Federalism Outlines

Federalism II – The Commerce Power

I.     The Marshall legacy of federalism.

    A.     National power in a federal system.
      1.     The form of government.
        a.     Principles of authority revisited.
          1)     The people have all authority to govern themselves.
          2)     The people separately delegated some authority to the states and some authority to the national government.
          3)     The same authority was never delegated to both the state and national gov’ts.
        b.     A federal republic is best.
          1)     “Federal”: civil power allocated btw. national and local bodies via covenant.
          2)     “Republic”: civil power is exercised by representatives of the people under “the rule of law.”
        c.     Israel as a federal republic.
          1)     Vertical unity and diversity exemplified – One nation, twelve tribes.
          2)     Internal unity & diversity within each tribe.
            A)     Polity: clans and families. Josh 7:14; 1 Kings 8:1; 1 Chr 28:1; Neh 8:13; 1 Sam 10:20-2
            B)     Tribal division (people) reflected in geographic division (real estate). Josh 14:1-5; Num 33:54.
            C)     The United States paralleled with Israel.
      2.     Anticipation of the federal union.
        a.     Declaration of Independence.
        b.     State constitutions
          1)     Mass. Const. of 1780.
          2)     New Hampshire Const. of 1784.
          3)     States are not political subdivisions of the nation.
        c.     The Constitution presupposes, and administers, a federal system.
          1)     The question of national authority and the relationship between federal and state authorities is one of law, not of degree.
          2)     Vertical unity and diversity in the U.S. Constitution.
            A)     Amendment X.
            B)     Article IV provisions.
            C)     Electoral processes.
      3.     Who gets what in the federal system?
        a.     Great v. small matters.
          1)     Israel: Exodus 18:22-26.
          2)     U.S. “great” matters: Art. I, § 8.
          3)     U.S. “small” matters: Art. I, § 9, Cl. 1.
        b.     Unity required in “great” matters, diversity is desired in “small” matters.
          1)     Not all matters in the U.S. are “great.” Diversity is OK.
            - Otherwise, an obliteration of the states.
          2)     “Small” – voting franchise. Art. I, § 2, Cl. 1.
          3)     “Great” – Commerce.
            - The problem of “balkanization.”
            - Commerce “among the several states,” not “interstate commerce.”
            - Presumption: state laws could not impede commerce among the states.
        c.     How to determine what matters are small or great?
          1)     Object/Purpose analysis.
          2)     Contrast subject analysis.
          3)     Which is broader or narrower?
    B.     Subjects/Objects (Gibbons v. Ogden): How to distinguish a great matter from a small matter?
      1.     Textual Construction (of the Constitution).
        a.     Employ words in their natural sense.
        b.     Read language in light of instrument’s purpose.
        c.     McCulloch: Constitutional interpretation is a matter of law, not politics, governed by ends (“great objects”), not means.
      2.     Subject matter jurisdiction: Does the statute deal with a subject matter entrusted to Congress?
        a.     For Commerce power, a threshold question.
          1)     “Navigation” => “Commerce”
          2)     “Among the several states” => involving multiple states => commerce with states.
        b.     Enumeration => something reserved. “Commerce” does not include internal commerce of a state.
      3.     Object/purpose analysis. If Congress has jurisdiction, to what ends may it exercise its power?
        a.     Congress’ power is plenary as to specified objects.
        b.     Analogy to taxing power disclaimed: Federal and state purposes are mutually exclusive, hence, no concurrent purposes.
        c.     State police purposes, i.e., inspection laws, distinguished.
          - Health & Safety legislation is a state object.
          - Subject analysis of powers rejected (i.e., not all matters “affecting” commerce are for Congress.
          - How would Marshall view the FDA?
    C.     The Supremacy Clause.
      1.     If legitimate national purpose and legitimate state purpose conflict, the will of Congress is supreme.
      2.     Willson v. Black Bird Creek Marsh Co.
        a.     An exercise of valid state health purpose.
        b.     No federal statute conflicts with state statute here.
          1)     If Congress had acted, its will would control.
          2)     But federal statute here is not related to activity pursued under state law.
      3.     The License Cases.
        a.     Taney:
          1)     Congress’ power over commerce is supreme.
          2)     But, Congress’ power is not exclusive.
          3)     State liquor license laws are OK.
        b.     McLean:
          1)     An exercise of state police power, not commerce regulation.
          2)     No supremacy clause issue.

II.     The Legacy Lost

    A.     Subjects, not Objects
      1.     Cooley v. Board of Wardens.
        a.     Both Congress and states have subject matter jurisdiction over commerce.
          - And that’s enough to sustain legislation.
        b.     Curtis’ view of federalism: Some subjects are national, other subjects are local.
        c.     Right conclusion, wrong rationale?
          1)     Constitutional interpretation: nature of subjects.
          2)     But, who determines nature of subjects?
          3)     Object/purpose analysis is irrelevant.
      2.     Leisy v. Hardin.
        a.     No inquiry as to state purpose or jurisdiction.
        b.     An application of the Cooley rule.
          1)     “Subject matter” demands uniformity.
          2)     Failure of Congress to act leaves no state power to regulate by default.
          3)     Court decides whether subject demands uniformity.
      3.     Definition of “Commerce” reflected “subject matter” approach.
        a.     Paul v. Virginia. Insurance policy is not commerce.
        b.     Coe v. Town of Errol. Cut timber, until transported, is not commerce.
        c.     Kidd v. Pearson. Manufacture is not commerce.
      Q:     Would the Court, during this period, have approved federally mandated minimum wage laws?
      4.     Wilkerson v. Rahrer.
        a.     Congress has said subject demands diversity.
          -even though Court says it demands uniformity.
        b.     Court backtracks from Leisy.
        c.     Is this an unlawful delegation of Congress’ power to states?
          1)     Court: Congress has stated a uniform rule of diversity.
          2)     Whatever Congress acts on is by definition “uniform.”
            -Court has no power to control or question.
    B.     Politics, not law.
      1.     Sherman Antitrust Act.
        a.     The move towards economic based analysis of the Constitution.
        b.     Knight.
          - Manufacturing isn’t commerce.
          - Business trusts don’t restrain commerce.
          - But, “monopoly” defined on purely economic basis, i.e., market position
            - Contrast historical definition of monopoly – i.e., government grant of exclusive commercial right
        c.     Addyston Pipe, etc.: Purely private acts are within Congress’ power to regulate.
      2.     Shreveport Rate Case.
        a.     Once subject matter jurisdiction is established, any purpose will do.
          - Congress has police power! Safety in interstate commerce.
        b.     Congress no longer constrained by law, only politics.
          - Was “balkanization” at issue?
        c.     Purpose of Congress’ power: to ensure economic fairness and equality.
      3.     Hammer v. Dagenhart.
        a.     A momentary retreat: Congress has no power to equalize conditions.
        b.     Holmes’ dissent: Return to Rahrer – Congress determines validity, not Court.
          - He views private acts as State Action.
    C.     The last Hurrah (1935-36) [before a total cave-in to politics].
      1.     Schecter Poultry.
        a.     Statute based on economic need.
        b.     Necessity (politics) does not create power (law).
        c.     Statute produced a breakdown of Federalism.
      2.     Carter v. Carter Coal.
        a.     Rejects subject matter uniformity
        b.     Rejects production as constituting “commerce.”
        c.     Rejects “promotion” of the general welfare
      3.     U.S. v. Butler.
        a.     Affirms law of enumerated powers.
        b.     Affirms object analysis (pretext test)
        c.     Affirms nature of federal structure.

III. Legacy perverted.

    A.     Regulation of activities merely affecting commerce.
      1.     NLRB v. Jones & Laughlin.
        a.     Federalism is a matter of degree (politics, not law).
        b.     Affirms Shreveport Case: goal of Congress is to promote economic efficiency.
        c.     New test: does regulated act affect commerce?
        d.     Was any state law even at issue here?
      2.     Darby.
        a.     Part I – Prohibiting shipment of goods.
          1)     Overrules Hammer v.
          Dagenhart
          .
          2)     Rejects purposive analysis (motive and purpose of Congress are beyond question).
          3)     Cites Gibbons as precedent for holding that Congress’ power is plenary as to subjects.
        b.     Part II – Wage and hour req’ts.
          1)     Even subject matter jurisdiction is unnecessary
            A)     Activities must only affect commerce.
            B)     Any means can be used to accomplish the end of regulating commerce.
            C)     Congress can assume attributes of state police power (inspection laws).
          2)     Of course, purpose analysis is discarded
          3)     All in the name of following McCulloch v. Maryland, when in reality it turns McCulloch upside down.
      3.     Wickard v. Filburn.
        a.     Basis for the Court’s decision: economics, not law.
        b.     Even things which admittedly are not commerce (wheat grown for home consumption) can be regulated by Congress under its commerce power.
        c.     Again, even subject matter jurisdiction is irrelevant.
          - Filburn’s activities did not affect commerce, but the aggregate impact of others similarly situated (hypothetically) would affect commerce.
    B.     The abandonment of limitations on Congressional commerce power.
      1.    Heart of Atlanta Motel.
        a.     Congress can regulate private conduct which merely affects commerce.
          1)     But, constitution does not outlaw private discrimination.
          2)     What about liberty of contract?
        b.     Opinion follows Darby.
          1)     Cites Gibbons.
          2)     Subject matter jurisdiction is irrelevant.
        c.     A “moral problem.” Does Congress have power over morality?
      2.     Katzenbach v. McClung.
        a.     Racial discrimination outlawed solely on the basis of its economic impact.
        b.     Affirms Darby, abandoning both purposive analysis and subject matter jurisdiction requirements.
        c.     Affirms Wickard v. Filburn.
    C.     A Federal System?
      1.     All issues of “right” and “wrong” reduced to economic concerns.
      2.     Congress controls “small matters’ – a breakdown in federalism.
      3.     Legacy: Hypocrisy and an undermining of the true foundation for the commerce power.