Just wondering, take 2

One of my college classmates (he asks that we not use his name) writes regarding the proposed bill (H.R. 5253) making “price-gouging” (as to be defined later by an administrative agency) a crime:

You guys are lawyers (like me) and I need a reality-check. This bill would criminalize “price gouging” by gasoline wholesalers and retailers, with fines of $150 Million per offense for wholesalers and $3 million for retailers, and years of jail time for both. But it doesn’t even pretend to define the elements of the crime, delegating this to the FTC, which will define what “price gouging” might be. Would that be raising your price because your supplier raised his? Or because you’d lost your shirt on the last shipment? Or because your other running costs have gone up? Or because you anticipate them going up? By how much and for how long would your prices have to be raised to expose you to jail time? What if you raise less than the guy across the street? Two blocks down the street? Across town? What if you just don’t lower your price when others do? These are just quick questions from a country lawyer with no experience in energy policy or law, nor in gasoline supply. But I thought Congress wrote the laws and the executive branch enforced them: with at most the power to create regulations to implement the Congressional purpose as disclosed in the law. I also thought that the duty to write a law, and clearly, was particularly strong when the statute might take away liberty as well as merely a stunning sum of money. What am I missing here? This looks to me like pure political grandstanding and a lawless grant of the lawmaking power.

I’m afraid that the delegation of Congress’s lawmaking power to administrative agencies is an old story, reviewed with a jaundiced eye by Professor G. Edward White in his revisionist The Constitution and the New Deal. Professor White concludes his chapter on “the emergence of agency government” with the observation:

Administrative law, in its modern form, has been taken to signify the presence and constitutional legitimacy of expansive agency government in America. With that premise in place, it seems unnecessary to recall previous constitutional objections to the agency form or to emphasize their importance in shaping administrative law itself. It is far easier to fashion a historical account in which the creation of administrative law is associate with the inevitable emergence of agencies in a complex world, one whose problems require the affirmative interventions of governmental experts. But the fashioning of that history leaves out at least half the story.

The proposed price-gouging law represents another side of the ideas embodied in the National Industrial Recovery Act through which Congress sought to raise prices in a host of industries and businesses under the hand of the National Recovery Administration. Among the prices to be raised, of course, were those of oil. In The Return of George Sutherland, Hadley Arkes quotes Justice Cardozo’s dissent in the Panama Refining Company case:

“Beyond question, [Cardozo] announced again, “the disregard of statutory quotas is wasting the oil fields in Texas and other states.” A remarkable proposition altogether, well in advance of its time in anticipating the cliches of the 1970s. And “beyond question prevailing conditions in the oil industry [that is, production without the discipline and constraint of legal controls] have brought about the need for temporary restriction in order to promote in the long run the fullest productive capacity of business…, for the effect of present practices is to diminish that capacity by demoralizing prices and thus increasing unemployment.”

It takes no small measure of credulity, to say nothing of an imagination reaching a fine point of distraction, to speak of “demoralizing prices,” with prices as the subjects that were suffering a loss of morale.

(Footnotes omitted). Professor Arkes comments on the NIRA: “For the workingmen of the country, the Act offered no deliverance from the Depression, or even a discernible gain; but it succeeded, handsomely, in providing steady work for the judges and lawyers of America.”

UPDATE; My classmate writes to correct the statutory citation and wonders if the proposed bill has been “buffed up (say by removing the limitation to areas where a disaster has been declared?) and rendered more vicious than the original text would suggest?”


Books to read from Power Line