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CRS Annotated Constitution

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Fair Labor Standards Act.—In 1938, Congress enacted the Fair Labor Standards Act. The measure prohibited not only the[p.193]shipment in interstate commerce of goods manufactured by employees whose wages are less than the prescribed maximum but also the employment of workmen in the production of goods for such commerce at other than the prescribed wages and hours. Interstate commerce was defined by the act to mean “trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof.”

It was further provided that “for the purposes of this act an employee shall be deemed to have been engaged in the production of goods [that is, for interstate commerce] if such employee was employed . . . in any process or occupation directly essential to the production thereof in any State.”748 Sustaining an indictment under the act, a unanimous Court, speaking through Chief Justice Stone, said: “The motive and purpose of the present regulation are plainly to make effective the congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions, which competition is injurious to the commerce and to the States from and to which the commerce flows.”749 In support of the decision the Court invoked Chief Justice Marshall’s reading of the necessary–and–proper clause in McCulloch v. Maryland and his reading of the commerce clause in Gibbons v. Ogden.750 Objections purporting to be based on the Tenth Amendment were met from the same point of view: “Our conclusion is unaffected by the Tenth Amendment which provides: ‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.’ The amendment states but a truism that all is retained which has not been surrendered. There is nothing in the history of its adoption to suggest that it was more than declaratory of the relationship between the national and State governments as it had been established by the Constitution before the amendment or that its purpose was other than to allay fears that[p.194]the new National Government might seek to exercise powers not granted, and that the States might not be able to exercise fully their reserved powers.”751

Subsequent decisions of the Court took a very broad view of which employees should be covered by the Act,752 and in 1949 Congress to some degree narrowed the permissible range of coverage and disapproved some of the Court’s decisions.753 But in 1961,754 with extensions in 1966,755 Congress itself expanded by several million persons the coverage of the Act, introducing the “enterprise” concept by which all employees in a business producing anything in commerce or affecting commerce were brought within the protection of the minimum wage–maximum hours standards.756 The “enterprise concept” was sustained by the Court in Maryland v. Wirtz.757 Justice Harlan, for a unanimous Court on this issue, found the extension entirely proper on the basis of two theories: one, a business’ competitive position in commerce is determined in part by all its significant labor costs, and not just those costs attributable to its employees engaged in production in interstate commerce, and, two, labor peace and thus smooth functioning of interstate commerce was facilitated by the termination of substandard labor conditions affecting all employees and not just those actually engaged in interstate commerce.758

Agricultural Marketing Agreement Act.—After its initial frustrations, Congress returned to the task of bolstering agriculture by passing the Agricultural Marketing Agreement Act of June 3,[p.195]1937,759 authorizing the Secretary of Agriculture to fix the minimum prices of certain agricultural products, when the handling of such products occurs “in the current of interstate or foreign commerce or . . . directly burdens, obstructs or affects interstate or foreign commerce in such commodity or product thereof.” In United States v. Wrightwood Dairy Co.,760 the Court sustained an order of the Secretary of Agriculture fixing the minimum prices to be paid to producers of milk in the Chicago “marketing area.” The dairy company demurred to the regulation on the ground it applied to milk produced and sold intrastate. Sustaining the order, the Court said: “Congress plainly has power to regulate the price of milk distributed through the medium of interstate commerce . . . and it possesses every power needed to make that regulation effective. The commerce power is not confined in its exercise to the regulation of commerce among the States. It extends to those activities intrastate which so affect interstate commerce, or the exertion of the power of Congress over it, as to make regulation of them appropriate means to the attainment of a legitimate end, the effective execution of the granted power to regulate interstate commerce. The power of Congress over interstate commerce is plenary and complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution. . . . It follows that no form of State activity can constitutionally thwart the regulatory power granted by the commerce clause to Congress. Hence the reach of that power extends to those intrastate activities which in a substantial way interfere with or obstruct the exercise of the granted power.”761

In Wickard v. Filburn,762 a still deeper penetration by Congress into the field of production was sustained. As amended by the act of 1941, the Agricultural Adjustment Act of 1938,763 regulated production even when not intended for commerce but wholly for consumption on the producer’s farm. Sustaining this extension of the act, the Court pointed out that the effect of the statute was to support the market. “It can hardly be denied that a factor of such volume and variability as home–consumed wheat would have a substantial influence on price and market conditions. This may arise because being in marketable condition such wheat overhangs the[p.196]market and, if induced by rising prices, tends to flow into the market and check price increases. But if we assume that it is never marketed, it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market. Home–grown wheat in this sense competes with wheat in commerce. The stimulation of commerce is a use of the regulatory function quite as definitely as prohibitions or restrictions thereon. This record leaves us in no doubt that Congress may properly have considered that wheat consumed on the farm grown, if wholly outside the scheme of regulation, would have a substantial effect in defeating and obstructing its purpose to stimulate trade therein at increased prices.”764 And it elsewhere stated: “Questions of the power of Congress are not to be decided by reference to any formula which would give controlling force to nomenclature such as ‘production’ and ‘indirect’ and foreclose consideration of the actual effects of the activity in question upon interstate commerce. . . . The Court’s recognition of the relevance of the economic effects in the application of the Commerce Clause . . . has made the mechanical application of legal formulas no longer feasible.”765

Acts of Congress Prohibiting Commerce

Foreign Commerce: Jefferson’s Embargo.—“Jefferson’s Embargo” of 1807–1808, which cut all trade with Europe, was attacked on the ground that the power to regulate commerce was the power to preserve it, not the power to destroy it. This argument was rejected by Judge Davis of the United States District Court for Massachusetts in the following words: “A national sovereignty is created [by the Constitution]. Not an unlimited sovereignty, but a sov[p.197]ereignty, as to the objects surrendered and specified, limited only by the qualification and restrictions, expressed in the Constitution. Commerce is one of those objects. The care, protection, management and control, of this great national concern, is, in my opinion, vested by the Constitution, in the Congress of the United States; and their power is sovereign, relative to commercial intercourse, qualified by the limitations and restrictions, expressed in that instrument, and by the treaty making power of the President and Senate. . . . Power to regulate, it is said, cannot be understood to give a power to annihilate. To this it may be replied, that the acts under consideration, though of very ample extent, do not operate as a prohibition of all foreign commerce. It will be admitted that partial prohibitions are authorized by the expression; and how shall the degree, or extent, of the prohibition be adjusted, but by the discretion of the National Government, to whom the subject appears to be committed? . . . The term does not necessarily include shipping or navigation; much less does it include the fisheries. Yet it never has contended, that they are not the proper objects of national regulation; and several acts of Congress have been made respecting them. . . . [Furthermore] if it be admitted that national regulations relative to commerce, may apply it as an instrument, and are not necessarily confined to its direct aid and advancement, the sphere of legislative discretion is, of course, more widely extended; and, in time of war, or of great impending peril, it must take a still more expanded range.

“Congress has power to declare war. It, of course, has power to prepare for war; and the time, the manner, and the measure, in the application of constitutional means, seem to be left to its wisdom and discretion. . . . Under the Confederation, . . . we find an express reservation to the State legislatures of the power to pass prohibitory commercial laws, and, as respects exportations, without any limitations. Some of them exercised this power. . . . Unless Congress, by the Constitution, possess the power in question, it still exists in the State legislatures—but this has never been claimed or pretended, since the adoption of the Federal Constitution; and the exercise of such a power by the States, would be manifestly inconsistent with the power, vested by the people in Congress, ‘to regulate commerce.’ Hence I infer, that the power, reserved to the States by the articles of Confederation, is surrendered to Congress, by the Constitution; unless we suppose, that, by some[p.198]strange process, it has been merged or extinguished, and now exists no where.”766

Foreign Commerce: Protective Tariffs.—Tariff laws have customarily contained prohibitory provisions, and such provisions have been sustained by the Court under Congress’ revenue powers and under its power to regulate foreign commerce. For the Court in Board of Trustees v. United States,767 in 1933, Chief Justice Hughes said: “The Congress may determine what articles may be imported into this country and the terms upon which importation is permitted. No one can be said to have a vested right to carry on foreign commerce with the United States. . . . It is true that the taxing power is a distinct power; that it is distinct from the power to regulate commerce. . . . It is also true that the taxing power embraces the power to lay duties. Art. I, Sec. 8, cl. 1. But because the taxing power is a distinct power and embraces the power to lay duties, it does not follow that duties may not be imposed in the exercise of the power to regulate commerce. The contrary is well established. Gibbons v. Ogden, 9 Wheat. 1, 202. ‘Under the power to regulate foreign commerce Congress imposes duties on importations, give drawbacks, pass embargo and nonintercourse laws, and make all other regulations necessary to navigation, to the safety of passengers, and the protection of property.’ Groves v. Slaughter, 15 Pet. 449, 505. The laying of duties is ‘a common means of executing the power.’ 2 Story on the Constitution, 1088.”768


748 52 Stat. 1060 , as amended, 63 Stat. 910 (1949). The 1949 amendment substituted the phrase “in any process or occupation directly essential to the production thereof in any State” for the original phrase “in any process or occupation necessary to the production thereof in any State.” In Mitchell v. H. B. Zachry Co., 362 U.S. 310, 317 (1960), the Court noted that the change “manifests the view of Congress that on occasion courts . . . had found activities to be covered, which . . . [Congress now] deemed too remote from commerce or too incidental to it.” The 1961 amendments to the Act, 75 Stat. 65 , departed from previous practices of extending coverage to employees individually connected to interstate commerce to cover all employees of any “enterprise” engaged in commerce or production of commerce; thus, there was an expansion of employees covered but not, of course, of employers, 29 U.S.C. Sec. 201 et seq. See 29 U.S.C. §§ 203 (r), 203(s), 206(a), 207(a).
749 United States v. Darby, 312 U.S. 100, 115 (1941).
750 Id., 113, 114, 118.
751 Id., 123–124.
752 E.g., Kirschbaum v. Walling, 316 U.S. 517 (1942) (operating and maintenance employees of building, part of which was rented to business producing goods for interstate commerce); Walton v. Southern Package Corp., 320 U.S. 540 (1944) (night watchman in a plant the substantial portion of the production of which was shipped in interstate commerce); Armour & Co. v. Wantock, 323 U.S. 126 (1944) (employees on stand–by auxiliary fire–fighting service of an employer engaged in interstate commerce); Borden Co. v. Borella, 325 U.S. 679 (1945) (maintenance employees in building housing company’s central offices where management was located though the production of interstate commerce was elsewhere); Martino v. Michigan Window Cleaning Co., 327 U.S. 173 (1946) (employees of a window–cleaning company the principal business of which was performed on windows of industrial plants producing goods for interstate commerce); Mitchell v. Lublin, McGaughy & Associates, 358 U.S. 207 (1959) (nonprofessional employees of architectural firm working on plans for construction of air bases, bus terminals, and radio facilities).
753 Cf. Mitchell v. H. B. Zachry Co., 362 U.S. 310, 316–318 (1960).
754 75 Stat. 65 .
755 80 Stat. 830 .
756 29 U.S.C. §§ 203 (r), 203(s).
757 392 U.S. 183 (1968).
758 Another aspect of this case was overruled in National League of Cities v. Usery, 426 U.S. 833 (1976), which itself was overruled in Garcia v. San Antonio Metropolitan Transit Auth., 469 U.S. 528 (1985).
759 50 Stat. 246 , 7 U.S.C. Sec. 601 et seq.
760 315 U.S. 110 (1942). The Court had previously upheld other legislation that regulated agricultural production through limitations on sales in or affecting interstate commerce. Currin v. Wallace, 306 U.S. 1 (1939); Mulford v. Smith, 307 U.S. 38 (1939).
761 Id., 315 U.S., 118–119.
762 317 U.S. 111 (1942).
763 52 Stat. 31 , 7 U.S.C. §§ 612c , 1281–1282 et seq.
764 Id., 317 U.S., 128–129.
765 Id., 120–124. In United States v. Rock Royal Co–operative, 307 U.S. 533 (1939), the Court sustained an order under the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246 , regulating the price of milk in certain instances. Said Justice Reed for the majority of the Court: “The challenge is to the regulation ‘of the price to be paid upon the sale by a dairy farmer who delivers his milk to some country plant.’ It is urged that the sale, a local transaction, is fully completed before any interstate commerce begins and that the attempt to fix the price or other elements of that incident violates the Tenth Amendment. But where commodities are bought for use beyond State lines, the sale is a part of interstate commerce. We have likewise held that where sales for interstate transportation were commingled with intrastate transactions, the existence of the local activity did not interfere with the federal power to regulate inspection of the whole. Activities conducted within State lines do not by this fact alone escape the sweep of the Commerce Clause. Interstate commerce may be dependent upon them. Power to establish quotas for interstate marketing gives power to name quotas for that which is to be left within the State of production. Where local and foreign milk alike are drawn into a general plan for protecting the interstate commerce in the commodity from the interferences, burdens and obstructions, arising from excessive surplus and the social and sanitary evils of low values, the power of the Congress extends also to the local sales.” Id., 568–569.
766 United States v. The William, 28 Fed. Cas. 614, 620–623 (No. 16,700) (D. Mass. 1808). See also Gibbons v. Ogden, 9 Wheat. (22 U.S.) 1, 191 (1824); United States v. Marigold, 9 How. (50 U.S.) 560 (1850).
767 289 U.S. 48 (1933).
768 Id., 57, 58.
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