Article I, Section 8, gives Congress the authority to regulate commerce with foreign nations and among the states.
The Constitution is ratified. Article I, Section 8, gives Congress the authority “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”
In its first major commerce clause case, Gibbons v. Ogden, the U.S. Supreme Court rules that the commerce clause is intended to apply not only to the exchange of goods, but also to their transport, referring to the combined acts as “intercourse.” New York granted Aaron Ogden the exclusive right to operate steamships in the waters between New York and New Jersey, but his claim is challenged by competing steamship operator Thomas Gibbons. The Court finds in Gibbons’ favor, ruling that interstate waters are the jurisdiction of Congress under the commerce clause, and that states may not enact legislation that conflicts with federal law.
In Cooley v. Board of Wardens, the U.S. Supreme Court votes to uphold the pilotage law of Pennsylvania that requires all out-of-state ships to hire a local pilot as a guide to navigate state waters. Ship pilot Cooley failed to hire a local pilot and refuses to pay the resulting fine on the grounds that the pilotage law is a violation of the commerce clause, burdening out-of-state pilots with different requirements than state residents. The Court finds that the states have the authority to legislate on uniquely local matters, even in instances that discriminate between intrastate and interstate commerce.
In the case The Daniel Ball, the U.S. Supreme Court upholds the ruling that the transportation of goods on navigable waters between states is tantamount to commerce and is therefore under the authority of Congress under the commerce clause. The steamship the Daniel Ball was found operating without a license on the Grand River in violation of a congressional act requiring licenses for the operation of steamships on bays, lakes, rivers and other navigable waters. The owner of the ship argued that the ship was not engaged in commerce, merely transportation, but the Court finds that there is no clear distinction to be made between commerce and the transportation of goods intended for commerce.
Before 1887, railroads were exclusively privately owned and unregulated, but as their scope and influence grew, the autonomy of railway companies became a liability. The Interstate Commerce Act gives the federal government authority over railways that operated between states and requires those companies to charge fair rates to customers. The law also creates the Interstate Commerce Commission, which is initially responsible for investigating and prosecuting unlawful activities committed by railroad companies. Its scope of authority includes automobile and water shipping until its closure in 1995.
President Benjamin Harris signs the Sherman Antitrust Act, which prohibits the monopolization of industries by companies whose business is conducted between states. As business expands rapidly at the height of the Gilded Age, the government recognizes a need to protect the economy from the acquisitive hands of industry titans attempting to consolidate power in national markets. The law seeks to guarantee fair and competitive prices for services provided to customers, who find themselves increasingly at the mercy of big-business tycoons.
In United States v. E.C. Knight Co., the Supreme Court finds that the Sherman Antitrust Act of 1890, which protects against the establishment of corporate monopolies, is not applicable to manufacturing operations and is strictly limited to a narrow definition of commerce under the commerce clause. E.C. Knight Co. dominated the national sugar refining business with the purchase of four Philadelphia refineries. It was sued by the United States to cancel the agreement and maintain the autonomy of the different companies. The Court’s decision to permit the agreement is initially an obstacle to the legislative efforts of the New Deal, but is effectively reversed in 1937 in NLRB v. Jones & Laughlin Corp., making way for comprehensive legislation to combat the economic tumult of the Great Depression.
The Elkins Act prohibits railroad companies from giving rebates to businesses that ship large quantities of goods and giving power to those businesses to artificially lower shipping prices. The law will be reinforced with the passage of the Hepburn Act in 1906 and the Mann-Elkins Act in 1910, which give Congress and the Interstate Commerce Commission the power to control railroad shipping rates.
In Northern Securities Co. v. United States, the U.S. Supreme Court upholds the Sherman Antitrust Act and prohibits the consolidation of railroad companies Great Northern and Northern Pacific Railway. The two companies run parallel lines from the Great Lakes and Mississippi River to the Pacific Ocean; their incorporation would effectively monopolize rail transportation in those regions. The Court asserts that the Antitrust Act is enforceable not only in instances when an entire industry is monopolized by one corporation, but also when the incorporation of multiple companies is shown to be significantly detrimental to interstate commerce.
In Swift & Co. v. United States, the U.S. Supreme Court unanimously upholds the Sherman Antitrust Act of 1890 and Congress’ power to ban national trade monopolies. The United States files suit against Swift & Co., a group of meat dealers who had established a set of private agreements to regulate meat pricing, and who, combined, made up 60 percent of the U.S. meat market. The plaintiff argues that the companies have violated the Sherman Antitrust Act of 1890 and have illegally conspired to control the market. Swift & Co. asserts that the law is an unconstitutional extension of Congress’ power. The Court finds that the actions of the company could adversely affect interstate markets, and therefore were under congressional jurisdiction.
With wide bipartisan support, President Woodrow Wilson signs legislation establishing the Federal Trade Commission, designed to aid in the antitrust efforts of the federal government, a major feature of the political and economic era. The FTC will continue regulate trade standards and enforce trade legislation to promote fair and competitive trade.
With the passage of the Adamson Act, President Woodrow Wilson effectively avoids a nationwide strike of railroad workers. The act sets an eight-hour work day and establishes overtime compensation for railroad workers, marking the first time the U.S. government regulates the labor conditions of non-government workers. In Wilson v. New, the railroads said the law raised wages rather than regulated hours. The U.S. Supreme Court ruled the law established an eight-hour day as the standard of service by employees and that it was within the power of Congress under the commerce clause.
In Hammer v. Dagenhart, the U.S. Supreme Court invalidates the Keating-Owen Child Labor Act of 1916, which set age limitations for workers producing goods for interstate commerce. Textile mill worker Rueben Dagenhart sues on behalf of his 14-year-old son for the right to work in the mill, whose products are sold across state lines. The Court maintains that the law is an unconstitutional over-extension of the commerce clause as it regulates the circumstances of the production of goods, rather than commerce.
The Agricultural Adjustment Act is passed as part of New Deal legislation aiming to stabilize the country’s economic markets. The law sets limits on agricultural production, subsidizing farmers who destroy their surpluses in order to raise the market value of produce. The 1933 law will be replaced in 1938 by more permanent legislation known informally as the Farm Bill, which will expand over time to include protections for farmers, rural communities, consumers and the environment.
In Baldwin v. G.A.F. Seelig Inc., the U.S. Supreme Court rules that the New York Milk Control Act of 1933 is a violation of the commerce clause, as the act sets a minimum price for milk produced in the state and prohibits the purchase of milk from other states to ensure the success of local milk markets. G.A.F. Seelig Inc. is a New York milk distributor who purchased milk from Vermont producers at a lower price than the minimum required by the law. He was denied a license for a new distribution plant in the state as a sanction under the Milk Control Act. The Court finds that states may not regulate commerce within their state in ways that create unequal competition between in-state and out-of-state companies.
In Schechter Corp. v. United States, the U.S. Supreme Court invalidates the National Industrial Recovery Act (NIRA), one of the New Deal’s key pieces of federal legislation. Among its provisions are minimum wage and maximum hours requirements and certain price controls. The Court rules that the NIRA exceeds Congress’ power to regulate interstate commerce and invades the states’ rights to regulate manufacturing. Even an economic emergency like the Depression, the Court finds, does not justify federal government interference with a state’s economic activity.
In Carter v. Carter Coal Co., the U.S. Supreme Court finds that the Bituminous Coal Conservation Act of 1935, which granted tax breaks to coal mining companies that adhered to minimum-wage and maximum-hour requirements, oversteps the limits of Congress’ power under the commerce clause. Carter, a shareholder in Carter Coal Co., sues to enjoin the company from following the regulations set by the law on the grounds that the law is unconstitutional. The Court rules for Carter, upholding the precedent set by Hammer v. Dagenhart, asserting that production of goods is not the same as commerce, and is therefore outside the authority of Congress.
In the landmark case National Labor Relations Board v. Jones & Laughlin Steel Corp., the U.S. Supreme Court upholds the ruling that the National Labor Relations Act of 1935 is constitutional and that labor-management disputes are within the authority of the commerce clause. The NLRB brings charges against Jones & Laughlin Steel Corp. for discriminating against labor union members and prospective members in hiring and for firing a number of union members in violation of the act. The Court grants certiorari to the District Court ruling against Jones & Laughlin Steel Corp. on the grounds that labor-management relations indirectly but significantly affect interstate commerce.
In South Carolina State Highway Department v. Barnwell Brothers Inc., the Supreme Court rules that states have the authority to determine local shipping regulations provided they apply regulations equally to interstate and intrastate highways. The Barnwell Brothers shipping company sues to enjoin the enforcement of a South Carolina law barring trucks that weigh over 20,000 pounds and measure over 90 inches wide from using state highways. Barnwell contends that 90 percent of shipping trucks are 96 inches wide and only four states enforce a 20,000-pound maximum. The Court’s decision effectively shows that states have the power to regulate commerce-related issues in the absence of congressional legislation, when state legislation does not conflict with federal regulations or with interstate commerce.
In United States v. Darby Lumber Co., the U.S. Supreme Court rules to uphold the Fair Labor Standards Act of 1938, which restricts the interstate shipment of goods produced by manufacturers that fail to meet the minimum wage and maximum working hours set by the law. Darby Lumber Co. is fined for hiring employees under the wage limit and refuses to pay the fine on the grounds that the law is unconstitutional under the precedent set by Hammer v. Dagenhart and Carter v. Carter Coal Co., in which the Court ruled that production is separate from commerce. Reversing the precedent, the Court maintains that the production of goods to be sold between states is effectively interstate commerce, and is therefore within the authority of Congress.
In Wickard v. Filburn, the Supreme Court upholds the Agricultural Adjustment Act of 1938, which restricts the total amount of wheat a farmer may produce. Secretary of Agriculture Claude Wickard fines farmer Roscoe Filburn for producing in excess of the maximum. Filburn contests that the wheat he sold on the market was within the limits set by the law and that the rest was used for personal consumption. The Court finds that the combined impact of individual farmers removing themselves from buying wheat on the market could destabilize the national wheat market and that their production must therefore be restricted.
In H.P. Hood & Sons Inc. v. Du Mond, the Supreme Court again rules that states may not regulate trade for the benefit of the local economy. H.P. Hood & Sons, which buys milk from New York producers to sell in Massachusetts, is denied a license to open a new New York plant under a law that allows the commissioner of agriculture and markets to refuse to license companies whose business does not serve the public good of New York. The Court rules that such preferential treatment is unconstitutional, giving unfair advantages to the local economy.
In Heart of Atlanta Motel v. United States, the Supreme Court upholds the Civil Rights Act of 1964, which prohibits discrimination against customers in public places on the basis of race. The owner of the Heart of Atlanta Motel argues that the law infringes on his Fourteenth Amendment rights, saying that the requirement to serve black customers is tantamount to indentured servitude. The Court finds that, because the business depends mostly on customers traveling from other states, it falls within the jurisdiction of Congress and the commerce clause, and is therefore subject to the law established by the Civil Rights Act. The Court will also uphold the ruling in Katzenbach v. McClung, in which a small restaurant is ordered to change its discriminatory policies.
In Heart of Atlanta Motel v. United States, the owners of a large motel in Atlanta, Ga., which restricts its clientele to white people, three-fourths of whom are transient interstate travelers, ask the courts to stop the enforcement of the Civil Rights Act of 1964. The hotel owners says Congress does not have the power to prohibit racial discrimination in places of public accommodation because neither the 13th, 14th, nor the 15th Amendment authorizes Congress to regulate private action. The owners also argue that the commerce clause (the phrase in the Constitution that gives Congress the power to regulate business transactions across state lines) does not include behavior such as this. In an important civil rights case, the Court here upholds the Civil Rights Act by finding that Congress can regulate hotels since interstate travel is “commerce.” At the same time, the Court finds that the race discrimination at issue here does not violate either the Fifth Amendment’s due process clause or the 13th Amendment’s prohibition on “involuntary servitude.”
In a companion case, Katzenbach v. McClung, restaurant owners challenge the power to prohibit discrimination in their establishments. Relying on its decision in Heart of Atlanta Motel, the U.S. Supreme Court upholds the Civil Rights Act finding that restaurants participate in interstate commerce.
In National League of Cities v. Usery, the U.S. Supreme Court rules that the federal Fair Labor Standards Act cannot be extended to cover all state and local employees. Although the fair labor law is a proper exercise of the federal government’s commerce clause power, the Court rules that the 10th Amendment requires the states to keep control over their own operations, and that the wage and hour requirements for government employees are part of such operations. The Court will overrule Usery nine years later, in Garcia v. San Antonio Metropolitan Authority.
In Hicklin v. Orbeck, the U.S. Supreme Court rules that the State of Alaska may not discriminate against nonresidents in hiring practices. The Alaska Hire Statute was enacted to curb unemployment among Alaska residents by giving them preference over nonresidents in employment, on the grounds that unemployment in the state was substantially the result of the influx of nonresident job seekers. The Court finds this suggestion to be untrue. The statute is ruled an unconstitutional violation of the commerce clause, which guarantees equal opportunity for employment for all citizens regardless of state residency.
The U.S. Supreme Court rules in Garcia v. San Antonio Metropolitan Transit Authority that the Fair Labor Standards Act does apply to state and local employees. Reversing its 1976 holding in Usery, the Court concludes that this extension of the fair labor law is appropriate under the federal government’s constitutionally delegated commerce clause power after all. The Court bases its ruling in part on the fact that because Congress is made up of representatives from each of the states, legislation enacted by Congress takes states’ rights into account. Unless the states can show that the federal lawmaking process is defective in some way, the Court rules, the 10th Amendment is not violated.
In the landmark decision in United States v. Lopez, for the first time in over 50 years the U.S. Supreme Court limits the powers of Congress under the commerce clause when it strikes down the 1990 Gun-Free School Zones Act. Alfonso Lopez Jr. is caught in his San Antonio high school with a handgun and bullets. He is arrested and accused of violating the federal Gun-Free School Zones Act of 1990, which prohibits the possession of guns in school zones. The Court says the Gun-Free School Zones Act, which bars people from knowingly carrying a gun in a school zone, exceeds the power of Congress to legislate under the commerce clause. Possession of a gun in a local school zone is not an economic activity that might, through repetition elsewhere, have a substantial effect on interstate commerce.
In United States v. Morrison, the U.S. Supreme Court strikes down a provision in the federal Violence Against Women Act as exceeding Congress’ commerce clause authority and impinging on an area of state control. The provision, which permitted victims of sex-based violence to bring a federal lawsuit against their attackers, is found to invade states’ “police power.” Legislation about domestic violence and family law is traditionally left to the states.
In Gonzales v. Raich, the U.S. Supreme Court rules that drug regulation, even within individual states, is within congressional authority. Angel Raich was prescribed medical marijuana by a doctor, made legal under California’s Compassionate Use Act of 1996, but her home was raided by the FDA under the federal Controlled Substances Act. Raich files suit to enjoin enforcement of the federal law on the grounds that medicinal marijuana purchased in California for use only in California exceeds Congress’ commerce clause authority. The Court finds that it is within congressional authority to regulate local drug sale and use.
In 2009, Montana passes the Montana Firearms Freedom Act to allow Montana gun manufacturers to sell guns without a federal license. The bill, authored by Gary Marbut, president of the Montana Shooting Sports Association, and supported by the National Rifle Association, attempts to reverse decades of gun legislation on the grounds that the federal government may not regulate firearms produced and distributed solely for use within a state. The law is eventually struck down by a District Court, but by 2014, eight more states – Alaska, Arizona, Idaho, Kansas, Tennessee, South Dakota, Utah and Wyoming – will pass similar laws.