Objection 1. It would seem that every priest can excommunicate. For excommunication is an act of the keys. But every priest has the keys. Therefore every priest can excommunicate.
Objection 2. Further, it is a greater thing to loose and bind in the tribunal of penance than in the tribunal of judgment. But every priest can loose and bind his subjects in the tribunal of Penance. Therefore every priest can excommunicate his subjects.
On the contrary, Matters fraught with danger should be left to the decision of superiors. Now the punishment of excommunication is fraught with many dangers, unless it be inflicted with moderation. Therefore it should not be entrusted to every priest.
I answer that, In the tribunal of conscience the plea is between man and God, whereas in the outward tribunal it is between man and man. Wherefore the loosing or binding of one man in relation to God alone, belongs to the tribunal of Penance, whereas the binding or loosing of a man in relation to other men, belongs to the public tribunal of external judgment. And since excommunication severs a man from the communion of the faithful, it belongs to the external tribunal. Consequently those alone can excommunicate who have jurisdiction in the judicial tribunal. Hence, of their own authority, only bishops and higher prelates, according to the more common opinion can excommunicate, whereas parish priests can do so only by commission or in certain cases, as those of theft, rapine and the like, in which the law allows them to excommunicate. Others, however, have maintained that even parish priests can excommunicate: but the former opinion is more reasonable.
Reply to Objection 1. Excommunication is an act of the keys not directly, but with respect to the external judgment. The sentence of excommunication, however, though it is promulgated by an external verdict, still, as it belongs somewhat to the entrance to the kingdom, in so far as the Church Militant is the way to the Church Triumphant, this jurisdiction whereby a man is competent to excommunicate, can be called a key. It is in this sense that some distinguish between the key of orders, which all priests have, and the key of jurisdiction in the tribunal of judgment, which none have but the judges of the external tribunal. Nevertheless God bestowed both on Peter (Matthew 16:19), from whom they are derived by others, whichever of them they have.
Reply to Objection 2. Parish priests have jurisdiction indeed over their subjects, in the tribunal of conscience, but not in the judicial tribunal, for they cannot summons them in contentious cases. Hence they cannot excommunicate, but they can absolve them in the tribunal of Penance. And though the tribunal of Penance is higher, yet more solemnity is requisite in the judicial tribunal, because therein it is necessary to make satisfaction not only to God but also to man.
Source: Summa Theologica (New Advent)