The Commerce Power and Its Federalism-Based Limits

Art I. §8, cl. 3 grants Congress the Power:

“to Regulate Commerce w/ Foreign Nations, and Among the Several States, and w/ the Indian Tribes”

It was enacted in the hopes it would end hostile State restrictions, retaliatory trade regulations, and protective tariffs on imports from other States, promoting a national market

So the issue is the scope and limits of the commerce power

Section 1. The Commerce Power Before the New Deal

Gibbons v. Ogden (justice Marshall)

NY granted Livingston and Fulton exclusive rights to operate steamboats on NY waters. They licensed Ogden to run a ferry btwn NY & NJ. But Gibbons was licensed under a 1793 fed statute. Ogden got an injunction against Gibbons in NY Court.

Sup. Ct. held the Fed Law “preempted” the NY law under the supremacy clause

Commerce is intercourse. It describes the commercial intercourse btwn nations or parts of them, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.

Commerce does include navigation

“among” the several states means “intermingled” with, and is restricted to that commerce which concerns more states than one

But states still have exclusive regulation of commerce wholly w/in that state so long as doesn’t work injury to other states.

The power to regulate is complete in itself, may be exercised to its fullest extent, and knows no limitations other than are prescribed in the constitution. (voting of people)

3 Principal Judicial Approaches to Commerce Power:

Direct vs. Indirect effect on interstate commerce:

U.S. v. E.C. Knight Co. (Sugar Trust Monopoly)(VERY BAD CASE)

Ct. interpreted the Sherman Anti-trust statute not to extend to this monopoly, based on view that Congress cldn’t constitutionally reach a monopoly in “manufacture” under commerce clause

Under this test, the activities challenged must bare DIRECT Relation to commerce btwn States, not just have a possible yet indirect effect on commerce in the end.

THIS IS A BAD TEST, too subjective and ignores N&P clause and McCulloch

“Substantial Economics Effect” test: (Still Good Test)

Shreveport Rate Case: Texas setting rates for travel between Texas points lower than rates btwn Texas and LA points.

Ct. held that Fed Congress had authority to regulate intrastate rail rates that discriminated against interstate rail traffic

Emphasis here is on the practical physical or economic effects of the regulated intrastate activities on interstate commerce

Ask: Does the item trying to regulate have a CLOSE AND SUBSTANTIAL relationship to interstate commerce? If yes, can regulate

“Stream of Commerce” test:

Some activities could be regulated cause could be viewed as themselves “in” commerce or as an integral part of the “current of commerce”

“current thus existing is a current of commerce among the states, and the purchase of the cattle is a part & incident of such commerce”

National “police” regulation:

Congress used the commerce power increasingly in the late 19^th century not only to deal w/ the problems in the national economy but also w/ problems of morality & criminality like gambling and prostitution

Champions v. Ames (The Lottery Case)

The court upheld the Fed Lottery Act of 1895, which prohibited importing, mailing, or interstate transporting of lottery tickets”

The court reasoned that cause they can be transported they are commercial in nature & can be regulated

This is a poor argument & seems seriously overstep bounds since anything can be transported BUT prohibition of goods crossing state lines is an appropriate way of regulating.

BUT in Hammer v. Dagenhart (Child Labor Case)

Law excluded products made by child labor

Ct. said the “production” of articles, even if intended for interstate commerce eventually, is a matter of local regulation. (WRONG)

Sd. There is No power vested in Congress to require the States to exercise their police power so as to prevent unfair competition.

Dissent: (CORRECT VIEW)

When states seek to send their products out of state then Congress can regulate it.

If Congress wants to regulate it & has a RB for enacting legislation then it can

Section 2. The Commerce Power and the New Deal

The Supreme Courts Invalidation of New Deal Measures

In New Deal measures, the gov. tried to justify some under the Commerce Clause as based on the “substantially affecting commerce” rational & “in commerce” rational

Railroad Retirment Board v. Alton Railroad Co.

Ct. held Congress lacked power to establish a compulsory retirement & pension plan for all carriers subject to Interstate Commerce Act

Roberts Opinion: “the law was not in purpose or effect a regulation of interstate commerce w/in the meaning of const.

Rather is was “really & essentially related solely to the social welfare of the worker and remote from any commerce regulation

Schecter Poultry v. U.S. (BAD CASE)

The law/act was the Code of Fair Competition for the Live Poultry Industry of NY Metro

Tried regulate unfair trade practices, minimum wage & hours, prices, max hours & collective bargaining

Ct held: Act unconstitutionally delegated leg. Power and that the application of the Act to INTRAstate activities exceeded the commerce power, & the wages & hours were local, so no fed control

Rejected “steam of commerce” argument and “affecting commerce” from Shreveport case.

Said “production” and activities local in their immediacy don’t become national and interstate because of distant repercussions

Carter v. Carter Coal Co. (BAD CASE)

Ct. invalidated the law whose objectives included regulation of max hours & min wages, and levied a tax of 13.5% for not accepting code.

General welfare & heath of nation were cited as general purposed of the code but court said these purposes were beyond the Congress power under Commerce Clause

Again pointed out that is was regulating production and not commerce.

Applied Direct vs. Indirect test which is BAD

FDR’s...

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