Commerce Clause

COMMERCE CLAUSE

COMMERCE CLAUSE. The judicial history of the commerce clause of the U.S. Constitution (Article I, section 8, paragraph 3) can be divided into three eras: the first 150 years after the Constitution went into effect in 1789; the 1937–1995 period; and 1995 and beyond. Gibbons v. Ogden (1824) defined the first era. In that case, Chief Justice John Marshall wrote for the Supreme Court that commerce encompassed "every species of commercial intercourse" and that if Congress had legislated in the area, federal power was plenary. Such breadth did not make the unimplemented power exclusive, however, and it was ultimately the Court, under Chief Justice Roger B. Taney, that resolved the issue of the extent of state power in the absence of federal legislation. After several indecisive attempts, Justice Benjamin R. Curtis (Cooley v. Board of Wardens of Port of Philadelphia [1851]) set forth a "selective exclusiveness" formula, holding that when Congress was silent, the states might act, unless the specific subject required "uniform national control." The ruling left the clause itself the most important basis for judicial review in limitation of state power prior to ratification of the Fourteenth Amendment (1868). Of the approximately 1,400 cases that reached the Supreme Court under the clause before 1900, the overwhelming proportion found the Court curbing state legislation for invading an area proper to federal commerce concern. A classic example was the case of Wabash, St. Louis, and Pacific Railway Company v. Illinois (1886), denying the right of a state to regulate that part of an interstate railroad journey that was entirely within its borders on the ground that Congress's power was exclusive. Congress responded with the Interstate Commerce Act of 1887, granting the federal government positive supervisory power over the railroads. Congressional extension of such authority limited the ability of the courts to negate it by interpretation (until after 1900), and commerce power in the transportation field was mostly nominal.

Positive federal use of the clause grew rapidly from the 1890s on. The Sherman Antitrust Act (1890) found constitutional justification in the clause, as it seemed to afford broad federal authority to prohibit combinations in restraint of trade and general market monopolization. The Court, however, relying on a distinction between production and distribution, held the statute inapplicable to a sugar monopoly that had acquired nearly complete control over the manufacture of refined sugar (United States v. E. C. Knight Company [1895]). "Commerce succeeds to manufacture, and is not part of it," stated Chief Justice Melville W. Fuller: "Commerce among the states does not begin until goods commence their final movement from the state of their origin to that of their destination." Over the next forty years, the Court applied the same restrictive principle to the control of mining, fishing, farming, oil production, and the generation of hydroelectric power. Similarly, the Court, in E. C. Knight, evolved another restrictive formula, the "direct effect" doctrine, which again ensured legal limits on federal use of the clause: only if a local activity directly affected interstate commerce was federal control valid.

Regulation-minded progressive leaders of the early twentieth century sought to evoke judicial rulings that would expand the sweep of the clause. In Swift v. United States (1905), Justice Oliver Wendell Holmes Jr. responded. "Commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business," he argued, setting forth a "stream of commerce" concept according to which the purchase of cattle, while a local process, became a federally regulatable one when it was part of an interstate commercial transaction. In the Minnesota Rate Cases (1913) and the Shreveport Rate Case (1914), the Court went further. In the former, Justice Charles Evans Hughes made clear that "direct" regulation of foreign or interstate commerce by the states was out of the question. In the latter, he took the next step, stating that "wherever interstate and intra-state activities are so related that the government of the one involves the control of the other, it is Congress, and not the States that is entitled to prescribe the final and dominant rule." But the social reform climate of the Progressive Era also intervened to affect expansion of the commerce power. When the Court sought to extend application of the Sherman Antitrust Act to labor organizations (Loewe v. Lawlor [1908]), Congress acted to retract such coverage in the Clayton Antitrust Act (1914).

The Progressives sought to use the clause in another novel way. In the effort to evolve a national police power, the clause was made the basis for legislation prohibiting lottery tickets, impure food and drugs, adulterated meat, transportation of women across state lines for immoral purposes, and, ultimately, child labor. The Court generally sustained such use, holding that Congress could validly close the channels of interstate commerce to items that were dangerous or otherwise objectionable. The Court made an exception with regard to child labor and returned to limiting federal power. In this case, the Court drew a much-criticized distinction between prohibiting the use of the facilities of interstate commerce to harmful goods, on the one hand, and using the commerce clause to get at the conditions under which goods entering that commerce were produced, on the other (Hammer v. Dagenhart [1918]).

The 1920s found similar interpretive strands continued. The movement of stolen cars (and ultimately inter-state shipment of stolen goods in general) was prohibited (Brooks v. United States [1925]). And whereas child-labor restrictions were again overthrown, federal authority was further extended in other areas through the widening of the "stream of commerce" concept to the regulation of the business of commission men and of livestock in the nation's stockyards. It became possible to regulate not only the "stream" but the "throat" through which commerce flowed (Stafford v. Wallace [1922]). In Railroad Commission of Wisconsin v. Chicago, Burlington and Quincy Railroad Company (1922), federal altering of intrastate rail rates was affirmed, the Court holding that the nation could not exercise complete effective control over inter-state commerce without incidental regulation of intrastate commerce.

On this broad judicial view of the clause, New Dealers of the early 1930s based the National Industrial Recovery Act (1933) and other broad measures, such as the Bituminous Coal Act (1935). Judicial response to these acts was not only hostile but entailed a sharp return to older formulas—especially the "production-distribution" and "direct effect" distinctions of the 1895 E. C. Knight case (Schechter Poultry Corporation v. United States [1935]). Charging that the Court had returned the country to a "horse-and-buggy" definition of interstate commerce, Franklin D. Roosevelt—especially after that body persisted in its narrow views on commerce (Carter v. Carter Coal Company [1936])—tried to "pack" the Court in hopes of inducing it to embrace broad commerce precedents. The success he achieved was notable. Starting with National Labor Relations Board v. Jones and Laughlin Steel Corporation in 1937, the Court not only rejected the whole battery of narrow commerce formulas (a process it extended in United States v. Darby Lumber Company [1941]) but also validated the clause as the principal constitutional base for later New Deal programs, authorizing broad federal control of labor relations, wages and hours, agriculture, business, and navigable streams. In 1946, Justice Frank Murphy stated: "The federal commerce power is as broad as the economic needs of the nation" (North American Company v. Securities and Exchange Commission ). The 1960s demonstrated that it was also as broad as the social needs of the nation. In the Civil Rights Act of 1964, Congress banned racial discrimination in all public accommodations. The constitutional foundations for the statute were the commerce clause and the equal protection clause of the Fourteenth Amendment. In Heart of Atlanta Motel, Inc. v. United States (1964), the Supreme Court found the commerce clause alone fully adequate to support the statute.

United States v. Lopez (1995) signaled that a more conservative Supreme Court may be ready to usher in a new era of commerce clause jurisprudence. In Lopez, the Court, in an opinion written by Chief Justice William H. Rehnquist, declared unconstitutional a 1990 congressional statute that had made it a federal crime to possess a gun on school property. The chief justice emphasized "first principles" and federalism and concluded that the possession of a gun in a local school zone was not an economic activity that might, through repetition elsewhere, "substantially affect" interstate commerce. Rather, he argued, the statute in question was an attempt by Congress to exercise a nonexistent national police power over a subject—criminal law—that was primarily of state and local concern. Significantly, Lopez marked only the second occasion since 1937 that the Court had held that Congress had exceeded its authority under the commerce clause, and the other occasion—National League of Cities v. Usery (1976)—had been overruled less than a decade after it had been decided (Garcia v. San Antonio Metro Transit Authority [1985]).

The conservative Court's reluctance to permit Congress to exercise broad legislative authority under the commerce clause was again in evidence at the dawn of the twenty-first century. In United States v. Morrison (2000), the Court, in another opinion by Chief Justice Rehnquist, struck down the federal Violence Against Women Act on the ground that Congress lacked authority under the commerce clause to enact it because it did not involve economic or interstate activity. Importantly, though, both Lopez and Morrison were five-to-four decisions, so the final chapter on Congress's authority under the commerce clause has yet to be written.

BIBLIOGRAPHY

Benson, Paul R., Jr. The Supreme Court and the Commerce Clause, 1937–1970. New York: Dunellen, 1970.

Epstein, Richard. "Constitutional Faith and the Commerce Clause." Notre Dame Law Review 71 no. 2 (January 1996): 167–193.

Frankfurter, Felix. The Commerce Clause under Marshall, Taney, and Waite. Chapel Hill: University of North Carolina Press, 1937.

Ramaswamy, M. The Commerce Clause in the Constitution of the United States. New York: Longman's Green, 1948.

Scott D. Gerber

Paul L. Murphy

See also Carter v. Carter Coal Company ; Constitution of the United States ; Cooley v. Board of Wardens of Port of Philadelphia ; Gibbons v. Ogden ; Interstate Commerce Laws ; National Labor Relations Board v. Jones and Laughlin Steel Corporation ; Schechter Poultry Corporation v. United States ; Sherman Antitrust Act ; Shreveport Rate Case ; Stafford v. Wallace ; United States v. E. C. Knight Company .