The Commerce Clause

The Secret Weapon of the United States Congress Elderhostel September 29, 2006 Artemus Ward Department of Political Science Northern Illinois University

The Articles of Confederation

  A strong impetus for calling the Constitutional Convention of 1787 was the need for national controls over the nation’s commerce, which had become chaotic under the weak Articles of Confederation.

Many states had erected barriers to interstate trade in an effort to protect business enterprise for its own citizens.

The Constitution: Article I, Section 8

“The Congress shall have Power . . . . To regulate Commerce . . . among the several states.”

Gibbons v. Ogden

(1824)

   New York granted a monopoly on steamship navigation in its waters to Ogden. However, the United States granted navigation rights to Gibbons under its Commerce Clause authority.

Chief Justice John Marshall spoke in broad, expansive language in upholding the national license. He said that commerce is not simply traffic but “intercourse” that included navigation. He held that federal power is “complete in itself” and “acknowledges no limitations, other than are prescribed in the Constitution.” The word “among,” means “intermingled with” and thus commerce among the states does not stop at state boundaries but “may be introduced into the interior.” Still, he did recognize state autonomy, declaring that the clause did not comprehend commerce which is completely within a state and “which does not extend to or affect other states.”

  

Congress Flexes Its Muscle

In the 60 years after Gibbons the national government rarely resorted to its Commerce Clause authority for national regulations of any kind.

The Interstate Commerce Act of 1887 regulated the railroads by establishing the Interstate Commerce Commission (ICC).

In the Shreveport Rate Cases (1914) the Supreme Court upheld the ICC’s power to order intrastate lines to charge the same rates as interstate carriers. The Court observed that wherever the “interstate and intrastate transactions of carriers are so related that the government of the one involves the control of the other, it is Congress and not the State, that is entitled to prescribe the final and dominant rule.”

United States v. E.C. Knight Co. (1895)

   Sherman Antitrust Act (1890): Prohibited monopolies.

The U.S. attempted to dissolve a sugar processing monopoly by the American Sugar Refining Co. which controlled 98% of the industry.

The Supreme Court held that sugar processing was a local enterprise, occurring totally within one state. The fact that it was manufactured for export to other states was irrelevant.

  

Swift & Co. v. United States (1905)

The Court began to retreat from the rigid transportation manufacturing distinction.

The agreed unanimously that a price-fixing arrangement among meat packers, although done locally, was a restraint on commerce.

Articulating a “stream of commerce” theory, the Court emphasized that the movement of cattle from one state to another for meat processing and subsequent shipment of meat to other parts of the country constituted a “typical, constantly recurring course,” a current or stream of commerce, and the effect of local price-fixing on interstate commerce was not “accidental, secondary, remote, or merely probable.” Justice Oliver Wendell Holmes, Jr.

Hammer v. Dagenhart

(1918)

   With the purpose of outlawing child labor, Congress enacted a statute in 1916 prohibiting the shipment in interstate commerce of products made in factories or mines by children under 14.

The Court declared that the evil of child labor involved manufacturing, was local in nature, and was thus outside of the reach of Congress.

Congress did not seek to regulate business during the roaring ’20s. However after the Great Depression and the election of FDR, Congress once again sought to use the Commerce Clause.

Schechter Poultry v. United States (1935) “The Sick Chicken Case”

    The National Industrial Recovery Act (1933) authorized the president to establish industrial codes of fair competition including the regulation of wages and hours.

Schechter imported chickens from out of state but sold them locally. They were cited for violating the new poultry code for selling an “unfit chicken.” The Court held that the Schechter’s business was purely local and had only an indirect and remote effect on commerce.

The Court regularly struck down similar New Deal programs during the first term of FDR’s presidency.

Court-Packing Plan

Claiming that the Court was overworked and filled with justices who were too old to keep up with the load, FDR proposed to add one new justice to the Court for every one over age 70. Though the plan was immediately seen as an attempt to meddle with the Court for political reasons and had little chance of passage, it became clear that the New Dealers were intent on pressuring the Court to shift gears and uphold the New Deal.

NLRB v. Jones & Laughlin Steel (1937)

  The National Labor Relations Act (1935) guaranteed collective bargaining to all employees engaged in the production of goods for interstate commerce and set up a National Labor Relations Board to regulate business labor relations.

In a major shift, the Court upheld the Act abandoning the local manufacturing and indirect effects distinctions. Now, any activity affecting commerce could be regulated.

United States v. Darby Lumber (1941)

  The Supreme Court upheld the Fair Labor Standards Act (1938) which barred the use of interstate commerce to goods made by workers who were not paid a minimum wage of forty cents and hour and guaranteed a forty-hour work week.

Overruled Hammer v. Dagenhart (1918).

Wickard v. Filburn

(1941)

    The Second Agricultural Adjustment Act (1938) regulated agricultural production affecting interstate commerce by, among other things, setting quotas for farmers.

Filburn grew wheat only for his own consumption and for the animals on his farm. When he exceeded his quota, the government fined him.

The Supreme Court unanimously sided with the government reasoning that since over 20% of the nation’s wheat was grown for home consumption, the overall demand for wheat was less, thereby depressing the market.

If individual behavior, taken in the aggregate, has a “substantial economic effect” on the market, then it can be reached by the government under the commerce clause authority.

  

The New Deal Regime

During the 50 years since expanded national regulation into myriad aspects of national life, using the Commerce Clause as the constitutional base, all with the Supreme Court’s approval.

Wickard , Congress For example, the 1964 Civil Rights Act prohibits racial discrimination in public accommodations such as motels, hotels, restaurants, gas stations, movie theaters, etc. throughout the country.

In Heart of Atlanta Motel v. United States the Supreme Court upheld the act reasoning that racial discrimination has a substantial negative effect on the economy.

(1964)

  

The New Right Regime

In a series of recent cases, a much more conservative Supreme Court has put the breaks on Congress’ Commerce Clause power.

For example, in United States v. Lopez (1995), the Court held 5-4 that Congress could not pass the Gun Free School Zones Act. They reasoned that the Commerce Clause only allows regulation of “economic” activity and guns in schools was not economic in nature.

Similarly, in United States v. Morrison (2000) the 5-4 Court struck down the civil rights portions of the Violence Against Women Act, which allowed women to bring civil suits in federal courts for rape and other violent acts. Again, the Court reasoned that violence against women was not an economic activity.

Chief Justice William H. Rehnquist

Gonzales v. Raich

(2005)

  The Court held 6-3 that Congress, through the Controlled Substances Act, may ban the use of marijuana even where states approve its use for medicinal purposes.

Liberal Justice John Paul Stevens relied on distinguished Wickard Lopez and and Morrison like in . He reasoned that whether legal or not, marijuana growing was a national economic activity and Wickard Congress.

, could therefore be reached by

Conclusion

   The Commerce Clause is the vehicle through which the United States government regulates business, labor, and more.

In general, liberals have supported using the commerce clause to regulate the economy while conservatives have sought to limit its scope.

Do conservatives in the national government use the commerce clause for regulatory purposes? Abortion restrictions? Prohibitions on certain kinds of medical research; cloning?