Part One: Gibbons and Later Cases

As you have seen, in Gibbons v. Ogden Chief Justice Marshall broadly construes each of the components of the Commerce Clause. First, “commerce” is construed to be any kind of intercourse. He follows this statement immediately with the qualification that it be “commercial intercourse.” Whatever his definition might mean, Marshall makes it clear that it is more than “trafficking,” a word often used during the early nineteenth century to mean buying and selling. The outer limits of the meaning of “commerce” were and still are difficult to determine. Not all of the activities that Congress has sought to regulate over the years have been activities in which something is bought or sold—things that most of us would probably identify with commercial activities.

In fact, regulation of navigation, not any activity of buying or selling was the actual subject of the Gibbons case. This conclusion gave rise to the idea that Congress has the power to regulate all navigable waters in the United States, waters that can be used to travel from one state to another or from the United States to other countries. As we shall see in a minute, many of the nineteenth century cases fleshing out the meaning of the Commerce Clause were cases involving navigation and shipping.

Second, the commerce power extends to activities “that concern more States than one.” Today, it is common to call such commerce “interstate commerce.” Marshall says that the federal power does not extend to the “completely interior traffic of a State.” At least it probably does not. Presumably, activities that take place within one state and do not involve or affect other states (usually referred to today as “intrastate commerce”) are beyond the federal power of regulation under the Commerce Clause. But in today’s world, it is hard to imagine any activity that does not have at least some effect on states other than the one in which it takes place. The 1942 case, Wickard v. Filburn, will make this evident.

Third, the power to regulate an activity includes the power to prohibit the activity entirely. Later cases hold that it also includes the power to encourage and to safeguard commercial activities.

Fourth, his response to the exclusivity argument is a bit coy, to say the least. After setting out the argument for the proposition that regulation of commerce is exclusively a national power, Marshall merely observes, “There is great force in this argument, and the Court is not satisfied that it has been refuted.” What does this mean to you? To me, if an argument has not been refuted, then it is sound and acceptable. Marshall, however, immediately follows his comment by remarking that the validity of state laws sometimes depends on the question of whether they conflict with other laws—a puzzling non sequitur. Suffice it to say, he did not hold in Gibbons that the commerce power was exclusively national, and subsequent cases worked out the exclusivity issue in some detail.

The Court addressed the issue of exclusivity of enumerated powers in other cases, as well. In Sturges v. Crowninshield and Ogden v. Saunders, which we briefly discussed in the last class, the issue was the extent to which states could enact bankruptcy legislation. The Constitution, Article I, Section 8, provides that Congress shall have the power to establish “uniform Laws on the subject of Bankruptcies throughout the United States.” Like the Commerce Clause, the Bankruptcy Clause does not indicate whether the power is exclusively granted to Congress. Marshall’s opinion in Sturges accorded with the majority of the justices in 1819 (and apparently in 1824, when Gibbons was decided) who rejected exclusivity—that is, the Court in Sturges held that states may also legislate on bankruptcy as long as their laws do not conflict with federal bankruptcy laws (there were none in 1819) or with other provisions of the Constitution, such as the Contracts Clause.

Finally, perhaps you found on page 189 of the opinion the word “dormant”: “The grant does not convey power which might be beneficial to the grantor, if retained by himself, or which can enure solely to the benefit of the grantee; but is an investment of power for the general advantage, in the hands of agents selected for that purpose; which power can never be exercised by the people themselves, but must be placed in the hands of agents, or lie dormant.” This off-hand comment was to provide a label for a “power” that Marshall would probably have approved of, had he then known how it would evolve over time, but that has very questionable constitutional foundations. As the scope of the Dormant Commerce Clause developed, especially since the 1930s, it has become one the principal restraints on state regulatory power in our modern, integrated national economy. We will look at the Dormant Commerce Clause in the next class.

The story of the expansion of federal power via the Commerce Clause would not be complete without discussing a few twentieth century cases. In a number of cases throughout the 1890s to the early 1930s, the Court limited the scope of federal power in the area of economic regulation by holding that local activities such as the mining or manufacturing or production of goods were intrastate activities and thus beyond the scope of federal regulation. Even if the goods were intended for interstate commerce, the actual production of them was not “commerce.” As the Court famously said in the E.C.Knight case, “Commerce succeeds to manufacture, and is not a part of it.” Conditions of production only indirectly affect commerce: Congress may only regulate activities which directly affect interstate commerce. While limiting federal power under such rules in a series of cases (E.C.Knight (1895), Hammer v. Dagenhart (1918), Railroad Retirement Board v. Alton Railroad Co. (1935), Carter v. Carter Coal (1936)), the Court was also sustaining federal regulatory power under the Commerce Clause in other cases even though the activities being regulated were arguably local or intrastate. See Champion v. Ames (1903), Swift and Co. v. United States (1905), Houston, East and West Texas Railway Co. v. United States (1914), Caminetti v. United States (1917), Stafford v. Wallace (1922).

The Court finally capitulated to the nationalists with the 1937 “switch in time that saved nine”—Justice Owen J. Roberts’s decision to side with the other four justices who supported broad federal commerce power to combat the Depression and uphold President Roosevelt’s New Deal initiatives. Frustration with the “nine old men” on the Court had sparked FDR’s “Court-packing plan” to replace each seventy-year-old justice with an additional justice, up to a total of fifteen justices. Roberts’s switch eliminated the need for such drastic action: thus, Roberts’s switch of sides saved the nine-man Court.

The case that marked the new endorsement of broad federal commerce power was National Labor Relations Board v. Jones and Laughlin Steel (1937), in which the Court said that under the Commerce Clause, Congress has the power to regulate activities that, “though intrastate in character when separately considered, . . . have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions.” (301 U.S. 1, 37). This was followed in 1941 by United States v. Darby, where the Court upheld the federal regulation of wages hours and working conditions under the Fair Labor Standards Act by holding that the Commerce Clause gave the federal government the authority to regulate intrastate activities where those activities have a “substantial effect” on interstate commerce. Thus, the Commerce Clause has provided the constitutional authority the 1964 Civil Rights Act, which prohibits racial and sexual discrimination in businesses, and many, many other social regulations that do not appear at first glance to be simply regulations of commercial activity.

That the Court had an expansive attitude toward what might constitute those activities that were closely and substantially related to interstate commerce was soon seen in the infamous 1942 case of Wickard v. Filburn, the case that Court principally relied upon in the recent California medical marijuana case of Gonzales v. Raich (2005) and that the government attorneys relied upon in the Patient Protection and Affordable Care Act case of National Federation of Independent Business (2012).

Finally, we must indicate that the Rehnquist Court attempted to rein in the federal commerce power with a couple of opinions in the 1990s—United States v. Lopez (1995) and United States v. Morrison (2000). In both of these cases, the Court struck down federal statutes (a criminal statute in Lopez and a civil statute in Morrison) as exceeding congressional power under the Commerce Clause. Lopez was the first case to do so since the early 1930s. More recently, the Court rejected the argument that the individual mandate provision of the Patient Protection and Affordable Care Act of 2010 was authorized by the Commerce Clause power, though Chief Justice Roberts—that’s John Roberts, not Owen J.—then turned right around and upheld the provision as a valid exercise of Congress’s Taxing and Spending power.

Please read the brief excerpts from (1) the Wickard case, (2) the Lopez case, and (3) the National Federation of Independent Business (“NFIB”) case and ask yourself the following questions. In Wickard, how does the Court expand the already broad “close and substantial relation” rule announced in the National Labor Relations case? In Lopez, how did the Court attempt to limit federal regulatory power under the Commerce Clause? According to the Court, what was lacking in the activity that Congress was trying to regulate that put the activity beyond Congress’s power under the Commerce Clause? And in the NFIB case, how did the statutory requirement to purchase medical insurance exceed the constitutional limit of Congress’s power under the Commerce Clause?