Quite logically, in constructing the working of the federal government, the drafters of the Constitution sought to centralize our nation’s dealing with other nations, and sought to provide some measure of fairness in the dealings among various states. The Commerce Clause grants Congress the exclusive power to regulate commerce with foreign nations. That part of the Commerce Clause is relatively simple and non-problematic, especially when compared with the other crucial grant of power. Because Congress is given the power to regulate commerce “among the several States,” the essential question arises of what constitutes commerce among the states. Show EXAMPLE: A New York beverage distributor wishes to enter into an agreement with a Canadian beer company to distribute their beer throughout the U.S. This agreement between a U.S. company and a Canadian company is subject to federal law, because it is commerce with a foreign nation. While there may be various New York statutes, which apply to the company for a variety of purposes, these statues must not infringe on the area belonging exclusively to federal law.So what is covered by “commerce among the states?” Through Supreme Court cases we can identify four general areas in which the Commerce Clause gives Congress exclusive authority.
This last category is particularly complicated and will be addressed individually in Subchapter 2. Note that in each case we have said simply that Congress may regulate the given areas. The Commerce Clause grants Congress this power but does not impose on Congress any responsibility to wield the power. If Congress should choose not to regulate anything falling into these categories, they may do so at their option. Let’s look at each category in more detail. Channels of Interstate CommerceChannels of interstate commerce include roadways, waterways, and airways. The Commerce Clause gives Congress the power to regulate activity in these areas even when the activity itself is solely within a particular state. EXAMPLE: Congress passes a law prohibiting ships carrying explosives from traveling a short stretch of the Mississippi. Although the restricted portion of the river is entirely within a single state, Congress may regulate this channel of interstate commerce in accordance with the Commerce Clause.Instrumentalities of Interstate CommerceThe “instrumentalities of interstate commerce” category includes people as well as vehicles, machines, etc., which are employed or used in the carrying out of commerce. Congress has authority to regulate these instrumentalities. EXAMPLE: Imagine that Congress, relying on its Commerce Clause powers, establishes the National Vehicle Testing Service (NVTS) and empowers it to “regulate and enforce vehicular safety measures.” After determining that the driving conditions in Colorado were unique, given the annual snowfall levels, NVTS passes a regulation requiring all vehicles in Colorado be equipped with snow tires year-round. Even if a car is manufactured entirely within Colorado and used exclusively in the state, the NVTS regulation would apply to that vehicle and would be valid under the Commerce Clause.Articles Traveling in Interstate CommerceCongress may properly regulate any items or objects which themselves move in interstate commerce. In Swift v. U.S., 196 U.S. 375 (1905) the Court determined that buyers of livestock for slaughterhouses were involved in a “constantly recurring course, the current thus existing is a current of commerce among the States, and the purchase of the cattle is a part and incident of such commerce.” Swift at 399. In other words, if the subject of federal regulation is something that has been placed in the stream of interstate commerce, the Commerce Clause will permit the regulation. In today’s computer age, this category has been expanded to include electronic databases, in addition to the traditional commodities such as machines, bales of hay, and other “things” which are routinely transported across state lines. In 1994 Congress passed the Driver’s Privacy Protection Act (DPPA) 18 USCS § 2721 which regulates the disclosure and sale of information contained in state department of motor vehicle drivers’ records. The Supreme Court refused to strike down the DPPA as unconstitutional, and instead found Congressional authority in the Commerce Clause, pointing out that the information which was the subject of the act was a “thing in interstate commerce” Reno v. Condon, 528 U.S. 141, 148 (2000). EXAMPLE: Today, the internet is no longer a phenomenon but merely another part of modern life, as is “spam,” or junk e-mail. Joe is an eighteen-year-old computer whiz who works out of his garage and has developed a new method for compiling and selling e-mail lists to bookstores nationwide. Congress, however, has passed a law regulating “the transmission or sale of electronic addresses,” which requires those selling the databases to file complicated documents to attest to the source of the addresses. Joe’s "garage set-up" is inadequate to handle the frequent filings and he is contemplating suit in federal court. Unfortunately (for Joe), Joe would not prevail on his claim, as the regulation is authorized under the Commerce Clause.Introduction The United States is a government of enumerated powers. Congress, and the other two branches of the federal government, can only exercise those powers given in the Constitution. The powers of Congress are enumerated in several places in the Constitution. The most important listing of congressional powers appears in Article I, Section 8. THE COMMERCE POWER No enumerated power has justified more exercises of congressional power than the Article I, Section 8 power to "regulate commerce among the several states." (Congress is also given the power to regulate commerce "with foreign nations" and to regulate commerce "with Indian Tribes.") The first major challenge to the exercise of congressional power under the Commerce Clause came in the 1824 case of Gibbons vs Ogden, when two steamship operators with exclusive licenses granted by New York to ferry passengers from New York City to Elizabethtown, New Jersey sued to block Gibbons, a new steamship operator granted a license to ferry passengers on the same route by Congress, from competing against them. Chief Justice Marshall found that the Commece Clause granted Congress ample power to issue the license to Gibbons. Commerce, wrote Marshall, is more than just the buying and selling of objects--it includes all branches of commercial intercourse between states, including navigation.The next series of cases illustrate two divergent approaches to analyzing whether an activity is reachable under the commerce power. In U. S. vs E. C. Knight the Court concluded that the Congress lacked the power to reach a monopoly in the "manufacture" of refined sugar, but could reach a "monopoly of commerce" involving sugar. The Knight case illustrates the formal (or "categorical") approach to analyzing the reach of the commerce power. The formal approach focuses on such questions as whether the regulated activitity is "in" or "outside" the stream of commerce, whether the activity is "local" or "interstate," or whether the effects of the activity on interstate commerce are "direct" or "indirect." The contrasting empirical approach, illustrated by Houston E. & W. Ry. Co. vs U. S., looks to the magnitude of the effect that the regulated activity has on interstate commerce, without special regard to how the activity is categorized. In Houston, the Court upheld a federal agency's regulation of freight rates on travel wholly within Texas because the freight transporation within Texas was found to be substantially affecting interstate commerce. Hammer vs Dagenhart (1918) considered the constitutionality of the Child Labor Act, which banned items produced by child labor from interstate commerce. Adopting the formal approach, the Court saw the Act as unconstitutional attempt to regulate a purely local matter, workplace conditions. The harm of child labor, the Court concluded, had nothing to do with interstate commerce and thus fell outside the reach of congressional power. Two girls working in Loudon Hosiery Mills (Tennessee) in 1910. N.L.R. B. vs Jones (1937) represented an important turning point in the Court's Commerce Clause jurisprudence. The year before, in a case called Carter vs Carter Coal Co., the Court had invalidated a New Deal program that attempted to regulate the wage and hour practices of coal companies on the ground that such practices were "local" and had only an "indirect" effect on interstate commerce. Enraged by the Court's decision in Carter and other cases, President Roosevelt proposed "packing the Court" with sympathetic justices by increasing its size from nine to fifteen. In N.L.R. B. vs Jones, Chief Justice Hughes and Justice Roberts side with the government in voting to uphold an N.L.R.B. action ordering the reinstatement of union organizing employees protected by federal law at a Pennsylvania steel plant--the "switch in time that saved nine." Over the objections of four dissenting justices who called the interstate effects of the regulated activity "too indirect," the Court concluded that the steel industry is an interstate web of activities stretching from the iron mines of Minnesota to the steel plants of Pennsylvania and thus the manufacturing of steel is properly reachable under the Commerce Clause. U. S. vs Darby (1941), in unanimously overruling Hammer vs Dagenhart, demonstrated how much the Court had changed its approach to Commerce Clause in a generation. Using a "substantial effects" test, the Court upheld the Fair Labor Standards Act--an important piece of legislation that effectively set national minimum wage and maximum hour laws by prohibiting the interstate shipment of goods manufactured in violation of the federal standards.
Once having established that congressional exercises of power were valid if shown to regulate activities "substantially affecting" interstate commerce, the Court proceeded to open up more opportunities for exercise of the commerce power by holding that an activity only trivially affecting interstate commerce might nonetheless by regulated if all of the regulated activities of various individuals--taken cumulatively--had substantial interstate effects. In Wickard vs Filburn (1942), for example, the Court upheld a $117 penalty imposed on a Ohio farmer for growing wheat on 12 more acres than he was permitted to under the Agricultural Adjustment Act. The Court relied on Wickard in the 2005 case of Gonzales v Raich, upholding the power of Congress to authorized seizure of doctor-prescribed marijuana allowed under the laws of California and other states. The Court in Gonzales noted that local use of medical marijuana had a cumulative effect on the black market for marijuana. President Lyndon Johnson signing the 1964 Civil Rights Act The cumulative effects test also convinced the Court to uphold provisions of the 1964 Civil Rights Act that required the 216-room Heart of Atlanta Motel to rent its rooms to persons regardless of race (Heart of Atlanta vs U. S.) and outlawed racial discrimination at small restaurants such as Ollie's Bar-B-Q in Birmingham (Katzenbach vs McClung). In 1971, legislation making loansharking a federal crime was upheld on a similar basis (Perez vs U. S.) . The Heart of Atlanta, McClung, and Perez cases led to speculation that perhaps any activity might be regulated under a loose application of the cumulative effects test.
Moreton Rolleston Jr., owner of the Heart of Atlanta motel (photo: Wayne Wilson/Leviton-Atlanta) In 1995, however, the Supreme Court--for the first time in more than half a century--invalidated a federal law on the ground that it was outside the scope of the commerce power. In U. S. vs Lopez the Court, by a 5 to 4 vote, found unconstitutional a provision of the Gun-Free School Zone Act that made it a federal crime to possess a gun (even one that never traveled across state lines) within a thousand feet of a school ground. It was unclear whether the government lost because the Congress failed to make adequate factual findings about the impact of school gun violence on interstate commerce or whether the Court was convinced that the interstate impact of possessing guns near schools had only an insignificant effect on interstate commerce. The four dissenters argued that it was sufficient for the Congress to show it had a rational basis for finding a significant effect on interstate commerce. Christy Brzonkala, the former student at VPI whose efforts to receive compensation for an alleged rape were ended by the Supreme Court in U. S. vs Morrison. In U. S. vs Morrison (2000) the Court considered a suit brought by a former student of Virginia Poytechnic Institute who alleged she was raped by two university football players. The defendant players and university argued that the Violence Against Women Act, which allowed victims of gender- motivated violence to bring federal civil suits for damages, was outside of the scope of the commerce power. The Court agreed with the defendants, even though in this case Congress had made specific findings that gender-motivated violence deterred interstate travel, diminished national productivity, and increased medical costs. The Court concluded that upholding the Violence Against Women Act would open the door to a federalization of virtually all serious crime--as well as family law and other areas of traditional state regulation. The Court said that Congress must distinguish between "what is truly national and what is truly local"--and that its power under the Commerce Clause reaches only the former. In a concurring opinion, Justice Thomas went even further, urging abandonment of "the substantial effects" test. In the closely watched case of National Federation of Independent Business v Sebelius(2012), the Court considered whether the Affordable Care Act of 2010, the Obama Administration's signature piece of legislation was constitutional. The Court, on a 5 to 4 vote, found that the individual mandate provision of the Act, which required all persons to buy health insurance or pay a penalty, was outside of Congress's powers under the Commerce Clause. (The individual mandate, also on a 5 to 4 vote, survived, however, as a valid exercise of Congress's taxing power.) Chief Justice Roberts concluded that the Commerce Clause gave Congress no power to regulate inactivity (here, the decision of an individual not to buy health insurance.) To allow such a power, Roberts argued, would give almost limitless power to Congress because there are "an infinite number" of things people do not do everyday. Congress might even, Roberts wrote, order people to buy broccoli. The four dissenters (Ginsburg, Sotomayor, Breyer, and Kagan) dissented on the Commerce Clause question, accusing the majority of returning to the categorical approach that had properly been long abandoned by the Court. In the view of the dissenters, the failure of healthy individuals to buy health insurance had obvious and substantial effects on the health care market, which represents almost one sixth of the U.S. economy. The dissenters argued that precedents such as Wickard v Filburn supported the exercise of power.
Questions COMMERCE CLAUSE QUESTIONS 1. What is "commerce"? Is it just the buying and selling of goods, or should it be interpreted to include, as Chief Justice Marshall says in Gibbons, all the branches of commercial intercourse, including the manufacture and transportation of goods?2. The Constitution gives Congress the power to regulate commerce "among" the several states. Does that mean "between" the states, or could it also mean "among the people"--that is, even within a state? 3. What would have been the economic future of the United States if Gibbons had gone the other way? 4. Which of the two basic approaches to Commerce Clause analysis is better, the "empirical test" (e.g., "substantial effects") or the categorical approach that seeks to label effects as "direct" or "indirect" or activities as "local" or "national." What are the advantages and disadvantages of each approach? 5. Does the power to "regulate" commerce include the power to ban outright certain articles of commerce--such as lottery tickets, firecrackers, hand grenades, or marijuana? 12. Is taking a woman across state lines for immoral purposes "commerce"? (The Court thought so in a decision upholding the constitutionality of the Mann Act.) 6. Should the Court examine the motive of Congress in enacting legislation under its commerce power, or just analyze the connection of the regulation to interstate effects? In Hammer vs Dagenhart, the Court was influenced by its conclusion that Congress really legislated because it disapproved of child labor, rather than out of any genuine concern for how child labor was affecting the national economy or the dangers posed by articles produced by child labor. Should the motive of Congress been a factor? 7. N.L.R.B. vs Jones, along with U. S. vs Lopez years later, is generally considered one of the two key turning points in Commerce Clause jurisprudence. What makes it so? 8. Does the "cumulative effects" approach of Wickard represent a major expansion of the "substantial effects" test as employed previously? 9. After McClung and Heart of Atlanta Motel, could you imagine any eating establishment or motel that would be outside the reach of Congress's power under the Commerce Clause to enact civil rights laws prohibiting discrimination against patrons or guests? 10. Lopez and Morrison raise serious questions about the ability of Congress to enact laws providing federal punishment or federal remedies for conduct traditionally regulated under state criminal codes. Which of the following are likely to be upheld?: (1) a law making "carjacking" a federal crime? (2) a law making "drive-by shootings" a federal crime? (3) a law making it a federal crime to carry out any action designed to terrorize? (4) a law making child molestation a federal crime? (5) a law making child pornography a federal crime? 11. How does Congress distinguish, as Morrison requires it to do, between "what is truly national and what is truly local."? 12. National Federation of Independent Business draws a line between commercial activity, which Congress can regulate, and inactivity, which it cannot. Many economists argue that any example of inactivity can be re-described as another sort of activity, but Justice Roberts says the Framers were practical men, not students of metaphysics, and would have appreciated the difference. Do you think he is right? 13. The dissenters suggest that the inactivity/activity line is just a return to the discredited categorical approaches of the past, and that the Court should have focused on the impact that people without health insurance were having on the overall market. Will this categorical distinction last, and how much of a limitation will it prove to be on attempts by Congress to enact social welfare legislation?
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