Carter v. Carter Coal Co.

298 U.S. 238 (1936)

Quick Summary

Carter (plaintiff) contested the legality of the Bituminous Coal Conservation Act’s regulations against Carter Coal Co. (defendant). The case revolved around federal authority over coal industry regulation and tax penalties for non-compliance.

The Supreme Court scrutinized whether these regulations and penalties were within Congress’s constitutional powers. The Court concluded that parts of the act were unconstitutional, including price control and labor relation measures, as well as the associated ‘tax’ penalty.

Facts of the Case

Carter (plaintiff) initiated legal action against Carter Coal Co. (defendant), which is a company he partly owned, to prevent it from complying with the Bituminous Coal Conservation Act (BCCA). The BCCA was a federal statute aiming to regulate the coal industry by setting standards for fair competition, pricing, wages, hours, and labor relations.

For compliance, the BCCA offered tax rebates to participating coal mines, effectively imposing a tax penalty on non-compliant mines. The plaintiff argued that these regulations were unconstitutional and sought an injunction against the company from paying the tax penalty.

The dispute raised fundamental questions about Congress’s authority to regulate the coal industry and the use of tax penalties to enforce compliance with federal regulations.

Procedural Posture and History

  1. Carter filed a lawsuit in the Supreme Court of the District of Columbia against Carter Coal Co. and various federal officials.
  2. The district court found certain provisions of the BCCA unconstitutional but upheld others, leading to appeals from both sides.
  3. Prior to appeals being heard, certiorari was granted by the Supreme Court of the United States for an expedited review due to the national importance of the questions involved.

I.R.A.C. Format


Whether the Bituminous Coal Conservation Act’s provisions for regulating coal prices and labor relations exceed Congress’s constitutional authority and whether the act’s tax penalty is constitutional.

Rule of Law

The powers of the federal government are limited to those specifically enumerated in the Constitution and such implied powers as are necessary and proper to carry out the enumerated powers.

Reasoning and Analysis

The Court analyzed the Bituminous Coal Conservation Act’s provisions under the lens of Congress’s regulatory powers. It found that the act’s tax penalty was not a genuine tax but a coercive measure designed to enforce compliance with the act’s regulatory provisions.

The Court reasoned that such coercion is equivalent to a penalty and not within Congress’s taxing authority. Furthermore, the Court examined whether Congress could regulate coal production and distribution under its power to regulate interstate commerce.

The Court concluded that while interstate commerce may be affected by coal production, the regulation of production itself is a matter reserved for individual states, not for federal intervention.


The Supreme Court held that certain provisions of the BCCA were unconstitutional as they overstepped Congress’s powers under the Commerce Clause. The ‘tax’ imposed by the BCCA was deemed a penalty and thus fell outside Congress’s taxing authority. The labor relations provisions were also found unconstitutional, leading to the invalidation of related sections of the act.

Key Takeaways

  1. The Supreme Court can review acts of Congress for constitutionality when it comes to regulation of industries traditionally within state control.
  2. A ‘tax’ that serves as a penalty to enforce compliance with federal regulations is not within Congress’s taxing authority according to the Constitution.
  3. Regulation of labor relations and production within an industry does not fall under Congress’s power to regulate interstate commerce when such regulation pertains primarily to intrastate activities.

Relevant FAQs of this case

What factors determine whether a federal law oversteps state sovereignty under the U.S. Constitution?

The determination hinges on the specific powers granted to the federal government by the Constitution, particularly those enumerated in Article I, Section 8. If a law regulates matters reserved for states—such as police powers, local commerce, or intrastate activities—it may overstep state sovereignty. The Tenth Amendment reaffirms this by stating that powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people.

  • For example: The federal government cannot pass laws directly regulating a purely local business that does not engage in or significantly affect interstate commerce.

How is a 'tax' differentiated from a 'penalty' in legal terms?

A ‘tax’ is a financial charge imposed by the government primarily for revenue purposes, whereas a ‘penalty’ is designed to deter or punish particular behaviors. When assessing if a charge is a tax or penalty, courts will look at its function rather than its label; if it’s punitive rather than revenue-generating, it’s likely a penalty.

  • For example: An exorbitant fee imposed on businesses for not adhering to certain non-tax related regulations would likely be considered a penalty because its aim is to compel compliance rather than collect revenue.

In what way does the Commerce Clause limit Congress's power to regulate activities?

The Commerce Clause allows Congress to regulate trade and commerce with foreign nations, among the states, and with Native American tribes. It does not extend to purely intrastate activities that do not substantially affect interstate commerce. This limitation preserves state authority over local matters and prevents Congress from overreaching into areas of state jurisdiction.

  • For example: A state cannot be compelled by Congress to adhere to federal regulations concerning a product that is produced, sold, and consumed entirely within its borders and does not impact interstate markets.


Last updated

Was this case brief helpful?

More Case Briefs in Constitutional Law