Commerce Clause

Commerce Clause Overview

The Commerce Clause grants Congress the power to regulate “commerce”:

– with foreign nations;

Commerce Clause
Commerce Clause

– among the several states;

– with the Indian tribes.

Meaning of Commerce

Commerce was understood to mean, trade, traffic, flow of goods, intercourse, exchange of one thing for another. Commerce, for purposes of the Commerce Clause, does not mean, “commercial activity” or “economic activity.” Commerce has a precise meaning, focused on the transportation or movement of goods.

Interstate Commerce Clause

Our focus, with respect to the post-1937 explosion of federal power, is on the regulation of commerce “among the several states.” This, “Interstate Commerce Clause,” grants Congress the power to act, if Congress chooses, to knock down internal trade barriers erected by the states. James Madison said the clause was meant to provide relief for producers or manufacturers who had to import or export through other states.

In 1937, the Supreme Court rewrote the Constitution and totally redefined the meaning of “commerce.” This new definition, created by the Supreme Court, granted Congress the power to regulate or control any activity or conduct that could have a substantial effect on interstate economic activity. Essentially, the limited Commerce Clause was turned into a virtually unlimited, national police power.

Logic of the Commerce Clause

To understand what the Commerce Clause really means, think of Manufacturing activities or Agricultural production activities. Businesses exist that produce goods or food, or some kind of service. These businesses do things like hire and fire employees and purchase goods or resources from other businesses.

Interstate Commerce
Interstate Commerce

Imagine Business A in California manufactures Blu-Ray players. Business A sells those Blu-Ray players to a retailer like Best Buy in Texas. Commerce is the activity whereby the Blu-Ray players are in transit between Business A and Best Buy. Congress has the power to act to knock down any tax or trade barriers erected by any states that impair the free flow of goods between states. Congress’ Commerce Clause power does not touch anything pertaining to Business A’s business practices, labor practices, nor does it touch Best Buy’s business practices, labor practices, environmental practices, or any other activity.

“Commerce succeeds to manufacture, and is not a part of it” United States v. E.C. Knight Co., 1895. (In plain English, Commerce comes after manufacturing activities and cannot be considered a part of manufacturing activities).

Business A would be subject to California’s state business laws, labor laws, environmental laws, and Best Buy would be subject to Texas’ state business laws, labor laws, environmental laws, etc… These domestic matters would be subject to the state’s police powers, but would not fall within the purview of federal legislative authority.

Supreme Court uses Commerce Clause to Aggrandize the Power of Congress

In 1937, the Supreme Court finally caved to the New Deal under significant political pressure from President Franklin Delano Roosevelt, Congress, and the progressive intelligentsia of the era. The Supreme Court, through creative interpretation, created a federal police power and abandoned the plain meaning of the Commerce Clause, along with more than a century’s worth of legal precedent. So much for Stare Decisis (“Let the decision stand”).

National Labor Relations Board (NLRB) v. Jones & Laughlin Steel Corporation, 1937

In NLRB v. Jones & Laughlin Steel Corp., the United States Supreme Court upheld the National Labor Relations Act (NLRA), which prohibited unfair labor practices impacting interstate commerce. Jones & Laughlin Steel Corp., a large steel producer, fired ten employees who tried to unionize. The NLRB ordered Jones & Laughlin Steel to rehire the ten employees and to provide back pay. Jones & Laughlin Steel Corp. refused and challenged the constitutionality of the NLRA.

Jones & Laughlin Steel Corp., relying on precedent, such as E.C. Knight Co., said the NLRA was unconstitutional because employer and employee relations are not “commerce” and, thus, are not subject to the control of Congress. The Supreme Court disagreed, broke with long-standing precedent, and created new law. The Supreme Court’s new position was that steel production had a close relationship with interstate economic activity, and, thus, Congress could control those matters that might place a burden on that economic activity. In the words of the court, purely intrastate activity can be controlled by Congress, “if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect commerce from burdens and obstructions.” This is the language of a political Supreme Court creating sweeping new law outside the scope of the Commerce Clause and Article 5.

Wickard v. Filburn, 1942

The Supreme Court expanded its tortured Commerce Clause reasoning in the head-scratching case of Wickard v. Filburn, 1942. In Wickard, the Supreme Court said Congress could control a farmer’s activity of growing wheat on his own property for his own consumption under the interstate Commerce Clause. How is it that growing wheat on your own property for your own consumption is “interstate commerce”? Under Supreme Court logic, one individual growing wheat for his own consumption would not be interstate commerce. However, taken in the aggregate, if thousands of people started growing wheat on their own land for their own consumption, this would have a “substantial effect” on the supply, demand, and price of wheat in the interstate market. Hence, Congress has the power to regulate and control this activity.

Wickard v. Filburn and NLRB v. Jones & Laughlin Steel Corp., form the illegitimate foundation of modern Supreme Court Commerce Clause jurisprudence.

If the Supreme Court’s decision in Wickard v. Filburn was an accurate “interpretation” of the Commerce Clause, then what sorts of activities would not be subject to Congressional regulation and control under the Commerce Clause?

Modern Limits of the Commerce Clause

The Supreme Court struck down Congressional legislation under the Commerce Clause in the 1995 case of United States v. Lopez. This was the first time an act of Congress had been struck down on Commerce Clause grounds since 1937. The Supreme Court proceeded to strike down another act of Congress on Commerce Clause grounds in United States v. Morrison, 2000. However, the Supreme Court backtracked and wiped out these gains in its 2005 decision, Raich v. Gonzalez. In Raich, the Supreme Court’s decision upheld federal drug laws on Commerce Clause grounds.

United States v. Lopez, 1995 – Gun Free School Zones Act

A high school senior named Alfonso Lopez, Jr. was charged under the federal Gun Free School Zones Act for bringing a revolver and ammunition to school. As its name sounds, the Gun Free School Zones Act (GFSZA) made it a federal crime to bring a gun into a School Zone. Lopez challenged the constitutionality of the law, claiming the law was outside the scope of Congress’ Enumerated Powers.

The federal government claimed the GFSZA was a constitutional exercise of Congress’ power under the Commerce Clause of Article 1, Section 8. The government argued that bringing guns into school zones inhibits the learning process… and makes students feel unsafe… which could have a “substantial effect” on interstate commerce by creating a less intelligent, unproductive workforce.

Ultimately, the Supreme Court sided with Lopez and stuck down the GFSZA as an unconstitutional exercise of Congressional power under the Commerce Clause. In doing so, the Supreme Court based its decision on the flawed New Deal precedent of NLRB v. Jones & Laughlin Steel Corp. and Wickard v. Filburn. Cutting through the nuanced legalese of the majority’s decision, the GFSZA simply failed to pass the Supreme Court’s puke test. The majority thought the government’s argument was too ridiculous to stomach. To his credit, Supreme Court Justice Clarence Thomas’ concurring opinion urged the Court to reconsider the flawed foundations of its post-1937 Commerce Clause jurisprudence.

The most troubling aspect of United States v. Lopez was the Supreme Court vote tally: Five to Four. Incredibly, laughingly and disturbingly, four of the nine Supreme Court justices sided with the government’s argument.

United States v. Morrison, 2000 – Violence Against Women Act

Five years after United States v. Lopez, the Supreme Court struck down another unconstitutional federal law on Commerce Clause grounds in United States v. Morrison. The federal law in question this time around was the Violence Against Women Act (VAWA), which, as its name sounds, created a private cause of action against individuals who committed gender motivated violence. As with the Gun Free School Zones Act, the government used creative reasoning to try and justify the constitutionality of the VAWA. The government said violence against women discourages women from traveling and transacting business, which, in the aggregate, would have a substantial effect on interstate commerce.

As with United States v. Lopez, the Supreme Court used its post-New Deal reasoning to decide the case. As before, the Supreme Court found the facts of the case and the government’s arguments too ridiculous to stomach.

By this point in time – 2000 – there appeared to be a small flicker of hope the Supreme Court could revisit and possibly repair some of the damage inflicted by the New Deal, NLRB v. Jones & Laughlin Steel Corp, Wickard v. Filburn and subsequent decisions. However, a major setback occurred in the 2005 case, Gonzalez v. Raich.

Gonzalez v. Raich, 2005 – Federal Criminalization of Marijuana

Hope the Supreme Court could repair damage caused by the New Deal soon vanished in Gonzalez v. Raich, 2005. The Supreme Court in Raich said federal drug laws were, “squarely within Congress’ commerce power because production of the commodity meant for home consumption, be it wheat or marijuana, has a substantial effect on supply and demand in the national market for that commodity.” Accordingly, the Supreme Court decided federal drug laws are perfectly Constitutional. This decision merely confirmed suspicions the Supreme Court had no serious interest in curtaining unconstitutional exercises of federal power under the Commerce Clause.

Implications of the Post-1937 Commerce Clause

At this point it should be clear most federal laws, including federal drug laws, federal minimum wage laws, federal securities laws, and most other forms of federal business regulation are unconstitutional since they fall outside the scope of the interstate commerce power of Article 1, Section 8. If the commerce clause were understood and respected today, the federal government would have a dramatically smaller impact on our day-to-day lives, especially for entrepreneurs, business owners and employees.

If people really want federal drug laws, federal business regulation, federal securities laws, federal minimum wage laws and other such federal economic regulation, a federal Constitutional amendment should be passed to legitimately delegate that authority to Congress.

Other Logical Problems with Modern Commerce Clause Jurisprudence

The Supreme Court’s post-1937, expansive Commerce Clause jurisprudence renders many of the other Enumerated Powers superfluous. Let’s assume, for example, the Constitution actually grants Congress the power to pass any law that has a “substantial effect” on interstate economic activity. If that were the case, then certainly this broad Commerce power would include the power to establish federal bankruptcy laws. How then do we reconcile the Commerce Clause (Article 1, Section 8, Clause 3) with Congress’ power to establish, “uniform laws on the subject of bankruptcies throughout the United States” (Article 1, Section 8, Clause 4)? What would be the point of expressly delegating the bankruptcy power to Congress if that power had already been included in the previous clause? Were the framers of the Constitution really that sloppy? Or dumb? Or are most Supreme Court justices really just intellectually dishonest politicians who dress like monks?

Clarence Thomas’ concurring opinion in United States v. Lopez acknowledged this logical inconsistency as well. According to Justice Thomas, “if Congress may regulate all matters that substantially affect commerce, there is no need for the Constitution to specify that Congress may enact bankruptcy laws, cl. 4, or coin money and fix the standard of weights and measures, cl. 5, or punish counterfeiters of United States coin and securities, cl. 6. Likewise, Congress would not need the separate authority to establish post-offices and  post-roads, cl. 7, or to grant patents and copyrights, cl. 8, or to “punish  Piracies and Felonies committed on the high Seas,” cl. 10. It might not even need the power to raise and support an Army and Navy, cls. 12 and 13, for fewer people would engage in commercial shipping if they thought that a foreign power could expropriate their property with ease.”

The only sensible conclusion is that modern Commerce Clause jurisprudence is illogical, dishonest, and purely political. Consider that the prescient Anti-Federalists of the late 1780s weren’t even concerned about the Commerce Clause as a potential avenue for the federal government to assume unlimited powers. This was because Commerce and the Commerce Clause had a clear, precise, technical meaning. Accordingly, modern Commerce Clause jurisprudence stands as the best example of how the federal government, largely through its own courts, has illegitimately aggrandized its own powers.

United States Constitution – Commerce Clause

The Congress shall have Power… To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

 

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