Outline of Congressional Power to Regulate Interstate Commerce

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. This third category is seen by Justice Scalia as justified by the Commerce Clause together with 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.

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 the federal regulation of intrastate rail rates which discriminated against interstate commerce by charging less for longer intrastate railroad journeys than 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 in the possession of an air carrier, motor carrier, or rail carrier and being transported 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 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.

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 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). 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 effect on interstate commerce by discouraging travel by African-Americans).

2. Regulation of Local 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 economic activity. If it does not, 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 of wheat for home consumption was considered 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 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).

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 more 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 elements 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.” It is unclear whether this jurisdictional element is sufficient to cure the constitutional defect identified in Lopez.

d. The presence or absence of Congressional findings (factor three) are 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, noneconomic 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)). An attenuated connection was not sufficient in either Lopez or Morrison.

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 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 noneconomic, 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 noneconomic 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 noneconomic activity (except if that activity is regulated as part of a comprehensive regulatory scheme that includes both economic and noneconomic activity as in 1.e. above).