What is the main issue in Panama Refining?

Whether Congress unconstitutionally gave the President open-ended lawmaking power under Section 9(c) of the National Industrial Recovery Act.

What did the Court decide?

The Court struck down Section 9(c). It held that Congress set no clear policy or standard to guide the President, so the delegation was invalid.

How is it different from later delegation cases?

Later cases often upheld delegations when Congress stated an intelligible principle. Here, the statute lacked such guidance.

Why is it called the 'Hot Oil' case?

The orders targeted petroleum produced or withdrawn above state limits—so-called 'hot oil'—banned from interstate shipment.

What should a student remember for exams?

Write: Issue—non-delegation; Rule—Congress must provide standards; Apply—Section 9(c) lacked standards; Conclude—unconstitutional.

Law Easy

01 November, 2025

1401

Panama Refining Co. v. Ryan (1935) – Non-Delegation & Section 9(c) Explained in Easy English

Panama Refining Co. v. Ryan (1935)

Non-Delegation, Section 9(c) of the NIRA, and limits on executive power—explained in easy classroom English.

Supreme Court of the United States 1935 Bench: Hughes, et al. 293 U.S. 388 Area: Constitutional Law 5 min read

By Gulzar Hashmi · India · Published: 23 Oct 2025

Table of Contents

Quick Summary

Congress gave the President power under Section 9(c) of the National Industrial Recovery Act to stop interstate transport of “hot oil” (oil produced beyond state limits). The statute gave no clear policy or standard to guide that power. The Court said this was an unconstitutional delegation of legislative power. Result: Section 9(c) fell.

Issues

Did Section 9(c) unconstitutionally let the President make law without a guiding standard?

Rules

Congress may delegate some details, but it must set a clear policy or standard. Essential law-making cannot be passed to the Executive without guidance (Article I structure; separation of powers). An “intelligible principle” is required.

Facts (Timeline)

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NIRA (1933) § 9(c) let the President bar interstate shipment of oil produced above state quotas (“hot oil”).

President issued an order; then delegated his § 9(c) powers to the Secretary of the Interior.

The Secretary required producers to file sworn monthly statements and enforced the ban.

Industry parties challenged § 9(c) as an unlawful delegation of legislative power.

Arguments

Appellants (Panama Refining)

Section 9(c) sets no policy or limits; it hands over law-making.
Executive orders + regulations create crimes without legislative standards.

Respondent (Government)

National emergency needs flexible tools.
Section 1 policy statement and “hot oil” context give enough guidance.

Judgment

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Held: Section 9(c) is unconstitutional. Congress did not state any workable standard to guide the President. The delegation was too broad.

Note: Justice Cardozo would have treated the Act’s policy declaration as enough, but the majority disagreed.

Ratio

When Congress gives power to the Executive, it must supply an intelligible principle—clear policy, boundaries, and conditions. Section 9(c) gave none; it let the President decide the “whether” and “how” without standards.

Why It Matters

Defines the outer limit of delegation during crises.
Pairs with Schechter Poultry as a key New Deal limit.
Exam anchor for “non-delegation + standards” questions.

Key Takeaways

Emergency does not erase separation of powers.
Congress must set policy; agencies fill details.
No standard = unconstitutional delegation.

Mnemonic + 3-Step Hook

Mnemonic: “HOT OIL, COLD LAW” — Hot oil facts, cold standard (none), law strikes.

Spot the delegation (Who got what power?).
Search for standards (Policy? Limits? Conditions?).
Say the result (No standard → unconstitutional).

IRAC Outline

Issue

Is Section 9(c) an unconstitutional delegation of legislative power?

Rule

Delegation needs an intelligible principle: clear policy and limits from Congress.

Application

Section 9(c) let the President choose the ban, scope, and timing without standards. Executive orders created crimes without legislative guidance.

Conclusion

Section 9(c) is unconstitutional; conviction measures under it cannot stand.

Glossary

Non-delegation: Rule that Congress cannot hand over core law-making without standards.
Intelligible principle: Clear guidance for how the Executive should use delegated power.
Hot oil: Oil produced beyond state-set limits; targeted by Section 9(c) orders.

FAQs

Delegation needs standards. Section 9(c) had none, so it was struck down.

No. Flexibility is allowed, but Congress must still set policy and limits.

Justice Cardozo saw the policy section as sufficient guidance, but the majority did not.

Fines up to $1,000 and up to six months’ imprisonment for violations.

Comment

Nothing for now