Commerce

The Commerce Clause of the constitution states:

• Congress shall have power...to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.

You may organize your study of the Commerce clause by thinking about the meaning of the critical words in this clause:

1. To Regulate: What does the power to regulate comprehend? Does the power to regulate encompass the power to prohibit?
2. Commerce: What is commerce? Does it include manufacturing? Does it include intangibles such as insurance policies or stocks and bonds?
3. Among the several States: When does commerce become commerce among the several states? Must it actually cross a state line? Must regulation focus only on that aspect of commerce which crosses state lines? May Congress regulate activities which occur exclusively in a single state but have an indirect impact upon interstate Commerce.

How should the Court answer these questions? What role should political and economic philosophy play? Or should the Court attempt to discern the will of the founders, the drafters of the Constitution? Here begins a nearly two century long tension between the Court's attempt to find principled judicially enforcible textual limits to the Commerce Clause power, on the one hand, and recognition that the democratic process itself represents the fundamental check upon that power. What values does the Court serve when it restricts Congressional Commerce clause power, exercised by the democratically elected representatives of the people? In the early Commerce clause decision, Gibbons v Ogden (1824), the Court pointed out:

• The wisdom and the discretion of Congress, their identity with the people, and the influence which their constituents possess at elections, are, in this, as in many other instances, as that, for example, of declaring war, the sole restraints on which they have relied, to secure them from its abuse. They are the restraints on which the people must often rely solely, in all representative governments....

But this early declaration of democratic as opposed to judicial control over Congressional power was not strictly observed by the Court until the Court's interpretation of the Commerce Clause, against the will of an overwhelming majority of Americans, interfered with the New Deal and seemed to threaten the Roosevelt administration's attempts to save the country from economic disaster.

In Gibbons v Ogden, the Court struck down New York's attempt to grant a steamboat monopoly to Robert Fulton, which he had then ultimately franchised to Ogden. Ogden claimed that river traffic was not "commerce" and further that Congress could not interfere with New York State's grant of an exclusive monopoly within its own borders. Ogden's assertion was untenable: he contended that New York could control river traffic within New York all the way to the border with New Jersey, that New Jersey could control river traffic within New Jersey all the way to the border with New York, leaving Congress with illusory power to control the traffic as it crossed the state line. In its decision, the Court assumed that interstate commerce required movement of the subject of regulation across state borders. The decision contains the following principles, some of which have since been altered by subsequent decisions:

1. Commerce is "intercourse, all its branches, and is regulated by prescribing rules for carrying on that intercourse."
2. Commerce among the states cannot stop at the external boundary-line of each state, but may be introduced into the interior...Comprehensive as the word "among" is, it may very properly be restricted to that commerce which concerns more states than one."
3. The Commerce power is the power to regulate, that is "to prescribe the rule by which commerce is to be governed" which "may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution."

Here we are talking about what Congress may regulate under its commerce clause power. We pause to note that Gibbons v Ogden is of interest in a related area of Constitutional law: what commerce powers are denied the states. The definition of the constitutional terms is of interest in both of these areas. Limitations on the powers of states is discussed in a different panel.

What is commerce: The definition of commerce is now quite broad. At one time the Courts held that manufacturing was not commerce, because it took place only within a particular state. For example, in Kidd v Pearson, (1888) the Court struck a federal law which prohibited the manufacture of liquor for shipment across state lines. Similar decisions were issued with regard to agriculture, mining, oil production, and generation of electricity. In 1936 the country was in the depth of the great depression. Yet despite the clear will of the democratically elected representatives of the people, the Court struck down a key element of the New Deal's regulation of the mining industry, on the grounds that mining was not commerce. Carter v Carter Coal. After the presidential election seemingly vindicated Roosevelt's position by an overwhelming majority, Roosevelt began an assault on the Court's anti-democratic decisions. In the preceding decades, the Court had struck down a laundry list of progressive legislation, minimum wage, child labor, agricultural relief and virtually every element of the New Deal which had come before it. Roosevelt, emboldened by the Court's interference with emergency legislation, launched a campaign to add a new Supreme Court justice for every justice over the age of 70, unless that Justice retired. In National Labor Relations Board v Jones & Laughlin Steel Corp (1937), the Court reversed itself and upheld the National Labor Relations Act of 1935 against an attack that steel manufacturing was not commerce. The Court wrote:

• [The] fundamental principle is that the power to regulate commerce is the power to enact 'all appropriate legislation' for its 'protection or advancement'; to adopt measures to 'promote its growth and insure its safety'; 'to foster, protect, control and restrain.' That power is plenary and may be exerted to protect interstate commerce 'no matter what the source of the dangers which threaten it.'.....When industries organize themselves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce from the paralyzing consequences of industrial war?

Following Jones & Laughlin Steel, the Court focussed upon whether the regulated activity had a "substantial economic effect" upon interstate commerce. The substantial economic effect test does not require proof that the individual regulated activity has substantial economic effect. It is enough that the individual's act, combined with others in the aggregate, has that impact. Crop control limits may be placed upon a farmer who grows that crop soley for home use, on the theory that the aggregate of such uses may have a substantial economic effect. Wickard v Filburn (1942)

In the next panel, we will continue our discussion of the Commerce Clause power and focus upon recent limits imposed by the Rehnquist Court.