an 8-1 vote, holding that Section 9(c) of the NIRA, which let the President ban the interstate shipment of so-called "hot oil" produced in violation of state quotas, gave him power without any standard to guide it. Cardozo dissented alone there. The story of that case, and of the discovery that the rule being enforced had been quietly dropped, is the subject of The Government Once Prosecuted Men Under a Rule That No Longer Existed.

Those two cases, Panama Refining and Schechter, are the only two in American history in which the Supreme Court has struck down a federal statute because it delegated legislative power too broadly. Both came in 1935, and neither has been followed.

Why the doctrine went quiet

What happened after 1935 is the part students are not usually taught. The Court did not repudiate the nondelegation doctrine. It stopped applying it.

In 1937 the Court shifted its position on federal economic power, and in 1938 it began to defer more to Congress and to the agencies. By the 1940s the Court was upholding delegations with standards so broad that they hardly counted as standards. In Yakus v. United States (1944) and American Power & Light Co. v. SEC (1946) it upheld delegations to a wartime price administrator and to the Securities and Exchange Commission under standards the Court found sufficiently definite, though they were broad. The formula the Court settled on was the one from J.W. Hampton, Jr. & Co. v. United States (1928): Congress needs only to lay down an "intelligible principle." That test is explained in The Nondelegation Doctrine Says Congress Cannot Hand Its Job to Someone Else.

An intelligible principle has been found in nearly everything since. The Court has found one even in the Clean Air Act's "requisite to protect the public health" standard. The two 1935 cases are the only exceptions in nearly nine decades.

The steelman and the answer

Here is the best case against reviving Schechter, in the words of its defenders.

One: Congress today writes statutes on subjects of enormous technical complexity, and it cannot specify everything. Two: the doctrine has no workable line. How much guidance is enough? Three: judges are poorly placed to decide how much discretion Congress may give. Four: if the Court strikes down the delegation, Congress will simply pass another statute with slightly different wording.

These are serious points, and the answers are plain enough.

On complexity. The doctrine has never forbidden Congress from asking experts for detail. Chief Justice Marshall said in 1825 that Congress may leave matters of detail to others while keeping for itself the decisions of real importance. Nothing in a revived doctrine requires Congress to fix the exact tolerance of a bolt.

On the line. Courts draw hard lines constantly: what counts as "unreasonable" under the Fourth Amendment, what is "cruel and unusual," what is "due process." The nondelegation line is no fuzzier than these. In Schechter the line was crossed so far that no one on the Court could pretend otherwise.

On judges. Deciding whether Congress has performed its own constitutional duty is the oldest job a court has, going back to Marbury v. Madison in 1803.

On rewording. If Congress must pass a more specific statute, then Congress will have actually decided something, and voters will be able to see who voted for what. That is not a bug in the doctrine. It is the doctrine.

What Schechter means for a family

It is easy to treat this as a lawyers' quarrel. It isn't. Every household is bound by rules that Congress did not write. Some of them are sensible. The question is who signed them, and whether you can unseat the person who did.

Schechter is the principle that the person who makes the law must be the person you can vote out. A rule written by a trade association and approved by one official had no such accountability, and the Court said so. The same logic runs through the cases on major questions, such as those in Five Times the Court Told an Agency That Big Questions Belong to Congress and The Major Questions Doctrine Explained, From Tobacco to the Power Plants, where the Court has returned to the idea that big decisions belong to the branch the people elect.

And here is the bit the commentators who cover this story tend to skip. Four tradesmen in Brooklyn were prosecuted, under a code that no elected legislator ever read, for how they sold chickens. They fought it through three courts and won. That is what the system is for. You can find the history of the court on the courts page, and the lessons for the modern agency in Seven Things Everyone Believes About the Federal Bureaucracy That Aren't So.

The case in brief

1. Schechter Poultry Corp. v. United States, decided May 27, 1935, struck down the National Industrial Recovery Act's code system by a unanimous vote.
2. Chief Justice Hughes held that Congress cannot transfer its essential legislative functions, and that the NIRA gave the President an unbounded license to approve codes written by private trade groups.
3. Justice Cardozo, a friend of the New Deal, called the delegation "delegation running riot" in a concurrence.
4. Together with Panama Refining v. Ryan in January 1935, it remains one of only two cases in which the Court has struck down a statute on nondelegation grounds.
5. The principle, that lawmaking power must stay with officials the voters can remove, is still the measuring stick for modern agency power.

What you can do: read Article I, Section 1 and Section 7 of the Constitution on the Constitution page, then pick one federal rule that affects you and find which statute authorized it and what the statute actually said.