A Whirlwind Tour Of The Supreme Court’s Commerce Clause Jurisprudence

Supreme Court building 2 SC A Whirlwind Tour of the Supreme Court’s Commerce Clause Jurisprudence

There is a widely held view that Congress has virtually unlimited power to legislate, especially concerning economic matters. Consider, for example, the passage of the controversial Patient Protection and Affordable Care Act two years ago. While Congress’ power to regulate the economy is not completely unbounded, it is very far-reaching indeed. However, it was not always so.

Under the Articles of Confederation, Congress was powerless to address conflicting commercial regulations imposed by the several states. To remedy that flaw, the enumerated powers given to Congress under the Constitution included the authority “[t]o regulate Commerce … among the several States.”

At the time the Constitution was ratified, “commerce” referred to trade—buying and selling products—but it did not include all economic activity, such as manufacturing, agriculture, and labor. In the ratification debates, there was little deliberation over the Commerce power because it was understood to be an insignificant threat to local or non-commercial affairs. James Madison emphasized that point in Federalist No. 45.

Early Congresses rarely invoked the Commerce power. The Supreme Court’s first opportunity to determine its scope did not arise until Gibbons v. Ogden (1824). In that case, the Court held that Congress may regulate interstate commerce, but not commerce that doesn’t extend to or affect other states.

Over the next century, the Court reiterated that Congress’ Commerce power did not include regulation of production in anticipation of trade. In these decisions, the Court emphasized the distinction between commerce and other types of economic activity that are not commerce: “Without agriculture, manufacturing, mining, etc., commerce could not exist, but this fact does not suffice to subject them to the control of Congress” (Newberry v. United States, 1921).

A slight shift occurred in 1914, when the Court held that where interstate and intrastate aspects of commerce are so intermingled, the Constitution permits regulation of interstate commerce even if that results in incidental regulation of purely intrastate commerce. But in general, the Court’s view of Congress’ Commerce power remained unchanged. In 1935, the Court held that Congress may not regulate intrastate sales of poultry, and as late as 1936, the Court invalidated a federal law regulating labor because “the relation of employer and employee is a local relation.”

The Court’s century-old Commerce Clause jurisprudence ultimately bowed to far-reaching New Deal laws. In NLRB v. Jones & Laughlin Steel Corp. (1937), the Court upheld the National Labor Relations Act against a Commerce Clause challenge, holding that Congress may regulate intrastate production if it has a “close and substantial relation to interstate commerce.” And in United States v. Darby (1941), the Court declared that “[t]he power of Congress over interstate commerce is not confined to the regulation of commerce among the states.”

Wickard v. Filburn (1942) is generally considered the most expansive Commerce Clause decision to date. In that case, the Court held that Congress could regulate a farmer’s production and consumption of homegrown wheat because even though his activity was local, was not commerce, and did not substantially or directly affect interstate commerce, it could, in combination with others’ similar conduct, affect interstate commerce.

In 1964 and 1971, the Supreme Court rejected Commerce Clause challenges to the application of civil rights laws to motels and restaurants, and to a federal criminal law prohibiting local instances of loan sharking. In these cases, the Court dismissed arguments that: the regulated activity was not commercial, Congress was legislating against moral wrongs, the activity was purely local, and the economic effect of the regulated activity was so small as to be trivial.

In United States v. Lopez (1995) and United States v. Morrison (2000), the Supreme Court resisted further expansion, a reminder that even after the New Deal cases, Congress’ Commerce power still has outer limits. Because the federal laws in Lopez and Morrison (prohibiting possession of a gun near a school and gender-motivated violence, respectively) regulated local activity having no effect on interstate commerce, they were really exercises of the general police power that belongs exclusively to the states.

In the case now pending before the Supreme Court on the Patient Protection and Affordable Care Act, the issue is whether Congress has the power to compel non-participants into the health insurance market, so that they can then be regulated. It’s a novel question, and no precedent governs the Court’s decision. During its oral argument, the federal government asserted that every person is an “actuarial reality” whose current existence and eventual mortality creates a statistically measurable insurance risk.

By that theory, everyone is inescapably a “participant” in the health insurance market and therefore subject to federal regulation. Such metaphysical abstraction threatens not merely to further stretch, but finally to break the Framers’ structural design that for 225 years has preserved individual liberty and served as a check on unlimited federal power.

David J. Porter, J.D., is an attorney with Buchanan Ingersoll & Rooney PC, a trustee of Grove City College, and a contributor to The Center for Vision & Values. The opinions expressed by the author are his own and do not necessarily reflect those of Grove City College, its Board of Trustees, or his firm.

Photo Credit: Laura Padgett (Creative Commons)

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Is The Health Care Law Constitutional? No, Strike It Down Now!

Obamacare SC Is the Health Care Law Constitutional? No, Strike It Down Now!

Editor’s note: A version of this article first appeared in the Pittsburgh Post-Gazette. Neither Porter nor his firm are involved in the ACA litigation.

This summer, the Supreme Court will decide whether Congress violated the Constitution when it enacted the Patient Protection and Affordable Care Act, which contains an “individual mandate” requiring virtually every American to purchase health insurance. Based on the Constitution’s text and structure, and judicial interpretations of the relevant provisions, the mandate should be struck down.

Pennsylvania is one of 26 states to have attacked the ACA’s constitutionality. They seek to uphold the Constitution’s basic division of power between the national government and state governments.

The framers and those who ratified the Constitution withheld from Congress a plenary police power to enact any law that it deems desirable. Instead, the powers granted to Congress in Article I of the Constitution are limited and enumerated. The 10th Amendment emphasizes this structure by affirming that all powers not given to Congress “are reserved to the States respectively, or to the people.”

Given that background, the states’ argument against ACA is simple: Even under the broadest interpretation, Congress’ enumerated powers do not authorize a federal law that forces individuals to purchase health insurance.

ACA’s defenders argue that Congress’ authority to impose the mandate is granted by any of three constitutional provisions: the Commerce Clause, the Necessary and Proper Clause, or the Taxing Clause. However, under the original understanding of those provisions and the more expansive interpretation given to them by the Supreme Court in recent decades, the mandate is an unprecedented assertion of federal control that violates the framers’ constitutional design.

Under the Commerce Clause, Congress may regulate interstate commerce. As originally understood, “interstate commerce” meant cross-border trade or exchange, as distinguished from other types of business activity such as manufacturing and agriculture. Subsequent Supreme Court decisions have expanded the term to include instances of intrastate “economic activity” if that activity, “viewed in the aggregate, substantially affects” interstate commerce.

ACA’s defenders argue that the law regulates economic activity with a substantial effect on interstate commerce, namely the manner in which individuals insure against their future purchase of healthcare services. But the individual mandate does not regulate anyone’s ongoing activity—those who are subject to it are strangers to the insurance market. Rather, the law compels inactive, nonparticipants in the health insurance market to purchase insurance so they can then be regulated.

As Congress itself said in the ACA, the mandate purports to regulate each individual’s “economic and financial decision” whether to purchase health insurance. But if that is a valid exercise of Commerce Clause power, then there is literally no end to Congress’ power over individuals.

Congress could require people to buy a car because refraining from doing so is an “economic decision” substantially affecting the automobile industry. Congress could require us to purchase a television or a computer because engaging in quiet reflection rather than watching TV or surfing the Internet is an “economic decision” that substantially affects national markets for entertainment and communication.

The possibilities are endless, and these examples are not mere hyperbole. In the case on appeal to the Supreme Court, the federal government could not identify any mandate to purchase a product or service that would be unconstitutional under this elastic interpretation of the Commerce Clause.

ACA’s defenders also argue that the mandate is supported by the Necessary and Proper Clause, which gives Congress wide latitude to determine what laws are necessary for the implementation of Congress’ enumerated powers. Specifically, the mandate is allegedly necessary to allow for other regulations and price controls (such as a ban on considering pre-existing conditions) that otherwise render the law unworkable and threaten to destroy the health insurance market.

The problem with this argument is that the individual mandate is neither “necessary” nor “proper.” A law is not “proper” if it depends on a constitutional theory that gives Congress unbounded discretion to legislate in areas traditionally reserved to the states. And a law is not “necessary” unless it carries into execution another enumerated power, such as the power to regulate interstate commerce.

The ACA flunks both of these tests. Rather than enabling the exercise of an enumerated power, the mandate compels individuals to buy insurance in an attempt to suppress the ruinous effects of ACA’s other provisions. Don’t expect the Supreme Court to ignore constitutional limitations just because Congress claims an unenumerated power to offset regulatory burdens created by its own statute.

Finally, ACA’s defenders argue that even if the individual mandate is not supported by the Commerce Clause or the Necessary and Proper Clause, it is nevertheless constitutional because it is a tax. For example, the penalty for noncompliance is calculated as a percentage of household income for income tax purposes, and it is self-declared on the taxpayer’s income tax return.

Congress foreclosed this argument by separating the individual mandate from the penalty. The mandate itself offends the constitutional separation of powers; it cannot be saved by pointing to a penalty for noncompliance.

In any event, the monetary fine was deliberately structured as a “penalty” and not as a “tax.” Congress could have provided health insurance for all Americans by invoking its Article I power “[t]o lay and collect Taxes,” but following President Barack Obama’s lead, it refused to do so for political reasons.

The federal government’s Taxing Clause argument has been rejected by every court that has reviewed the ACA, and the Supreme Court is not likely to adopt it, either. Nor should it.

Photo Credit: Fresh Conservative (Creative Commons)

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