The Government claims that the excise tax of 15% on the sale price of coal at the mine was validly imposed under the power of Congress to regulate interstate commerce.
The police power of a State is as broad and plenary as its taxing power; and property within the State is subject to the operations of the former so long as it is within the regulating restrictions of the latter.
The “Bituminous Coal Conservation Act of 1935, covering every producer of bituminous coal in the United States, imposed a 15% tax on the sale price of coal at the mine, 90% of which was refundable if the producer filed with the National Bituminous Coal Commission his acceptance of a Bituminous Coal Code which was required to organize 23 coal district board, which would fix minimum and maximum prices of coal at every coal mine in the United States. The labor provisions of the code provided for the establishment of maximum daily and weekly hours and minimum wages.
Does Congress have the power to impose a 15% tax on the sale price of coal at the mine, 90% of which was refundable if the producer meets certain requirements?
No, the congressional Act delegates the power to fix minimum hours of labor to a part of the producers and the miners – the producers of more than two-thirds of the national tonnage production and more than one-half of the mine workers employed. The effect, in respect of wages and hours, is to subject to dissatisfied minority, either of producers or miners or both, to the will of the stated majority because by refusing to submit, the minority incurs the risk of enforcement of the drastic compulsory provisions of the act. To accept the terms in the provisions is not to exercise a choice, but to surrender to force.
The Act at issue confers the power upon the majority to regulate the affairs of an unwilling minority. The is legislative delegation in its most undesired form because it is not even delegation to an official or an official body, but to private persons whose interests may be adverse to the interests of others in the same business. The evidence demonstrates that the conditions of competition differ among the various localities. In some, coal dealers compete among themselves whereas in others, they also compete with the mechanical production of different energy sources. Some coal producers favor the code; others oppose it. It is clear that this diversity of view arises from their conflicting and antagonistic interests. Yet, the Act in question that attempts to confer the power undertakes the intolerable and unconstitutional interference with personal liberty and private property. The delegation is clearly arbitrary, and denies the rights safeguarded by the Constitution.