Decision
Chief Justice Hughes wrote for a unanimous Court in invalidating the industrial "codes of fair competition" which the NIRA enabled the President to issue. The Court held that the codes violated the constitutional separation of powers as an impermissible delegation of legislative power to the executive branch. The Court also held that the NIRA provisions were in excess of congressional power under the Commerce Clause.
The Court distinguished between direct effects on interstate commerce, which Congress could lawfully regulate, and indirect, which were purely matters of state law. Though the raising and sale of poultry was an interstate industry, the Court found that the "stream of interstate commerce" had stopped in this case—Schechter's slaughterhouses chickens were sold completely exclusively to intrastate buyers. Any interstate effect of Schechter was indirect, and therefore beyond federal reach.
Though many considered the NIRA a "dead statute" at this point in the New Deal scheme, the Court used its invalidation as an opportunity to affirm constitutional limits on congressional power, for fear that it could otherwise reach virtually anything that could be said to "affect" interstate commerce and intrude on many areas of legitimate state power.
Justice Cardozo's concurring opinion clarified that a spectrum approach to direct and indirect effects is preferable to a strict dichotomy. Cardozo felt that in this case, Schechter was simply too small a player to be relevant to interstate commerce.
This traditional reading of the Commerce Clause was later disavowed by the Court, which after threats from Roosevelt began to read congressional power more expansively in this area, in cases such as National Labor Relations Board v. Jones & Laughlin Steel Corporation (1937). However, more recent cases such as United States v. Lopez, 514 U.S. 549 (1995) perhaps signal a growing inclination in the Court to once again affirm limits on its scope.
Read more about this topic: Schechter Poultry Corp. V. United States
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