Commerce Powers

Commerce Powers

 

LO2-6

Congress’s broadest power is derived from the Commerce Clause whereby Congress is given the power to “regulate Commerce among the several states.”⁵ Under the modern trend, federal courts have been largely deferential to legislative decisions under Congress’s commerce powers. Despite some limits placed by the U.S. Supreme Court in the relatively recent past, Congress still exercises very broad powers to pass laws where the activity being regulated affects interstate commerce in any way.

⁵Article I, § 8.

Application of Commerce Powers

Congress exercises its commerce powers in various forms. However, the direct and broad power to regulate all persons and products related to the flow of interstate commerce is the fundamental source of its authority.

Interstate versus Intrastate Commercial Activity

Congress has the express constitutional authority to regulate (1) channels of interstate commerce such as railways and highways, (2) the instrumentalities of interstate commerce such as vehicles used in shipping, and (3) the articles moving in interstate commerce. Even for commercial activity that is purely intrastate (takes place within one state’s borders), Congress has the power to regulate the activity so long as it has a substantial economic effect on interstate commerce. For example, suppose that Congress passes the Whistleblower Act, a statute that prohibits any business engaged in interstate commerce from firing their employees for reporting safety violations. Steel Co., a West Virginia company, begins to engage in a pattern of firing all employees who report safety violations. When a government agency files a civil lawsuit against Steel Co. to enforce the Whistleblower Act, Steel Co. defends that the act is unconstitutional because the activity of firing their employees is purely within the state of West Virginia and not related to interstate commerce. A court would likely find that if Steel Co. had any commercial activity at all (such as shipping, warehouses, equipment, advertising, or importing) that is outside of West Virginia, Congress has the authority to regulate Steel Co.’s workplace policies.⁶ In the dynamics of the modern-day commercial world, a large amount of seemingly intrastate activity has some degree of economic effect on interstate commerce.

⁶Based on the landmark Supreme Court case of NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937). This was the first modern case where the Supreme Court began to broaden its interpretation of Congress’s commerce powers. The groundwork for this expansion was laid out in Gibbons v. Ogden, 9 Wheat. 1 (1824) in which the Court recognized a more wide-ranging view of congressional power to regulate commerce.

Case 2.1. Cipollone v. Liggett Group, Inc., et al., 505 U.S. 504 (1992)

Fact Summary

Cipollone brought suit against Liggett for violation of several New Jersey consumer protection statutes alleging that Liggett (and other cigarette manufacturers) were liable for his mother’s death because they engaged in a course of conduct including false advertising, fraudulently misrepresenting the hazards of smoking, and conspiracy to deprive the public of medical and scientific information about smoking. Liggett urged the court to dismiss the state law claims contending that the claims related to the manufacturer’s advertising and promotional activities were preempted by two federal laws: (1) the Federal Cigarette Labeling and Advertising Act of 1965, and (2) the Public Health Cigarette Smoking Act of 1969.

Synopsis of Decision and Opinion

The U.S. Supreme Court ruled against Cipollone, holding that his claims relying on state law were preempted by federal law. The Court cited both the text of the statute and the legislative history in concluding that Congress’s intent in enactment of the laws was to preempt state laws regulating the advertising and promotion of tobacco products. Because Congress chose specifically to regulate a certain type of advertising (tobacco), federal law is supreme to any state law that attempts to regulate that same category of advertising.

Words of the Court: Preemption

“Article VI of the Constitution provides that the laws of the United States shall be the supreme Law of the Land. Thus, [. . .] it has been settled that state law that conflicts with federal law is ‘without effect.’ [. . .] Accordingly, ‘the purpose of Congress is the ultimate touchstone’ of pre-emption analysis. Congress’s intent may be ‘explicitly stated in the statute’s language or implicitly contained in its structure and purpose.’ In the absence of an express congressional command, state law is preempted if that law actually conflicts with federal law, [. . .], or if federal law so thoroughly occupies a legislative field ‘as to make reasonable the inference that Congress left no room for the States to supplement it.’ [. . .] [Cipollone’s] claims are preempted to the extent that they rely on a state-law ‘requirement or prohibition . . . with respect to . . . advertising or promotion.’“

Case Questions

1.	Given the Supreme Court’s language and the result of this case, is Congress’s preemption power broad or narrow? Explain your answer.

 

2.	Does the Supreme Court’s ruling bar all residents of New Jersey, or any other state, from bringing suit against a tobacco company for false advertising or promotion? Why or why not?

 

3.	Why would Congress want to preempt state law regarding the advertising and promotion of tobacco products? Do you agree with their decision to do so? Why or why not?

The U.S. Supreme Court has even deferred to congressional regulation of a product that is cultivated for noncommercial purposes solely in one state as sufficiently related to interstatecommerce. In Gonzalez v. Raich,⁷ the Court ruled that Congress had the power to criminalize the possession of marijuana even if it was noncommercially cultivated and consumed by medical prescription all in the same state. The case involved a challenge by two California residents to the enforcement by federal officials of the federal Controlled Substances Act after California passed a state law via voter ballot proposition to exempt anyone involved in the cultivating, prescribing, and consuming marijuana for medical purposes from prosecution. The plaintiffs were each arrested by federal officials for possession of marijuana that had been grown at home. Each had a prescription from a licensed physician. In refusing to invalidate the Controlled Substances Act, the Court noted that Congress could have rationally believed that the noncommercially grown marijuana would be drawn into the interstate market and, therefore, the banning of the substance was sufficiently related to interstate commercial activity.

⁷545 U.S. 1 (2005).

Legal Speak

Ballot proposition

A question put to the voters during a state election to decide (usually controversial) issues such as imposing a new income tax or whether the state should allow marijuana to be used for medicinal purposes. In some states, this is known as a ballot initiative or a referendum.

Civil Rights Legislation

A key use of the federal commerce power has been in the area of civil rights legislation. Indeed, the Supreme Court’s level of deference for use of congressional commerce powers reached its peak during and directly after the civil rights era. In the 1964 Civil Rights Act, Congress used its commerce power to ban discrimination in places of public accommodation such as restaurants and hotels. In two important civil rights cases decided by the U.S. Supreme Court, the Court ruled that the Civil Rights Act was a permissible application of Congress’s commerce powers. In Heart of Atlanta Motel v. U.S.,⁸ the Court made clear that a federal ban on racial discrimination was a constitutionally permitted use of congressional commerce powers because the hotel was open to interstate travelers. Additionally, the Court deferred to a congressional finding of fact that racial discrimination in accommodations discouraged travel by limiting a substantial portion of the black community’s ability to find suitable lodging. In a companion case,⁹Katzenbach v. McClung,¹⁰ the Court held that a local restaurant that was located far from any interstate highway, and with no appreciable business from interstate travelers, was nevertheless subject to the reach of the federal statute because the restaurant purchased some food and paper supplies from out-of-state vendors. Since these purchases were of items that had moved in commerce, Congress could properly exercise their power to regulate a restaurant whose business interests were primarily local.

⁸379 U.S. 241 (1964).

⁹Two cases that have similar issues where the Court publishes its opinion at the same time.

¹⁰379 U.S. 294 (1964).

President Johnson, seen here with Dr. Martin Luther King, Jr., signed the Civil Rights Act in 1964.

© AP Photo

Noncommercial Activity

In 1995, the U.S. Supreme Court signaled that some limits on Congress’s commerce power still exist. In cases where the activity is purely noncommercial (such as when Congress passes a criminal statute that is seemingly unrelated to commerce), the Court has used increased levels of scrutiny to be sure that the activity that Congress seeks to regulate has a sufficient nexus (connection) to some legitimate economic interest. In U.S. v. Lopez,¹¹ the Court invalidated a federal statute on the basis that it was beyond Congress’s commerce powers. In Lopez, the Court struck down the Gun-Free School Zones Act of 1990, which made it a federal crime to possess a gun within a certain distance from a school. The Court rejected the government’s argument that gun possession in schools affected economic productivity (by making it more difficult for students to obtain an education) and thus was within the purview of congressional commerce power. The Court held that such a broad interpretation of the commerce power would mean that congressional power was virtually unlimited, and that such an expansive authority was directly contrary to the express limits imposed by the Constitution. The court reasoned that the banning of firearms in local schools was a government police power and, therefore, more appropriately handled by the state government. Five years later, in U.S. v. Morrison, the Court invalidated another statute on the same grounds. In that case, the Court struck down the Violence Against Women Act, which gave victims of gender-motivated violence the right to sue their attacker for money damages in a federal court. In light of the Lopez decision, Congress made exhaustive findings of fact that detailed the cumulative economic affect of gender-motivated crimes. Nonetheless, the Court held that the congressional findings were too broad to justify use of the commerce power and that virtually any local crime could become a federal offense under a similar justification. As a general rule, the further that Congress strays from regulating commercial activity, the more likely the Court will be to give the law intense constitutional scrutiny.

¹¹514 U.S. 549 (1995).

Key Point

Congress’s broadest powers are derived from the Commerce Clause. Courts are highly deferential to congressional action in areas that affect interstate commerce.

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