When private entities act like a state case law

Article I, Section 1:

All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.

In contrast to the relative latitude given to delegations to other branches of the government under the “intelligible principle” standard,1 Footnote
See ArtI.S1.5.3 Origin of Intelligible Principle Standard. the Supreme Court has limited the types of authority and functions that Congress can delegate to a purely private entity.2 Footnote
See A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 537 (1935) (holding that delegation to trade and industrial associations of the power to develop codes of “fair competition” for the poultry industry “is unknown to our law and utterly inconsistent with the constitutional prerogatives and duties of Congress” ). The seminal case addressing delegations to a private entity is Carter v. Carter Coal Co. 3 Footnote
298 U.S. 238 (1936) . In Carter Coal , the Supreme Court invalidated the Bituminous Coal Conservation Act of 1935, a law that granted a majority of coal producers and miners in a given region the authority to impose maximum hour and minimum wage standards on all other miners and producers in that region.4 Footnote
Id. at 311–12 . The Court reasoned that by conferring on a majority of private individuals the authority to regulate “the affairs of an unwilling minority,” the law was “legislative delegation in its most obnoxious form; for it is not even delegation to an official or an official body, presumptively disinterested, but to private persons whose interests may be and often are adverse to the interests of others in the same business.” 5 Footnote
Id. at 311 . The Court appeared to characterize the wage and hour provisions as an unlawful “delegation” to a private entity, but also held that the provision in question was “clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment,” id. at 311–12 , leading some to question whether Carter should be considered a nondelegation case at all. The Court did not apply the “intelligible principle” standard, but instead focused on the regulatory and “coercive” power given to private entities over its competitors and the due process concerns raised by such delegations.6 Footnote
See id. at 311 ( “The difference between producing coal and regulating its production is, of course, fundamental. The former is a private activity; the latter is necessarily a governmental function, since, in the very nature of things, one person may not be entrusted with the power to regulate the business of another, and especially of a competitor.” ).

Although Carter Coal concerned the delegation of authority to private entities and not governmental bodies, some courts and commentators have suggested that the Carter Coal decision may more accurately be viewed as a due process case.7 Footnote
At least one court has debated on whether Carter Coal is a nondelegation or due process decision. See Ass’n of Am. R.R. v. Dep’t of Transp. , 821 F.3d 19, 31 (D.C. Cir. 2016) (explaining that it was unclear what aspect of the “delegation [in Carter Coal ] offended the Court. By one reading, it was the Act’s delegation to ‘private persons rather than official bodies. By another, it was the delegation to persons ‘whose interests may be and often are adverse to the interests of others in the same business’ rather than persons who are ‘presumptively disinterested,’ as official bodies tend to be. Of course, the Court also may have been offended on both fronts. But as the opinion continues, it becomes clear that what primarily drives the Court to strike down this provision is the self-interested character of the delegatees’ . . . .” ). The Fifth Amendment’s Due Process Clause prohibits the Federal Government8 Footnote
The Fifth Amendment’s Due Process Clause, by its very nature, only applies to the actions of the Federal Government. See Farrington v. Tokushige, 273 U.S. 284, 299 (1927) ( “[T]he inhibition of the Fifth Amendment—'No person shall . . . be deprived of life, liberty or property without due process of law'—applies to the federal government and agencies set up by Congress for the government of the Territory.” ). For discussion of the Fifth Amendment’s Due Process Clause, see Amdt5.5.1 Overview of Due Process. The Fourteenth Amendment’s Due Process Clause as applied to actions of the states is discussed at Fourteenth Amendment, Section 1. from depriving any person of “life, liberty, or property without due process of law,” 9 Footnote
U.S. Const. amend. V . See also Marshall v. Jerrico, Inc., 446 U.S. 238, 242 (1980) ( “The Due Process Clause entitles a person to an impartial and disinterested tribunal in both civil and criminal cases.” ); Carter Coal , 298 U.S. at 311 ; Eubank v. City of Richmond, 226 U.S. 137, 143–44 (1912) (invalidating a city ordinance on the grounds that it established “no standard by which the power thus given is to be exercised; in other words, the property holders who desire and have the authority to establish the line may do so solely for their own interest, or even capriciously. . . . ” ). See Amdt5.5.1 Overview of Due Process. which the Court has interpreted as establishing certain principles of fundamental fairness, including the notion that decision makers must be disinterested and unbiased.10 Footnote
See, e.g., Marshall , 446 U.S. at 242 . In striking down the delegation to coal producers and miners to impose standards on other producers and miners, the Supreme Court in Carter Coal centered its analysis on the coercive power that the majority could exercise over the “unwilling minority.” 11 Footnote
Carter Coal , 298 U.S. at 311 . The opinion articulated the due process problems involved with providing regulatory authority to private entities, stating:

The difference between producing coal and regulating its production is, of course, fundamental. The former is a private activity; the latter is necessarily a governmental function, since, in the very nature of things, one person may not be entrusted with the power to regulate the business of another, and especially of a competitor. And a statute which attempts to confer such power undertakes an intolerable and unconstitutional interference with personal liberty and private property. The delegation is so clearly arbitrary, and so clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment, that it is unnecessary to do more than refer to decisions of this court which foreclose the question.12 Footnote
Id. at 311–12 .

The Court’s reasoning in Carter Coal suggests that delegating authority to coal producers and miners to impose standards on its competitors is in tension with both the nondelegation doctrine and the Due Process Clause.13 Footnote
The intersection of the Due Process Clause and the nondelegation doctrine as illustrated by the Court’s decision in Carter Coal may arise when Congress delegates authority to government-created corporations that have both public and private aspects. For example, in Department of Transportation v. Association of American Railroads , the Supreme Court held that “Amtrak is a governmental entity, not a private one” for purposes of reviewing Congress’s power to delegate regulatory authority to Amtrak, a for-profit entity created by Congress. Dep’t of Transp. v. Ass’n of Am. R.R. , 575 U.S. 43, 45, 54 (2015) . The Court, however, did not reach the issue of whether the delegation of coercive power given to Amtrak over its competitors violates the Due Process Clause or the nondelegation doctrine. Id. at 55–56 .

After its Carter Coal decision, the Supreme Court did not comprehensively ban private involvement in regulation. In the context of private parties aiding in regulatory functions and decisions, the Court has indicated that Congress may empower a private party to play a more limited and supervised role in the regulatory process. For example, in Currin v. Wallace ,14 Footnote
306 U.S. 1 (1939) . the Court upheld a law that authorized the Secretary of Agriculture to issue a regulation respecting the tobacco market, but only if two-thirds of the growers in that market voted for the Secretary to do so.15 Footnote
Id. at 6 . In distinguishing Carter Coal , the Court stated that “this is not a case where a group of producers may make the law and force it upon a minority.” 16 Footnote
Id. at 15 . Rather, it was Congress that had exercised its “legislative authority in making the regulation and in prescribing the conditions of its application.” 17 Footnote
Id. at 16 .

Similarly, in Sunshine Anthracite Coal Co. v. Adkins ,18 Footnote
310 U.S. 381 (1940) . the Supreme Court upheld a provision of the Bituminous Coal Act of 1937,19 Footnote
Pub. L. No. 75–48, 50 Stat. 72 (1937) . which authorized private coal producers to propose standards for the regulation of coal prices.20 Footnote
Sunshine Anthracite Coal Co. v. Adkins , 310 U.S. at 388–89 . Those proposals were provided to a governmental entity, which was then authorized to approve, disapprove, or modify the proposal.21 Footnote
Id. at 388 . The Court approved this framework, heavily relying on the fact that the private coal producers did not have the authority to set coal prices, but rather acted “subordinately” to the governmental entity (the National Bituminous Coal Commission).22 Footnote
Id. at 399 . In particular, the Sunshine Anthracite Court noted that the Commission and not the private industry entity determined the final industry prices to conclude that the “statutory scheme” was “unquestionably valid.” 23 Footnote
Id.

In the same vein as Carter Coal , the Supreme Court in Currin and Sunshine Anthracite did not evaluate whether Congress laid out an “intelligible principle” guiding the delegations to the private entities. Rather than applying the “intelligible principle” standard, the Court reviewed whether the responsibilities given to the private entities were acts of legislative or regulatory authority.24 Footnote
Id. at 388–89 ; Currin v. Wallace, 306 U.S. 1, 15–16 (1939) . In these nondelegation cases involving private entities, the Court drew the “line which separates legislative power to make laws, from administrative authority” to administer laws.25 Footnote
United States v. Grimaud, 220 U.S. 506, 517 (1911) . In both Currin and Adkins , the Court reasoned that the private entities did not exercise legislative power because they did not impose or enforce binding legal requirements.26 Footnote
Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 388–89 (1940) ; Currin , 306 U.S. at 15–16 . Because the private entity’s responsibilities were primarily administrative or advisory, the Court determined that the statutes did not violate the nondelegation doctrine.27 Footnote
Id.

Footnotes 1 See ArtI.S1.5.3 Origin of Intelligible Principle Standard. 2 See A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 537 (1935) (holding that delegation to trade and industrial associations of the power to develop codes of “fair competition” for the poultry industry “is unknown to our law and utterly inconsistent with the constitutional prerogatives and duties of Congress” ). 3 298 U.S. 238 (1936) . 4 Id. at 311–12 . 5 Id. at 311 . The Court appeared to characterize the wage and hour provisions as an unlawful “delegation” to a private entity, but also held that the provision in question was “clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment,” id. at 311–12 , leading some to question whether Carter should be considered a nondelegation case at all. 6 See id. at 311 ( “The difference between producing coal and regulating its production is, of course, fundamental. The former is a private activity; the latter is necessarily a governmental function, since, in the very nature of things, one person may not be entrusted with the power to regulate the business of another, and especially of a competitor.” ). 7 At least one court has debated on whether Carter Coal is a nondelegation or due process decision. See Ass’n of Am. R.R. v. Dep’t of Transp. , 821 F.3d 19, 31 (D.C. Cir. 2016) (explaining that it was unclear what aspect of the “delegation [in Carter Coal ] offended the Court. By one reading, it was the Act’s delegation to ‘private persons rather than official bodies. By another, it was the delegation to persons ‘whose interests may be and often are adverse to the interests of others in the same business’ rather than persons who are ‘presumptively disinterested,’ as official bodies tend to be. Of course, the Court also may have been offended on both fronts. But as the opinion continues, it becomes clear that what primarily drives the Court to strike down this provision is the self-interested character of the delegatees’ . . . .” ). 8 The Fifth Amendment’s Due Process Clause, by its very nature, only applies to the actions of the Federal Government. See Farrington v. Tokushige, 273 U.S. 284, 299 (1927) ( “[T]he inhibition of the Fifth Amendment—'No person shall . . . be deprived of life, liberty or property without due process of law'—applies to the federal government and agencies set up by Congress for the government of the Territory.” ). For discussion of the Fifth Amendment’s Due Process Clause, see Amdt5.5.1 Overview of Due Process. The Fourteenth Amendment’s Due Process Clause as applied to actions of the states is discussed at Fourteenth Amendment, Section 1. 9 U.S. Const. amend. V . See also Marshall v. Jerrico, Inc., 446 U.S. 238, 242 (1980) ( “The Due Process Clause entitles a person to an impartial and disinterested tribunal in both civil and criminal cases.” ); Carter Coal , 298 U.S. at 311 ; Eubank v. City of Richmond, 226 U.S. 137, 143–44 (1912) (invalidating a city ordinance on the grounds that it established “no standard by which the power thus given is to be exercised; in other words, the property holders who desire and have the authority to establish the line may do so solely for their own interest, or even capriciously. . . . ” ). See Amdt5.5.1 Overview of Due Process. 10 See, e.g., Marshall , 446 U.S. at 242 . 11 Carter Coal , 298 U.S. at 311 . 12 Id. at 311–12 . 13 The intersection of the Due Process Clause and the nondelegation doctrine as illustrated by the Court’s decision in Carter Coal may arise when Congress delegates authority to government-created corporations that have both public and private aspects. For example, in Department of Transportation v. Association of American Railroads , the Supreme Court held that “Amtrak is a governmental entity, not a private one” for purposes of reviewing Congress’s power to delegate regulatory authority to Amtrak, a for-profit entity created by Congress. Dep’t of Transp. v. Ass’n of Am. R.R. , 575 U.S. 43, 45, 54 (2015) . The Court, however, did not reach the issue of whether the delegation of coercive power given to Amtrak over its competitors violates the Due Process Clause or the nondelegation doctrine. Id. at 55–56 . 14 306 U.S. 1 (1939) . 15 Id. at 6 . 16 Id. at 15 . 17 Id. at 16 . 18 310 U.S. 381 (1940) . 19 Pub. L. No. 75–48, 50 Stat. 72 (1937) . 20 Sunshine Anthracite Coal Co. v. Adkins , 310 U.S. at 388–89 . 21 Id. at 388 . 22 Id. at 399 . 23 Id. 24 Id. at 388–89 ; Currin v. Wallace, 306 U.S. 1, 15–16 (1939) . 25 United States v. Grimaud, 220 U.S. 506, 517 (1911) . 26 Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 388–89 (1940) ; Currin , 306 U.S. at 15–16 . 27 Id.