Commerce Clause

1. Commerce Clause • Overview of topic • The Constitution created a national government of limited, enumerated powers. • Art. I, § 8 is the key source of congressional powers. • Most of the Art. I, § 8 powers are narrow in scope (e.g., to establish post offices), but over time the Supreme Court has interpreted the Commerce Clause to grant broad congressional power to enact agricultural, environmental, labor, telecommunications, criminal, civil rights (state action problem) and other laws. • In the past, the Supreme Court has held both expansive and narrow views of the Commerce Clause power. Lopez provides the Court’s current standard for analyzing the extent of the Commerce Clause power, and it sets minor limits on an expansive power.

2. U.S. Constitution • Designed to • Create a national government with enough power (including the power to promote economic unity and growth) and • Establish limits on that power to prevent it from being abused • Accountability to the public • Federalism—power is divided between states and national government • Separation of powers—power is subdivided further among the branches of government • Bill of Rights—individuals in the minority may need protection from the majority

3. U.S. Constitution • Preventing abuse of power • The Constitution denies some powers to the national government because too much government of any kind can be bad • Power to regulate speech • Power to decide which profession young adults undertake • States would be denied these powers too • The Constitution denies other powers to the national government because they are powers that state governments should exercise • Local matters like marriage and divorce law

4. Allocating government power • Some exercises of power may not be permitted for federal or state governments (e.g., violations of the Bill of Rights) • Some exercises of power may be permitted for both governments (e.g., prosecution of drug dealers) • Some exercises of power may be exclusively within the domain of the national government (e.g., Art. I, § 10—entering treaties with foreign governments, coining money) • Some exercises of power may be exclusively within the domain of the state governments (see Lopez)

5. U.S. Constitution • Note how the point that some powers should be exercised by state governments fits into the representation-reinforcement theme • We talked last week about how it is okay for Congress to tax state banks generally because Congress represents the entire public • But imposing national policy on every state interferes with the ability of each state’s voters to decide policy for their state—everyone has to play by the same rules rather than allowing for local variations (note 2, pages 169-171)

6. U.S. Constitution • But note also that for some issues, when one state decides policy for its residents, it effectively decides policy for everyone else • If Indiana burns coal to generate electric power, the byproducts are carried east by the winds, and other states suffer from the pollution • If South Dakota allows high interest rates for credit cards, credit card companies will locate in SD, and other states cannot protect their residents from high rates (the race to the bottom problem (note 3, page 192)) • How we choose between federal and state regulation (or both) will be a key focus today and the next four classes

7. Reasons for local control • Conditions vary from state to state, and we can better match laws to local conditions if we rely on state law • Local control may allow for more individual choice, with some states catering to one kind of preference and other states catering to other kinds of preferences (representation-reinforcement) • State governmental power also allows for the laboratory of state experimentation to work. • Local control encourages people to take a more active role in their governance (the anti-Federalist view)

8. Commerce Clause • The Congress shall have Power . . . To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes. • Art. I, § 8, cl. 3 • Our focus will be on the regulation of commerce among the states

9. Partial birth abortion law “Any physician who, in or affecting interstate or foreign commerce, knowingly performs a partial-birth abortion and thereby kills a human fetus shall be fined under this title or imprisoned not more than 2 years or both. . . .” 18 U.S.C. § 1531

10. Internal and external limits • Internal limits derive from the provision authorizing congressional action—the power to regulate interstate commerce applies to interstate commerce • External limits derive from other constitutional provisions—the commerce clause may allow regulation of television advertising, but the first amendment may not.

11. Kinds of argument • Text • Constitutional structure • The nature of a constitution or the Constitution • Original intent • Representation-reinforcement • Natural law • Tradition

12. Comstock Good bridge between McCullough and the Commerce Clause material Court upheld the constitutionality of a federal statute authorizing the civil commitment of mentally ill, sexually dangerous federal prisoners after the dates they would otherwise be released The Court set out five factors (S45-46) for allowing the statute as an exercise of the Necessary and Proper clause in order to execute the Commerce Clause power.

13. Comstock • Factor 1 suggests a broad reading of the Necessary and Proper Clause: • “[In] determining whether the Necessary and Proper Clause grants Congress the legislative authority to enact a particular federal statute, we look to see whether the statute constitutes a means that is rationally related to the implementation of a constitutionally enumerated power.’’

14. Comstock • But factor 2 refers to the statute as a “modest addition to a set of federal prison-related mental-health statutes that have existed for many decades.” • Couldn’t have justified a national bank under this factor • Probably reflects the fact that the civil commitment statute has an attenuated connection with the enumerated power • The enumerated power was the power to regulate interstate commerce • Comstock was convicted of possessing child pornography, and Congress may regulate interstate commerce to protect it from being used for immoral or illicit purposes (Champion) • But not all sex offenses are federal offenses, and civil commitment is generally done by the states

15. Comstock • Factors 4 and 5 reflect key Commerce Clause themes: • (4) ‘‘[T]he statute properly accounts for state interests. [It] requires accommodation of state interests,’’ by requiring that relevant state authorities be informed of the civil commitment and requiring the release from federal custody of those for whom a state is willing to accept responsibility. • (5) ‘‘[T]he links between [the statute] and an enumerated Article I power are not too attenuated. Neither is the statutory provision too sweeping in its scope.’’

16. Gibbons v. Ogden • What are the important facts? • Ogden had a ferry license authorized under state law, and Gibbons had a ferry license authorized under federal law for the same route • Why is it important that the ferry ran between NYC and Elizabethtown Point, NJ? • Congress may regulate interstate commerce • Why did Ogden have to show that the federal law was unconstitutional to win his lawsuit? • Federal law trumps state law under the Supremacy Clause

17. Gibbons v. Ogden • What kinds of arguments did the Court invoke to uphold the statute? • The Court started with text—what does the word commerce mean? It doesn’t have a narrow meaning and apply only to the buying and selling of commodities. Rather, it encompasses the entire range of commercial relations between people, including navigation. • The Court also drew on original intent—“All America understands [the] word “commerce,” to comprehend navigation. [The] power over commerce, including navigation, was one of the primary objects for which the people of America adopted their government” • In short, we should read “commerce” broadly

18. Gibbons v. Ogden • The Court also drew on text to limit the commerce clause authority. How did it limit the power? • Congress may not regulate purely intrastate commerce—No authority to regulate commerce which • is completely within a particular state, • does not affect other states and • is not necessary for the national government to regulate to carry out some of its general powers (p.174)

19. Gibbons v. Ogden • What is permitted by the power to “regulate” interstate commerce? • The commerce clause power is the “power [to] prescribe the rule by which commerce is to be governed” (p. 174) • What limits are there to the power to regulate? • The commerce clause power “is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the constitution” (p.174) • But might Congress not abuse its power? What will protect us if the Court won’t? • The principle of accountability—“The wisdom and discretion of Congress, their identity with the people, and the influence which their constituents possess at elections, are . . . the sole restraints on which they have relied, to secure them from its abuse” (p.174)

20. Gibbons v. Ogden • The Court concluded with some general observations about the interpretation of the national government’s powers. What did it say, and what kind of argument did it make (page 175)? • It invoked the nature of the US Constitution • Our Constitution should not be interpreted by giving “the narrowest possible compass” to the national powers and using “any possible construction” to conclude that the states retained their original powers • To do so would leave the Constitution as “a magnificent structure, indeed, to look at, but totally unfit for use”

21. Evolution of commerce clause doctrine • During the late 19th and early 20th centuries, the Court often imposed a good deal of internal limits on the commerce clause power • Hammer v. Dagenhart • United States v. E.C. Knight • A.L.A. Schechter Poultry Corp. v. United States • But the Court also allowed many regulations • Houston, East & West Texas Railway v. United States • Champion v. Ames

22. Hammer • What was this case about? • Congress passed the Child Labor Act to prohibit the overworking of children • Goods that were made with child labor in violation of the act could not be shipped in interstate commerce • Children under age 14, no work; children between 14 and 16, no more than 8 hours a day or 6 days a week, and no night work • What do you think of the father who brought the case? • Would he have been okay with a NC law imposing the same rules? See Lochner

23. Hammer • The Court drew two distinctions that have since been abandoned (page 177) (textual arguments) • The Court distinguished between regulating and prohibiting commerce • But what about other laws banning certain kinds of commerce (e.g., interstate sale of lottery tickets)? • “The goods shipped are of themselves harmless” • The Court distinguished between direct and indirect effects of the activity on interstate commerce. The law really was regulating the intrastate employment practices of manufacturers and miners, not the interstate transportation of goods • In other words, Congress was trying to regulate activities pre-interstate commerce

24. Hammer • But what about the fact that companies in states with child labor laws were subject to unfair competition from companies in states without child labor laws (page 177)? • The commerce clause was not intended to prevent unfair competition among the states. Local conditions often give one state an advantage over another • What about the principle of fostering a national economy?

25. Hammer • Note the Court’s concern in the last two paragraphs (the nature of our Constitution) • Congress was trying to regulate “a matter purely local in character” (pages 177-178) • If Congress can regulate any good that will enter interstate commerce even before the good enters interstate commerce, what are the limits of federal power? • Could Congress try to address the low high school graduation rate in some school districts by requiring a high school diploma for workers who make goods shipped in interstate commerce? • While the Court rejected the Hammer distinctions in later cases, it adopted an economic/non-economic distinction in Lopez

26. Filburn • This case illustrates a return to the Gibbons v. Ogden approach of commerce clause doctrine • What regulation was involved in this case? • To protect farmers from low crop prices, Congress limited the amount of wheat that a farmer could grow • Filburn exceeded his quota • How did Filburn argue that Congress was regulating activity that did not involve interstate commerce? • The quota restricted his ability to grow wheat for his livestock and for making flour for home use

27. Filburn • Note how the Court rejected the Hammer distinctions and referred favorably to Gibbons v. Ogden (page 179) • The commerce clause power should not be defined by reference to terms like “production” or “indirect” • As Marshall warned in Gibbons, effective restraints on the commerce clause power should come from political processes • What about the fact that growing wheat for home consumption is a local, noncommercial activity? • It may be regulated “if it exerts a substantial economic effect on interstate commerce” • Recall Gibbons. Also recall the implied powers arguments in McCullough.

28. Filburn • How does growing wheat for home consumption have an effect on interstate commerce? • Congress was trying to reduce surpluses in wheat production, and the most variable component of total wheat production was consumption of home-grown wheat • Home-grown wheat competes with wheat in commerce. If prices rose, Filburn would sell his home-grown wheat and check the price increases (which the government was trying to cause); if prices fell, then Filburn would use his own wheat and not buy anyone else’s wheat • “The stimulation of commerce is a use of the regulatory function quite as definitely as prohibitions or restrictions thereon”

29. Filburn • But Filburn grew only a few hundred bushels. How could that have a substantial effect on interstate commerce? • “That appellee’s own contribution for the demand of wheat may be trivial by itself” is not the issue. Rather, the question is whether his contribution “taken together with that of many others similarly situated” is substantial.” (page 180)

30. Other cases pre-Filburn • In E.C. Knight (page 190), the Court invalidated an application of the Sherman Antitrust Act on the ground that it entailed the regulation of “manufacturing” (as in Hammer) • In The Shreveport Rate Cases (page 191), the Court upheld regulation of intrastate railway fares because the railroad’s interstate rates were affected by its intrastate rates (The railroad shouldn’t be able to discriminate against Louisianans and in favor of Texans)

31. Other cases pre-Filburn • In Champion (page 193), the Court upheld a prohibition on the interstate transportation of lottery tickets even though the purpose was to implement a moral view, not to facilitate interstate commerce. • Note that the Court thought it appropriate to protect the states that wanted to ban sales of lottery tickets (page 194) • In Schechter (page 196), the Court struck down a regulation of employment practices for the poultry industry in metropolitan NYC. • The regulations applied to activities that were “post-interstate” commerce. Just as Congress cannot regulate manufacturing or mining that occurs pre-interstate commerce, it cannot regulate businesses that slaughter and sell chickens within one state after the chickens have completed their interstate travels (Court was interpreting the meaning of “interstate”)

32. McCullough • In addition to the argument from the text of the 10th Amendment, the Court makes a different kind of argument for why we should recognize implied powers. What is that argument (page 64)? • Constitutions by their nature provide only “great outlines” and do not “partake of the prolixity of a legal code” • There’s a second argument from text that also is based on the constitutional structure • Article I, § 9 lists limitations on the power of Congress—why would you need to list limitations if all powers are explicitly described?