I. Congressional Power to
Regulate Interstate Commerce
Congress has the power to regulate interstate commerce. The
source of congressional power to regulate interstate commerce is the
Commerce Clause in Article I, Section 8. This power is viewed as
consisting of 3 categories of regulatory authority: (1) the power to
regulate the channels of interstate commerce, (2) the power to regulate
the instrumentalities of interstate commerce, and (3) the power to
regulate local activities that have a substantial economic effect on
interstate commerce. While most of the current members of the
Supreme Court recognize the commerce power itself as including all
three categories, Justices Scalia and Thomas do not. The third
Commere Clause category is seen by Justice
Scalia as justified by the combination of the Commerce Clause and the
Necessary
and Proper Clause (a grant of power to Congress to employ all means
that are plainly adapted to an enumerated end) and not based on the
Commerce Clause alone. Justice Thomas is the only member of the
Court who views category 3 legislation as beyond the power of Congress.
A. Category One - Regulation of the Use of the Channels of
Interstate Commerce:
1. What is a channel of interstate commerce? These include
navigable waterways, airspace, highways, railroad tracks, telephone
lines and the internet - these are the conduits through which
interstate commerce travels.
2. What does the power to regulate include? Congress’s
regulatory power is complete. It can regulate the use of the
channels of interstate commerce in any fashion (including prohibiting
transportation entirely) and for any purpose. The purpose need
not be to protect or stimulate or inhibit the economy, but could be
related to morality, health or safety. Congress can use its
plenary power to regulate the channels of interstate commerce even if
it is doing so to accomplish traditional police power objectives.
3. What are some examples of this use of the commerce
power? The Lottery Case
where Congress banned the shipment of
lottery tickets in interstate commerce, Hammar v. Dagenhart (The Child
Labor Case) (reversed in Darby),
and Darby
(§ 15(a)(1) - the ban
on shipping goods not produced in compliance with the FLSA).
B. Category Two - Regulation of the Instrumentalities of
Interstate Commerce:
1. What is an instrumentality of interstate commerce? These
are means used to transport goods and persons in interstate commerce
including railroad cars, buses, trucks, airplanes, and boats (as in
Gibbons v. Ogden). The
line between a channel and an
instrumentality is somewhat unclear, but it has no practical
consequence since the Court’s analysis is the same for activities
falling within either of the first two categories.
2. What does the power to regulate include? In Lopez, the
Court stated that Congress has the power to “regulate and protect the
instrumentalities of interstate commerce, or persons or things in
interstate commerce, even though the threat may come only from
intrastate activities.” Therefore, the power includes the power to
regulate the instrumentalities or means of interstate transportation
and persons or things in interstate commerce as well as to protect
those instrumentalities, persons, or things in interstate commerce
against threats to them even if the source of the threat is from
intrastate activities. This allows Congress to regulate
activities at places such as airports, train stations, and cargo
storage areas to protect interstate commerce. Category two can be
thought of as incidental to category one since it is designed to
protect activities that occur in the channels of interstate commerce
from threats even if those threats originate from intrastate
activities.
3. What are some examples of this use of the commerce
power? One example is the Shreveport
Rate Case,
where the Court
upheld a federal regulation of interstate rail rates that was aimed at
eliminating the adverse impact on interstate commerce of intrastate
rail rates which
discriminated against interstate commerce by charging less for longer
intrastate railroad journeys than were charged for shorter interstate
railroad
trips. Another is a federal
law that makes it a crime to damage
or destroy an airplane employed in interstate or foreign commerce even
though the destruction occurs while the plane is stored in an airplane
hangar. A third example is a federal law that makes it a crime to
damage property that is in the possession of an air carrier, motor
carrier, or
rail carrier and is awaiting transportation in interstate or foreign
commerce.
C. Category Three - Regulation of Local Activities that have a
Substantial Economic Effect on Interstate Commerce.
Since United States v. Lopez,
this category has been further subdivided
into the regulation of local economic (or commercial) activities on the
one hand and the regulation of local non-economic (or non-commercial)
activities on the other. While this is the first of the four
Lopez factors, it is the most
important factor because it is used as a
threshold inquiry to decide if the congressional action is going to be
reviewed using a highly deferential standard (likely to result in
upholding the law) or a less deferential standard (less likely to
result in upholding the law).
1. Regulation of Local Commercial/Economic Activities
a. When Congress regulates an intrastate economic or commercial
activity (as in Wickard v. Filburn,
Heart of Atlanta, and Perez), the
test the Court uses is whether Congress could have rationally concluded
that the regulated activity has a substantial economic effect on
interstate commerce. It is not always clear whether the activity that
Congress is regulating is a commercial or a noncommercial activity. In
such situations, the government will argue that the activity is
commercial in order to get the benefit of a more deferential standard
of review and the challenger will argue that the activity is
noncommercial in order to get the benefit of a less deferential
standard of review (see 2.a below).
b. This test shows great deference to the judgment of Congress, a
judgment often, but not necessarily, reflected in congressional
findings, hearings and committee reports.
c. The substantial economic effects required under this test can
be found in the aggregate
so the question is not whether an individual instance of the regulated
activity affects commerce (the wheat grown by farmer Filburn or the
guests who want to stay at the Heart of Atlanta Motel), but whether the
regulated activity in its entirety (adding together the impact of each
individual instance of the regulated activity) has a substantial
economic effect on interstate commerce (all the wheat that farmers grow
for
home consumption or all the travelers who are unable to stay at hotels
and motels because such places discriminate based on race).
d. When Congress regulates an interstate economic activity or
enterprise under a comprehensive regulatory scheme (such as the sale of
wheat in interstate commerce), it may also
regulate the aspects of that activity that are not interstate in
character
(as in Wickard v. Filburn and
Gonzales v. Raich). The
intrastate
or local aspect of the activity (even if it is an agricultural product
grown for
home or personal consumption) may be regulated in order to make the
entire regulatory scheme effective. This is true where the
characteristics of the product are the same (fungible) (like the wheat
in Wickard), and
where the failure to regulate
the
quantity intended for local use would, in the view of Congress, leave a
significant
gap in the regulatory scheme.
e. Similar to d. above, when Congress regulates an economic activity
under a comprehensive regulatory scheme (such as the sale of majijuana
in Raich), it may also
regulate noneconomic aspects of that activity
(as in Gonzales v. Raich).
The noneconomic aspect of the activity (even
if it is the possession of marijuana used for medicinal purposes) may
be regulated in order to make the entire regulatory scheme effective.
This is true where the characteristics of the product are the same
(fungible) (like the marijuana in Raich),
and where the failure to
regulate the quantity intended for noneconomic use would, in the view
of Congress, leave a significant gap in the regulatory scheme. The
degree of deference that will be given to a congressional decision
to include the local noneconomic activity in a comprehensive regulatory
scheme is not yet completely clear, although
some degree of deference exists as can be seen in Gonzalez v. Raich.
f. In a similar fashion to d. and e. above, Congress may regulate
a
class of activities if the class as a whole affects interstate commerce
even if not all members of the class affect interstate commerce. The
“class of activities” rationale was relied on in Perez to regulate
extortionate credit transactions and was a source of disagreement
between the majority and dissent in Gonzales
v. Raich. In Raich,
the majority concluded that the class of activities being regulated was
the cultivation, possession, and distribution of marijuana, a class of
activities that had a substantial economic effect on interstate
commerce. Congress could regulate the cultivation and possession
of marijuana for medicinal purposes since it was part of the regulated
class. The dissent, by contrast, concluded that the cultivation
and possession of marijuana for medicinal purposes was a separate class
of activities and that this more limited class did not have a
substantial economic effect on interstate commerce and, therefore,
could not be regulated by Congress.
g. The fact that Congress may have been motivated in whole or in
part by a moral objective is not relevant so long as the regulated
activity also has a substantial economic effect on interstate commerce
(as in the case of the Civil Rights Act of 1964 when Congress outlawed
racial discrimination in places of public accommodation both because of
the immorality of discrimination and also because the discrimination
had a negative economic effect on interstate commerce by discouraging
travel by
African-Americans).
h. In National Federation of
Independent Business (NFIB) v. Sebelius,
the category three power to regulate local economic activities was
found by a majority of the Court not to extend to the regulation of
inactivity (regulating the behavior of people who have chosen not to
buy health insurance by requiring that they either buy health insurance
or make a payment to the IRS in lieu of buying health insurance) even
if that inactivity has a substantial economic effect on interstate
commerce. Under this view, while the commerce power allows Congress to
regulate the
behavior of people who are participating in commerce (growing wheat in Wickard v. Filburn, operating a
restaurant in Katzenbach v. McClung,
growing marijuana in Gonzalez v.
Raich, and lending money in Perez
v. United States), it does not allow Congress to force people
into commerce who have chosen not to engage in commerce. The
distinction between activity and inactivity will not always be clear so
that it may be possible for the federal government to argue it is
regulating activity and, therefore, within the scope of the commerce
power while the challenger argues that that the government is
regulating inactivity and, therefore, beyond the scope of the commerce
power. Because the Commerce Clause analysis was not necessary to the
result reached by Chief Justice Roberts in NFIB v. Sebelius (since he upheld
the individual mandate as a legiitimate exercise of the taxing power),
there is a division of opinion in the lower courts as to whether the
distinction between activity and inactivity is part of the holding of
the case and, therefore, binding on the lower courts.
2. Regulation of Local Non-Commercial/Non-economic Activities
a. The distinction between economic and commercial activities as
contrasted with non-economic and noncommercial activities (factor one)
became critically important after the Court’s decision in Lopez. The distinction is evaluated
on a case by case basis and the dividing
line may be somewhat murky. If the regulated activity involves
the production of a good for sale or the sale of a good or service, it
will easily be classified as commercial activity. If it does not
involve a commercial transaction,
the Court may be inclined to characterize it as non-economic. The
Court characterized possession of a gun in a school zone as
non-economic in Lopez and
violence against women as non-economic in
Morrison. By contrast,
growing wheat for home consumption was
considered to be an economic activity in Wickard and racial discrimination
against travelers by hotels and motels was considered to be an economic
activity in Heart of Atlanta Motel.
The question of whether the
activity regulated is economic/commercial or not may depend on the
scope of the
congressional regulatory scheme. If the scheme generally
regulates a commercial activity (see 1.e. above), the Court may be
willing to
characterize all of the applications of the statute as the regulation
of commercial activity including those that reach activity, which
viewed in isolation, might be considered noncommercial (such as the
medicinal marijuana grown for personal consumption in Raich which was
regulated as part of a comprehensive regulation of the illegal drug
market). Some activities may be difficult to classify as either
economic or non-economic. For example, if a regulated activity does not
involve an economic exchange (such as a sale of goods), but the
motivation for the activity is economic, it is not clear how the
activity will be classified. In such cases, the challenger will
argue that the regulated activity is non-economic and the federal
government will argue that the regulated activity is economic. In
addition, both parties will need to argue in the alternative, if
possible on the available facts. The challenger will argue that the law
exceeds the scope of the commerce power even if the regulated activity
is classified as economic. The government will argue that the law is a
legitimate exercise of the commerce power even if the regulated
activity is classified as non-economic.
b. When Congress regulates an intrastate noncommercial,
non-economic
activity (as in Lopez and Morrison), the court is less
deferential to
Congress.
c. When Congress regulates a non-economic, noncommercial local
activity, the Court will be likely to uphold the regulation if the
statute contains a jurisdictional element (factor two) that requires a
connection to interstate commerce be shown in each individual case
where the statute is applied (such an element was missing in both Lopez
and Morrison). However,
there is still uncertainty over what
kinds of jurisdictional element will be viewed as sufficient to tie
the regulated activity to interstate commerce. After Lopez,
Congress amended the statute struck down in that case to add the
requirement that the firearm have “moved in or that otherwise affects
interstate commerce.” The Supreme Court has not reviewed this amended
version of the statute so it is unclear whether this jurisdictional
element will be viewed as sufficient to cure the constitutional defect
identified in
Lopez. Therefore, a challenger
may be able to argue that a statute that contains a jurisdictional
element violates the Commerce Clause because it does not impose a
sufficient limit on the exercise of Congressional power by requiring a
meaningful link or nexus between the regulated activity and interstate
commerce. The lower courts have generally unheld statutes that contain
jurisdictional elements when challenged on Commerce Clause grounds.
d. The presence or absence of congressional findings (factor
three) is not
determinative (they were present in Morrison,
but absent in Lopez), but
such findings may help to demonstrate that the local activity being
regulated has a substantial economic effect on interstate commerce.
e. When Congress regulates a local, non-economic activity, the
substantial economic effect on interstate commerce needs to be
based on more than a showing of an attenuated connection between the
regulated activity and interstate commerce (factor four). The
effect needs to be more direct and not based on a long series of links
in a chain that eventually connects the regulated activity to
interstate commerce. An attenuated connection is likely to be
available in most cases, including when Congress regulates violent
crime
(and can show a connection between local crime and an increase in costs
and/or a reduction in economic productivity (Morrison)) and education
(and can show that poor educational quality leads to a less qualified
workforce and less economic productivity (Lopez)). Acceptance of such an
argument would effectively do away with any limit on congressional
power. Therefore, the Court
views such "limitless" arguments based on an attenuated connection as
insufficient, as it did in both Lopez
and Morrison, because
they do not
impose any real limits on Congress's power to regulate local
non-economic activities and, therefore, do not preserve an appropriate
balance between state and federal power.
f. Without a limit on the nature of the connection that must
exist between the regulated activity and interstate commerce, Congress
would have the equivalent of a federal police power and its power would
be virtually unlimited and include areas (education or family
relationships, for example) that have traditionally been the province
of the states and not the federal government. However, the
distinction between activities that have traditionally been the
province of the states as contrasted to those that have traditionally
been the province of the federal government is far from clear
cut. Therefore, this federalism concern is not one of the specific
factors in the
Lopez analysis, but only a
consideration which may influence the
Court’s analysis of the four factors it relies on.
g. In the case of non-economic, violent crime, the Court will not
allow Congress to regulate “based solely on that conduct’s aggregate
effect on interstate commerce.” Therefore, the federal government
must show a connection to interstate commerce in each individual
instance of the regulated activity (as it must if the statute contains
a jurisdictional element). It is not yet clear whether a similar
restriction on the use of aggregation will be applied to all
congressional
regulation of non-economic activities even when violent crime is
not being regulated and even when the statute does not regulate
criminal behavior at all. However, there are suggestions in the cases
that Congress will not be able to rely on aggregation in all cases
where it regulates a non-economic activity (except if that activity is
regulated as part of a comprehensive regulatory scheme that includes
both economic and non-economic activity as in 1.e. above).