Skinner v. Mid-America Pipeline Co.

Supreme Court of the United States · 1989 · Administrative Law

Administrative LawNondelegationTaxing PowerAgency Feesnondelegation doctrinetaxing poweruser feesintelligible principle

Facts

Section 7005 of COBRA directed the Secretary of Transportation to establish annual pipeline safety user fees for operators regulated under the Natural Gas Pipeline Safety Act and the Hazardous Liquid Pipeline Safety Act. The statute limited the Secretary to setting fees based on usage in reasonable relationship to volume-miles, miles, revenues, or an appropriate combination, and restricted the use of collected funds to administering the two pipeline safety acts, with aggregate fees capped at 105 percent of annual appropriations for those activities. The Secretary adopted mileage-based fee schedules, allocated costs between gas and hazardous-liquid programs, and exempted certain very small operators where collection costs would exceed the fees. Mid-America, a hazardous liquid pipeline operator, was assessed $53,023.52, paid under protest, and challenged the statute as an unconstitutional delegation of the taxing power.

Issue

Whether § 7005 of COBRA, which authorizes the Secretary of Transportation to assess pipeline safety user fees to cover the costs of administering federal pipeline safety programs, unconstitutionally delegates Congress' taxing power to the Executive Branch. More specifically, the question was whether delegations under the taxing power are subject to a stricter nondelegation standard than ordinary delegations.

Rule

Delegations of discretionary authority under Congress' taxing power are subject to the same constitutional nondelegation standard as other delegations of legislative authority. A delegation is constitutional when Congress provides standards sufficient for a court to ascertain whether Congress' will has been obeyed, including a delineation of the general policy, the administering agency, and the boundaries of the delegated authority.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Congress authorizes the Secretary of Agriculture to impose annual assessments on all commercial grain-storage operators regulated under two federal safety statutes. The law requires the assessments to be based on storage capacity, facility acreage, annual receipts, or a reasonable combination of those measures; limits the money to administering those statutes; and caps total collections at 103% of annual appropriations. Prairie Basin Storage, a Kansas company, argues the assessments are really taxes, so Congress had to provide stricter guidance than ordinary delegations require.

How should a court rule on Prairie Basin Storage's nondelegation challenge?

Explanation. The majority held that delegations of discretionary authority under Congress' taxing power are subject to the same nondelegation standard as other delegations. The question whether an exaction is labeled a fee or a tax does not trigger a heightened constitutional standard. Here, Congress identified who pays, what the money funds, permissible assessment criteria, and a cap tied to appropriations, so a court can ascertain whether Congress' will has been obeyed. (Derived from Skinner v. Mid-America Pipeline Co. (n.d.).)