Gray v. Powell

Mr. Justice Roberts:

I think the judgment should be affirmed. There are limits to which administrative officers and courts may ap*418propriately go in reconstructing a statute so as to accomplish aims which the legislature might have had but which the statute itself, and its legislative history, do not disclose. The present decision, it seems to me, passes that limitation.

The case involves an Act of Congress which, in implementing its declared purpose and intent, carefully delimits by inclusive and exclusive definition those who shall and those who shall not be subject to its regulatory provisions. Upon a record in which there is not a single disputed fact, the bare question is presented whether the words the Congress used bring the respondents within the Bituminous Coal Code or exclude them from its operation. In answering that question, the Director made no controverted finding of fact, exercised no judgment as to what the relevant circumstances were, but merely decided that the meaning of the statute was that the respondents’ transactions required that they become members of the Code or suffer the penalty of the 19y2% tax for failing to join the Code. If the Director was in error, his error was a misconstruction of the Act which created his office; and that error, under all relevant authorities, is subject to court review. It is specifically made so subject to review by the statute in question.1

The Bituminous Coal Act, as its preamble declares, is aimed at the regulation of prices and unfair methods of competition in the marketing of bituminous coal in interstate commerce,2 as the means of promoting that commerce and relieving it from practices and methods which burden and obstruct it. The body of the Act is confined to the enforcement of these purposes and none other.

To accomplish the declared end, the statute adopts a comprehensive scheme for the regulation of prices and *419trade practices in the marketing of bituminous coal in interstate commerce. It creates a Commission and, by § 4, directs the Commission to promulgate a Bituminous Coal Code, to which coal producers who are “code members” are made subject. By Part II of § 4, the Commission is given authority to fix minimum and maximum prices for code members in conformity to specified standards. Subdivision (i) of § 4, Part II, specifies methods of competition in the marketing of coal which are declared to be unfair and violations of the Code.

Section 3 (a) imposes a tax of 1 cent per ton on all coal “sold or otherwise disposed of by the producer” and defines disposal, for the purposes of this section alone, as including “consumption or use” by a producer and any transfer of title by a producer other than by sale. The acknowledged purpose of this subsection is the levy on all coal taken out of the ground, and used by whomsoever, of a small tax to pay the expense of the administration of the Act. The respondents admit their liability for this exaction. They have paid this tax and no question arises in respect of it.

Section 3 (b), as a means of securing compliance with the regulatory provisions of § 4, imposes a penal tax of 19%% of the sale price of the coal, or of its fair market value when disposed of otherwise than by a sale, on all the coal sold or otherwise disposed of by a producer to whom the regulatory provisions as to price and unfair methods of competition included in § 4 are applicable. Only those who are producers of coal and would be subject to the provisions of the Code are liable to the penalty tax as an alternative to joining the Code and thus coming within the regulatory provisions applicable to such Code members. Such regulatory provisions are concerned only with those who sell or market coal.

Subdivision (1) of Part II of § 4 declares: “The provisions of this section shall not apply to coal consumed by the *420producer or to coal transported by the producer to himself for consumption by him.” The respondents insist that this subsection plainly exempts them from becoming members of the Code and that, in pursuance of the subsection, the Director should have granted their application for exemption.

Some stress is laid by the petitioners on § 17 (c) which declares that:

“As used in this Act,
“(c) The term 'producer’ includes all individuals, firms, associations, corporations, trustees, and receivers engaged in the business of mining coal.”

It seems plain enough that this provision was not intended to nullify subsection (1) of § 4, Part II. The evident purpose was to make it clear that, under whatever form the business was done, the operator should come under the applicable provisions of the statute. This subsection has no relevance to the question presented in this case.

The term “producer” is not a technical term or a term of art, but the statute has not left the Director or the courts without guides respecting the meaning of the word as used in the statute. It is the Director’s duty to observe those guides in applying the statute and, if he fails so to do, it is the obligation of the courts to observe them in performing their statutory duty to review his determination. The context, the purpose of the Act, and the means adopted to carry them into effect, make clear the meaning of the word “producer” as used in the statute. This court obviously fails in performing its duty and abdicates its function as a court of review if it accepts, as the opinion seems to do, the Director’s definition of “producer” and then proceeds to accommodate the meaning of related provisions to the predetermined definition. So to do is a *421complete reversal of the normal and usual method of construing a statute.

The legislative history3 demonstrates, and the opinion of the court concedes, that the purpose of § 4 (Pt. II (1) ) was to exclude from the provisions of the Act regulating prices and other matters of competition in interstate marketing, coal produced from “captive mines”; that is, coal produced by the owner of a mine and consumed by him without placing it on the market. It is, as it must be, also conceded that subdivision (1) excludes from the operation of the Act one who mines coal by his own employes, upon land owned or leased by him, and consumes it in his business or industry. The only possible differentiation between the respondents’ method of conducting the business and that of the usual captive mine lies in the fact that the respondents’ coal is mined by an independent contractor instead of by employes. That circumstance, however, will not justify the statement that respondents do not produce the coal, any more than it would justify the statement that they would not transport coal to themselves, within the meaning of the Act, if they shipped it by a common carrier who was an independent contractor. The circumstance that the coal is mined by a contractor instead of an employe, or transported by a common carrier, cannot have any more, or any different, effect upon the subjects of regulation — prices and unfair methods of competition — in the one case than in the other. In both cases, the owner would consume coal which would otherwise come on the market. In neither case would the coal be brought into competition with marketed coal. In each case, the owner would remain free to buy coal on the market whenever the market price fell below the cost of production at his own mine.

*422Subdivision (1) cannot appropriately be construed to deny respondents the right to be excluded from the operation of the Act upon their application as provided in § 4-A when there are plainly no affirmative provisions of the Act subjecting them to its regulation. It will hardly be denied that, by respondents’ total operation, coal is produced. If they are not the producers, because they pay a contract price instead of wages for its production, they are not subject to the 19%% tax which applies only to producers; and they are thus exempt from the only sanction which would compel them to become Code members subject to the regulatory provisions of the Act. Since they market no coal, the provisions of § 4 relating to prices and methods of competition in the marketing of coal are not applicable to them. On the other hand, if the independent contractor whom respondents employ to mine the coal is deemed the producer of the coal, he likewise is exempt from the regulatory provisions and also exempt from the 19% % penal tax. For, even if he be called a producer, he neither markets nor sells the coal and he cannot be said to dispose of coal which he does not own. Disposal must mean something more than physical production, delivery, or transportation of the coal of another. If it were otherwise, the superintendent of a captive mine would be subject to the tax because he is engaged in mining coal and delivering it to the owner who consumes it. It is well known that, in many coal fields, coal is gotten out by employing a miner who in turn employs his own gang to assist him in the mine. If the Director’s position is correct, this method of operation would subject the owner and operator of a captive mine to regulation under the Act. That view would be plainly untenable.

The vice in the construction which the court now adopts, apparently only because the Director has adopted it, lies in the fact that this construction is of practical significance *423only as it is preliminary to regulation of features of the coal industry other than prices and methods of competition in the marketing of coal. Congress has not seen fit to prescribe such regulation. It is clear that the attempted subjection of respondents to the control of the Commission is without congressional authority.

The Chief Justice and Mr. Justice Byrnes join in this opinion.

Section 6 (b) and (d).

Sunshine Coal Co. v. Adkins, 310 U. S. 381, 388, 393.

Hearings before the Committee on Interstate Commerce of the Senate, 2d Sess., 74th Cong., on S. 4668, pp. 32, 33.