Clause 3. The Congress shall have Power * * * To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.
POWER TO REGULATE COMMERCE
Purposes Served by the Grant
The Commerce Clause serves a two-fold purpose: it is the direct source of the most important powers that the Federal Government exercises in peacetime, and, except for the due process and equal protection clauses of the Fourteenth Amendment, it is the most important limitation imposed by the Constitution on the exercise of state power. The latter, restrictive operation of the clause was long the more important one from the point of view of the constitutional lawyer. Of the approximately 1400 cases that reached the Supreme Court under the clause prior to 1900, the overwhelming proportion stemmed from state legislation.663 The result was that, generally, the guiding lines in construction of the clause were initially laid down in the context of curbing state power rather than in that of its operation as a source of national power. The consequence of this historical progression was that the word “commerce” came to dominate the clause while the word “regulate” remained in the background. The so-called “constitutional revolution” of the 1930s, however, brought the latter word to its present prominence.
Definition of Terms
The etymology of the word “commerce” 664 carries the primary meaning of traffic, of transporting goods across state lines for sale. This possibly narrow constitutional conception was rejected by Chief Justice Marshall in Gibbons v. Ogden,665 which remains one of the seminal cases dealing with the Constitution. The case arose because of a monopoly granted by the New York legislature on the operation of steam-propelled vessels on its waters, a monopoly challenged by Gibbons, who transported passengers from New Jersey to New York pursuant to privileges granted by an act of Congress.666 The New York monopoly was not in conflict with the congressional regulation of commerce, argued the monopolists, because the vessels carried only passengers between the two states and were thus not engaged in traffic, in “commerce” in the constitutional sense.
“The subject to be regulated is commerce,” the Chief Justice wrote. “The counsel for the appellee would limit it to traffic, to buying and selling, or the interchange of commodities, and do not admit that it comprehends navigation. This would restrict a general term, applicable to many objects, to one of its significations. Commerce, undoubtedly, is traffic, but it is something more—it is intercourse.”667 The term, therefore, included navigation, a conclusion that Marshall also supported by appeal to general understanding, to the prohibition in Article I, § 9, against any preference being given “by any regulation of commerce or revenue, to the ports of one State over those of another,” and to the admitted and demonstrated power of Congress to impose embargoes.668
Marshall qualified the word “intercourse” with the word “commercial,” thus retaining the element of monetary transactions.669 But, today, “commerce” in the constitutional sense, and hence “interstate commerce,” covers every species of movement of persons and things, whether for profit or not, across state lines,670 every species of communication, every species of transmission of intelligence, whether for commercial purposes or otherwise,671 every species of commercial negotiation that will involve sooner or later an act of transportation of persons or things, or the flow of services or power, across state lines.672
There was a long period in the Court’s history when a majority of the Justices, seeking to curb the regulatory powers of the Federal Government by various means, held that certain things were not encompassed by the Commerce Clause because they were neither interstate commerce nor bore a sufficient nexus to interstate commerce. Thus, at one time, the Court held that mining or manufacturing, even when the product would move in interstate commerce, was not reachable under the Commerce Clause;673 it held insurance transactions carried on across state lines not to be commerce,674 and that exhibitions of baseball between professional teams that travel from state to state were not in commerce.675 Similarly, it held that the Commerce Clause was not applicable to the making of contracts for the insertion of advertisements in periodicals in another state676 or to the making of contracts for personal services to be rendered in another state.677
Later decisions either have overturned or have undermined all of these holdings. The gathering of news by a press association and its transmission to client newspapers are interstate commerce.678 The activities of Group Health Association, Inc., which serves only its own members, are “trade” and capable of becoming interstate commerce;679 the business of insurance when transacted between an insurer and an insured in different states is interstate commerce.680 But most important of all there was the development of, or more accurately the return to,681 the rationales by which manufacturing,682 mining,683 business transactions,684 and the like, which are antecedent to or subsequent to a move across state lines, are conceived to be part of an integrated commercial whole and therefore subject to the reach of the commerce power.
Among the Several States.
Continuing in Gibbons v. Ogden, Chief Justice Marshall observed that the phrase “among the several States” was “not one which would probably have been selected to indicate the completely interior traffic of a state.” It must therefore have been selected to exclude “the exclusively internal commerce of a state.” Although, of course, the phrase “may very properly be restricted to that commerce which concerns more states than one,” it is obvious that “[c]ommerce among the states, cannot stop at the external boundary line of each state, but may be introduced into the interior.” The Chief Justice then succinctly stated the rule, which, though restricted in some periods, continues to govern the interpretation of the clause. “The genius and character of the whole government seem to be, that its action is to be applied to all the external concerns of the nation, and to those internal concerns which affect the states generally; but not to those which are completely within a particular state, which do not affect other states, and with which it is not necessary to interfere, for the purpose of executing some of the general powers of the government.”685
Recognition of an “exclusively internal” commerce of a state, or “intrastate commerce” in today’s terms, was regarded as setting out an area of state concern that Congress was precluded from reaching.686 Although these cases seemingly visualized Congress’s power arising only when there was an actual crossing of state boundaries, this view ignored Marshall’s equation of intrastate commerce that affects other states or with which it is necessary to interfere in order to effectuate congressional power with those actions which are purely interstate. This equation came back into its own, both with the Court’s stress on the “current of commerce” bringing each element in the current within Congress’s regulatory power,687 with the emphasis on the interrelationships of industrial production to interstate commerce688 but especially with the emphasis that even minor transactions have an effect on interstate commerce689 and that the cumulative effect of many minor transactions with no separate effect on interstate commerce, when they are viewed as a class, may be sufficient to merit congressional regulation.690 “Commerce among the states must, of necessity, be commerce with[in] the states. . . . The power of congress, then, whatever it may be, must be exercised within the territorial jurisdiction of the several states.”691
“We are now arrived at the inquiry—what is this power?” continued the Chief Justice. “It is the power to regulate; that is, to prescribe the rule by which commerce is to be governed. This power, like all others vested in congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the constitution . . . If, as has always been understood, the sovereignty of congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations, and among the several states, is vested in Congress as absolutely as it would be in a single government, having in its constitution the same restrictions on the exercise of the power as are found in the constitution of the United States.”692
Of course, the power to regulate commerce is the power to prescribe conditions and rules for the carrying-on of commercial transactions, the keeping-free of channels of commerce, the regulating of prices and terms of sale. Even if the clause granted only this power, the scope would be wide, but it extends to include many more purposes than these. “Congress can certainly regulate interstate commerce to the extent of forbidding and punishing the use of such commerce as an agency to promote immorality, dishonesty, or the spread of any evil or harm to the people of other states from the state of origin. In doing this, it is merely exercising the police power, for the benefit of the public, within the field of interstate commerce.”693 Thus, in upholding a federal statute prohibiting the shipment in interstate commerce of goods made with child labor, not because the goods were intrinsically harmful but in order to extirpate child labor, the Court said: “It is no objection to the assertion of the power to regulate commerce that its exercise is attended by the same incidents which attend the exercise of the police power of the states.”694
The power has been exercised to enforce majority conceptions of morality,695 to ban racial discrimination in public accommodations,696 and to protect the public against evils both natural and contrived by people.697 The power to regulate interstate commerce is, therefore, rightly regarded as the most potent grant of authority in section 8.
Necessary and Proper Clause.
All grants of power to Con- gress in § 8, as elsewhere, must be read in conjunction with the Necessary and Proper Clause, § 8, cl. 18, which authorizes Congress “[t]o make all Laws which shall be necessary and proper for carrying into Execution the foregoing powers.” Chief Justice Marshall alluded to the power thus enhanced by this clause when he said that the regulatory power did not extend “to those internal concerns [of a state] . . . with which it is not necessary to interfere, for the purpose of executing some of the general powers of the government.”698 There are numerous cases permitting Congress to reach “purely” intrastate activities on the theory, combined with the previously mentioned emphasis on the cumulative effect of minor transactions, that it is necessary to regulate them in order that the regulation of interstate activities might be fully effectuated.699 In other cases, the clause may not have been directly cited, but the dictates of Chief Justice Marshall have been used to justify more expansive applications of the commerce power.700
Federalism Limits on Exercise of Commerce Power.
As is recounted below, prior to reconsideration of the federal commerce power in the 1930s, the Court in effect followed a doctrine of “dual federalism,” under which Congress’s power to regulate much activity depended on whether it had a “direct” rather than an “indirect” effect on interstate commerce.701 When the restrictive interpretation was swept away during and after the New Deal, the question of federalism limits respecting congressional regulation of private activities became moot. However, in a number of instances the states engaged in commercial activities that would be regulated by federal legislation if the enterprise were privately owned, and the Court easily sustained application of federal law to these state proprietary activities.702 However, as Congress began to extend regulation to state governmental activities, the judicial response was inconsistent and wavering.703 Although the Court may shift again to constrain federal power on federalism grounds, at the present time the rule is that Congress lacks authority under the Commerce Clause to regulate the states as states in some circumstances, namely, when the federal statutory provisions “commandeer” a state’s legislative or executive authority in order to implement a regulatory program.704
That Congress’s protective power over interstate commerce reaches all kinds of obstructions and impediments was made clear in United States v. Ferger.705 The defendants had been indicted for issuing a false bill of lading to cover a fictitious shipment in interstate commerce. Before the Court they argued that, because there could be no commerce in a fraudulent bill of lading, Congress had no power to exercise criminal jurisdiction over them. Chief Justice White wrote: “But this mistakenly assumes that the power of Congress is to be necessarily tested by the intrinsic existence of commerce in the particular subject dealt with, instead of by the relation of that subject to commerce and its effect upon it. We say mistakenly assumes, because we think it clear that if the proposition were sustained it would destroy the power of Congress to regulate, as obviously that power, if it is to exist, must include the authority to deal with obstructions to interstate commerce . . . and with a host of other acts which, because of their relation to and influence upon interstate commerce, come within the power of Congress to regulate, although they are not interstate commerce in and of themselves.”706 Much of Congress’s criminal legislation is based simply on the crossing of a state line as creating federal jurisdiction.707
Interstate Versus Foreign Commerce
There are certain dicta urging or suggesting that Congress’s power to regulate interstate commerce restrictively is less than its analogous power over foreign commerce, the argument being that whereas the latter is a branch of the Nation’s unlimited power over foreign relations, the former was conferred upon the National Government primarily in order to protect freedom of commerce from state interference. The four dissenting Justices in the Lottery Case endorsed this view in the following words: “[T]he power to regulate commerce with foreign nations and the power to regulate interstate commerce, are to be taken diverso intuitu, for the latter was intended to secure equality and freedom in commercial intercourse as between the States, not to permit the creation of impediments to such intercourse; while the former clothed Congress with that power over international commerce, pertaining to a sovereign nation in its intercourse with foreign nations, and subject, generally speaking, to no implied or reserved power in the States. The laws which would be necessary and proper in the one case, would not be necessary or proper in the other.”708
Twelve years later, Chief Justice White, speaking for the Court, expressed the same view: “In the argument reference is made to decisions of this court dealing with the subject of the power of Congress to regulate interstate commerce, but the very postulate upon which the authority of Congress to absolutely prohibit foreign importations as expounded by the decisions of this court rests is the broad distinction which exists between the two powers and therefore the cases cited and many more which might be cited announcing the principles which they uphold have obviously no relation to the question in hand.”709
But dicta to the contrary are much more numerous and span a far longer period of time. Thus Chief Justice Taney wrote in 1847: “The power to regulate commerce among the several States is granted to Congress in the same clause, and by the same words, as the power to regulate commerce with foreign nations, and is coextensive with it.”710 And nearly fifty years later, Justice Field, speaking for the Court, said: “The power to regulate commerce among the several States was granted to Congress in terms as absolute as is the power to regulate commerce with foreign nations.”711 Today it is firmly established that the power to regulate commerce, whether with foreign nations or among the several states, comprises the power to restrain or prohibit it at all times for the welfare of the public, provided only that the specific limitations imposed upon Congress’s powers, as by the Due Process Clause of the Fifth Amendment, are not transgressed.712
Instruments of Commerce
The applicability of Congress’s power to the agents and instruments of commerce is implied in Marshall’s opinion in Gibbons v. Ogden,713 where the waters of the State of New York in their quality as highways of interstate and foreign transportation were held to be governed by the overriding power of Congress. Likewise, the same opinion recognizes that in “the progress of things,” new and other instruments of commerce will make their appearance. When the Licensing Act of 1793 was passed, the only craft to which it could apply were sailing vessels, but it and the power by which it was enacted were, Marshall asserted, indifferent to the “principle” by which vessels were moved. Its provisions therefore reached steam vessels as well. A little over half a century later the principle embodied in this holding was given its classic expression in the opinion of Chief Justice Waite in the case of the Pensacola Telegraph Co. v. Western Union Telegraph Co.,714 a case closely paralleling Gibbons v. Ogden in other respects also. “The powers thus granted are not confined to the instrumentalities of commerce, or the postal service known or in use when the Constitution was adopted, but they keep pace with the progress of the country, and adapt themselves to the new developments of times and circumstances. They extend from the horse with its rider to the stage-coach, from the sailing-vessel to the steamboat, from the coach and the steamboat to the railroad, and from the railroad to the telegraph, as these new agencies are successively brought into use to meet the demands of increasing population and wealth. They were intended for the government of the business to which they relate, at all times and under all circumstances. As they were intrusted to the general government for the good of the nation, it is not only the right, but the duty, of Congress to see to it that intercourse among the States and the transmission of intelligence are not obstructed or unnecessarily encumbered by State legislation.”715
The Radio Act of 1927716 whereby “all forms of interstate and foreign radio transmissions within the United States, its Territories and possessions” were brought under national control, affords another illustration. Because of the doctrine thus stated, the measure met no serious constitutional challenge either on the floors of Congress or in the Courts.717
Congressional Regulation of Waterways
In Pennsylvania v. Wheeling & Belmont Bridge Co.,718 the Court granted an injunction requiring that a bridge erected over the Ohio River under a charter from the State of Virginia either be altered so as to admit of free navigation of the river or else be entirely abated. The decision was justified on the basis both of the Commerce Clause and of a compact between Virginia and Kentucky, under which both these states had agreed to keep the Ohio River “free and common to the citizens of the United States.” The injunction was promptly rendered inoperative by an act of Congress declaring the bridge to be “a lawful structure” and requiring all vessels navigating the Ohio to be so regulated as not to interfere with it.719 This act the Court sustained as within Congress’s power under the Commerce Clause, saying: “So far . . . as this bridge created an obstruction to the free navigation of the river, in view of the previous acts of Congress, they are to be regarded as modified by this subsequent legislation; and, although it still may be an obstruction in fact, [it] is not so in the contemplation of law. . . . [Congress] having in the exercise of this power, regulated the navigation consistent with its preservation and continuation, the authority to maintain it would seem to be complete. That authority combines the concurrent powers of both governments, State and federal, which, if not sufficient, certainly none can be found in our system of government.”720 In short, it is Congress, and not the Court, which is authorized by the Constitution to regulate commerce.721
The law and doctrine of the earlier cases with respect to the fostering and protection of navigation are well summed up in a frequently cited passage from the Court’s opinion in Gilman v. Philadelphia.722 “Commerce includes navigation. The power to regulate commerce comprehends the control for that purpose, and to the extent necessary, of all the navigable waters of the United States which are accessible from a State other than those in which they lie. For this purpose they are the public property of the nation, and subject to all requisite legislation by Congress. This necessarily includes the power to keep them open and free from any obstruction to their navigation, interposed by the States or otherwise; to remove such obstructions when they exist; and to provide, by such sanctions as they may deem proper, against the occurrence of the evil and for the punishment of offenders. For these purposes, Congress possesses all the powers which existed in the States before the adoption of the national Constitution, and which have always existed in the Parliament in England.”723
Thus, Congress was within its powers in vesting the Secretary of War with power to determine whether a structure of any nature in or over a navigable stream is an obstruction to navigation and to order its abatement if he so finds.724 Nor is the United States required to compensate the owners of such structures for their loss, since they were always subject to the servitude represented by Congress’s powers over commerce, and the same is true of the property of riparian owners that is damaged.725 And while it was formerly held that lands adjoining nonnavigable streams were not subject to the above mentioned servitude,726 this rule has been impaired by recent decisions;727 and at any rate it would not apply as to a stream rendered navigable by improvements.728
In exercising its power to foster and protect navigation, Congress legislates primarily on things external to the act of navigation. But that act itself and the instruments by which it is accomplished are also subject to Congress’s power if and when they enter into or form a part of “commerce among the several States.” When does this happen? Words quoted above from the Court’s opinion in the Gilman case answered this question to some extent; but the decisive answer to it was returned five years later in the case of The Daniel Ball.729 Here the question at issue was whether an act of Congress, passed in 1838 and amended in 1852, which required that steam vessels engaged in transporting passengers or merchandise upon the “bays, lakes, rivers, or other navigable waters of the United States,” applied to the case of a vessel that navigated only the waters of the Grand River, a stream lying entirely in the State of Michigan. The Court ruled: “In this case it is admitted that the steamer was engaged in shipping and transporting down Grand River, goods destined and marked for other States than Michigan, and in receiving and transporting up the river goods brought within the State from without its limits; . . . So far as she was employed in transporting goods destined for other States, or goods brought from without the limits of Michigan and destined to places within that State, she was engaged in commerce between the States, and however limited that commerce may have been, she was, so far as it went, subject to the legislation of Congress. She was employed as an instrument of that commerce; for whenever a commodity has begun to move as an article of trade from one State to another, commerce in that commodity between the States has commenced.”730
Counsel had suggested that if the vessel was in commerce because it was part of a stream of commerce then all transportation within a State was commerce. Turning to this point, the Court added: “We answer that the present case relates to transportation on the navigable waters of the United States, and we are not called upon to express an opinion upon the power of Congress over interstate commerce when carried on by land transportation. And we answer further, that we are unable to draw any clear and distinct line between the authority of Congress to regulate an agency employed in commerce between the States, when the agency extends through two or more States, and when it is confined in its action entirely within the limits of a single State. If its authority does not extend to an agency in such commerce, when that agency is confined within the limits of a State, its entire authority over interstate commerce may be defeated. Several agencies combining, each taking up the commodity transported at the boundary line at one end of a State, and leaving it at the boundary line at the other end, the Federal jurisdiction would be entirely ousted, and the constitutional provision would become a dead letter.”731 In short, it was admitted, inferentially, that the principle of the decision would apply to land transportation, but the actual demonstration of the fact still awaited some years.732
Hydroelectric Power; Flood Control.
As a consequence, in part, of its power to forbid or remove obstructions to navigation in the navigable waters of the United States, Congress has acquired the right to develop hydroelectric power and the ancillary right to sell it to all takers. By a long-standing doctrine of constitutional law, the states possess dominion over the beds of all navigable streams within their borders,733 but because of the servitude that Congress’s power to regulate commerce imposes upon such streams, the states, without the assent of Congress, practically are unable to use their prerogative for power-development purposes. Sensing no doubt that controlling power to this end must be attributed to some government in the United States and that “in such matters there can be no divided empire,”734 the Court held in United States v. Chandler-Dunbar Co.,735 that in constructing works for the improvement of the navigability of a stream, Congress was entitled, as part of a general plan, to authorize the lease or sale of such excess water power as might result from the conservation of the flow of the stream. “If the primary purpose is legitimate,” it said, “we can see no sound objection to leasing any excess of power over the needs of the Government. The practice is not unusual in respect to similar public works constructed by State governments.”736
Since the Chandler-Dunbar case, the Court has come, in effect, to hold that it will sustain any act of Congress that purports to be for the improvement of navigation whatever other purposes it may also embody, nor does the stream involved have to be one “navigable in its natural state.” Such, at least, seems to be the sum of its holdings in Arizona v. California,737 and United States v. Appalachian Power Co.738 In the former, the Court, speaking through Justice Brandeis, said that it was not free to inquire into the motives “which induced members of Congress to enact the Boulder Canyon Project Act,” adding: “As the river is navigable and the means which the Act provides are not unrelated to the control of navigation . . . the erection and maintenance of such dam and reservoir are clearly within the powers conferred upon Congress. Whether the particular structures proposed are reasonably necessary, is not for this Court to determine. . . . And the fact that purposes other than navigation will also be served could not invalidate the exercise of the authority conferred, even if those other purposes would not alone have justified an exercise of congressional power.”739
And, in the Appalachian Power case, the Court, abandoning previous holdings laying down the doctrine that to be subject to Congress’s power to regulate commerce a stream must be “navigable in fact,” said: “A waterway, otherwise suitable for navigation, is not barred from that classification merely because artificial aids must make the highway suitable for use before commercial navigation may be undertaken,” provided there must be a “balance between cost and need at a time when the improvement would be useful. . . . Nor is it necessary that the improvements should be actually completed or even authorized. The power of Congress over commerce is not to be hampered because of the necessity for reasonable improvements to make an interstate waterway available for traffic. . . . Nor is it necessary for navigability that the use should be continuous. . . . Even absence of use over long periods of years, because of changed conditions, . . . does not affect the navigability of rivers in the constitutional sense.”740
Furthermore, the Court defined the purposes for which Congress may regulate navigation in the broadest terms. “It cannot properly be said that the constitutional power of the United States over its waters is limited to control for navigation. . . . That authority is as broad as the needs of commerce. . . . Flood protection, watershed development, recovery of the cost of improvements through utilization of power are likewise parts of commerce control.”741 These views the Court has since reiterated.742 Nor is it by virtue of Congress’s power over navigation alone that the National Government may develop water power. Its war powers and powers of expenditure in furtherance of the common defense and the general welfare supplement its powers over commerce in this respect.743
Congressional Regulation of Land Transportation
Federal Stimulation of Land Transportation.
The settle- ment of the interior of the country led Congress to seek to facilitate access by first encouraging the construction of highways. In successive acts, it authorized construction of the Cumberland and the National Road from the Potomac across the Alleghenies to the Ohio, reserving certain public lands and revenues from land sales for construction of public roads to new states granted statehood.744 Acquisition and settlement of California stimulated interest in railway lines to the west, but it was not until the Civil War that Congress voted aid in the construction of a line from the Missouri River to the Pacific; four years later, it chartered the Union Pacific Company.745
The litigation growing out of these and subsequent activities settled several propositions. First, Congress may provide highways and railways for interstate transportation;746 second, it may charter private corporations for that purpose; third, it may vest such corporations with the power of eminent domain in the states; and fourth, it may exempt their franchises from state taxation.747
Federal Regulation of Land Transportation.
Congressio- nal regulation of railroads may be said to have begun in 1866. By the Garfield Act, Congress authorized all railroad companies operating by steam to interconnect with each other “so as to form continuous lines for the transportation of passengers, freight, troops, governmental supplies, and mails, to their destination.”748 An act of the same year provided federal chartering and protection from conflicting state regulations to companies formed to construct and operate telegraph lines.749 Another act regulated the transportation by railroad of livestock so as to preserve the health and safety of the animals.750
Congress’s entry into the rate regulation field was preceded by state attempts to curb the abuses of the rail lines in the Middle West, which culminated in the “Granger Movement.” Because the businesses were locally owned, the Court at first upheld state laws as not constituting a burden on interstate commerce;751 but after the various business panics of the 1870s and 1880s drove numerous small companies into bankruptcy and led to consolidation, there emerged great interstate systems. Thus in 1886, the Court held that a state may not set charges for carriage even within its own boundaries of goods brought from without the state or destined to points outside it; that power was exclusively with Congress.752 In the following year, Congress passed the original Interstate Commerce Act.753 A Commission was authorized to pass upon the “reasonableness” of all rates by railroads for the transportation of goods or persons in interstate commerce and to order the discontinuance of all charges found to be “unreasonable.” In ICC v. Brimson,754 the Court upheld the Act as “necessary and proper” for the enforcement of the Commerce Clause and also sustained the Commission’s power to go to court to secure compliance with its orders. Later decisions circumscribed somewhat the ICC’s power.755
Expansion of the Commission’s authority came in the Hepburn Act of 1906756 and the Mann-Elkins Act of 1910.757 By the former, the Commission was explicitly empowered, after a full hearing on a complaint, “to determine and prescribe just and reasonable” maximum rates; by the latter, it was authorized to set rates on its own initiative and empowered to suspend any increase in rates by a carrier until it reviewed the change. At the same time, the Commission’s jurisdiction was extended to telegraphs, telephones, and cables.758 By the Motor Carrier Act of 1935,759 the ICC was authorized to regulate the transportation of persons and property by motor vehicle common carriers.
The modern powers of the Commission were largely defined by the Transportation Acts of 1920760 and 1940.761 The jurisdiction of the Commission covers not only the characteristics of the rail, motor, and water carriers in commerce among the states but also the issuance of securities by them and all consolidations of existing companies or lines.762 Further, the Commission was charged with regulating so as to foster and promote the meeting of the transportation needs of the country. Thus, from a regulatory exercise originally begun as a method of restraint there has emerged a policy of encouraging a consistent national transportation policy.763
Federal Regulation of Intrastate Rates (The Shreveport Doctrine).
Although its statutory jurisdiction did not apply to intra- state rate systems, the Commission early asserted the right to pass on rates, which, though in effect on intrastate lines, gave these lines competitive advantages over interstate lines the rates of which the Commission had set. This power the Supreme Court upheld in a case involving a line operating wholly intrastate in Texas but which paralleled within Texas an interstate line operating between Louisiana and Texas; the Texas rate body had fixed the rates of the intrastate line substantially lower than the rate fixed by the ICC on the interstate line. “Wherever the interstate and intrastate transactions of carriers are so related that the government of the one involves the control of the other, it is Congress, and not the State, that is entitled to prescribe the final and dominant rule, for otherwise Congress would be denied the exercise of its constitutional authority and the States and not the Nation, would be supreme in the national field.”764
The same holding was applied in a subsequent case in which the Court upheld the Commission’s action in annulling intrastate passenger rates it found to be unduly low in comparison with the rates the Commission had established for interstate travel, thus tending to thwart, in deference to a local interest, the general purpose of the act to maintain an efficient transportation service for the benefit of the country at large.765
Federal Protection of Labor in Interstate Rail Transportation.
Federal entry into the field of protective labor legislation and the protection of organization efforts of workers began in connection with the railroads. The Safety Appliance Act of 1893,766 applying only to cars and locomotives engaged in moving interstate traffic, was amended in 1903 so as to embrace much of the intrastate rail systems on which there was any connection with interstate commerce.767 The Court sustained this extension in language much like that it would use in the Shreveport case three years later.768 These laws were followed by the Hours of Service Act of 1907,769 which prescribed maximum hours of employment for rail workers in interstate or foreign commerce. The Court sustained the regulation as a reasonable means of protecting workers and the public from the hazards which could develop from long, tiring hours of labor.770
Most far-reaching of these regulatory measures were the Federal Employers Liability Acts of 1906771 and 1908.772 These laws were intended to modify the common-law rules with regard to the liability of employers for injuries suffered by their employees in the course of their employment and under which employers were generally not liable. Rejecting the argument that regulation of such relationships between employers and employees was a reserved state power, the Court adopted the argument of the United States that Congress was empowered to do anything it might deem appropriate to save interstate commerce from interruption or burdening. Inasmuch as the labor of employees was necessary for the function of commerce, Congress could certainly act to ameliorate conditions that made labor less efficient, less economical, and less reliable. Assurance of compensation for injuries growing out of negligence in the course of employment was such a permissible regulation.773
Legislation and litigation dealing with the organizational rights of rail employees are dealt with elsewhere.774
Regulation of Other Agents of Carriage and Communications.
In 1914, the Court affirmed the power of Congress to regu- late the transportation of oil and gas in pipelines from one State to another and held that this power applied to the transportation even though the oil or gas was the property of the lines.775 Subsequently, the Court struck down state regulation of rates of electric current generated within that state and sold to a distributor in another State as a burden on interstate commerce.776 Proceeding on the assumption that the ruling meant the Federal Government had the power, Congress in the Federal Power Act of 1935 conferred on the Federal Power Commission authority to regulate the wholesale distribution of electricity in interstate commerce777 and three years later vested the FPC with like authority over natural gas moving in interstate commerce.778 Thereafter, the Court sustained the power of the Commission to set the prices at which gas originating in one state and transported into another should be sold to distributors wholesale in the latter state.779 “The sale of natural gas originating in the State and its transportation and delivery to distributors in any other State constitutes interstate commerce, which is subject to regulation by Congress . . . . The authority of Congress to regulate the prices of commodities in interstate commerce is at least as great under the Fifth Amendment as is that of the States under the Fourteenth to regulate the prices of commodities in intrastate commerce.”780
Other acts regulating commerce and communication originating in this period have evoked no basic constitutional challenge. These include the Federal Communications Act of 1934, providing for the regulation of interstate and foreign communication by wire and radio,781 and the Civil Aeronautics Act of 1938, providing for the regulation of all phases of airborne commerce, foreign and interstate.782
Congressional Regulation of Commerce as Traffic
The Sherman Act: Sugar Trust Case.
Congress’s chief ef- fort to regulate commerce in the primary sense of “traffic” is embodied in the Sherman Antitrust Act of 1890, the opening section of which declares “every contract, combination in the form of trust or otherwise,” or “conspiracy in restraint of trade and commerce among the several States, or with foreign nations” to be “illegal,” while the second section makes it a misdemeanor for anybody to “monopolize or attempt to monopolize any part of such commerce.”783 The act was passed to curb the growing tendency to form industrial combinations, and the first case to reach the Court under it was the famous Sugar Trust Case, United States v. E. C. Knight Co.784 Here the government asked for the cancellation of certain agreements, whereby the American Sugar Refining Company, had “acquired,” it was conceded, “nearly complete control of the manufacture of refined sugar in the United States.”
The question of the validity of the Act was not expressly discussed by the Court but was subordinated to that of its proper construction. The Court, in pursuance of doctrines of constitutional law then dominant with it, turned the Act from its intended purpose and destroyed its effectiveness for several years, as that of the Interstate Commerce Act was being contemporaneously impaired. The following passage early in Chief Justice Fuller’s opinion for the Court sets forth the conception of the federal system that controlled the decision: “It is vital that the independence of the commercial power and of the police power, and the delimination between them, however sometimes perplexing, should always be recognized and observed, for while the one furnishes the strongest bond of union, the other is essential to the preservation of the autonomy of the States as required by our dual form of government; and acknowledged evils, however grave and urgent they may appear to be, had better be borne, than the risk be run, in the effort to suppress them, of more serious consequences by resort to expedients of even doubtful constitutionality.”785
In short, what was needed, the Court felt, was a hard and fast line between the two spheres of power, and, in a series of propositions, it endeavored to lay down such a line: (1) production is always local, and under the exclusive domain of the states; (2) commerce among the states does not begin until goods “commence their final movement from their State of origin to that of their destination;” (3) the sale of a product is merely an incident of its production and, while capable of “bringing the operation of commerce into play,” affects it only incidentally; (4) such restraint as would reach commerce, as above defined, in consequence of combinations to control production “in all its forms,” would be “indirect, however inevitable and whatever its extent,” and as such beyond the purview of the Act.786 Applying this reasoning to the case before it, the Court proceeded: “The object [of the combination] was manifestly private gain in the manufacture of the commodity, but not through the control of interstate or foreign commerce. It is true that the bill alleged that the products of these refineries were sold and distributed among the several States, and that all the companies were engaged in trade or commerce with the several States and with foreign nations; but this was no more than to say that trade and commerce served manufacture to fulfill its function.”
“Sugar was refined for sale, and sales were probably made at Philadelphia for consumption, and undoubtedly for resale by the first purchasers throughout Pennsylvania and other States, and refined sugar was also forwarded by the companies to other States for sale. Nevertheless it does not follow that an attempt to monopolize, or the actual monopoly of, the manufacture was an attempt, whether executory or consummated, to monopolize commerce, even though, in order to dispose of the product, the instrumentality of commerce was necessarily invoked. There was nothing in the proofs to indicate any intention to put a restraint upon trade or commerce, and the fact, as we have seen, that trade or commerce might be indirectly affected was not enough to entitle complainants to a decree.”787
Sherman Act Revived.
Four years later came Addyston Pipe and Steel Co. v. United States,788 in which the Antitrust Act was successfully applied to an industrial combination for the first time. The agreements in the case, the parties to which were manufacturing concerns, effected a division of territory among them, and so involved, it was held, a “direct” restraint on the distribution and hence of the transportation of the products of the contracting firms. The holding, however, did not question the doctrine of the earlier case, which in fact continued substantially undisturbed until 1905, when Swift & Co. v. United States789 was decided.
The “Current of Commerce” Concept: The Swift Case.
Defendants in Swift were some thirty firms engaged in Chicago and other cities in the business of buying livestock in their stockyards, in converting it at their packing houses into fresh meat, and in the sale and shipment of such fresh meat to purchasers in other states. The charge against them was that they had entered into a combination to refrain from bidding against each other in the local markets, to fix the prices at which they would sell, to restrict shipments of meat, and to do other forbidden acts. The case was appealed to the Supreme Court on defendants’ contention that certain of the acts complained of were not acts of interstate commerce and so did not fall within a valid reading of the Sherman Act. The Court, however, sustained the government on the ground that the “scheme as a whole” came within the act, and that the local activities alleged were simply part and parcel of this general scheme.790
Referring to the purchase of livestock at the stockyards, the Court, speaking by Justice Holmes, said: “Commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business. When cattle are sent for sale from a place in one State, with the expectation that they will end their transit, after purchase, in another, and when in effect they do so, with only the interruption necessary to find a purchaser at the stockyards, and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the States, and the purchase of the cattle is a part and incident of such commerce.”791 Likewise the sales alleged of fresh meat at the slaughtering places fell within the general design. Even if they imported a technical passing of title at the slaughtering places, they also imported that the sales were to persons in other states, and that shipments to such states were part of the transaction.792 Thus, sales of the type that in the Sugar Trust case were thrust to one side as immaterial from the point of view of the law, because they enabled the manufacturer “to fulfill its function,” were here treated as merged in an interstate commerce stream.
Thus, the concept of commerce as trade, that is, as traffic, again entered the constitutional law picture, with the result that conditions directly affecting interstate trade could not be dismissed on the ground that they affected interstate commerce, in the sense of interstate transportation, only “indirectly.” Lastly, the Court added these significant words: “But we do not mean to imply that the rule which marks the point at which state taxation or regulation becomes permissible necessarily is beyond the scope of interference by Congress in cases where such interference is deemed necessary for the protection of commerce among the States.”793 That is to say, the line that confines state power from one side does not always confine national power from the other. Even though the line accurately divides the subject matter of the complementary spheres, national power is always entitled to take on the additional extension that is requisite to guarantee its effective exercise and is furthermore supreme.
The Danbury Hatters Case.
In this respect, the Swift case only states what the Shreveport case was later to declare more explicitly, and the same may be said of an ensuing series of cases in which combinations of employees engaged in such intrastate activities as manufacturing, mining, building, construction, and the distribution of poultry were subjected to the penalties of the Sherman Act because of the effect or intended effect of their activities on interstate commerce.794
Stockyards and Grain Futures Acts.
In 1921, Congress passed the Packers and Stockyards Act,795 whereby the business of commission men and livestock dealers in the chief stockyards of the country was brought under national supervision, and in the year following it passed the Grain Futures Act,796 whereby exchanges dealing in grain futures were subjected to control. The decisions of the Court sustaining these measures both built directly upon the Swift case.
In Stafford v. Wallace,797 which involved the former act, Chief Justice Taft, speaking for the Court, said: “The object to be secured by the act is the free and unburdened flow of livestock from the ranges and farms of the West and Southwest through the great stockyards and slaughtering centers on the borders of that region, and thence in the form of meat products to the consuming cities of the country in the Middle West and East, or, still as livestock, to the feeding places and fattening farms in the Middle West or East for further preparation for the market.”798 The stockyards, therefore, were “not a place of rest or final destination.” They were “but a throat through which the current flows,” and the sales there were not “merely local transactions. . . . [T]hey do not stop the flow . . . but, on the contrary, [are] indispensable to its continuity.”799
In Chicago Board of Trade v. Olsen,800 involving the Grain Futures Act, the same course of reasoning was repeated. Speaking of Swift, Chief Justice Taft remarked: “That case was a milestone in the interpretation of the commerce clause of the Constitution. It recognized the great changes and development in the business of this vast country and drew again the dividing line between interstate and intrastate commerce where the Constitution intended it to be. It refused to permit local incidents of a great interstate movement, which taken alone are intrastate, to characterize the movement as such.”801
Of special significance, however, is the part of the opinion devoted to showing the relation between future sales and cash sales, and hence the effect of the former upon the interstate grain trade. The test, said the Chief Justice, was furnished by the question of price. “The question of price dominates trade between the States. Sales of an article which affect the country-wide price of the article directly affect the country-wide commerce in it.”802 Thus, a practice that demonstrably affects prices would also affect interstate trade “directly,” and so, even though local in itself, would fall within the regulatory power of Congress. In the following passage, indeed, Chief Justice Taft whittled down, in both cases, the “direct-indirect” formula to the vanishing point: “Whatever amounts to more or less constant practice, and threatens to obstruct or unduly to burden the freedom of interstate commerce is within the regulatory power of Congress under the commerce clause, and it is primarily for Congress to consider and decide the fact of the danger to meet it. This court will certainly not substitute its judgment for that of Congress in such a matter unless the relation of the subject to interstate commerce and its effect upon it are clearly nonexistent.”803
It was in reliance on the doctrine of these cases that Congress first set to work to combat the Depression in 1933 and the years immediately following. But, in fact, much of its legislation at this time marked a wide advance upon the measures just passed in review. They did not stop with regulating traffic among the states and the instrumentalities thereof; they also attempted to govern production and industrial relations in the field of production. Confronted with this expansive exercise of Congress’s power, the Court again deemed itself called upon to define a limit to the commerce power that would save to the states their historical sphere, and especially their customary monopoly of legislative power in relation to industry and labor management.
Securities and Exchange Commission.
Not all antidepres- sion legislation, however, was of this new approach. The Securities Exchange Act of 1934804 and the Public Utility Company Act (“Wheeler-Rayburn Act”) of 1935805 were not. The former created the Securities and Exchange Commission and authorized it to lay down regulations designed to keep dealing in securities honest and aboveboard and closed the channels of interstate commerce and the mails to dealers refusing to register under the act. The latter required the companies governed by it to register with the Securities and Exchange Commission and to inform it concerning their business, organization, and financial structure, all on pain of being prohibited use of the facilities of interstate commerce and the mails; while, by § 11, the so-called “death sentence” clause, the same act closed the channels of interstate communication after a certain date to certain types of public utility companies whose operations, Congress found, were calculated chiefly to exploit the investing and consuming public. All these provisions have been sustained,806 with the Court relying principally on Gibbons v. Ogden.
Congressional Regulation of Production and Industrial Relations: Antidepression Legislation
In the words of Chief Justice Hughes, spoken in a case decided a few days after President Franklin D. Roosevelt’s first inauguration, the problem then confronting the new Administration was clearly set forth. “When industry is grievously hurt, when producing concerns fail, when unemployment mounts and communities dependent upon profitable production are prostrated, the wells of commerce go dry.”807
National Industrial Recovery Act.
The initial effort of Con- gress to deal with this situation was embodied in the National Industrial Recovery Act of June 16, 1933.808 The opening section of the Act asserted the existence of “a national emergency productive of widespread unemployment and disorganization of industry which” burdened “interstate and foreign commerce,” affected “the public welfare,” and undermined “the standards of living of the American people.” To affect the removal of these conditions the President was authorized, upon the application of industrial or trade groups, to approve “codes of fair competition,” or to prescribe the same in cases where such applications were not duly forthcoming. Among other things such codes, of which eventually more than 700 were promulgated, were required to lay down rules of fair dealing with customers and to furnish labor certain guarantees respecting hours, wages and collective bargaining. For the time being, business and industry were to be cartelized on a national scale.
In A. L. A. Schechter Poultry Corp. v. United States,809 one of these codes, the Live Poultry Code, was pronounced unconstitutional. Although it was conceded that practically all poultry handled by the Schechters came from outside the State, and hence via interstate commerce, the Court held, nevertheless, that once the chickens came to rest in the Schechter’s wholesale market, interstate commerce in them ceased. The act, however, also purported to govern business activities which “affected” interstate commerce. This, Chief Justice Hughes held, must be taken to mean “directly” affect such commerce: “the distinction between direct and indirect effects of intrastate transactions upon interstate commerce must be recognized as a fundamental one, essential to the maintenance of our constitutional system. Otherwise, . . . there would be virtually no limit to the federal power and for all practical purposes we should have a completely centralized government.”810 In short, the case was governed by the ideology of the Sugar Trust case, which was not mentioned in the Court’s opinion.811
Agricultural Adjustment Act.
Congress’s second attempt to combat the Depression was the Agricultural Adjustment Act of 1933.812 As is pointed out elsewhere, the measure was set aside as an attempt to regulate production, a subject held to be “prohibited” to the United States by the Tenth Amendment.813
Bituminous Coal Conservation Act.
The third measure to be disallowed was the Guffey-Snyder Bituminous Coal Conservation Act of 1935.814 The statute created machinery for the regulation of the price of soft coal, both that sold in interstate commerce and that sold “locally,” and other machinery for the regulation of hours of labor and wages in the mines. The clauses of the act dealing with these two different matters were declared by the act itself to be separable so that the invalidity of the one set would not affect the validity of the other, but this strategy was ineffectual. A majority of the Court, speaking by Justice Sutherland, held that the act constituted one connected scheme of regulation, which, because it invaded the reserved powers of the states over conditions of employment in productive industry, violated the Constitution.815 Justice Sutherland’s opinion set out from Chief Justice Hughes’ assertion in the Schechter case of the “fundamental” character of the distinction between “direct” and “indirect” effects, that is to say, from the doctrine of the Sugar Trust case. It then proceeded: “Much stress is put upon the evils which come from the struggle between employers and employees over the matter of wages, working conditions, the right of collective bargaining, etc., and the resulting strikes, curtailment and irregularity of production and effect on prices; and it is insisted that interstate commerce is greatly affected thereby. But . . . the conclusive answer is that the evils are all local evils over which the Federal Government has no legislative control. The relation of employer and employee is a local relation. At common law, it is one of the domestic relations. The wages are paid for the doing of local work. Working conditions are obviously local conditions. The employees are not engaged in or about commerce, but exclusively in producing a commodity. And the controversies and evils, which it is the object of the act to regulate and minimize, are local controversies and evils affecting local work undertaken to accomplish that local result. Such effect as they may have upon commerce, however extensive it may be, is secondary and indirect. An increase in the greatness of the effect adds to its importance. It does not alter its character.”816
Railroad Retirement Act.
Still pursuing the idea of protect- ing commerce and the labor engaged in it concurrently, Congress, by the Railroad Retirement Act of June 27, 1934,817 ordered the compulsory retirement of superannuated employees of interstate carriers, and provided that they be paid pensions out of a fund comprising compulsory contributions from the carriers and their present and future employees. In Railroad Retirement Bd. v. Alton R.R.,818 however, a closely divided Court held this legislation to be in excess of Congress’s power to regulate commerce and contrary to the Due Process Clause of the Fifth Amendment. Justice Roberts wrote for the majority: “We feel bound to hold that a pension plan thus imposed is in no proper sense a regulation of the activity of interstate transportation. It is an attempt for social ends to impose by sheer fiat noncontractual incidents upon the relation of employer and employee, not as a rule or regulation of commerce and transportation between the States, but as a means of assuring a particular class of employees against old age dependency. This is neither a necessary nor an appropriate rule or regulation affecting the due fulfillment of the railroads’ duty to serve the public in interstate transportation.”819
Chief Justice Hughes, speaking for the dissenters, contended, on the contrary, that “the morale of the employees [had] an important bearing upon the efficiency of the transportation service.” He added: “The fundamental consideration which supports this type of legislation is that industry should take care of its human wastage, whether that is due to accident or age. That view cannot be dismissed as arbitrary or capricious. It is a reasoned conviction based upon abundant experience. The expression of that conviction in law is regulation. When expressed in the government of interstate carriers, with respect to their employees likewise engaged in interstate commerce, it is a regulation of that commerce. As such, so far as the subject matter is concerned, the commerce clause should be held applicable.”820 Under subsequent legislation, an excise is levied on interstate carriers and their employees, while by separate but parallel legislation a fund is created in the Treasury out of which pensions are paid along the lines of the original plan. The constitutionality of this scheme appears to be taken for granted in Railroad Retirement Board v. Duquesne Warehouse Co.821
National Labor Relations Act.
The case in which the Court reduced the distinction between “direct” and “indirect” effects to the vanishing point and thereby placed Congress in the position to regulate productive industry and labor relations in these industries was NLRB v. Jones & Laughlin Steel Corporation.822 Here the statute involved was the National Labor Relations Act of 1935,823 which declared the right of workers to organize, forbade unlawful employer interference with this right, established procedures by which workers could choose exclusive bargaining representatives with which employers were required to bargain, and created a board to oversee all these processes.824
The Court, speaking through Chief Justice Hughes, upheld the Act and found the corporation to be subject to the Act. “The close and intimate effect,” he said, “which brings the subject within the reach of federal power may be due to activities in relation to productive industry although the industry when separately viewed is local.” Nor will it do to say that such effect is “indirect.” Considering defendant’s “far-flung activities,” the effect of strife between it and its employees “would be immediate and [it] might be catastrophic. We are asked to shut our eyes to the plainest facts of our national life and to deal with the question of direct and indirect effects in an intellectual vacuum. . . . When industries organize themselves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce from the paralyzing consequences of industrial war? We have often said that interstate commerce itself is a practical conception. It is equally true that interferences with that commerce must be appraised by a judgment that does not ignore actual experience.”825
While the Act was thus held to be within the constitutional powers of Congress in relation to a productive concern because the interruption of its business by strike “might be catastrophic,” the decision was forthwith held to apply also to two minor concerns,826 and in a later case the Court stated specifically that the smallness of the volume of commerce affected in any particular case is not a material consideration.827 Subsequently, the act was declared to be applicable to a local retail auto dealer on the ground that he was an integral part of the manufacturer’s national distribution system,828 to a labor dispute arising during alteration of a county courthouse because one-half of the cost—$225,000—was attributable to materials shipped from out-of-state,829 and to a dispute involving a retail distributor of fuel oil, all of whose sales were local, but who obtained the oil from a wholesaler who imported it from another state.830
Indeed, “[t]his Court has consistently declared that in passing the National Labor Relations Act, Congress intended to and did vest in the Board the fullest jurisdictional breadth constitutionally permissible under the Commerce Clause.”831 Thus, the Board has formulated jurisdictional standards which assume the requisite effect on interstate commerce from a prescribed dollar volume of business and these standards have been implicitly approved by the Court.832
Fair Labor Standards Act.
In 1938, Congress enacted the Fair Labor Standards Act. The measure prohibited not only the 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.”833 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.”834 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.835 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 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.”836
Subsequent decisions of the Court took a very broad view of which employees should be covered by the Act,837 and in 1949 Congress to some degree narrowed the permissible range of coverage and disapproved some of the Court’s decisions.838 But, in 1961,839 with extensions in 1966,840 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.841 The “enterprise concept” was sustained by the Court in Maryland v. Wirtz.842 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.843
Agricultural Marketing Agreement Act.
After its initial frus- trations, Congress returned to the task of bolstering agriculture by passing the Agricultural Marketing Agreement Act of June 3, 1937,844 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.,845 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.”846
In Wickard v. Filburn,847 the Court sustained a still deeper penetration by Congress into the field of production. As amended by the act of 1941, the Agricultural Adjustment Act of 1938848 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 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.”849 And, it elsewhere stated “that 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.”850
Acts of Congress Prohibiting Commerce
Foreign Commerce: Jefferson’s Embargo.
“Jefferson’s Em- bargo” 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 sovereignty, 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 strange process, it has been merged or extinguished, and now exists no where.”851
Foreign Commerce: Protective Tariffs.
Tariff laws have cus- tomarily contained prohibitory provisions, and such provisions have been sustained by the Court under Congress’s revenue powers and under its power to regulate foreign commerce. For the Court in Board of Trustees v. United States,852 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, § 8, par. 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, supra, p. 202. ‘Under the power to regulate foreign commerce Congress impose duties on importations, give drawbacks, pass embargo and non-intercourse 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.”853
Foreign Commerce: Banned Articles.
The forerunners of more recent acts excluding objectionable commodities from interstate commerce are the laws forbidding the importation of like commodities from abroad. Congress has exercised this power since 1842, when it forbade the importation of obscene literature or pictures from abroad.854 Six years, later it passed an act “to prevent the importation of spurious and adulterated drugs” and to provide a system of inspection to make the prohibition effective.855 Such legislation guarding against the importation of noxiously adulterated foods, drugs, or liquor has been on the statute books ever since. In 1887, the importation by Chinese nationals of opium was prohibited,856 and subsequent statutes passed in 1909 and 1914 made it unlawful for anyone to import it.857 In 1897, Congress forbade the importation of any tea “inferior in purity, quality, and fitness for consumption” as compared with a legal standard.858 The Act was sustained in 1904, in Buttfield v. Stranahan.859 In “The Abby Dodge” an act excluding sponges taken by means of diving or diving apparatus from the waters of the Gulf of Mexico or Straits of Florida was sustained but construed as not applying to sponges taken from the territorial water of a state.860
In Weber v. Freed,861 the Court upheld an act prohibiting the importation and interstate transportation of prize-fight films or of pictorial representation of prize fights. Chief Justice White grounded his opinion for a unanimous Court on the complete and total control over foreign commerce possessed by Congress, in contrast implicitly to its lesser power over interstate commerce.862 And, in Brolan v. United States,863 the Court rejected as wholly inappropriate citation of cases dealing with interstate commerce on the question of Congress’s power to prohibit foreign commerce. It has been earlier noted, however, that the purported distinction is one that the Court both previously to and subsequent to these opinions has rejected.
Interstate Commerce: Power to Prohibit Questioned.
The question whether Congress’s power to regulate commerce “among the several States” embraced the power to prohibit it furnished the topic of one of the most protracted debates in the entire history of the Constitution’s interpretation, a debate the final resolution of which in favor of congressional power is an event of first importance for the future of American federalism. The issue was as early as 1841 brought forward by Henry Clay, in an argument before the Court in which he raised the specter of an act of Congress forbidding the interstate slave trade.864 The debate was concluded ninety-nine years later by the decision in United States v. Darby,865 which sustained the Fair Labor Standards Act.866
Interstate Commerce: National Prohibitions and State Police Power.
The earliest acts prohibiting commerce were in the nature of quarantine regulations and usually dealt solely with interstate transportation. In 1884, the exportation or shipment in interstate commerce of livestock having any infectious disease was forbidden.867 In 1903, power was conferred upon the Secretary of Agriculture to establish regulations to prevent the spread of such diseases through foreign or interstate commerce.868 In 1905, the same official was authorized to lay an absolute embargo or quarantine upon all shipments of cattle from one state to another when the public necessity might demand it.869 A statute passed in 1905 forbade the transportation in foreign and interstate commerce and the mails of certain varieties of moths, plant lice, and other insect pests injurious to plant crops, trees, and other vegetation.870 In 1912, a similar exclusion of diseased nursery stock was decreed,871 while by the same act and again by an act of 1917,872 the Secretary of Agriculture was invested with powers of quarantine on interstate commerce for the protection of plant life from disease similar to those above described for the prevention of the spread of animal disease. Although the Supreme Court originally held federal quarantine regulations of this sort to be constitutionally inapplicable to intrastate shipments of livestock, on the ground that federal authority extends only to foreign and interstate commerce,873 this view has today been abandoned.
The Lottery Case.
The first case to come before the Court in which the issues discussed above were canvassed at all thoroughly was Champion v. Ames,874 involving the act of 1895 “for the suppression of lotteries.”875 An earlier act excluding lottery tickets from the mails had been upheld in the case In re Rapier,876 on the proposition that Congress clearly had the power to see that the very facilities furnished by it were not put to bad use. But in the case of commerce, the facilities are not ordinarily furnished by the National Government, and the right to engage in foreign and interstate commerce comes from the Constitution itself or is anterior to it.
How difficult the Court found the question produced by the act of 1895, forbidding any person to bring within the United States or to cause to be “carried from one State to another” any lottery ticket, or an equivalent thereof, “for the purpose of disposing of the same,” was shown by the fact that the case was argued three times before the Court and the fact that the Court’s decision finally sustaining the act was a five-to-four decision. The opinion of the Court, on the other hand, prepared by Justice Harlan, marked an almost unqualified triumph at the time for the view that Congress’s power to regulate commerce among the States included the power to prohibit it, especially to supplement and support state legislation enacted under the police power. Early in the opinion, extensive quotation is made from Chief Justice Marshall’s opinion in Gibbons v. Ogden,877 with special stress upon the definition there given of the phrase “to regulate.” Justice Johnson’s assertion on the same occasion is also given: “The power of a sovereign State over commerce, . . . amounts to nothing more than a power to limit and restrain it at pleasure.” Further along is quoted with evident approval Justice Bradley’s statement in Brown v. Houston,878 that “[t]he power to regulate commerce among the several States is granted to Congress in terms as absolute as is the power to regulate commerce with foreign nations.”
Following the wake of the Lottery Case, Congress repeatedly brought its prohibitory powers over interstate commerce and communications to the support of certain local policies of the states in the exercise of their reserved powers, thereby aiding them in the repression of a variety of acts and deeds objectionable to public morality. The conception of the Federal System on which the Court based its validation of this legislation was stated by it in 1913 in sustaining the Mann “White Slave” Act in the following words: “Our dual form of government has its perplexities, State and Nation having different spheres of jurisdiction . . . but it must be kept in mind that we are one people; and the powers reserved to the States and those conferred on the Nation are adapted to be exercised, whether independently or concurrently, to promote the general welfare, material, and moral.”879 At the same time, the Court made it plain that in prohibiting commerce among the states, Congress was equally free to support state legislative policy or to devise a policy of its own. “Congress,” it said, “may exercise this authority in aid of the policy of the State, if it sees fit to do so. It is equally clear that the policy of Congress acting independently of the States may induce legislation without reference to the particular policy or law of any given State. Acting within the authority conferred by the Constitution it is for Congress to determine what legislation will attain its purpose. The control of Congress over interstate commerce is not to be limited by State laws.”880
In Brooks v. United States,881 the Court sustained the National Motor Vehicle Theft Act882 as a measure protective of owners of automobiles; that is, of interests in “the State of origin.” The statute was designed to repress automobile motor thefts, notwithstanding that such thefts antedate the interstate transportation of the article stolen. Speaking for the Court, Chief Justice Taft, at the outset, stated the general proposition that “Congress can certainly regulate interstate commerce to the extent of forbidding and punishing the use of such commerce as an agency to promote immorality, dishonesty, or the spread of any evil or harm to the people of other States from the State of origin.” Noting “the radical change in transportation” brought about by the automobile, and the rise of “[e]laborately organized conspiracies for the theft of automobiles . . . and their sale or other disposition” in another jurisdiction from the owner’s, the Court concluded that such activity “is a gross misuse of interstate commerce. Congress may properly punish such interstate transportation by anyone with knowledge of the theft, because of its harmful result and its defeat of the property rights of those whose machines against their will are taken into other jurisdictions.” The fact that stolen vehicles were “harmless” and did not spread harm to persons in other states on this occasion was not deemed to present any obstacle to the exercise of the regulatory power of Congress.883
The Darby Case.
In sustaining the Fair Labor Standards Act 884 in 1941,885 the Court expressly overruled Hammer v. Dagenhart.886 “The distinction on which the [latter case] . . . was rested that Congressional power to prohibit interstate commerce is limited to articles which in themselves have some harmful or deleterious property—a distinction which was novel when made and unsupported by any provision of the Constitution—has long since been abandoned. . . . The thesis of the opinion that the motive of the prohibition or its effect to control in some measure the use or production within the States of the article thus excluded from the commerce can operate to deprive the regulation of its constitutional authority has long since ceased to have force. . . . The conclusion is inescapable that Hammer v. Dagenhart, was a departure from the principles which have prevailed in the interpretation of the Commerce Clause both before and since the decision and that such vitality, as a precedent, as it then had has long since been exhausted. It should be and now is overruled.”887
The Commerce Clause as a Source of National Police Power
The Court has several times expressly noted that Congress’s exercise of power under the Commerce Clause is akin to the police power exercised by the states.888 It should follow, therefore, that Congress may achieve results unrelated to purely commercial aspects of commerce, and this result in fact has often been accomplished. Paralleling and contributing to this movement is the virtual disappearance of the distinction between interstate and intrastate commerce.
Is There an Intrastate Barrier to Congress’s Commerce Power?.
Not only has there been legislative advancement and ju- dicial acquiescence in Commerce Clause jurisprudence, but the melding of the Nation into one economic union has been more than a little responsible for the reach of Congress’s power. “The volume of interstate commerce and the range of commonly accepted objects of government regulation have . . . expanded considerably in the last 200 years, and the regulatory authority of Congress has expanded along with them. As interstate commerce has become ubiquitous, activities once considered purely local have come to have effects on the national economy, and have accordingly come within the scope of Congress’s commerce power.”889
Congress’s commerce power has been characterized as having three, or sometimes four, interrelated principles of decision, some old, some of recent vintage. The Court in 1995 described “three broad categories of activity that Congress may regulate under its commerce power. First, Congress may regulate the use of the channels of interstate commerce. Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities. Finally, Congress’s commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, i.e., those activities that substantially affect interstate commerce.”890
An example of the first category, regulating to protect the channels and instrumentalities of interstate commerce, is Pierce County v. Guillen,891 in which the Court upheld a prohibition on the use in state or federal court proceedings of highway data required to be collected by states on the basis that “Congress could reasonably believe that adopting a measure eliminating an unforeseen side effect of the information-gathering requirement . . . would result in more diligent efforts [by states] to collect the relevant information.”
Under the second category, which attaches to instrumentalities
892 and persons crossing of state lines, Congress has validly legislated to protect interstate travelers from harm, to prevent such travelers from being deterred in the exercise of interstate traveling, and to prevent them from being burdened. Many of the 1964 public accommodations law applications have been premised on the point that larger establishments do serve interstate travelers and that even small stores, restaurants, and the like may serve interstate travelers, and, therefore, it is permissible to regulate them to prevent or deter racial discrimination.893
Commerce regulation under this second category is not limited to persons who cross state lines but can also extend to an object that will or has crossed state lines, and the regulation of a purely intrastate activity may be premised on the presence of such object. Thus, the public accommodations law reached small establishments that served food and other items that had been purchased from interstate channels.894 Congress has validly penalized convicted felons, who had no other connection to interstate commerce, for possession or receipt of firearms, which had been previously transported in interstate commerce independently of any activity by the two felons.895
This reach is not of recent origin. In United States v. Sullivan,896 the Court sustained a conviction of misbranding under the Federal Food, Drug and Cosmetic Act. Sullivan, a Columbus, Georgia druggist, had bought a properly labeled 1000-tablet bottle of sulfathiazole from an Atlanta wholesaler. The bottle had been shipped to the Atlanta wholesaler by a Chicago supplier six months earlier. Three months after Sullivan received the bottle, he made two retail sales of 12 tablets each, placing the tablets in boxes not labeled in strict accordance with the law. Upholding the conviction, the Court concluded that there was no question of “the constitutional power of Congress under the Commerce Clause to regulate the branding of articles that have completed an interstate shipment and are being held for future sales in purely local or intrastate commerce.”897
Under the third category, Congress’s power reaches not only transactions or actions that occasion the crossing of state or national boundaries but extends as well to activities that, though local, “affect” commerce; this power derives from the Commerce Clause enhanced by the Necessary and Proper Clause. The seminal case, of course, is Wickard v. Filburn,898 sustaining federal regulation of a crop of wheat grown on a farm and intended solely for home consumption. The premise was that if it were never marketed, it supplied a need otherwise to be satisfied only in the market, and that if prices rose it might be induced onto the market. “Even activity that is purely intrastate in character may be regulated by Congress, where the activity, combined with like conduct by others similarly situated, affects commerce among the States or with foreign nations.”899 Coverage under federal labor and wage-and-hour laws after the 1930s showed the reality of this doctrine.900
In upholding federal regulation of strip mining, the Court demonstrated the breadth of the “affects” standard. One case dealt with statutory provisions designed to preserve “prime farmland.” The trial court had determined that the amount of such land disturbed annually amounted to 0.006% of the total prime farmland acreage in the Nation and, thus, that the impact on commerce was “infinitesimal” or “trivial.” Disagreeing, the Court said: “A court may invalidate legislation enacted under the Commerce Clause only if it is clear that there is no rational basis for a congressional finding that the regulated activity affects interstate commerce, or that there is no reasonable connection between the regulatory means selected and the asserted ends.”901 Moreover, “[t]he pertinent inquiry therefore is not how much commerce is involved but whether Congress could rationally conclude that the regulated activity affects interstate commerce.”902
In a companion case, the Court reiterated that “[t]he denomination of an activity as a ‘local’ or ‘intrastate’ activity does not resolve the question whether Congress may regulate it under the Commerce Clause. As previously noted, the commerce power ‘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.’ ”903 Judicial review is narrow. Congress’s determination of an “effect” must be deferred to if it is rational, and Congress must have acted reasonably in choosing the means.904
Fourth, a still more potent engine of regulation has been the expansion of the class-of-activities standard, which began in the “affecting” cases. In Perez v. United States,905 the Court sustained the application of a federal “loan-sharking” law to a local culprit. The Court held that, although individual loan-sharking activities might be intrastate in nature, still it was within Congress’s power to determine that the activity was within a class the activities of which did affect interstate commerce, thus affording Congress the opportunity to regulate the entire class. Although the Perez Court and the congressional findings emphasized that loan-sharking was generally part of organized crime operating on a national scale and that loan-sharking was commonly used to finance organized crime’s national operations, subsequent cases do not depend upon a defensible assumption of relatedness in the class.
Thus, the Court applied the federal arson statute to the attempted “torching” of a defendant’s two-unit apartment building. The Court merely pointed to the fact that the rental of real estate “unquestionably” affects interstate commerce and that “the local rental of an apartment unit is merely an element of a much broader commercial market in real estate.”906 The apparent test of whether aggregation of local activity can be said to affect commerce was made clear next in an antitrust context.907
In a case allowing the continuation of an antitrust suit challenging a hospital’s exclusion of a surgeon from practice in the hospital, the Court observed that in order to establish the required jurisdictional nexus with commerce, the appropriate focus is not on the actual effects of the conspiracy but instead is on the possible consequences for the affected market if the conspiracy is successful. The required nexus in this case was sufficient because competitive significance is to be measured by a general evaluation of the impact of the restraint on other participants and potential participants in the market from which the surgeon was being excluded.908
Requirement that Regulation be Economic.
In United States v. Lopez909 the Court, for the first time in almost sixty years,910 invalidated a federal law as exceeding Congress’s authority under the Commerce Clause. The statute made it a federal offense to possess a firearm within 1,000 feet of a school.911 The Court reviewed the doctrinal development of the Commerce Clause, especially the effects and aggregation tests, and reaffirmed that it is the Court’s responsibility to decide whether a rational basis exists for concluding that a regulated activity sufficiently affects interstate commerce when a law is challenged.912 As noted previously, the Court evaluation started with a consideration of whether the legislation fell within the three broad categories of activity that Congress may regulate or protect under its commerce power: (1) use of the channels of interstate commerce, (2) the use of instrumentalities of interstate commerce, or (3) activities that substantially affect interstate commerce.913
Clearly, the Court said, the criminalized activity did not implicate the first two categories.914 As for the third, the Court found an insufficient connection. First, a wide variety of regulations of “intrastate economic activity” has been sustained where an activity substantially affects interstate commerce. But the statute being challenged, the Court continued, was a criminal law that had nothing to do with “commerce” or with “any sort of economic enterprise.” Therefore, it could not be sustained under precedents “upholding regulations of activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce.”915 The provision did not contain a “jurisdictional element which would ensure, through case-by-case inquiry, that the firearm possession in question affects interstate commerce.”916 The existence of such a section, the Court implied, would have saved the constitutionality of the provision by requiring a showing of some connection to commerce in each particular case.
Finally, the Court rejected the arguments of the government and of the dissent that there existed a sufficient connection between the offense and interstate commerce.917 At base, the Court’s concern was that accepting the attenuated connection arguments presented would result in the evisceration of federalism. “Under the theories that the government presents . . . it is difficult to perceive any limitation on federal power, even in areas such as criminal law enforcement or education where States historically have been sovereign. Thus, if we were to accept the Government’s arguments, we are hard pressed to posit any activity by an individual that Congress is without power to regulate.”918
Whether Lopez bespoke a Court determination to police more closely Congress’s exercise of its commerce power, so that it would be a noteworthy case,919 or whether it was rather a “warning shot” across the bow of Congress, urging more restraint in the exercise of power or more care in the drafting of laws, was not immediately clear. The Court’s decision five years later in United States v. Morrison,920 however, suggests that stricter scrutiny of Congress’s commerce power exercises is the chosen path, at least for legislation that falls outside the area of economic regulation.921 The Court will no longer defer, via rational basis review, to every congressional finding of substantial effects on interstate commerce, but instead will examine the nature of the asserted nexus to commerce, and will also consider whether a holding of constitutionality is consistent with its view of the commerce power as being a limited power that cannot be allowed to displace all exercise of state police powers.
In Morrison the Court applied Lopez principles to invalidate a provision of the Violence Against Women Act (VAWA) that created a federal cause of action for victims of gender-motivated violence. Gender-motivated crimes of violence “are not, in any sense of the phrase, economic activity,”922 the Court explained, and there was allegedly no precedent for upholding commerce-power regulation of intrastate activity that was not economic in nature. The provision, like the invalidated provision of the Gun-Free School Zones Act, contained no jurisdictional element tying the regulated violence to interstate commerce. Unlike the Gun-Free School Zones Act, the VAWA did contain “numerous” congressional findings about the serious effects of gender-motivated crimes,923 but the Court rejected reliance on these findings. “The existence of congressional findings is not sufficient, by itself, to sustain the constitutionality of Commerce Clause legislation. . . . [The issue of constitutionality] is ultimately a judicial rather than a legislative question, and can be settled finally only by this Court.”924
The problem with the VAWA findings was that they “relied heavily” on the reasoning rejected in Lopez—the “but-for causal chain from the initial occurrence of crime . . . to every attenuated effect upon interstate commerce.” As the Court had explained in Lopez, acceptance of this reasoning would eliminate the distinction between what is truly national and what is truly local, and would allow Congress to regulate virtually any activity, and basically any crime.925 Accordingly, the Court “reject[ed] the argument that Congress may regulate noneconomic, violent criminal conduct based solely on that conduct’s aggregate effect on interstate commerce.” Resurrecting the dual federalism dichotomy, the Court could find “no better example of the police power, which the Founders denied the National Government and reposed in the States, than the suppression of violent crime and vindication of its victims.”926
Yet, the ultimate impact of these cases on Congress’s power over commerce may be limited. In Gonzales v. Raich,927 the Court reaffirmed an expansive application of Wickard v. Filburn, and signaled that its jurisprudence is unlikely to threaten the enforcement of broad regulatory schemes based on the Commerce Clause. In Raich, the Court considered whether the cultivation, distribution, or possession of marijuana for personal medical purposes pursuant to the California Compassionate Use Act of 1996 could be prosecuted under the federal Controlled Substances Act (CSA).928 The respondents argued that this class of activities should be considered as separate and distinct from the drug-trafficking that was the focus of the CSA, and that regulation of this limited non-commercial use of marijuana should be evaluated separately.
In Raich, the Court declined the invitation to apply Lopez and Morrison to select applications of a statute, holding that the Court would defer to Congress if there was a rational basis to believe that regulation of home-consumed marijuana would affect the market for marijuana generally. The Court found that there was a “rational basis” to believe that diversion of medicinal marijuana into the illegal market would depress the price on the latter market.929 The Court also had little trouble finding that, even in application to medicinal marijuana, the CSA was an economic regulation. Noting that the definition of “economics” includes “the production, distribution, and consumption of commodities,”930 the Court found that prohibiting the intrastate possession or manufacture of an article of commerce is a rational and commonly used means of regulating commerce in that product.931
The Court’s decision also contained an intertwined but potentially separate argument that Congress had ample authority under the Necessary and Proper Clause to regulate the intrastate manufacture and possession of controlled substances, because failure to regulate these activities would undercut the ability of the government to enforce the CSA generally.932 The Court quoted language from Lopez that appears to authorize the regulation of such activities on the basis that they are an essential part of a regulatory scheme.933 Justice Scalia, in concurrence, suggested that this latter category of activities could be regulated under the Necessary and Proper Clause regardless of whether the activity in question was economic or whether it substantially affected interstate commerce.934
Activity Versus Inactivity.
In National Federation of Independent Business (NFIB) v. Sebelius,935 the Court held that Congress did not have the authority under the Commerce Clause to impose a requirement compelling certain individuals to maintain a minimum level of health insurance (although, as discussed previously, the Court found such power to exist under the taxing power). Under this “individual mandate,” failure to purchase health insurance may subject a person to a monetary penalty, administered through the tax code.936 By requiring that individuals purchase health insurance, the mandate prevents cost-shifting by those who would otherwise go without it. In addition, the mandate forces healthy individuals into the insurance risk pool, thus allowing insurers to subsidize the costs of covering the unhealthy individuals they are now required to accept.
Chief Justice Roberts, in a controlling opinion,937 suggested that Congress’s authority to regulate interstate commerce presupposes the existence of a commercial activity to regulate. Further, his opinion noted that the commerce power had been uniformly described in previous cases as involving the regulation of an “activity.”938 The individual mandate, on the other hand, compels an individual to become active in commerce on the theory that the individual’s inactivity affects interstate commerce. Justice Roberts suggested that regulation of individuals because they are doing nothing would result in an unprecedented expansion of congressional authority with few discernable limitations. While recognizing that most people are likely to seek health care at some point in their lives, Justice Roberts noted that there was no precedent for the argument that individuals who might engage in a commercial activity in the future could, on that basis, be regulated today.939 The Chief Justice similarly rejected the argument that the Necessary and Proper Clause could provide this additional authority. Rather than serving as a “incidental” adjunct to the Commerce Clause, reliance on the Necessary and Proper Clause in this instance would, according to the Chief Justice, create a substantial expansion of federal authority to regulate persons not otherwise subject to such regulation.940
It had been generally established some time ago that Congress had power under the Commerce Clause to prohibit racial discrimination in the use of the channels of commerce.941 The power under the clause to forbid discrimination within the states was firmly and unanimously sustained by the Court when Congress in 1964 enacted a comprehensive measure outlawing discrimination because of race or color in access to public accommodations with a requisite connection to interstate commerce.942 Hotels and motels were declared covered—that is, declared to “affect commerce”—if they provided lodging to transient guests; restaurants, cafeterias, and the like, were covered only if they served or offered to serve interstate travelers or if a substantial portion of the food which they served had moved in commerce.943 The Court sustained the Act as applied to a downtown Atlanta motel that did serve interstate travelers,944 to an out-of-the-way restaurant in Birmingham that catered to a local clientele but that had spent 46 percent of its previous year’s out-go on meat from a local supplier who had procured it from out-of-state,945 and to a rural amusement area operating a snack bar and other facilities, which advertised in a manner likely to attract an interstate clientele and that served food a substantial portion of which came from outside the state.946
Writing for the Court in Heart of Atlanta Motel and McClung, Justice Clark denied that Congress was disabled from regulating the operations of motels or restaurants because those operations may be, or may appear to be, “local” in character. “[T]he power of Congress to promote interstate commerce also includes the power to regulate the local incidents thereof, including local activities in both the States of origin and destination, which might have a substantial and harmful effect upon that commerce.”947
But, it was objected, Congress is regulating on the basis of moral judgments and not to facilitate commercial intercourse. “That Congress [may legislate] . . . against moral wrongs . . . rendered its enactments no less valid. In framing Title II of this Act Congress was also dealing with what it considered a moral problem. But that fact does not detract from the overwhelming evidence of the disruptive effect that racial discrimination has had on commercial intercourse. It was this burden which empowered Congress to enact appropriate legislation, and, given this basis for the exercise of its power, Congress was not restricted by the fact that the particular obstruction to interstate commerce with which it was dealing was also deemed a moral and social wrong.”948 The evidence did, in fact, noted the Justice, support Congress’s conclusion that racial discrimination impeded interstate travel by more than 20 million black citizens, which was an impairment Congress could legislate to remove.949
The Commerce Clause basis for civil rights legislation prohibiting private discrimination was important because of the understanding that Congress’s power to act under the Fourteenth and Fifteenth Amendments was limited to official discrimination.950 The Court’s subsequent determination that Congress is not necessarily so limited in its power reduces greatly the importance of the Commerce Clause in this area.951
Federal criminal jurisdiction based on the com- merce power, and frequently combined with the postal power, has historically been an auxiliary criminal jurisdiction. That is, Congress has made federal crimes of acts that constitute state crimes on the basis of some contact, however tangential, with a matter subject to congressional regulation even though the federal interest in the acts may be minimal.952 Examples of this type of federal criminal statute abound, including the Mann Act designed to outlaw interstate white slavery,953 the Dyer Act punishing interstate transportation of stolen automobiles,954 and the Lindbergh Law punishing interstate transportation of kidnapped persons.955 But, just as in other areas, Congress has passed beyond a proscription of the use of interstate facilities in the commission of a crime, it has in the criminal law area expanded the scope of its jurisdiction. Typical of this expansion is a statute making it a federal offense to “in any way or degree obstruct . . . delay . . . or affect . . . commerce . . . by robbery or extortion . . . .”956 Nonetheless, “Congress cannot punish felonies generally” and may enact only those criminal laws that are connected to one of its constitutionally enumerated powers, such as the commerce power.957 As a consequence, “most federal offenses include . . . a jurisdictional” element that ties the underlying offense to one of Congress’s constitutional powers.958
The most far-reaching measure the Court has sustained is the “loan-sharking” prohibition of the Consumer Credit Protection Act.959 The title affirmatively finds that extortionate credit transactions affect interstate commerce because loan sharks are in a class largely controlled by organized crime with a substantially adverse effect on interstate commerce. Upholding the statute, the Court found that though individual loan-sharking activities may be intrastate in nature, still it is within Congress’s power to determine that it was within a class the activities of which did affect interstate commerce, thus affording Congress power to regulate the entire class.960
THE COMMERCE CLAUSE AS A RESTRAINT ON STATE POWERS
The grant of power to Congress over commerce, unlike that of power to levy customs duties, the power to raise armies, and some others, is unaccompanied by correlative restrictions on state power.961 This circumstance does not, however, of itself signify that the states were expected to participate in the power thus granted Congress, subject only to the operation of the Supremacy Clause. As Hamilton pointed out in The Federalist,962 while some of the powers that are vested in the National Government admit of their “concurrent” exercise by the states, others are of their very nature “exclusive,” and hence render the notion of a like power in the states “contradictory and repugnant.” As an example of the latter kind of power, Hamilton mentioned the power of Congress to pass a uniform naturalization law. Was the same principle expected to apply to the power over foreign and interstate commerce?
Unquestionably, one of the great advantages anticipated from the grant to Congress of power over commerce was that state interferences with trade, which had become a source of sharp discontent under the Articles of Confederation, would thereby be brought to an end. As Webster stated in his argument for appellant in Gibbons v. Ogden: “The prevailing motive was to regulate commerce; to rescue it from the embarrassing and destructive consequences, resulting from the legislation of so many different States, and to place it under the protection of a uniform law.”963 In other words, the constitutional grant was itself a regulation of commerce in the interest of uniformity.964
That the Commerce Clause, unimplemented by congressional legislation, took from the states any and all power over foreign and interstate commerce was by no means conceded and was, indeed, counterintuitive, considering the extent of state regulation that existed before the Constitution.965 Moreover, legislation by Congress that regulated any particular phase of commerce would raise the question whether the states were entitled to fill the remaining gaps, if not by virtue of a “concurrent” power over interstate and foreign commerce, then by virtue of “that immense mass of legislation” as Marshall termed it, “which embraces everything within the territory of a State, not surrendered to the general government”966 —in a word, the “police power.”
The text and drafting record of the Commerce Clause fails, therefore to settle the question of what power is left to the states to adopt legislation regulating foreign or interstate commerce in greater or lesser measure. To be sure, in cases of flat conflict between an act or acts of Congress that regulate such commerce and a state legislative act or acts, from whatever state power ensuing, the act of Congress is today recognized, and was recognized by Marshall, as enjoying an unquestionable supremacy.967 But suppose, first, that Congress has passed no act, or second, that its legislation does not clearly cover the ground traversed by previously enacted state legislation. What rules then apply? Since Gibbons v. Ogden, both of these situations have confronted the Court, especially as regards interstate commerce, hundreds of times, and in meeting them the Court has, first, determined that it has power to decide when state power is validly exercised, and, second, it has coined or given currency to numerous formulas, some of which still guide, even when they do not govern, its judgment.968
Thus, it has been judicially established that the Commerce Clause is not only a “positive” grant of power to Congress, but is also a “negative” constraint upon the states. This aspect of the Commerce Clause, sometimes called the “dormant” commerce clause, means that the courts may measure state legislation against Commerce Clause values even in the absence of congressional regulation, i.e., when Congress’s exercise of its power is dormant.
Webster, in Gibbons, argued that a state grant of a monopoly to operate steamships between New York and New Jersey not only contravened federal navigation laws but violated the Commerce Clause as well, because that clause conferred an exclusive power upon Congress to make the rules for national commerce, although he conceded that the grant to regulate interstate commerce was so broad as to reach much that the states had formerly had jurisdiction over, the courts must be reasonable in interpretation.969 But, because he thought the state law was in conflict with the federal legislation, Chief Justice Marshall was not compelled to pass on Webster’s arguments, although in dicta he indicated his considerable sympathy with them and suggested that the power to regulate commerce between the states might be an exclusively federal power.970
Chief Justice Marshall originated the concept of the “dormant commerce clause” in Willson v. Black Bird Creek Marsh Co.,971 although in dicta. Attacked before the Court was a state law authorizing the building of a dam across a navigable creek, and it was claimed the law was in conflict with the federal power to regulate interstate commerce. Rejecting the challenge, Marshall said that the state act could not be “considered as repugnant to the [federal] power to regulate commerce in its dormant state . . . .”
Returning to the subject in Cooley v. Board of Wardens of Port of Philadelphia,972 the Court, upholding a state law that required ships to engage a local pilot when entering or leaving the port of Philadelphia, enunciated a doctrine of partial federal exclusivity. According to Justice Curtis’ opinion, the state act was valid on the basis of a distinction between those subjects of commerce that “imperatively demand a single uniform rule” operating throughout the country and those that “as imperatively” demand “that diversity which alone can meet the local necessities of navigation,” that is to say, of commerce. As to the former, the Court held Congress’s power to be “exclusive”; as to the latter, it held that the states enjoyed a power of “concurrent legislation.”973 The Philadelphia pilotage requirement was of the latter kind.
Thus, the contention that the federal power to regulate interstate commerce was exclusive of state power yielded to a rule of partial exclusivity. Among the welter of such cases, the first actually to strike down a state law solely974 on Commerce Clause grounds was the State Freight Tax Case.975 The question before the Court was the validity of a nondiscriminatory statute that required every company transporting freight within the state, with certain exceptions, to pay a tax at specified rates on each ton of freight carried. Opining that a tax upon freight, or any other article of commerce, transported from state to state is a regulation of commerce among the states and, further, that the transportation of merchandise or passengers through a state or from state to state was a subject that required uniform regulation, the Court held the tax in issue to be repugnant to the Commerce Clause.
Whether exclusive or partially exclusive, however, the Commerce Clause as a restraint upon state exercises of power, absent congressional action, received no sustained justification or explanation; the clause, of course, empowers Congress, not the courts, to regulate commerce among the states. Often, as in Cooley and in later cases, the Court stated or implied that the rule was imposed by the Commerce Clause.976 In Welton v. Missouri,977 the Court attempted to suggest a somewhat different justification. The case involved a challenge to a state statute that required a “peddler’s” license for merchants selling goods that came from other states, but that required no license if the goods were produced in the state. Declaring that uniformity of commercial regulation is necessary to protect articles of commerce from hostile legislation and that the power asserted by the state belonged exclusively to Congress, the Court observed that “[t]he fact that Congress has not seen fit to prescribe any specific rules to govern inter-State commerce does not affect the question. Its inaction on this subject . . . is equivalent to a declaration that inter-State commerce shall be free and untrammelled.”978
It has been evidently of little importance to the Court to explain. “Whether or not this long recognized distribution of power between the national and state governments is predicated upon the implications of the commerce clause itself . . . or upon the presumed intention of Congress, where Congress has not spoken . . . the result is the same.”979 Thus, “[f]or a hundred years it has been accepted constitutional doctrine . . . that . . . where Congress has not acted, this Court, and not the state legislature, is under the commerce clause the final arbiter of the competing demands of state and national interests.”980
Two other justifications can be found throughout the Court’s decisions, but they do not explain why the Court is empowered under a grant of power to Congress to police state regulatory and taxing decisions. For example, in Welton v. Missouri,981 the statute under review, as the Court observed several times, was clearly discriminatory as between in-state and interstate commerce, but that point was not sharply drawn as the constitutional fault of the law. That the Commerce Clause had been motivated by the Framers’ apprehensions about state protectionism has been frequently noted.982 A later theme has been that the Framers desired to create a national area of free trade, so that unreasonable burdens on interstate commerce violate the clause in and of themselves.983
Nonetheless, the power of the Court is established and is freely exercised. No reservations can be discerned in the opinions for the Court.984 Individual Justices, to be sure, have urged renunciation of the power and remission to Congress for relief sought by litigants,985 but that has not been the course followed.
The State Proprietary Activity (Market Participant) Exception.
In a case of first impression, the Court held that a Mary- land bounty scheme by which the state paid scrap processors for each “hulk” automobile destroyed is “the kind of action with which the Commerce Clause is not concerned.”986 As first enacted, the bounty plan did not distinguish between in-state and out-of-state processors, but it was amended in a manner that substantially disadvantaged out-of-state processors. The Court held “that entry by the State itself into the market itself as a purchaser, in effect, of a potential article of interstate commerce [does not] create[ ] a burden upon that commerce if the State restricts its trade to its own citizens or businesses within the State.”987
Affirming and extending this precedent, the Court held that a state operating a cement plant could in times of shortage (and presumably at any time) confine the sale of cement by the plant to residents of the state.988 “[T]he Commerce Clause responds principally to state taxes and regulatory measures impeding free private trade in the national marketplace. . . . There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market.”989 It is yet unclear how far this concept of the state as market participant rather than market regulator will be extended.990
Congressional Authorization of Otherwise Impermissible State Action.
The Supreme Court has heeded the lesson that was administered to it by the Act of Congress of August 31, 1852,991 which pronounced the Wheeling Bridge “a lawful structure,” thereby setting aside the Court’s determination to the contrary earlier the same year.992 The lesson, subsequently observed the Court, is that “[i]t is Congress, and not the Judicial Department, to which the Constitution has given the power to regulate commerce.”993 Similarly, when in the late 1880s and the early 1890s statewide prohibition laws began making their appearance, Congress again authorized state laws that the Court had held to violate the dormant commerce clause.
The Court applied the “original package” doctrine to interstate commerce in intoxicants, which the Court denominated “legitimate articles of commerce.”994 Although it held that a state was entitled to prohibit the manufacture and sale of intoxicants within its boundaries,995 it contemporaneously laid down the rule, in Bowman v. Chicago & Northwestern Ry. Co.,996 that, so long as Congress remained silent in the matter, a state lacked the power, even as part and parcel of a program of statewide prohibition of the traffic in intoxicants, to prevent the importation of liquor from a sister state. This holding was soon followed by another to the effect that, so long as Congress remained silent, a state had no power to prevent the sale in the original package of liquors introduced from another state.997 Congress soon attempted to overcome the effect of the latter decision by enacting the Wilson Act,998 which empowered states to regulate imported liquor on the same terms as domestically produced liquor, but the Court interpreted the law narrowly as subjecting imported liquor to local authority only after its resale.999 Congress did not fully nullify the Bowman case until 1913, when enactment of the Webb-Kenyon Act1000 clearly authorized states to regulate direct shipments for personal use.
National Prohibition, imposed by the Eighteenth Amendment, temporarily mooted these conflicts, but they reemerged with repeal of Prohibition by the Twenty-first Amendment. Section 2 of the Twenty-first Amendment prohibits “the importation into any State . . . for delivery or use therein of intoxicating liquors, in violation of the laws thereof.” Initially the Court interpreted this language to authorize states to discriminate against imported liquor in favor of that produced in-state, but the modern Court has rejected this interpretation, holding instead that “state regulation of alcohol is limited by the nondiscrimination principle of the Commerce Clause.”1001
Less than a year after the ruling in United States v. South-Eastern Underwriters Ass’n1002 that insurance transactions across state lines constituted interstate commerce, thereby establishing their immunity from discriminatory state taxation, Congress passed the McCarran-Ferguson Act,1003 authorizing state regulation and taxation of the insurance business. In Prudential Ins. Co. v. Benjamin,1004 the Court sustained a South Carolina statute that imposed on foreign insurance companies, as a condition of their doing business in the state, an annual tax of three percent of premiums from business done in South Carolina, while imposing no similar tax on local corporations. “Obviously,” said Justice Rutledge for the Court, “Congress’s purpose was broadly to give support to the existing and future state systems for regulating and taxing the business of insurance. This was done in two ways. One was by removing obstructions which might be thought to flow from its own power, whether dormant or exercised, except as otherwise expressly provided in the Act itself or in future legislation. The other was by declaring expressly and affirmatively that continued state regulation and taxation of this business is in the public interest and that the business and all who engage in it ‘shall be subject to’ the laws of the several states in these respects.”1005
Justice Rutledge continued: “The power of Congress over commerce exercised entirely without reference to coordinated action of the states is not restricted, except as the Constitution expressly provides, by any limitation which forbids it to discriminate against interstate commerce and in favor of local trade. Its plenary scope enables Congress not only to promote but also to prohibit interstate commerce, as it has done frequently and for a great variety of reasons. . . . This broad authority Congress may exercise alone, subject to those limitations, or in conjunction with coordinated action by the states, in which case limitations imposed for the preservation of their powers become inoperative and only those designed to forbid action altogether by any power or combination of powers in our governmental system remain effective.”1006
Thus, it is now well-established that “[w]hen Congress so chooses, state actions which it plainly authorizes are invulnerable to constitutional attack under the Commerce Clause.”1007 But the Court requires congressional intent to permit otherwise impermissible state actions to “be unmistakably clear.”1008 The fact that federal statutes and regulations had restricted commerce in timber harvested from national forest lands in Alaska was, therefore, “insufficient indicium” that Congress intended to authorize the state to apply a similar policy for timber harvested from state lands. The rule requiring clear congressional approval for state burdens on commerce was said to be necessary in order to strengthen the likelihood that decisions favoring one section of the country over another are in fact “collective decisions” made by Congress rather than unilateral choices imposed on unrepresented out-of-state interests by individual states.1009 And Congress must be plain as well when the issue is not whether it has exempted a state action from the Commerce Clause but whether it has taken the less direct form of reduction in the level of scrutiny.1010
State Taxation and Regulation: The Old Law
In 1959, the Supreme Court acknowledged that, with respect to the taxing power of the states in light of the negative (or “dormant”) commerce clause, “some three hundred full-dress opinions” as of that year had not resulted in “consistent or reconcilable” doctrine but rather in something more resembling a “quagmire.”1011 Although many of the principles still applicable in constitutional law may be found in the older cases, the Court has worked a revolution in this area, though at different times for taxation and for regulation. Thus, in this section we summarize the “old” law and then deal more fully with the “modern” law of the negative commerce clause.
The task of drawing the line be- tween state power and the commercial interest has proved a comparatively simple one in the field of foreign commerce, the two things being in great part territorially distinct.1012 With “commerce among the States” affairs are very different. Interstate commerce is conducted in the interior of the country, by persons and corporations that are ordinarily engaged also in local business; its usual incidents are acts that, if unconnected with commerce among the states, would fall within the state’s powers of police and taxation, while the things it deals in and the instruments by which it is carried on comprise the most ordinary subject matter of state power. In this field, the Court consequently has been unable to rely upon sweeping solutions. To the contrary, its judgments have often been fluctuating and tentative, even contradictory, and this is particularly the case with respect to the infringement of interstate commerce by the state taxing power.1013
The leading case dealing with the relation of the states’ taxing power to interstate commerce—the case in which the Court first struck down a state tax as violating the Commerce Clause— was the State Freight Tax Case.1014 Before the Court was the validity of a Pennsylvania statute that required every company transporting freight within the state, with certain exceptions, to pay a tax at specified rates on each ton of freight carried by it. The Court’s reasoning was forthright. Transportation of freight constitutes commerce.1015 A tax upon freight transported from one state to another effects a regulation of interstate commerce.1016 Under the Cooley doctrine, whenever the subject of a regulation of commerce is in its nature of national interest or admits of one uniform system or plan of regulation, that subject is within the exclusive regulating control of Congress.1017 Transportation of passengers or merchandise through a state, or from one state to another, is of this nature.1018 Hence, a state law imposing a tax upon freight, taken up within the state and transported out of it or taken up outside the state and transported into it, violates the Commerce Clause.1019
The principle thus asserted, that a state may not tax interstate commerce, confronted the principle that a state may tax all purely domestic business within its borders and all property “within its jurisdiction.” Inasmuch as most large concerns prosecute both an interstate and a domestic business, while the instrumentalities of interstate commerce and the pecuniary returns from such commerce are ordinarily property within the jurisdiction of some state or other, the task before the Court was to determine where to draw the line between the immunity claimed by interstate business, on the one hand, and the prerogatives claimed by local power on the other. In the State Tax on Railway Gross Receipts Case,1020 decided the same day as the State Freight Tax Case, the issue was a tax upon gross receipts of all railroads chartered by the state, part of the receipts having been derived from interstate transportation of the same freight that had been held immune from tax in the first case. If the latter tax were regarded as a tax on interstate commerce, it too would fall. But to the Court, the tax on gross receipts of an interstate transportation company was not a tax on commerce. “[I]t is not everything that affects commerce that amounts to a regulation of it, within the meaning of the Constitution.”1021 A gross receipts tax upon a railroad company, which concededly affected commerce, was not a regulation “directly. Very manifestly it is a tax upon the railroad company. . . . That its ultimate effect may be to increase the cost of transportation must be admitted. . . . Still it is not a tax upon transportation, or upon commerce. . . .”1022
Insofar as it drew a distinction between these two cases, the Court did so in part on the basis of Cooley, that some subjects embraced within the meaning of commerce demand uniform, national regulation, whereas other similar subjects permit of diversity of treatment, until Congress acts; and in part on the basis of a concept of a “direct” tax on interstate commerce, which was impermissible, and an “indirect” tax, which was permissible until Congress acted.1023 Confusingly, the two concepts were sometimes conflated and sometimes treated separately. In any event, the Court itself was clear that interstate commerce could not be taxed at all, even if the tax was a nondiscriminatory levy applied alike to local commerce.1024 “Thus, the States cannot tax interstate commerce, either by laying the tax upon the business which constitutes such commerce or the privilege of engaging in it, or upon the receipts, as such, derived from it . . . ; or upon persons or property in transit in interstate commerce.”1025 However, some taxes imposed only an “indirect” burden and were sustained; property taxes and taxes in lieu of property taxes applied to all businesses, including instrumentalities of interstate commerce, were sustained.1026 A good rule of thumb in these cases is that taxation was sustained if the tax was imposed on some local, rather than an interstate, activity or if the tax was exacted before interstate movement had begun or after it had ended.
An independent basis for invalidation was that the tax was discriminatory, that its impact was intentionally or unintentionally felt by interstate commerce and not by local, perhaps in pursuit of parochial interests. Many of the early cases actually involving discriminatory taxation were decided on the basis of the impermissibility of taxing interstate commerce at all, but the category was soon clearly delineated as a separate ground (and one of the most important today).1027
Following the Great Depression and under the leadership of Justice, and later Chief Justice, Stone, the Court attempted to move away from the principle that interstate commerce may not be taxed and reliance on the direct-indirect distinction. Instead, a state or local levy would be voided only if in the opinion of the Court it created a risk of multiple taxation for interstate commerce not felt by local commerce.1028 It became much more important to the validity of a tax that it be apportioned to an interstate company’s activities within the taxing state, so as to reduce the risk of multiple taxation.1029 But, just as the Court had achieved constancy in the area of regulation, it reverted to the older doctrines in the taxation area and reiterated that interstate commerce may not be taxed at all, even by a properly apportioned levy, and reasserted the direct-indirect distinction.1030 The stage was set, following a series of cases in which through formalistic reasoning the states were permitted to evade the Court’s precedents,1031 for the formulation of a more realistic doctrine.
Much more diverse were the cases dealing with regulation by the state and local governments. Taxation was one thing, the myriad approaches and purposes of regulations another. Generally speaking, if the state action was perceived by the Court to be a regulation of interstate commerce itself, it was deemed to impose a “direct” burden on interstate commerce and impermissible. If the Court saw it as something other than a regulation of interstate commerce, it was considered only to “affect” interstate commerce or to impose only an “indirect” burden on it in the proper exercise of the police powers of the states.1032 But the distinction between “direct” and “indirect” burdens was often perceptible only to the Court.1033
A corporation’s status as a foreign entity did not immunize it from state requirements, conditioning its admission to do a local business, to obtain a local license, and to furnish relevant information as well as to pay a reasonable fee.1034 But no registration was permitted of an out-of-state corporation, the business of which in the host state was purely interstate in character.1035 Neither did the Court permit a state to exclude from its courts a corporation engaging solely in interstate commerce because of a failure to register and to qualify to do business in that state.1036
Interstate transportation brought forth hundreds of cases. State regulation of trains operating across state lines resulted in divergent rulings. It was early held improper for states to prescribe charges for transportation of persons and freight on the basis that the regulation must be uniform and thus could not be left to the states.1037 The Court deemed “reasonable” and therefore constitutional many state regulations requiring a fair and adequate service for its inhabitants by railway companies conducting interstate service within its borders, as long as there was no unnecessary burden on commerce.1038 A marked tolerance for a class of regulations that arguably furthered public safety was long exhibited by the Court,1039 even in instances in which the safety connection was tenuous.1040 Of particular controversy were “full-crew” laws, represented as safety measures, that were attacked by the companies as “feather-bedding” rules.1041
Similarly, motor vehicle regulations have met mixed fates. Basically, it has always been recognized that states, in the interest of public safety and conservation of public highways, may enact and enforce comprehensive licensing and regulation of motor vehicles using its facilities.1042 Indeed, states were permitted to regulate many of the local activities of interstate firms and thus the interstate operations, in pursuit of these interests.1043 Here, too, safety concerns became overriding objects of deference, even in doubtful cases.1044 In regard to navigation, which had given rise to Gibbons v. Ogden and Cooley, the Court generally upheld much state regulation on the basis that the activities were local and did not demand uniform rules.1045
As a general rule, although the Court during this time did not permit states to regulate a purely interstate activity or prescribe prices for purely interstate transactions,1046 it did sustain a great deal of price and other regulation imposed prior to or subsequent to the travel in interstate commerce of goods produced for such commerce or received from such commerce. For example, decisions late in the period upheld state price-fixing schemes applied to goods intended for interstate commerce.1047
However, the states always had an obligation to act nondiscriminatorily. Just as in the taxing area, regulation that was parochially oriented, to protect local producers or industries, for instance, was not evaluated under ordinary standards but subjected to practically per se invalidation. The mirror image of Welton v. Missouri,1048 the tax case, was Minnesota v. Barber,1049 in which the Court invalidated a facially neutral law that in its practical effect discriminated against interstate commerce and in favor of local commerce. The law required fresh meat sold in the state to have been inspected by its own inspectors with 24 hours of slaughter. Thus, meat slaughtered in other states was excluded from the Minnesota market. The principle of the case has a long pedigree of application.1050 State protectionist regulation on behalf of local milk producers has occasioned judicial censure. Thus, in Baldwin v. G.A.F. Seelig.,1051 the Court had before it a complex state price-fixing scheme for milk, in which the state, in order to keep the price of milk artificially high within the state, required milk dealers buying out-of-state to pay producers, wherever they were, what the dealers had to pay within the state, and, thus, in-state producers were protected. And, in H. P. Hood & Sons, Inc. v. Du Mond,1052 the Court struck down a state refusal to grant an out-of-state milk distributor a license to operate a milk receiving station within the state on the basis that the additional diversion of local milk to the other state would impair the supply for the in-state market. A state may not bar an interstate market to protect local interests.1053
State Taxation and Regulation: The Modern Law
Transition from the old law to the modern standard occurred relatively smoothly in the field of regulation,1054 but in the area of taxation the passage was choppy and often witnessed retreats and advances.1055 In any event, both taxation and regulation now are evaluated under a judicial balancing formula comparing the burden on interstate commerce with the importance of the state interest, save for discriminatory state action that cannot be justified at all.
During the 1940s and 1950s, there was conflict within the Court between the view that interstate commerce could not be taxed at all, at least “directly,” and the view that the negative commerce clause protected against the risk of double taxation.1056 In Northwestern States Portland Cement Co. v. Minnesota,1057 the Court reasserted the principle expressed earlier in Western Live Stock, that the Framers did not intend to immunize interstate commerce from its just share of the state tax burden even though it increased the cost of doing business.1058 Northwestern States held that a state could constitutionally impose a nondiscriminatory, fairly apportioned net income tax on an out-of-state corporation engaged exclusively in interstate commerce in the taxing state. “For the first time outside the context of property taxation, the Court explicitly recognized that an exclusively interstate business could be subjected to the states’ taxing powers.”1059 Thus, in Northwestern States, foreign corporations that maintained a sales office and employed sales staff in the taxing state for solicitation of orders for their merchandise that, upon acceptance of the orders at their home office in another jurisdiction, were shipped to customers in the taxing state, were held liable to pay the latter’s income tax on that portion of the net income of their interstate business as was attributable to such solicitation.
Yet, the following years saw inconsistent rulings that turned almost completely upon the use of or failure to use “magic words” by legislative drafters. That is, it was constitutional for the states to tax a corporation’s net income, properly apportioned to the taxing state, as in Northwestern States, but no state could levy a tax on a foreign corporation for the privilege of doing business in the state, both taxes alike in all respects.1060 In Complete Auto Transit, Inc. v. Brady,1061 the Court overruled the cases embodying the distinction and articulated a standard that has governed the cases since. The tax in Brady was imposed on the privilege of doing business as applied to a corporation engaged in interstate transportation services in the taxing state; it was measured by the corporation’s gross receipts from the service. The appropriate concern, the Court wrote, was to pay attention to “economic realities” and to “address the problems with which the commerce clause is concerned.”1062 The standard, a set of four factors that was distilled from precedent but newly applied, was firmly set out. A tax on interstate commerce will be sustained “when the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.”1063 All subsequent cases have been decided in this framework.
Nexus.—“The Commerce Clause and the Due Process Clause impose distinct but parallel limitations on a State’s power to tax out-of-state activities. The Due Process Clause demands that there exist some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax, as well as a rational relationship between the tax and the values connected with the taxing State. The Commerce Clause forbids the States to levy taxes that discriminate against interstate commerce or that burden it by subjecting activities to multiple or unfairly apportioned taxation.”1064 “The broad inquiry subsumed in both constitutional requirements is whether the taxing power exerted by the state bears fiscal relation to protection, opportunities and benefits given by the state—that is, whether the state has given anything for which it can ask return.”1065
The question of the presence of a substantial nexus often arises when a state imposes on out-of-state vendors an obligation to collect use taxes on goods sold in the taxing state, and a determinative factor is whether the vendor is physically present in the state. The Court has sustained such an imposition on mail order sellers with retail outlets, solicitors, or property within the taxing state,1066 but it has denied the power to a state to tax a seller whose “only connection with customers in the State is by common carrier or the United States mail.”1067 The validity of general business taxes on interstate enterprises may also be determined by the nexus standard. However, again, only a minimal contact is necessary.1068 Thus, maintenance of one full-time employee within the state (plus occasional visits by non-resident engineers) to make possible the realization and continuance of contractual relations seemed to the Court to make almost frivolous a claim of lack of sufficient nexus.1069 The application of a state business-and-occupation tax on the gross receipts from a large wholesale volume of pipe and drainage products in the state was sustained, even though the company maintained no office, owned no property, and had no employees in the state, its marketing activities being carried out by an in-state independent contractor.1070 The Court also upheld a state’s application of a use tax to aviation fuel stored temporarily in the state prior to loading on aircraft for consumption in interstate flights.1071
When “there is no dispute that the taxpayer has done some business in the taxing State, the inquiry shifts from whether the State may tax to what it may tax. To answer that question, [the Court has] developed the unitary business principle. Under that principle, a State need not isolate the intrastate income-producing activities from the rest of the business but may tax an apportioned sum of the corporation’s multistate business if the business is unitary. The court must determine whether intrastate and extrastate activities formed part of a single unitary business, or whether the out-of-state values that the State seeks to tax derive[d] from unrelated business activity which constitutes a discrete business enterprise. . . . If the value the State wishe[s] to tax derive[s] from a ‘unitary business’ operated within and without the State, the State [may] tax an apportioned share of the value of that business instead of isolating the value attributable to the operation of the business within the State. Conversely, if the value the State wished to tax derived from a discrete business enterprise, then the State could not tax even an apportioned share of that value.”1072 But, even when there is a unitary business, “[t]he Due Process and Commerce Clauses of the Constitution do not allow a State to tax income arising out of interstate activities—even on a proportional basis—unless there is a ‘minimal connection’ or ‘nexus’ between the interstate activities and the taxing State and ‘a rational relationship between the income attributed to the State and the intrastate values of the enterprise.’ ”1073
Apportionment.—This requirement is of long standing,1074 but its importance has broadened as the scope of the states’ taxing powers has enlarged. It is concerned with what formulas the states must use to claim a share of a multistate business’ tax base for the taxing state, when the business carries on a single integrated enterprise both within and without the state. A state may not exact from interstate commerce more than the state’s fair share. Avoidance of multiple taxation, or the risk of multiple taxation, is the test of an apportionment formula. Generally speaking, this factor has been seen as both a Commerce Clause and a due process requisite,1075 although, as one recent Court decision notes, some tax measures that are permissible under the Due Process Clause nonetheless could run afoul of the Commerce Clause.1076 The Court has declined to impose any particular formula on the states, reasoning that to do so would be to require the Court to engage in “extensive judicial law-making,” for which it was ill-suited and for which Congress had ample power and ability to legislate.1077
“Instead,” the Court wrote, “we determine whether a tax is fairly apportioned by examining whether it is internally and externally consistent. To be internally consistent, a tax must be structured so that if every State were to impose an identical tax, no multiple taxation would result. Thus, the internal consistency test focuses on the text of the challenged statute and hypothesizes a situation where other States have passed an identical statute. . . . The external consistency test asks whether the State has taxed only that portion of the revenues from the interstate activity which reasonably reflects the in-state component of the activity being taxed. We thus examine the in-state business activity which triggers the taxable event and the practical or economic effect of the tax on that interstate activity.”1078
In Goldberg v. Sweet, the Court upheld as properly apportioned a state tax on the gross charge of any telephone call originated or terminated in the state and charged to an in-state service address, regardless of where the telephone call was billed or paid.1079 A complex state tax imposed on trucks displays the operation of the test. Thus, a state registration tax met the internal consistency test because every state honored every other states’, and a motor fuel tax similarly was sustained because it was apportioned to mileage traveled in the state, whereas lump-sum annual taxes, an axle tax and an identification marker fee, being unapportioned flat taxes imposed for the use of the state’s roads, were voided, under the internal consistency test, because if every state imposed them, then the burden on interstate commerce would be great.1080 Similarly, the Court held that Maryland’s personal income tax scheme—which taxed Maryland residents on their worldwide income and nonresidents on income earned in the state and did not offer Maryland residents a full credit for income taxes they paid to other states—“fails the internal consistency test.”1081 The Court did so because, if every state adopted the same approach, taxpayers who “earn income interstate” would be taxed twice on a portion of that income, while those who earned income solely within their state of residence would be taxed only once.1082
Deference to state taxing authority was evident in a case in which the Court sustained a state sales tax on the price of a bus ticket for travel that originated in the state but terminated in another state. The tax was unapportioned to reflect the intrastate travel and the interstate travel.1083 The tax in this case was different from the tax upheld in Central Greyhound, the Court held. The previous tax constituted a levy on gross receipts, payable by the seller, whereas the present tax was a sales tax, also assessed on gross receipts, but payable by the buyer. The Oklahoma tax, the Court continued, was internally consistent, because if every state imposed a tax on ticket sales within the state for travel originating there, no sale would be subject to more than one tax. The tax was also externally consistent, the Court held, because it was a tax on the sale of a service that took place in the state, not a tax on the travel.1084
However, the Court found discriminatory and thus invalid a state intangibles tax on a fraction of the value of corporate stock owned by state residents inversely proportional to the state’s exposure to the state income tax.1085
Discrimination.—The “fundamental principle” governing this factor is simple. “ ‘No State may, consistent with the Commerce Clause, impose a tax which discriminates against interstate commerce . . . by providing a direct commercial advantage to local business.’ ”1086 That is, a tax that by its terms or operation imposes greater burdens on out-of-state goods or activities than on competing in-state goods or activities will be struck down as discriminatory under the Commerce Clause.1087 In Armco, Inc. v. Hardesty,1088 the Court voided as discriminatory the imposition on an out-of-state wholesaler of a state tax that was levied on manufacturing and wholesaling but that relieved manufacturers subject to the manufacturing tax of liability for paying the wholesaling tax. Even though the former tax was higher than the latter, the Court found that the imposition discriminated against the interstate wholesaler.1089 A state excise tax on wholesale liquor sales, which exempted sales of specified local products, was held to violate the Commerce Clause.1090 A state statute that granted a tax credit for ethanol fuel if the ethanol was produced in the state, or if it was produced in another state that granted a similar credit to the state’s ethanol fuel, was found discriminatory in violation of the clause.1091 The Court reached the same conclusion as to Maryland’s personal income tax scheme, previously noted, which taxed Maryland residents on their worldwide income and nonresidents on income earned in the state and did not offer Maryland residents a full credit for income taxes they paid to other states, finding the scheme “inherently discriminatory.”1092
Expanding, although neither unexpectedly nor exceptionally, its dormant commerce jurisprudence, the Court in Camps Newfound/Owatonna, Inc. v. Town of Harrison,1093 applied its nondiscrimination element of the doctrine to invalidate the state’s charitable property tax exemption statute, which applied to nonprofit firms performing benevolent and charitable functions, but which excluded entities serving primarily out-of-state residents. The claimant here operated a church camp for children, most of whom resided out-of-state. The discriminatory tax would easily have fallen had it been applied to profit-making firms, and the Court saw no reason to make an exception for nonprofits. The tax scheme was designed to encourage entities to care for local populations and to discourage attention to out-of-state individuals and groups. “For purposes of Commerce Clause analysis, any categorical distinction between the activities of profit-making enterprises and not-for-profit entities is therefore wholly illusory. Entities in both categories are major participants in interstate markets. And, although the summer camp involved in this case may have a relatively insignificant impact on the commerce of the entire Nation, the interstate commercial activities of nonprofit entities as a class are unquestionably significant.”1094
Benefit Relationship.—Although, in all the modern cases, the Court has stated that a necessary factor to sustain state taxes having an interstate impact is that the levy be fairly related to benefits provided by the taxing state, it has declined to be drawn into any consideration of the amount of the tax or the value of the benefits bestowed. The test rather is whether, as a matter of the first factor, the business has the requisite nexus with the state; if it does, then the tax meets the fourth factor simply because the business has enjoyed the opportunities and protections that the state has afforded it.1095
The modern standard of Commerce Clause re- view of state regulation of, or having an impact on, interstate commerce was adopted in Southern Pacific Co. v. Arizona,1096 although it was presaged in a series of opinions, mostly dissents, by Chief Justice Stone.1097 Southern Pacific tested the validity of a state train-length law, justified as a safety measure. Revising a hundred years of doctrine, the Chief Justice wrote that whether a state or local regulation was valid depended upon a “reconciliation of the conflicting claims of state and national power [that] is to be attained only by some appraisal and accommodation of the competing demands of the state and national interests involved.”1098 Save in those few cases in which Congress has acted, “this Court, and not the state legislature, is under the commerce clause the final arbiter of the competing demands of state and national interests.”1099
That the test to be applied was a balancing one, the Chief Justice made clear at length, stating that, in order to determine whether the challenged regulation was permissible, “matters for ultimate determination are the nature and extent of the burden which the state regulation of interstate trains, adopted as a safety measure, imposes on interstate commerce, and whether the relative weights of the state and national interests involved are such as to make inapplicable the rule, generally observed, that the free flow of interstate commerce and its freedom from local restraints in matters requiring uniformity of regulation are interests safeguarded by the commerce clause from state interference.”1100
The test today continues to be the Stone articulation, although the more frequently quoted encapsulation of it is from Pike v. Bruce Church, Inc.: “Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities.”1101
Obviously, the test requires “evenhanded[ness].” Discrimination in regulation is another matter altogether. When on its face or in its effect a regulation betrays “economic protectionism”—an intent to benefit in-state economic interests at the expense of out-of-state interests—then no balancing is required. “When a state statute clearly discriminates against interstate commerce, it will be struck down . . . unless the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism, . . . . Indeed, when the state statute amounts to simple economic protectionism, a ‘virtually per se rule of invalidity’ has applied.”1102 Thus, an Oklahoma law that required coal-fired electric utilities in the state, producing power for sale in the state, to burn a mixture of coal containing at least 10% Oklahoma-mined coal was invalidated at the behest of a state that had previously provided virtually 100% of the coal used by the Oklahoma utilities.1103 Similarly, the Court invalidated a state law that permitted interdiction of export of hydroelectric power from the state to neighboring states, when in the opinion of regulatory authorities the energy was required for use in the state; a state may not prefer its own citizens over out-of-state residents in access to resources within the state.1104
States may certainly promote local economic interests and favor local consumers, but they may not do so by adversely regulating out-of-state producers or consumers. In Hunt v. Washington State Apple Advertising Comm’n,1105 the Court confronted a North Carolina requirement that closed containers of apples offered for sale or shipped into North Carolina carry no grade other than the applicable U.S. grade. Washington State mandated that all apples produced in and shipped in interstate commerce pass a much more rigorous inspection than that mandated by the United States. The inability to display the recognized state grade in North Carolina impeded marketing of Washington apples. The Court obviously suspected that the impact was intended, but, rather than strike down the state requirement as purposeful, it held that the regulation had the practical effect of discriminating, and, as no defense based on possible consumer protection could be presented, the Court invalidated the state law.1106 State actions to promote local products and producers, of everything from milk1107 to alcohol,1108 may not be achieved through protectionism.
Even garbage transportation and disposition is covered by the negative commerce clause. A New Jersey statute that banned the importation of most solid or liquid wastes that originated outside the state was struck down as “an obvious effort to saddle those outside the State with the entire burden of slowing the flow of refuse into New Jersey’s remaining landfill sites”; the state could not justify the statute as a quarantine law designed to protect the public health because New Jersey left its landfills open to domestic waste.1109 Further extending the application of the negative commerce clause to waste disposal,1110 the Court, in C & A Carbone, Inc. v. Town of Clarkstown,1111 invalidated as discriminating against interstate commerce a local “flow control” ordinance that required all solid waste within the town to be processed at a designated transfer station before leaving the municipality. Underlying the restriction was the town’s decision to have a solid waste transfer station built by a private contractor, rather than with public funds. To make the arrangement appealing to the contractor, the town guaranteed it a minimum waste flow, which the town ensured by requiring that all solid waste generated within the town be processed at the contractor’s station.
The Court saw the ordinance as a form of economic protectionism, in that it “hoard[ed] solid waste, and the demand to get rid of it, for the benefit of the preferred processing facility.”1112 The Court found that the town could not “justify the flow control ordinance as a way to steer solid waste away from out-of-town disposal sites that it might deem harmful to the environment. To do so would extend the town’s police power beyond its jurisdictional bounds. States and localities may not attach restrictions to exports or imports in order to control commerce in other states.”1113 The Court also found that the town’s goal of “revenue generation is not a local interest that can justify discrimination against interstate commerce. Otherwise States could impose discriminatory taxes against solid waste originating outside the State.”1114 Moreover, the town had other means to raise revenue, such as subsidizing the facility through general taxes or municipal bonds.1115 The Court did not deal with—indeed, did not notice—the fact that the local law conferred a governmentally granted monopoly—an exclusive franchise, indistinguishable from a host of local monopolies at the state and local level.1116
In United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Management Authority,1117 the Court declined to apply Carbone where haulers were required to bring waste to facilities owned and operated by a state-created public benefit corporation instead of to a private processing facility, as was the case in Carbone. The Court found this difference constitutionally significant because “[d]isposing of trash has been a traditional government activity for years, and laws that favor the government in such areas—but treat every private business, whether in-state or out-of-state, exactly the same—do not discriminate against interstate commerce for purposes of the Commerce Clause. Applying the Commerce Clause test reserved for regulations that do not discriminate against interstate commerce, we uphold these ordinances because any incidental burden they may have on interstate commerce does not outweigh the benefits they confer . . . .”1118
In Department of Revenue of Kentucky v. Davis,1119 the Court considered a challenge to the long-standing state practice of issuing bonds for public purposes while exempting interest on the bonds from state taxation.1120 In Davis, a challenge was brought against Kentucky for such a tax exemption because it applied only to government bonds that Kentucky issued, and not to government bonds issued by other states. The Court, however, recognizing the long pedigree of such taxation schemes, applied the logic of United Haulers Ass’n, Inc., noting that the issuance of debt securities to pay for public projects is a “quintessentially public function,” and that Kentucky’s differential tax scheme should not be treated like one that discriminated between privately issued bonds.1121 In what may portend a significant change in dormant commerce clause doctrine, however, the Court declined to evaluate the governmental benefits of Kentucky’s tax scheme versus the economic burdens it imposed, holding that, at least in this instance, the “Judicial Branch is not institutionally suited to draw reliable conclusions.”1122
Drawing the line between regulations that are facially discriminatory and regulations that necessitate balancing is not an easy task. Not every claim of unconstitutional protectionism has been sustained. Thus, in Minnesota v. Clover Leaf Creamery Co.,1123 the Court upheld a state law banning the retail sale of milk products in plastic, nonreturnable containers but permitting sales in other nonreturnable, nonrefillable containers, such as paperboard cartons. The Court found no discrimination against interstate commerce, because both in-state and out-of-state interests could not use plastic containers, and it refused to credit a lower, state-court finding that the measure was intended to benefit the local pulpwood industry. In Exxon Corp. v. Governor of Maryland,1124 the Court upheld a statute that prohibited producers or refiners of petroleum products from operating retail service stations in Maryland. The statute did not on its face discriminate against out-of-state companies, but, as there were no producers or refiners in Maryland, “the burden of the divestiture requirements” fell solely on such companies.1125 The Court found, however, that “this fact does not lead, either logically or as a practical matter, to a conclusion that the State is discriminating against interstate commerce at the retail level,”1126 as the statute does not “distinguish between in-state and out-of-state companies in the retail market.”1127
Still a model example of balancing is Chief Justice Stone’s opinion in Southern Pacific Co. v. Arizona.1128 At issue was the validity of Arizona’s law barring the operation within the state of trains of more than 14 passenger cars (no other state had a figure this low) or 70 freight cars (only one other state had a cap this low). First, the Court observed that the law substantially burdened interstate commerce. Enforcement of the law in Arizona, while train lengths went unregulated or were regulated by varying standards in other states, meant that interstate trains of a length lawful in other states had to be broken up before entering Arizona. As it was not practicable to break up trains at the border, that act had to be done at yards quite removed, with the result that the Arizona limitation controlled train lengths as far east as El Paso, Texas, and as far west as Los Angeles. Nearly 95 percent of the rail traffic in Arizona was interstate. The other alternative was to operate in other states with the lowest cap, Arizona’s, with the result that Arizona’s law controlled the railroads’ operations over a wide area.1129 If other states began regulating at different lengths, as they would be permitted to do, the burden on the railroads would burgeon. Moreover, the additional number of trains needed to comply with the cap just within Arizona was costly, and delays were occasioned by the need to break up and remake lengthy trains.1130
Conversely, the Court found that, as a safety measure, the state cap had “at most slight and dubious advantage, if any, over unregulated train lengths.” That is, although there were safety problems with longer trains, the shorter trains mandated by state law required increases in the numbers of trains and train operations and a consequent increase in accidents generally more severe than those attributable to longer trains. In short, the evidence did not show that the cap lessened rather than increased the danger of accidents.1131
Conflicting state regulations appeared in Bibb v. Navajo Freight Lines.1132 There, Illinois required the use of contour mudguards on trucks and trailers operating on the state’s highways, while adjacent Arkansas required the use of straight mudguards and banned contoured ones. At least 45 states authorized straight mudguards. The Court sifted the evidence and found it conflicting on the comparative safety advantages of contoured and straight mudguards. But, admitting that if that were all that was involved the Court would have to sustain the costs and burdens of outfitting with the required mudguards, the Court invalidated the Illinois law, because of the massive burden on interstate commerce occasioned by the necessity of truckers to shift cargoes to differently designed vehicles at the state’s borders.
Arguably, the Court in more recent years has continued to stiffen the scrutiny with which it reviews state regulation of interstate carriers purportedly for safety reasons.1133 Difficulty attends any evaluation of the possible developing approach, because the Court has spoken with several voices. A close reading, however, indicates that, although the Court is most reluctant to invalidate regulations that touch upon safety and that if safety justifications are not illusory it will not second-guess legislative judgments, the Court nonetheless will not accept, without more, state assertions of safety motivations. “Regulations designed for that salutary purpose nevertheless may further the purpose so marginally, and interfere with commerce so substantially, as to be invalid under the Commerce Clause.” Rather, the asserted safety purpose must be weighed against the degree of interference with interstate commerce. “This ‘weighing’ . . . requires . . . a sensitive consideration of the weight and nature of the state regulatory concern in light of the extent of the burden imposed on the course of interstate commerce.”1134
Balancing has been used in other than transportation-industry cases. Indeed, the modern restatement of the standard was in such a case.1135 There, the state required cantaloupes grown in the state to be packed there, rather than in an adjacent state, so that in-state packers’ names would be associated with a superior product. Promotion of a local industry was legitimate, the Court, said, but it did not justify the substantial expense the company would have to incur to comply. State efforts to protect local markets, concerns, or consumers against outside companies have largely been unsuccessful. Thus, a state law that prohibited ownership of local investment-advisory businesses by out-of-state banks, bank holding companies, and trust companies was invalidated.1136 The Court plainly thought the statute was protectionist, but instead of voiding it for that reason it held that the legitimate interests the state might have did not justify the burdens placed on out-of-state companies and that the state could pursue the accomplishment of legitimate ends through some intermediate form of regulation. In Edgar v. MITE Corp.,1137 an Illinois regulation of take-over attempts of companies that had specified business contacts with the state, as applied to an attempted take-over of a Delaware corporation with its principal place of business in Connecticut, was found to constitute an undue burden, with special emphasis upon the extraterritorial effect of the law and the dangers of disuniformity. These problems were found lacking in the next case, in which the state statute regulated the manner in which purchasers of corporations chartered within the state and with a specified percentage of in-state shareholders could proceed with their take-over efforts. The Court emphasized that the state was regulating only its own corporations, which it was empowered to do, and no matter how many other states adopted such laws there would be no conflict. The burdens on interstate commerce, and the Court was not that clear that the effects of the law were burdensome in the appropriate context, were justified by the state’s interests in regulating its corporations and resident shareholders.1138
In other areas, although the Court repeats balancing language, it has not applied it with any appreciable bite,1139 but in most respects the state regulations involved are at most problematic in the context of the concerns of the Commerce Clause.
Foreign Commerce and State Powers
State taxation and regulation of commerce from abroad are also subject to negative commerce clause constraints. In the seminal case of Brown v. Maryland,1140 in the course of striking down a state statute requiring “all importers of foreign articles or commodities,” preparatory to selling the goods, to take out a license, Chief Justice Marshall developed a lengthy exegesis explaining why the law was void under both the Import-Export Clause1141 and the Commerce Clause. According to the Chief Justice, an inseparable part of the right to import was the right to sell, and a tax on the sale of an article is a tax on the article itself. Thus, the taxing power of the states did not extend in any form to imports from abroad so long as they remain “the property of the importer, in his warehouse, in the original form or package” in which they were imported. This is the famous “original package” doctrine. Only when the importer parts with his importations, mixes them into his general property by breaking up the packages, may the state treat them as taxable property.
Obviously, to the extent that the Import-Export Clause was construed to impose a complete ban on taxation of imports so long as they were in their original packages, there was little occasion to develop a Commerce Clause analysis that would have reached only discriminatory taxes or taxes upon goods in transit.1142 In other respects, however, the Court has applied the foreign commerce aspect of the clause more stringently against state taxation.
Thus, in Japan Line, Ltd. v. County of Los Angeles,1143 the Court held that, in addition to satisfying the four requirements that govern the permissibility of state taxation of interstate commerce,1144 “When a State seeks to tax the instrumentalities of foreign commerce, two additional considerations . . . come into play. The first is the enhanced risk of multiple taxation. . . . Second, a state tax on the instrumentalities of foreign commerce may impair federal uniformity in an area where federal uniformity is essential.”1145 Multiple taxation is to be avoided with respect to interstate commerce by apportionment so that no jurisdiction may tax all the property of a multistate business, and the rule of apportionment is enforced by the Supreme Court with jurisdiction over all the states. However, the Court is unable to enforce such a rule against another country, and the country of the domicile of the business may impose a tax on full value. Uniformity could be frustrated by disputes over multiple taxation, and trade disputes could result.
Applying both these concerns, the Court invalidated a state tax, a nondiscriminatory, ad valorem property tax, on foreign-owned instrumentalities, i.e., cargo containers, of international commerce. The containers were used exclusively in international commerce and were based in Japan, which did in fact tax them on full value. Thus, there was the actuality, not only the risk, of multiple taxation. National uniformity was endangered, because, although California taxed the Japanese containers, Japan did not tax American containers, and disputes resulted.1146
On the other hand, the Court has upheld a state tax on all aviation fuel sold within the state as applied to a foreign airline operating charters to and from the United States. The Court found the Complete Auto standards met, and it similarly decided that the two standards specifically raised in foreign commerce cases were not violated. First, there was no danger of double taxation because the tax was imposed upon a discrete transaction—the sale of fuel—that occurred within only one jurisdiction. Second, the one-voice standard was satisfied, because the United States had never entered into any compact with a foreign nation precluding such state taxation, having only signed agreements with others, which had no force of law, aspiring to eliminate taxation that constituted impediments to air travel.1147 Also, a state unitary-tax scheme that used a worldwide-combined reporting formula was upheld as applied to the taxing of the income of a domestic-based corporate group with extensive foreign operations.1148
Extending Container Corp., the Court in Barclays Bank v. Franchise Tax Bd. of California,1149 upheld the state’s worldwide-combined reporting method of determining the corporate franchise tax owed by unitary multinational corporations, as applied to a foreign corporation. The Court determined that the tax easily satisfied three of the four-part Complete Auto test—nexus, apportionment, and relation to state’s services—and concluded that the nondiscrimination principle—perhaps violated by the letter of the law—could be met by the discretion accorded state officials. As for the two additional factors, as outlined in Japan Lines, the Court pronounced itself satisfied. Multiple taxation was not the inevitable result of the tax, and that risk would not be avoided by the use of any reasonable alternative. The tax, it was found, did not impair federal uniformity or prevent the Federal Government from speaking with one voice in international trade, in view of the fact that Congress had rejected proposals that would have preempted California’s practice.1150 The result of the case, perhaps intended, is that foreign corporations have less protection under the negative commerce clause.1151
The power to regulate foreign commerce was always broader than the states’ power to tax it, an exercise of the “police power” recognized by Chief Justice Marshall in Brown v. Maryland.1152 That this power was constrained by notions of the national interest and pre-emption principles was evidenced in the cases striking down state efforts to curb and regulate the actions of shippers bringing persons into their ports.1153 On the other hand, quarantine legislation to protect the states’ residents from disease and other hazards was commonly upheld though it regulated international commerce.1154 A state game-season law applied to criminalize the possession of a dead grouse imported from Russia was upheld because of the practical necessities of enforcement of domestic law.1155
Nowadays, state regulation of foreign commerce is likely to be judged by the extra factors set out in Japan Line.1156 Thus, the application of a state civil rights law to a corporation transporting passengers outside the state to an island in a foreign province was sustained in an opinion emphasizing that, because of the particularistic geographic situation the foreign commerce involved was more conceptual than actual, there was only a remote hazard of conflict between state law and the law of the other country and little if any prospect of burdening foreign commerce.
CONCURRENT FEDERAL AND STATE JURISDICTION
The General Issue: Preemption
In Gibbons v. Ogden,1157 the Court, speaking by Chief Justice Marshall, held that New York legislation that excluded from the navigable waters of that state steam vessels enrolled and licensed under an act of Congress to engage in the coasting trade was in conflict with the federal law and hence void.1158 The result, said the Chief Justice, was required by the Supremacy Clause, which proclaims that statutes and treaties as well as the Constitution itself supersede state laws that “interfere with, or are contrary to” their dictates. “In every such case, the act of congress, or the treaty, is supreme; and the law of the state, though enacted in the exercise of powers not controverted, must yield to it.”1159
Since the turn of the 20th century, federal legislation, primarily but not exclusively under the Commerce Clause, has penetrated deeper and deeper into areas once occupied by the regulatory power of the states. One result is that state laws on subjects about which Congress has legislated have been more and more frequently attacked as being incompatible with the acts of Congress and hence invalid under the supremacy clause.1160
“The constitutional principles of preemption, in whatever particular field of law they operate, are designed with a common end in view: to avoid conflicting regulation of conduct by various official bodies which might have some authority over the subject matter.”1161 As Justice Black once explained in a much quoted exposition of the matter: “There is not—and from the very nature of the problem there cannot be—any rigid formula or rule which can be used as a universal pattern to determine the meaning and purpose of every act of Congress. This Court, in considering the validity of state laws in the light of treaties or federal laws touching the same subject, has made use of the following expressions: conflicting; contrary to; occupying the field; repugnance; difference; irreconcilability; inconsistency; violation; curtailment; and interference. But none of these expressions provides an infallible constitutional test or an exclusive constitutional yardstick. In the final analysis, there can be no one crystal clear distinctly marked formula. Our primary function is to determine whether, under the circumstances of this particular case, Pennsylvania’s law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”1162
Before setting out in their various forms the standards and canons to which the Court formally adheres, one must still recognize the highly subjective nature of their application. As an astute observer long ago observed, “the use or non-use of particular tests, as well as their content, is influenced more by judicial reaction to the desirability of the state legislation brought into question than by metaphorical sign-language of ‘occupation of the field.’ And it would seem that this is largely unavoidable. The Court, in order to determine an unexpressed congressional intent, has undertaken the task of making the independent judgment of social values that Congress has failed to make. In making this determination, the Court’s evaluation of the desirability of overlapping regulatory schemes or overlapping criminal sanctions cannot but be a substantial factor.”1163
Until roughly the New Deal, as re- cited above, the Supreme Court applied a doctrine of “dual federalism,” under which the Federal Government and the states were separate sovereigns, each preeminent in its own fields but lacking authority in the other’s. This conception affected preemption cases, with the Court taking the view, largely, that any congressional regulation of a subject effectively preempted the field and ousted the states.1164 Thus, when Congress entered the field of railroad regulation, the result was invalidation of many previously enacted state measures. Even here, however, safety measures tended to survive, and health and safety legislation in other areas was protected from the effects of federal regulatory actions.
In the 1940s, the Court began to develop modern standards, still recited and relied on, for determining when preemption occurred.1165 All modern cases recite some variation of the basic standards. “[T]he question whether a certain state action is pre-empted by federal law is one of congressional intent. The purpose of Congress is the ultimate touchstone. To discern Congress’s intent we examine the explicit statutory language and the structure and purpose of the statute.”1166 Congress’s intent to supplant state authority in a particular field may be “explicitly stated in the statute’s language or implicitly contained in its structure and purpose.”1167 Because preemption cases, when the statute contains no express provision, theoretically turn on statutory construction, generalizations about them can carry one only so far. Each case must construe a different federal statute with a distinct legislative history. If the statute and the legislative history are silent or unclear, the Supreme Court has developed general criteria which it purports to use in determining the preemptive reach.
“Absent explicit pre-emptive language, we have recognized at least two types of implied pre-emption: field pre-emption, where the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it, . . . and conflict pre-emption, where compliance with both federal and state regulations is a physical impossibility, . . . or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”1168 However, “federal regulation of a field of commerce should not be deemed pre-emptive of state regulatory power in the absence of persuasive reasons—either that the nature of the regulated subject matters permits no other conclusion, or that the Congress has unmistakably so ordained.”1169 At the same time, “[t]he relative importance to the State of its own law is not material when there is a conflict with a valid federal law, for the Framers of our Constitution provided that the federal law must prevail.”1170
In the final analysis, “the generalities” that may be drawn from the cases do not decide them. Rather, “the fate of state legislation in these cases has not been determined by these generalities but by the weight of the circumstances and the practical and experienced judgment in applying these generalities to the particular instances.”1171
The Standards Applied.
As might be expected from the caveat just quoted, any overview of the Court’s preemption decisions can only make the field seem tangled, and to some extent it is. But some threads may be extracted.
Express Preemption. Of course, it is possible for Congress to write preemptive language that clearly and cleanly prescribes or does not prescribe displacement of state laws in an area.1172 Provisions governing preemption can be relatively interpretation free,1173 and the Court has recognized that certain statutory language can guide the interpretation.1174 For example, a prohibition of state taxes on carriage of air passengers “or on the gross receipts derived therefrom” was held to preempt a state tax on airlines, described by the state as a personal property tax, but based on a percentage of the airline’s gross income. “The manner in which the state legislature has described and categorized [the tax] cannot mask the fact that the purpose and effect of the provision are to impose a levy upon the gross receipts of airlines.”1175
But, more often than not, express preemptive language may be ambiguous or at least not free from conflicting interpretation. Thus, the Court was divided with respect to whether a provision of the Airline Deregulation Act proscribing the states from having and enforcing laws “relating to rates, routes, or services of any air carrier” applied to displace state consumer-protection laws regulating airline fare advertising.1176 Delimiting the scope of an exception in an express preemption provision can also present challenges. For example, the Immigration Control and Reform Act of 1986 (IRCA), which imposed the first comprehensive federal sanctions against employing aliens not authorized to work in the United States, pre-empted “any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ unauthorized aliens.”1177 In Chamber of Commerce of the United States v. Whiting, a majority of the Court adopted a straightforward “plain meaning” approach to uphold a 2007 Arizona law that called for the suspension or revocation of the business licenses (including articles of incorporation and like documents) of Arizona employers found to have knowingly hired an unauthorized alien.1178 By contrast, two dissenting opinions were troubled that the Arizona sanction was far more severe than that authorized for similar violations under either federal law or state laws in force prior to IRCA. The dissents interpreted IRCA’s “licensing and similar laws” language narrowly to cover only businesses that primarily recruit or refer workers for employment, or businesses that have been found by federal authorities to have violated federal sanctions, respectively.1179
At issue in AT&T Mobility, LLC v. Concepcion1180 was a savings provision of the Federal Arbitration Act (FAA) that made arbitration provisions in contracts “valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”1181 An arbitration provision in their cellular telephone contract forbade plaintiffs from seeking arbitration of an allegedly fraudulent practice by AT&T on a class basis. The Court closely divided over whether the FAA saving clause made this anti-class arbitration provision attackable under California law against class action waivers in consumer contracts, or whether the savings clause looked solely to grounds for revoking the cellular contract that had nothing to do with the arbitration provision.1182 Another case focused on a preemption clause that preempted certain laws of “a State [or] political subdivision of a State” regulating motor carriers, but excepted “[State] safely regulatory authority.” The Court interpreted the exception to allow a safety regulation adopted by a city: “[a]bsent a clear statement to the contrary, Congress’s reference to the ‘regulatory authority of a State’ should be read to preserve, not preempt, the traditional prerogative of the States to delegate their authority to their constituent parts.”1183
Perhaps the broadest preemption section ever enacted, § 514 of the Employment Retirement Income Security Act of 1974 (ERISA), is so constructed that the Court has been moved to comment that the provisions “are not a model of legislative drafting.”1184 The section declares that the statute shall “supersede any and all State laws insofar as they now or hereafter relate to any employee benefit plan,” but saves to the States the power to enforce “any law . . . which regulates insurance, banking, or securities,” except that an employee benefit plan governed by ERISA shall not be “deemed” an insurance company, an insurer, or engaged in the business of insurance for purposes of state laws “purporting to regulate” insurance companies or insurance contracts.1185 Interpretation of the provisions has resulted in contentious and divided Court opinions.1186
Also illustrative of the judicial difficulty with ambiguous pre-emption language are the fractured opinions in Cipollone, in which the Court had to decide whether sections of the Federal Cigarette Labeling and Advertising Act, enacted in 1965 and 1969, pre-empted state common-law actions against a cigarette company for the alleged harm visited on a smoker.1187 The 1965 provision barred the requirement of any “statement” relating to smoking health, other than what the federal law imposed, and the 1969 provision barred the imposition of any “requirement or prohibition based on smoking and health” by any “State law.” It was, thus, a fair question whether common-law claims, based on design defect, failure to warn, breach of express warranty, fraudulent misrepresentation, and conspiracy to defraud, were preempted or whether only positive state enactments came within the scope of the clauses. Two groups of Justices concluded that the 1965 section reached only positive state law and did not preempt common-law actions;1188 different alignments of Justices concluded that the 1969 provisions did reach common-law claims, as well as positive enactments, and did preempt some of the claims insofar as they in fact constituted a requirement or prohibition based on smoking health.1189
Little clarification of the confusing Cipollone decision and opinions resulted in the cases following, although it does seem evident that the attempted distinction limiting courts to the particular language of preemption when Congress has spoken has not prevailed. At issue in Medtronic, Inc. v. Lohr1190 was the Medical Device Amendments (MDA) of 1976, which prohibited states from adopting or continuing in effect “with respect to a [medical] device” any “requirement” that is “different from, or in addition to” the applicable federal requirement and that relates to the safety or effectiveness of the device.1191 The issue was whether a common-law tort obligation imposed a “requirement” that was different from or in addition to any federal requirement. The device, a pacemaker lead, had come on the market not pursuant to the rigorous FDA test but rather as determined by the FDA to be “substantially equivalent” to a device previously on the market, a situation of some import to at least some of the Justices.
Unanimously, the Court determined that a defective design claim was not preempted and that the MDA did not prevent states from providing a damages remedy for violation of common-law duties that paralleled federal requirements. But the Justices split 4–1–4 with respect to preemption of various claims relating to manufacturing and labeling. FDA regulations, which a majority deferred to, limited preemption to situations in which a particular state requirement threatens to interfere with a specific federal interest. Moreover, the common-law standards were not specifically developed to govern medical devices and their generality removed them from the category of requirements “with respect to” specific devices. However, five Justices did agree that common-law requirements could be, just as statutory provisions, “requirements” that were pre-empted, though they did not agree on the application of that view.1192
Following Cipollone, the Court observed that, although it “need not go beyond” the statutory preemption language, it did need to “identify the domain expressly pre-empted” by the language, so that “our interpretation of that language does not occur in a contextual vacuum.” That is, it must be informed by two presumptions about the nature of preemption: the presumption that Congress does not cavalierly preempt common-law causes of action and the principle that Congress’s purpose is the ultimate touchstone.1193
The Court continued to struggle with application of express pre-emption language to state common-law tort actions in Geier v. American Honda Motor Co.1194 The National Traffic and Motor Vehicle Safety Act contained both a preemption clause, prohibiting states from applying “any safety standard” different from an applicable federal standard, and a “saving clause,” providing that “compliance with” a federal safety standard “does not exempt any person from any liability under common law.” The Court determined that the express preemption clause was inapplicable, because the saving clause implied that some number of state common law actions would be saved. However, despite the saving clause, the Court ruled that a common law tort action seeking damages for failure to equip a car with a front seat airbag, in addition to a seat belt, was preempted. According to the Court, allowing the suit would frustrate the purpose of a Federal Motor Vehicle Safety Standard that specifically had intended to give manufacturers a choice among a variety of “passive restraint” systems for the applicable model year.1195 The Court’s holding makes clear, contrary to the suggestion in Cipollone, that existence of express preemption language does not foreclose the alternative operation of conflict (in this case “frustration of purpose”) preemption.1196
Field Preemption. Where the scheme of federal regulation is “so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,”1197 states are ousted from the field. Still a paradigmatic example of field preemption is Hines v. Davidowitz,1198 in which the Court held that a new federal law requiring the registration of all aliens in the country precluded enforcement of a pre-existing state law mandating registration of aliens within the state.1199 Adverting to the supremacy of national power in foreign relations and the sensitivity of the relationship between the regulation of aliens and the conduct of foreign affairs, the Court had little difficulty declaring the entire field to have been occupied by federal law.1200 Similarly, in Pennsylvania v. Nelson,1201 the Court invalidated as preempted a state law punishing sedition against the National Government. The Court enunciated a three-part test: (1) the pervasiveness of federal regulation, (2) federal occupation of the field as necessitated by the need for national uniformity, and (3) the danger of conflict between state and federal administration.1202
Rice itself held that a federal system of regulating the operations of warehouses and the rates they charged completely occupied the field and ousted state regulation.1203
Field preemption analysis often involves delimiting the subject of federal regulation and determining whether a federal law has regulated part of the field, however defined, or the whole area, so that state law cannot even supplement the federal.1204 Illustrative of this point is the Court’s holding that the Atomic Energy Act’s preemption of the safety aspects of nuclear power did not invalidate a state law conditioning construction of nuclear power plants on a finding by a state agency that adequate storage and disposal facilities were available to treat nuclear wastes, because “economic” regulation of power generation has traditionally been left to the states—an arrangement maintained by the Act—and because the state law could be justified as an economic rather than a safety regulation.1205
A city’s effort to enforce stiff penalties for ship pollution that resulted from boilers approved by the Federal Government was held not preempted, the field of boiler safety, but not boiler pollution, having been occupied by federal regulation.1206 A state liability scheme imposing cleanup costs and strict, no-fault liability on shore facilities and ships for any oil-spill damage was held to complement a federal law concerned solely with recovery of actual cleanup costs incurred by the Federal Government and which textually presupposed federal-state cooperation.1207 On the other hand, a comprehensive regulation of the design, size, and movement of oil tankers in Puget Sound was found, save in one respect, to be either expressly or implicitly preempted by federal law and regulations. Critical to the determination was the Court’s conclusion that Congress, without actually saying so, had intended to mandate exclusive standards and a single federal decisionmaker for safety purposes in vessel regulation.1208 Also, a closely divided Court voided a city ordinance placing an 11 p.m. to 7 a.m. curfew on jet flights from the city airport where, despite the absence of preemptive language in federal law, federal regulation of aircraft noise was of such a pervasive nature as to leave no room for state or local regulation.1209
The Court has, however, recognized that when a federal statute preempts a narrow field, leaving states to regulate outside of that field, state laws whose “target” is beyond the field of federal regulation are not necessarily displaced by field preemption principles,1210 and such state laws may “incidentally” affect the pre-empted field.1211 In Oneok v. Learjet, gas pipeline companies and the federal government asserted that state antitrust claims against the pipeline companies for alleged manipulation of certain indices used in setting natural gas prices were field preempted because the Natural Gas Act (NGA) regulates wholesale prices of natural gas.1212 The Court disagreed. In so doing, the Court noted that the alleged manipulation of the price indices also affected retail prices, the regulation of which is left to the states by the NGA.1213 Because the Court viewed Congress as having struck a “careful balance” between federal and state regulation when enacting the NGA, it took the view that,1214 “where (as here) a state law can be applied” both to sales regulated by the federal government and to other sales, “we must proceed cautiously, finding pre-emption only where detailed examination convinces us that a matter falls within the pre-empted field as defined by our precedents.”1215 The Court found no such preemption here, in part because the “target at which the state law aims” was practices affecting retail prices, something which the Court viewed as “firmly on the States’ side of th[e] dividing line.”1216 The Court also noted that the “broad applicability” of state antitrust laws supported a finding of no preemption here,1217 as does the states’ historic role in providing common law and statutory remedies against monopolies and unfair business practices.1218 However, while declining to find field preemption, the Court left open the possibility of conflict preemption, which had not been raised by the parties.1219
Congress may preempt state regulation without itself prescribing a federal standard; it may deregulate a field and thus occupy it by opting for market regulation and precluding state or local regulation.1220
Conflict Preemption. Several possible situations will lead to a holding that a state law is preempted as in conflict with federal law. First, it may be that the two laws, federal and state, will actually conflict. Thus, in Rose v. Arkansas State Police,1221 federal law provided for death benefits for state law enforcement officers “in addition to” any other compensation, while the state law required a reduction in state benefits by the amount received from other sources. The Court, in a brief, per curiam opinion, had no difficulty finding the state provision preempted.1222
Second, conflict preemption may occur when it is practically impossible to comply with the terms of both laws. Thus, where a federal agency had authorized federal savings and loan associations to include “due-on-sale” clauses in their loan instruments and where the state had largely prevented inclusion of such clauses, while it was literally possible for lenders to comply with both rules, the federal rule being permissive, the state regulation prevented the exercise of the flexibility the federal agency had conferred and was pre-empted.1223 More problematic are circumstances in which a party has an administrative avenue for seeking removal of impediments to dual compliance. In Pliva, Inc. v. Mensing,1224 federal law required generic drugs to be labeled the same as the brand name counterpart, while state tort law required drug labels to contain adequate warnings to render use of the drug reasonably safe. There had been accumulating evidence that long-term use of the drug metoclopramide carried a significant risk of severe neurological damage, but manufacturers of generic metoclopramide neither amended their warning labels nor sought to have the Food and Drug Administration require the brand name manufacturer to include stronger label warnings, which consequently would have led to stronger labeling of the generic. Five Justices held that state tort law was pre-empted.1225 It was impossible to comply both with the state law duty to change the label and the federal law duty to keep the label the same.1226 The four dissenting Justices argued that inability to change the labels unilaterally was insufficient, standing alone, to establish a defense based on impossibility.1227 Emphasizing the federal duty to monitor the safety of their drugs, the dissenters would require that the generic manufacturers also show some effort to effectuate a labeling change through the FDA.
The Court reached a similar result in Mutual Pharmaceutical Co. v. Bartlett.1228 There, the Court again faced the question of whether FDA labeling requirements preempted state tort law in a case involving sales by a generic drug manufacturer. The lower court had held that it was not impossible for the manufacturer to comply with both the FDA’s labeling requirements and state law that required stronger warnings regarding the drug’s safety because the manufacturer could simply stop selling the drug. The Supreme Court rejected the “stop-selling rationale” because it “would render impossibility pre-emption a dead letter and work a revolution in . . . pre-emption case law.”1229
In contrast to Pliva, Inc. v. Mensing and Mutual Pharmaceutical Co. v. Bartlett, the Court found no preemption in Wyeth v. Levine,1230 a state tort action against a brand-name drug manufacturer based on inadequate labeling. A brand-name drug manufacturer, unlike makers of generic drugs, could unilaterally strengthen labeling under federal regulations, subject to subsequent FDA override, and thereby independently meet state tort law requirements. In another case of alleged impossibility, it was held possible for an employer to comply both with a state law mandating leave and reinstatement to pregnant employees and with a federal law prohibiting employment discrimination on the basis of pregnancy.1231 Similarly, when faced with both federal and state standards on the ripeness of avocados, the Court discerned that the federal standard was a “minimum” one rather than a “uniform” one and decided that growers could comply with both.1232
Third, a fruitful source of preemption is found when it is determined that the state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress.1233 Thus, despite the inclusion of a saving clause preserving liability under common law, the National Traffic and Motor Vehicle Safety Act nevertheless was found to have preempted a state common law tort action based on the failure of a car manufacturer to install front seat airbags: Giving car manufacturers some leeway in developing and introducing passive safety restraint devices was, according to the Court, a key congressional objective under the Act, one that would frustrated should a tort action be allowed to proceed.1234 The Court also has voided a state requirement that the average net weight of a package of flour in a lot could not be less than the net weight stated on the package. While applicable federal law permitted variations from stated weight caused by distribution losses, such as through partial dehydration, the state allowed no such deviation. Although it was possible for a producer to satisfy the federal standard while satisfying the tougher state standard, the Court discerned that to do so defeated one purpose of the federal requirement—the facilitating of value comparisons by shoppers. Because different producers in different situations in order to comply with the state standard may have to overpack flour to make up for dehydration loss, consumers would not be comparing packages containing identical amounts of flour solids.1235 In Felder v. Casey,1236 a state notice-of-claim statute was found to frustrate the remedial objectives of civil rights laws as applied to actions brought in state court under 42 U.S.C. § 1983. A state law recognizing the validity of an unrecorded oral sale of an aircraft was held preempted by the Federal Aviation Act’s provision that unrecorded “instruments” of transfer are invalid, since the congressional purpose evidenced in the legislative history was to make information about an aircraft’s title readily available by requiring that all transfers be documented and recorded.1237
In Boggs v. Boggs,1238 the Court, 5-to-4, applied the “stands as an obstacle” test for conflict even though the statute (ERISA) contains an express preemption section. The dispute arose in a community-property state, in which heirs of a deceased wife claimed property that involved pension-benefit assets that was left to them by testamentary disposition, as against a surviving second wife. Two ERISA provisions operated to prevent the descent of the property to the heirs, but under community-property rules the property could have been left to the heirs by their deceased mother. The Court did not pause to analyze whether the ERISA preemption provision operated to preclude the descent of the property, either because state law “relate[d] to” a covered pension plan or because state law had an impermissible “connection with” a plan, but it instead decided that the operation of the state law insofar as it conflicted with the purposes Congress had intended to achieve by ERISA and insofar as it ran into the two noted provisions of ERISA stood as an obstacle to the effectuation of the ERISA law. “We can begin, and in this case end, the analysis by simply asking if state law conflicts with the provisions of ERISA or operates to frustrate its objects. We hold that there is a conflict, which suffices to resolve the case. We need not inquire whether the statutory phrase ‘relate to’ provides further and additional support for the pre-emption claim. Nor need we consider the applicability of field pre-emption.”1239
Similarly, the Court found it unnecessary to consider field pre-emption due to its holding that a Massachusetts law barring state agencies from purchasing goods or services from companies doing business with Burma imposed obstacles to the accomplishment of Congress’s full objectives under the federal Burma sanctions law.1240 The state law was said to undermine the federal law in several respects that could have implicated field preemption—by limiting the President’s effective discretion to control sanctions, and by frustrating the President’s ability to engage in effective diplomacy in developing a comprehensive multilateral strategy—but the Court “decline[d] to speak to field preemption as a separate issue.”1241
Also, a state law making agricultural producers’ associations the exclusive bargaining agents and requiring payment of service fees by nonmember producers was held to counter a strong federal policy protecting the right of farmers to join or not join such associations.1242 And a state assertion of the right to set minimum stream-flow requirements different from those established by FERC in its licensing capacity was denied as being preempted under the Federal Power Act, despite language requiring deference to state laws “relating to the control, appropriation, use, or distribution of water.”1243
Contrarily, a comprehensive federal regulation of insecticides and other such chemicals was held not to preempt a town ordinance that required a permit for the spraying of pesticides, there being no conflict between requirements.1244 The application of state antitrust laws to authorize indirect purchasers to recover for all overcharges passed on to them by direct purchasers was held to implicate no preemption concerns, because the federal antitrust laws had been interpreted to not permit indirect purchasers to recover under federal law; the state law may have been inconsistent with federal law but in no way did it frustrate federal objectives and policies.1245 The effect of federal policy was not strong enough to warrant a holding of preemption when a state authorized condemnation of abandoned railroad property after conclusion of an ICC proceeding permitting abandonment, although the railroad’s opportunity costs in the property had been considered in the decision on abandonment.1246
Federal Versus State Labor Laws.
One group of cases, which has caused the Court much difficulty over the years, concerns the effect of federal labor laws on state power to govern labor-management relations. Although the Court some time ago reached a settled rule, changes in membership on the Court re-opened the issue and modified the rules.
With the enactment of the National Labor Relations Act and subsequent amendments, Congress declared a national policy in labor-management relations and established the NLRB to carry out that policy.1247 It became the Supreme Court’s responsibility to determine what role state law on labor-management relations was to play. At first, the Court applied a test of determination whether the state regulation was in direct conflict with the national regulatory scheme. Thus, in one early case, the Court held that an order by a state board which commanded a union to desist from mass picketing of a factory and from assorted personal threats was not in conflict with the national law that had not been invoked and that did not touch on some of the union conduct in question.1248 A cease-and-desist order of a state board implementing a state provision making it an unfair labor practice for employees to conduct a slowdown or to otherwise interfere with production while on the job was found not to conflict with federal law,1249 and another order of the board was also sustained in its prohibition of the discharge of an employee under a maintenance-of-membership clause inserted in a contract under pressure from the War Labor Board and which violated state law.1250
By contrast, a state statute requiring business agents of unions operating in the state to file annual reports and to pay an annual fee of one dollar was voided as in conflict with federal law.1251 And state statutes providing for mediation and outlawing public utility strikes were similarly voided as being in specific conflict with federal law.1252 A somewhat different approach was noted in several cases in which the Court held that the federal act had so occupied the field in certain areas as to preclude state regulation.1253 The latter approach was predominant through the 1950s, as the Court voided state court action in enjoining1254 or awarding damages1255 for peaceful picketing, in awarding of relief by damages or otherwise for conduct that constituted an unfair labor practice under federal law,1256 or in enforcing state antitrust laws so as to affect collective bargaining agreements1257 or to bar a strike as a restraint of trade,1258 even with regard to disputes over which the NLRB declined to assert jurisdiction because of the degree of effect on interstate commerce.
In San Diego Building Trades Council v. Garmon,1259 the Court enunciated the rule, based on its previous decade of adjudication. “When an activity is arguably subject to § 7 or § 8 of the Act, the States . . . must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference with national policy is to be averted.”1260
For much of the period since Garmon, the dispute in the Court concerned the scope of the few exceptions permitted in the Garmon principle. First, when picketing is not wholly peaceful but is attended by intimidation, violence, and obstruction of the roads affording access to the struck establishment, state police powers have been held not disabled to deal with the conduct and narrowly drawn injunctions directed against violence and mass picketing have been permitted1261 as well as damages to compensate for harm growing out of such activities.1262
A 1958 case permitted a successful state court suit for reinstatement and damages for lost pay because of a wrongful expulsion, leading to discharge from employment, based on a theory that the union constitution and by-laws constitute a contract between the union and the members the terms of which can be enforced by state courts without the danger of a conflict between state and federal law.
1263 The Court subsequently narrowed the interpretation of this ruling by holding in two cases that members who alleged union interference with their existing or prospective employment relations could not sue for damages but must file unfair labor practice charges with the NLRB.1264 Gonzales was said to be limited to “purely internal union matters.”1265 Finally, Gonzales, was abandoned in a five-to-four decision in which the Court held that a person who alleged that his union had misinterpreted its constitution and its collective bargaining agreement with the individual’s employer in expelling him from the union and causing him to be discharged from his employment because he was late paying his dues had to pursue his federal remedies.1266 Justice Harlan wrote for the Court that, although it was not likely that, in Gonzales, a state court resolution of the scope of duty owed the member by the union would implicate principles of federal law, state court resolution in this case involved an interpretation of the contract’s union security clause, a matter on which federal regulation is extensive.1267
One other exception has been based, like the violence cases, on the assumption that it concerns areas traditionally left to local law into which Congress would not want to intrude. In Linn v. Plant Guard Workers,1268 the Court permitted a state court adjudication of a defamation action arising out of a labor dispute. And, in Letter Carriers v. Austin,1269 the Court held that federal law preempts state defamation laws in the context of labor disputes to the extent that the state seeks to make actionable defamatory statements in labor disputes published without knowledge of their falsity or in reckless disregard of truth or falsity.
However, a state tort action for the intentional infliction of emotional distress occasioned through an alleged campaign of personal abuse and harassment of a member of the union by the union and its officials was held not preempted by federal labor law. Federal law was not directed to the “outrageous conduct” alleged, and NLRB resolution of the dispute would neither touch upon the claim of emotional distress and physical injury nor award the plaintiff any compensation. But state court jurisdiction, in order that there not be interference with the federal scheme, must be premised on tortuous conduct either unrelated to employment discrimination or a function of the particularly abusive manner in which the discrimination is accomplished or threatened rather than a function of the actual or threatened discrimination itself.1270
A significant retrenchment of Garmon occurred in Sears, Roebuck & Co. v. Carpenters,1271 in the context of state court assertion of jurisdiction over trespassory picketing. Objecting to the company’s use of nonunion work in one of its departments, the union picketed the store, using the company’s property, the lot area surrounding the store, instead of the public sidewalks, to walk on. After the union refused to move its pickets to the sidewalk, the company sought and obtained a state court order enjoining the picketing on company property. Depending upon the union motivation for the picketing, it was either arguably prohibited or arguably protected by federal law, the trespassory nature of the picketing being one factor the NLRB would have looked to in determining at least the protected nature of the conduct. The Court held, however, that under the circumstances, neither the arguably prohibited nor the arguably protected rationale of Garmon was sufficient to deprive the state court of jurisdiction.
First, as to conduct arguably prohibited by NLRA, the Court seemingly expanded the Garmon exception recognizing state court jurisdiction for conduct that touches interests “deeply rooted in local feeling”1272 in holding that where there exists “a significant state interest in protecting the citizens from the challenged conduct” and there exists “little risk of interference with the regulatory jurisdiction” of the NLRB, state law is not preempted. Here, there was obviously a significant state interest in protecting the company from trespass; the second, “critical inquiry” was whether the controversy presented to the state court was identical to or different from that which could have been presented to the Board. The Court concluded that the controversy was different. The Board would have been presented with determining the motivation of the picketing and the location of the picketing would have been irrelevant; the motivation was irrelevant to the state court and the situs of the picketing was the sole inquiry. Thus, there was deemed to be no realistic risk of state interference with Board jurisdiction.1273
Second, in determining whether the picketing was protected, the Board would have been concerned with the situs of the picketing, since under federal labor laws the employer has no absolute right to prohibit union activity on his property. Preemption of state court jurisdiction was denied, nonetheless, in this case on two joined bases. One, preemption is not required in those cases in which the party who could have presented the protection issue to the Board has not done so and the other party to the dispute has no acceptable means of doing so. In this case, the union could have filed with the Board when the company demanded removal of the pickets, but did not, and the company could not file with the Board at all. Two, even if the matter is not presented to the Board, preemption is called for if there is a risk of erroneous state court adjudication of the protection issue that is unacceptable, so that one must look to the strength of the argument that the activity is protected. While the state court had to make an initial determination that the trespass was not protected under federal law, the same determination the Board would have made, in the instance of trespassory conduct, the risk of erroneous determination is small, because experience shows that a trespass is far more likely to be unprotected than protected.1274
Introduction of these two balancing tests into the Garmon rationale substantially complicates determining when state courts do not have jurisdiction, and will no doubt occasion much more litigation in state courts than has previously existed.
Another series of cases involves not a Court-created exception to the Garmon rule but the applicability and interpretation of § 301 of the Taft-Hartley Act,1275 which authorizes suits in federal, and state,1276 courts to enforce collective bargaining agreements. The Court has held that in enacting § 301, Congress authorized actions based on conduct arguably subject to the NLRA, so that the Garmon pre-emption doctrine does not preclude judicial enforcement of duties and obligations which would otherwise be within the exclusive jurisdiction of the NLRB so long as those duties and obligations are embodied in a collective-bargaining agreement, perhaps as interpreted in an arbitration proceeding.1277
Here, too, the permissible role of state tort actions has been in great dispute. Generally, a state tort action as an alternative to a § 301 arbitration or enforcement action is preempted if it is substantially dependent upon analysis of the terms of a collective-bargaining agreement.1278 Thus, a state damage action for the bad-faith handling of an insurance claim under a disability plan that was part of a collective-bargaining agreement was preempted because it involved interpretation of that agreement and because state enforcement would frustrate the policies of § 301 favoring uniform federal-law interpretation of collective-bargaining agreements and favoring arbitration as a predicate to adjudication.1279
Finally, the Court has indicated that, with regard to some situations, Congress has intended to leave the parties to a labor dispute free to engage in “self-help,” so that conduct not subject to federal law is nonetheless withdrawn from state control.1280 However, the NLRA is concerned primarily “with establishing an equitable process for determining terms and conditions of employment, and not with particular substantive terms of the bargain that is struck when the parties are negotiating from relatively equal positions,” so states are free to impose minimum labor standards.1281
COMMERCE WITH INDIAN TRIBES
Congress’s power to regulate commerce “with the Indian tribes,” once almost rendered superfluous by Court decision,1282 has now been resurrected and made largely the basis for informing judicial judgment with respect to controversies concerning the rights and obligations of Native Americans. Although Congress in 1871 forbade the further making of treaties with Indian tribes,1283 cases disputing the application of the old treaties and especially their effects upon attempted state taxation and regulation of on-reservation activities continue to be a staple of the Court’s docket.1284 But this clause is one of the two bases now found sufficient to empower Federal Government authority over Native Americans. “The source of federal authority over Indian matters has been the subject of some confusion, but it is now generally recognized that the power derives from federal responsibility for regulating commerce with Indian tribes and for treaty making.”1285
Forsaking reliance upon other theories and rationales, the Court has established the preemption doctrine as the analytical framework within which to judge the permissibility of assertions of state jurisdiction over the Indians. However, the “semi-autonomous status” of Indian tribes erects an “independent but related” barrier to the exercise of state authority over commercial activity on an Indian reservation.1286 Thus, the question of preemption is not governed by the standards of preemption developed in other areas. “Instead, the traditional notions of tribal sovereignty, and the recognition and encouragement of this sovereignty in congressional Acts promoting tribal independence and economic development, inform the pre-emption analysis that governs this inquiry. . . . As a result, ambiguities in federal law should be construed generously, and federal pre-emption is not limited to those situations where Congress has explicitly announced an intention to pre-empt state activity.”1287 A corollary is that the preemption doctrine will not be applied strictly to prevent states from aiding Native Americans.1288 However, the protective rule is inapplicable to state regulation of liquor transactions, because there has been no tradition of tribal sovereignty with respect to that subject.1289
The scope of state taxing powers—the conflict of “the plenary power of the States over residents within their borders with the semi-autonomous status of Indians living on tribal reservations”1290 — has been often litigated. Absent cession of jurisdiction or other congressional consent, states possess no power to tax Indian reservation lands or Indian income from activities carried on within the boundaries of the reservation.1291 Off-reservation Indian activities require an express federal exemption to deny state taxing power.1292 Subjection to taxation of non-Indians doing business with Indians on the reservation involves a close analysis of the federal statutory framework, although the operating premise was for many years to deny state power because of its burdens upon the development of tribal self-sufficiency as promoted through federal law and its interference with the tribes’ ability to exercise their sovereign functions.1293
That operating premise, however, seems to have been eroded. For example, in Cotton Petroleum Corp. v. New Mexico,1294 the Court held that, despite of the existence of multiple taxation occasioned by a state oil and gas severance tax applied to on-reservation operations by non-Indians, which was already taxed by the tribe,1295 the impairment of tribal sovereignty was “too indirect and too insubstantial” to warrant a finding of preemption. The fact that the state provided significant services to the oil and gas lessees justified state taxation and also distinguished earlier cases in which the state had “asserted no legitimate regulatory interest that might justify the tax.”1296 Still further erosion, or relaxation, of the principle of construction may be found in a later case, in which the Court, confronted with arguments that the imposition of particular state taxes on Indian property on the reservation was inconsistent with self-determination and self-governance, denominated these as “policy” arguments properly presented to Congress rather than the Court.1297
The impact on tribal sovereignty is also a prime determinant of relative state and tribal regulatory authority.1298
Since Worcester v. Georgia,1299 the Court has recognized that Indian tribes are unique aggregations possessing attributes of sovereignty over both their members and their territory.1300 They are, of course, no longer possessed of the full attributes of sovereignty,1301 having relinquished some part of it by their incorporation within the territory of the United States and their acceptance of its protection. By specific treaty provision, they yielded up other sovereign powers, and Congress has removed still others. “The sovereignty that the Indian tribes retain is of a unique and limited character. It exists only at the sufferance of Congress and is subject to complete defeasance.”1302
In a case of major import for the settlement of Indian land claims, the Court ruled in County of Oneida v. Oneida Indian Nation,1303 that an Indian tribe may obtain damages for wrongful possession of land conveyed in 1795 without the federal approval required by the Nonintercourse Act.1304 The Act reflected the accepted principle that extinguishment of the title to land by Native Americans required the consent of the United States and left intact a tribe’s common-law remedies to protect possessory rights. The Court reiterated the accepted rule that enactments are construed liberally in favor of Native Americans and that Congress may abrogate Indian treaty rights or extinguish aboriginal land title only if it does so clearly and unambiguously. Consequently, federal approval of land-conveyance treaties containing references to earlier conveyances that had violated the Nonintercourse Act did not constitute ratification of the invalid conveyances.1305 Similarly, the Court refused to apply the general rule for borrowing a state statute of limitations for the federal common-law action, and it rejected the dissent’s view that, given “the extraordinary passage of time,” the doctrine of laches should have been applied to bar the claim.1306
Although the power of Congress over Indian affairs is broad, it is not limitless.1307 The Court has promulgated a standard of review that defers to the legislative judgment “[a]s long as the special treatment can be tied rationally to the fulfillment of Congress’s unique obligation toward the Indians . . . ”1308 A more searching review is warranted when it is alleged that the Federal Government’s behavior toward the Indians has been in contravention of its obligation and that it has in fact taken property from a tribe which it had heretofore guaranteed to the tribe, without either compensating the tribe or otherwise giving the Indians the full value of the land.1309
- E. PRENTICE & J. EGAN, THE COMMERCE CLAUSE OF THE FEDERAL CONSTITUTION
- OED: “com– together, with, + merx, merci- merchandise, ware.”
- 22 U.S. (9 Wheat.) 1 (1824).
- Act of February 18, 1793, 1 Stat. 305, entitled “An Act for enrolling and licensing ships or vessels to be employed in the coasting trade and fisheries, and for regulating the same.”
- Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 189 (1824).
- 22 U.S. at 190–94.
- 22 U.S. at 193.
- As we will see, however, in many later formulations the crossing of state lines is no longer the sine qua non; wholly intrastate transactions with substantial effects on interstate commerce may suffice.
- E.g., United States v. Simpson, 252 U.S. 465 (1920); Caminetti v. United States, 242 U.S. 470 (1917).
- “Not only, then, may transactions be commerce though non-commercial; they may be commerce though illegal and sporadic, and though they do not utilize common carriers or concern the flow of anything more tangible than electrons and information.” United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 549–50 (1944).
- Kidd v. Pearson, 128 U.S. 1 (1888); Oliver Iron Co. v. Lord, 262 U.S. 172 (1923); United States v. E. C. Knight Co., 156 U.S. 1 (1895); see also Carter v. Carter Coal Co., 298 U.S. 238 (1936).
- Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1869); see also the cases to this effect cited in United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 543–545, 567–568, 578 (1944).
- Federal Baseball League v. National League of Professional Baseball Clubs, 259 U.S. 200 (1922). When called on to reconsider its decision, the Court declined, noting that Congress had not seen fit to bring the business under the antitrust laws by legislation having prospective effect and that the business had developed under the understanding that it was not subject to these laws, a reversal of which would have retroactive effect. Toolson v. New York Yankees, 346 U.S. 356 (1953). In Flood v. Kuhn, 407 U.S. 258 (1972), the Court recognized these decisions as aberrations, but it thought the doctrine entitled to the benefits of stare decisis, as Congress was free to change it at any time. The same considerations not being present, the Court has held that businesses conducted on a multistate basis, but built around local exhibitions, are in commerce and subject to, inter alia, the antitrust laws, in the instance of professional football, Radovich v. National Football League, 352 U.S. 445 (1957), professional boxing, United States v. International Boxing Club, 348 U.S. 236 (1955), and legitimate theatrical productions. United States v. Shubert, 348 U.S. 222 (1955).
- Blumenstock Bros. v. Curtis Pub. Co., 252 U.S. 436 (1920).
- Williams v. Fears, 179 U.S. 270 (1900). See also Diamond Glue Co. v. United States Glue Co., 187 U.S. 611 (1903); Browning v. City of Waycross, 233 U.S. 16 (1914); General Railway Signal Co. v. Virginia, 246 U.S. 500 (1918). But see York Manufacturing Co. v. Colley, 247 U.S. 21 (1918).
- Associated Press v. United States, 326 U.S. 1 (1945).
- American Medical Ass’n v. United States, 317 U.S. 519 (1943). Cf. United States v. Oregon Medical Society, 343 U.S. 326 (1952).
- United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533 (1944).
- “It has been truly said, that commerce, as the word is used in the constitution, is a unit, every part of which is indicated by the term.” Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 194 (1824). See also id. at 195–196.
- NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937).
- Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381 (1940). See also Hodel v. Virginia Surface Mining & Recl. Ass’n, 452 U.S. 264, 275–283 (1981); Mulford v. Smith, 307 U.S. 38 (1939) (agricultural production).
- Swift & Co. v. United States, 196 U.S. 375 (1905); Stafford v. Wallace, 258 U.S. 495 (1922); Chicago Board of Trade v. Olsen, 262 U.S. 1 (1923).
- 22 U.S. (9 Wheat.) 1, 194, 195 (1824).
- New York v. Miln, 36 U.S. (11 Pet.) 102 (1837); License Cases, 46 U.S. (5 How.) 504 (1847); Passenger Cases, 48 U.S. (7 How.) 283 (1849); Patterson v. Kentucky, 97 U.S. 501 (1879); Trade-Mark Cases, 100 U.S. 82 (1879); Kidd v. Pearson, 128 U.S. 1 (1888); Illinois Central R.R. v. McKendree, 203 U.S. 514 (1906); Keller v. United States, 213 U.S. 138 (1909); Hammer v. Dagenhart, 247 U.S. 251 (1918); Oliver Iron Co. v. Lord, 262 U.S. 172 (1923).
- Swift & Co. v. United States, 196 U.S. 375 (1905); Stafford v. Wallace, 258 U.S. 495 (1922); Chicago Board of Trade v. Olsen, 262 U.S. 1 (1923).
- NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937).
- NLRB v. Fainblatt, 306 U.S. 601 (1939); Kirschbaum v. Walling, 316 U.S. 517 (1942); United States v. Wrightwood Dairy Co., 315 U.S. 110 (1942); Wickard v. Filburn, 317 U.S. 111 (1942); NLRB v. Reliance Fuel Oil Co., 371 U.S. 224 (1963); Katzenbach v. McClung, 379 U.S. 294 (1964); Maryland v. Wirtz, 392 U.S. 183 (1968); McLain v. Real Estate Bd. of New Orleans, 444 U.S. 232, 241–243 (1980); Hodel v. Virginia Surface Mining & Reclamation Ass’n, 452 U.S. 264 (1981).
- United States v. Darby, 312 U.S. 100 (1941); Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964); Maryland v. Wirtz, 392 U.S. 183 (1968); Perez v. United States, 402 U.S. 146 (1971); Russell v. United States, 471 U.S. 858 (1985); Summit Health, Ltd. v. Pinhas, 500 U.S. 322 (1991).
- Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 196 (1824). Commerce “among the several States” does not comprise commerce of the District of Columbia nor of the territories of the United States. Congress’s power over their commerce is an incident of its general power over them. Stoutenburgh v. Hennick, 129 U.S. 141 (1889); Atlantic Cleaners & Dyers v. United States, 286 U.S. 427 (1932); In re Bryant, 4 Fed. Cas. 514 (No. 2067) (D. Oreg. 1865). Transportation between two points in the same state, when a part of the route is a loop outside the state, is interstate commerce. Hanley v. Kansas City Southern Ry. Co., 187 U.S. 617 (1903); Western Union Tel. Co. v. Speight, 254 U.S. 17 (1920). But such a deviation cannot be solely for the purpose of evading a tax or regulation in order to be exempt from the state’s reach. Greyhound Lines v. Mealey, 334 U.S. 653, 660 (1948); Eichholz v. Public Service Comm’n, 306 U.S. 268, 274 (1939). Red cap services performed at a transfer point within the state of departure but in conjunction with an interstate trip are reachable. New York, N.H. & H. R.R. v. Nothnagle, 346 U.S. 128 (1953).
- Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 196–197 (1824).
- Brooks v. United States, 267 U.S. 432, 436–37 (1925).
- United States v. Darby, 312 U.S. 100, 114 (1941).
- E.g., Caminetti v. United States, 242 U.S. 470 (1917) (transportation of female across state line for noncommercial sexual purposes); Cleveland v. United States, 329 U.S. 14 (1946) (transportation of plural wives across state lines by Mormons); United States v. Simpson, 252 U.S. 465 (1920) (transportation of five quarts of whiskey across state line for personal consumption).
- Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964); Katzenbach v. McClung, 379 U.S. 294 (1964); Daniel v. Paul, 395 U.S. 298 (1969).
- E.g., Reid v. Colorado, 187 U.S. 137 (1902) (transportation of diseased livestock across state line); Perez v. United States, 402 U.S. 146 (1971) (prohibition of all loansharking).
- Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 195 (1824).
- E.g., Houston & Texas Ry. v. United States, 234 U.S. 342 (1914) (necessary for ICC to regulate rates of an intrastate train in order to effectuate its rate setting for a competing interstate train); Wisconsin R.R. Comm’n v. Chicago, B. & Q. R.R., 257 U.S. 563 (1922) (same); Southern Ry. v. United States, 222 U.S. 20 (1911) (upholding requirement of same safety equipment on intrastate as interstate trains). See also Wickard v. Filburn, 317 U.S. 111 (1942); United States v. Wrightwood Dairy Co., 315 U.S. 110 (1942); Gonzales v. Raich, 545 U.S. 1 (2005).
- See, e.g., United States v. Darby, 312 U.S. 100, 115–16 (1941).
- E.g., United States v. E. C. Knight Co., 156 U.S. 1 (1895); Hammer v. Dagenhart, 247 U.S. 251 (1918). Of course, there existed much of this time a parallel doctrine under which federal power was not so limited. E.g., Houston & Texas Ry. v. United States (The Shreveport Rate Case), 234 U.S. 342 (1914).
- E.g., California v. United States, 320 U.S. 577 (1944); California v. Taylor, 353 U.S. 553 (1957).
- For example, federal regulation of the wages and hours of certain state and local governmental employees has alternatively been upheld and invalidated. See Maryland v. Wirtz, 392 U.S. 183 (1968), overruled in National League of Cities v. Usery, 426 U.S. 833 (1976), overruled in Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985).
- New York v. United States, 505 U.S. 144 (1992); Printz v. United States, 521 U.S. 898 (1997). For elaboration, see the discussions under the Supremacy Clause and under the Tenth Amendment.
- 250 U.S. 199 (1919).
- 250 U.S. at 203.
- E.g., Hoke v. United States, 227 U.S. 308 (1913) (transportation of women for purposes of prostitution); Gooch v. United States, 297 U.S. 124 (1936) (kidnaping); Brooks v. United States, 267 U.S. 432 (1925) (stolen autos). For example, in Scarborough v. United States, 431 U.S. 563 (1977), the Court upheld a conviction for possession of a firearm by a felon upon a mere showing that the gun had sometime previously traveled in interstate commerce, and Barrett v. United States, 423 U.S. 212 (1976), upheld a conviction for receipt of a firearm on the same showing. The Court does require Congress in these cases to speak plainly in order to reach such activity, inasmuch as historic state police powers are involved. United States v. Bass, 404 U.S. 336 (1971).
- Lottery Case (Champion v. Ames), 188 U.S. 321, 373 (1903).
- Brolan v. United States, 236 U.S. 216, 222 (1915). The most recent dicta to this effect appears in Japan Line v. County of Los Angeles, 441 U.S. 434, 448–51 (1979), a “dormant” commerce clause case involving state taxation with an impact on foreign commerce. In context, the distinction seems unexceptionable, but the language extends beyond context.
- License Cases, 46 U.S. (5 How.) 504, 578 (1847).
- Pittsburg & Southern Coal Co. v. Bates, 156 U.S. 577, 587 (1895).
- United States v. Carolene Products Co., 304 U.S. 144, 147–148 (1938).
- 22 U.S. (9 Wheat.) 1, 217, 221 (1824).
- 96 U.S. 1 (1878). See also Western Union Telegraph Co. v. Texas, 105 U.S. 460 (1882).
- 96 U.S. at 9. “Commerce embraces appliances necessarily employed in carrying on transportation by land and water.” Railroad Co. v. Fuller, 84 U.S. (17 Wall.) 560, 568 (1873).
- Act of March 28, 1927, 45 Stat. 373, superseded by the Communications Act of 1934, 48 Stat. 1064, 47 U.S.C. §§ 151 et seq.
- “No question is presented as to the power of the Congress, in its regulation of interstate commerce, to regulate radio communication.” Chief Justice Hughes speaking for the Court in Federal Radio Comm’n v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 279 (1933). See also Fisher’s Blend Station v. Tax Comm’n, 297 U.S. 650, 654–55 (1936).
- 54 U.S. (13 How.) 518 (1852).
- Ch. 111, § 6, 10 Stat 112 (1852).
- Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421, 430 (1856). “It is Congress, and not the Judicial Department, to which the Constitution has given the power to regulate commerce with foreign nations and among the several States. The courts can never take the initiative on this subject.” Transportation Co. v. Parkersburg, 107 U.S. 691, 701 (1883). See also Prudential Ins. Co. v. Benjamin, 328 U.S. 408 (1946); Robertson v. California, 328 U.S. 440 (1946).
- But see In re Debs, 158 U.S. 564 (1895), in which the Court held that in the absence of legislative authorization the Executive had power to seek and federal courts to grant injunctive relief to remove obstructions to interstate commerce and the free flow of the mail.
- 70 U.S. (3 Wall.) 713 (1866).
- 70 U.S. at 724–25.
- Union Bridge Co. v. United States, 204 U.S. 364 (1907). See also Monongahela Bridge Co. v. United States, 216 U.S. 177 (1910); Wisconsin v. Illinois, 278 U.S. 367 (1929). The United States may seek injunctive or declaratory relief requiring the removal of obstructions to commerce by those negligently responsible for them or it may itself remove the obstructions and proceed against the responsible party for costs. United States v. Republic Steel Corp., 362 U.S. 482 (1960); Wyandotte Transportation Co. v. United States, 389 U.S. 191 (1967). Congress’s power in this area is newly demonstrated by legislation aimed at pollution and environmental degradation. In confirming the title of the states to certain waters under the Submerged Lands Act, 67 Stat. 29 (1953), 43 U.S.C. §§ 1301 et seq., Congress was careful to retain authority over the waters for purposes of commerce, navigation, and the like. United States v. Rands, 389 U.S. 121, 127 (1967).
- Gibson v. United States, 166 U.S. 269 (1897). See also Bridge Co. v. United States, 105 U.S. 470 (1882); United States v. Rio Grande Irrigation Co., 174 U.S. 690 (1899); United States v. Chandler-Dunbar Co., 229 U.S. 53 (1913); Seattle v. Oregon & W.R.R., 255 U.S. 56, 63 (1921); Economy Light Co. v. United States, 256 U.S. 113 (1921); United States v. River Rouge Co., 269 U.S. 411, 419 (1926); Ford & Son v. Little Falls Co., 280 U.S. 369 (1930); United States v. Commodore Park, Inc., 324 U.S. 386 (1945); United States v. Twin City Power Co., 350 U.S. 222 (1956); United States v. Rands, 389 U.S. 121 (1967).
- United States v. Cress, 243 U.S. 316 (1917).
- United States v. Chicago, M., St. P. & P. R.R., 312 U.S. 592, 597 (1941); United States v. Willow River Power Co., 324 U.S. 499 (1945).
- United States v. Rio Grande Irrigation Co., 174 U.S. 690 (1899).
- 77 U.S. (10 Wall.) 557 (1871).
- 77 U.S. at 565.
- 77 U.S. at 566. “The regulation of commerce implies as much control, as far-reaching power, over an artificial as over a natural highway.” Justice Brewer for the Court in Monongahela Navigation Co. v. United States, 148 U.S. 312, 342 (1893).
- Congress had the right to confer upon the Interstate Commerce Commission the power to regulate interstate ferry rates, N.Y. Central R.R. v. Hudson County, 227 U.S. 248 (1913), and to authorize the Commission to govern the towing of vessels between points in the same state but partly through waters of an adjoining state. Cornell Steamboat Co. v. United States, 321 U.S. 634 (1944). Congress’s power over navigation extends to persons furnishing wharfage, dock, warehouse, and other terminal facilities to a common carrier by water. Hence an order of the United States Maritime Commission banning certain allegedly “unreasonable practices” by terminals in the Port of San Francisco, and prescribing schedules of maximum free time periods and of minimum charges was constitutional. California v. United States, 320 U.S. 577 (1944). The same power also comprises regulation of the registry enrollment, license, and nationality of ships and vessels, the method of recording bills of sale and mortgages thereon, the rights and duties of seamen, the limitations of the responsibility of shipowners for the negligence and misconduct of their captains and crews, and many other things of a character truly maritime. See The Lottawanna, 88 U.S. (21 Wall.) 558, 577 (1875); Providence & N.Y. S.S. Co. v. Hill Mfg. Co., 109 U.S. 578, 589 (1883); The Hamilton, 207 U.S. 398 (1907); O’Donnell v. Great Lakes Dredge & Dock Co., 318 U.S. 36 (1943).
- Pollard v. Hagan, 44 U.S. (3 How.) 212 (1845); Shively v. Bowlby, 152 U.S. 1 (1894).
- Green Bay & Miss. Canal Co. v. Patten Paper Co., 172 U.S. 58, 80 (1898).
- 229 U.S. 53 (1913).
- 229 U.S. at 73, citing Kaukauna Water Power Co. v. Green Bay & Miss. Canal Co., 142 U.S. 254 (1891).
- 283 U.S. 423 (1931).
- 311 U.S. 377 (1940).
- 283 U.S. at 455–56. See also United States v. Twin City Power Co., 350 U.S. 222, 224 (1956).
- 311 U.S. at 407, 409–10.
- 311 U.S. at 426.
- Oklahoma v. Atkinson Co., 313 U.S. 508, 523–33 (1941).
- Ashwander v. TVA, 297 U.S. 288 (1936).
- Cf. Indiana v. United States, 148 U.S. 148 (1893).
- 12 Stat. 489 (1862); 13 Stat. 356 (1864); 14 Stat. 79 (1866).
- The result then as well as now might have followed from Congress’s power of spending, independently of the Commerce Clause, as well as from its war and postal powers, which were also invoked by the Court in this connection.
- Thomson v. Pacific R.R., 76 U.S. (9 Wall.) 579 (1870); California v. Pacific R.R. Co. (Pacific Ry. Cases), 127 U.S. 1 (1888); Cherokee Nation v. Southern Kansas Ry., 135 U.S. 641 (1890); Luxton v. North River Bridge Co., 153 U.S. 525 (1894).
- 14 Stat. 66 (1866).
- 14 Stat. 221 (1866).
- 17 Stat. 353 (1873).
- Munn v. Illinois, 94 U.S. 113 (1877); Chicago B. & Q. R. Co. v. Iowa, 94 U.S. 155 (1877); Peik v. Chicago & N.W. Ry., 94 U.S. 164 (1877); Pickard v. Pullman Southern Car Co., 117 U.S. 34 (1886).
- Wabash, St. L. & P. Ry. Co. v. Illinois, 118 U.S. 557 (1886). A variety of state regulations have been struck down on the burdening-of-commerce rationale. E.g., Southern Pacific Co. v. Arizona ex rel. Sullivan, 325 U.S. 761 (1945) (train length); Napier v. Atlantic Coast Line R.R., 272 U.S. 605 (1926) (locomotive accessories); Pennsylvania R.R. v. Public Service Comm’n, 250 U.S. 566 (1919). But the Court has largely exempted regulations with a safety purpose, even a questionable one. Brotherhood of Firemen v. Chicago, R.I. & P. R.R., 393 U.S. 129 (1968).
- 24 Stat. 379 (1887).
- 154 U.S. 447, 470 (1894).
- ICC v. Alabama Midland Ry., 168 U.S. 144 (1897); Cincinnati, N.O. & Texas Pacific Ry. v. ICC, 162 U.S. 184 (1896).
- 34 Stat. 584.
- 36 Stat. 539.
- These regulatory powers are now vested, of course, in the Federal Communications Commission.
- 49 Stat. 543 (1935).
- 41 Stat. 474.
- 54 Stat. 898, U.S.C. §§ 1 et seq. The two acts were “intended . . . to provide a completely integrated interstate regulatory system over motor, railroad, and water carriers.” United States v. Pennsylvania R.R., 323 U.S. 612, 618–19 (1945). The ICC’s powers include authority to determine the reasonableness of a joint through international rate covering transportation in the United States and abroad and to order the domestic carriers to pay reparations in the amount by which the rate is unreasonable. Canada Packers v. Atchison, T. & S. F. Ry., 385 U.S. 182 (1966), and cases cited.
- Disputes between the ICC and other government agencies over mergers have occupied a good deal of the Court’s time. Cf. United States v. ICC, 396 U.S. 491 (1970). See also County of Marin v. United States, 356 U.S. 412 (1958); McLean Trucking Co. v. United States, 321 U.S. 67 (1944); Penn-Central Merger & N & W Inclusion Cases, 389 U.S. 486 (1968).
- Among the various provisions of the Interstate Commerce Act which have been upheld are: a section penalizing shippers for obtaining transportation at less than published rates, Armour Packing Co. v. United States, 209 U.S. 56 (1908); a section construed as prohibiting the hauling of commodities in which the carrier had at the time of haul a proprietary interest, United States v. Delaware & Hudson Co., 213 U.S. 366 (1909); a section abrogating life passes, Louisville & Nashville R.R. v. Mottley, 219 U.S. 467 (1911); a section authorizing the ICC to regulate the entire bookkeeping system of interstate carriers, including intrastate accounts, ICC v. Goodrich Transit Co., 224 U.S. 194 (1912); a clause affecting the charging of rates different for long and short hauls. Intermountain Rate Cases, 234 U.S. 476 (1914).
- Houston & Texas Ry. v. United States, 234 U.S. 342, 351–352 (1914). See also, American Express Co. v. Caldwell, 244 U.S. 617 (1917); Pacific Tel. & Tel. Co. v. Tax Comm’n, 297 U.S. 403 (1936); Weiss v. United States, 308 U.S. 321 (1939); Bethlehem Steel Co. v. State Board, 330 U.S. 767 (1947); United States v. Walsh, 331 U.S. 432 (1947).
- Wisconsin R.R. Comm’n v. Chicago, B. & Q. R. Co., 257 U.S. 563 (1922). Cf. Colorado v. United States, 271 U.S. 153 (1926), upholding an ICC order directing abandonment of an intrastate branch of an interstate railroad. But see North Carolina v. United States, 325 U.S. 507 (1945), setting aside an ICC disallowance of intrastate rates set by a state commission as unsupported by the evidence and findings.
- 27 Stat. 531, 45 U.S.C. §§ 1–7.
- 32 Stat. 943, 45 U.S.C. §§ 8–10.
- Southern Ry. v. United States, 222 U.S. 20 (1911). See also Texas & Pacific Ry. v. Rigsby, 241 U.S. 33 (1916); United States v. California, 297 U.S. 175 (1936); United States v. Seaboard Air Line R.R., 361 U.S. 78 (1959).
- 34 Stat. 1415, 45 U.S.C. §§ 61–64.
- Baltimore & Ohio R.R. v. ICC, 221 U.S. 612 (1911).
- 34 Stat. 232, held unconstitutional in part in the Employers’ Liability Cases, 207 U.S. 463 (1908).
- 35 Stat. 65, 45 U.S.C. §§ 51–60.
- The Second Employers’ Liability Cases, 223 U.S. 1 (1912). For a longer period, a Court majority reviewed a surprising large number of FELA cases, almost uniformly expanding the scope of recovery under the statute. Cf. Rogers v. Missouri Pacific R.R., 352 U.S. 500 (1957). This practice was criticized both within and without the Court, cf. Ferguson v. Moore-McCormack Lines, 352 U.S. 521, 524 (1957) (Justice Frankfurter dissenting); Hart, Foreword: The Time Chart of the Justices, 73 HARV. L. REV. 84, 96–98 (1959), and has been discontinued.
- See discussion under Railroad Retirement Act and National Labor Relations Act, infra.
- The Pipe Line Cases, 234 U.S. 548 (1914). See also State Comm’n v. Wichita Gas Co., 290 U.S. 561 (1934); Eureka Pipe Line Co. v. Hallanan, 257 U.S. 265 (1921); United Fuel Gas Co. v. Hallanan, 257 U.S. 277 (1921); Pennsylvania v. West Virginia, 262 U.S. 553 (1923); Missouri ex rel. Barrett v. Kansas Gas Co., 265 U.S. 298 (1924).
- Public Utilities Comm’n v. Attleboro Co., 273 U.S. 83 (1927). See also Utah Power & Light Co. v. Pfost, 286 U.S. 165 (1932); Pennsylvania Power Co. v. FPC, 343 U.S. 414 (1952).
- 49 Stat. 863, 16 U.S.C. §§ 791a–825u.
- 52 Stat. 821, 15 U.S.C. §§ 717–717w.
- FPC v. Natural Gas Pipeline Co., 315 U.S. 575 (1942).
- 315 U.S. at 582. Sales to distributors by a wholesaler of natural gas delivered to it from out-of-state sources are subject to FPC jurisdiction. Colorado-Wyoming Co. v. FPC, 324 U.S. 626 (1945). See also Illinois Gas Co. v. Public Service Co., 314 U.S. 498 (1942); FPC v. East Ohio Gas Co., 338 U.S. 464 (1950). In Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672 (1954), the Court ruled that an independent company engaged in one state in production, gathering, and processing of natural gas, which it thereafter sells in the same state to pipelines that transport and sell the gas in other states is subject to FPC jurisdiction. See also California v. Lo-Vaca Gathering Co., 379 U.S. 366 (1965).
- 48 Stat. 1064, 47 U.S.C. §§ 151 et seq. Cf. United States v. Southwestern Cable Co., 392 U.S. 157 (1968), on the regulation of community antenna television systems (CATV).
- 52 Stat. 973, as amended. The CAB has now been abolished and its functions are exercised by the Federal Aviation Administration, 49 U.S.C. § 106, as part of the Department of Transportation.
- 26 Stat. 209 (1890); 15 U.S.C. §§ 1–7.
- 156 U.S. 1 (1895).
- 156 U.S. at 13.
- 156 U.S. at 13–16.
- 156 U.S. at 17. The doctrine of the case boiled down to the proposition that commerce was transportation only, a doctrine Justice Harlan undertook to refute in his notable dissenting opinion. “Interstate commerce does not, therefore, consist in transportation simply. It includes the purchase and sale of articles that are intended to be transported from one State to another—every species of commercial intercourse among the States and with foreign nations.” 156 U.S. at 22. “Any combination, therefore, that disturbs or unreasonably obstructs freedom in buying and selling articles manufactured to be sold to persons in other States or to be carried to other States—a freedom that cannot exist if the right to buy and sell is fettered by unlawful restraints that crush out competition—affects, not incidentally, but directly, the people of all the States; and the remedy for such an evil is found only in the exercise of powers confided to a government which, this court has said, was the government of all, exercising powers delegated by all, representing all, acting for all. McCulloch v. Maryland, 4 Wheat. 316, 405.” 156 U.S. at 33.
- 175 U.S. 211 (1899).
- 196 U.S. 375 (1905). The Sherman Act was applied to break up combinations of interstate carriers in United States v. Trans-Missouri Freight Ass’n, 166 U.S. 290 (1897); United States v. Joint-Traffic Ass’n, 171 U.S. 505 (1898); and Northern Securities Co. v. United States, 193 U.S. 197 (1904). In Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 229–39 (1948), Justice Rutledge, for the Court, critically reviewed the jurisprudence of the limitations on the Act and the deconstruction of the judicial constraints. In recent years, the Court’s decisions have permitted the reach of the Sherman Act to expand along with the expanding notions of congressional power. Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186 (1974); Hospital Building Co. v. Rex Hospital Trustees, 425 U.S. 738 (1976); McLain v. Real Estate Bd. of New Orleans, 444 U.S. 232 (1980); Summit Health, Ltd. v. Pinhas, 500 U.S. 322 (1991). The Court, however, does insist that plaintiffs alleging that an intrastate activity violates the Act prove the relationship to interstate commerce set forth in the Act. Gulf Oil Corp, 419 U.S. at 194–99.
- Swift & Co. v. United States, 196 U.S. 375, 396 (1905).
- 196 U.S. at 398–99.
- 196 U.S. at 399–401.
- 196 U.S. at 400.
- Loewe v. Lawlor (The Danbury Hatters Case), 208 U.S. 274 (1908); Duplex Printing Press Co. v. Deering, 254 U.S. 443 (1921); Coronado Co. v. United Mine Workers, 268 U.S. 295 (1925); United States v. Bruins, 272 U.S. 549 (1926); Bedford Co. v. Stone Cutters Ass’n, 274 U.S. 37 (1927); Local 167 v. United States, 291 U.S. 293 (1934); Allen Bradley Co. v. Union, 325 U.S. 797 (1945); United States v. Employing Plasterers Ass’n, 347 U.S. 186 (1954); United States v. Green, 350 U.S. 415 (1956); Callanan v. United States, 364 U.S. 587 (1961).
- 42 Stat. 159, 7 U.S.C. §§ 171–183, 191–195, 201–203.
- 42 Stat. 998 (1922), 7 U.S.C. §§ 1–9, 10a–17.
- 258 U.S. 495 (1922).
- 258 U.S. at 514.
- 258 U.S. at 515–16. See also Lemke v. Farmers Grain Co., 258 U.S. 50 (1922); Minnesota v. Blasius, 290 U.S. 1 (1933).
- 262 U.S. 1 (1923).
- 262 U.S. at 35.
- 262 U.S. at 40.
- 262 U.S. at 37, quoting Stafford v. Wallace, 258 U.S. 495, 521 (1922).
- 48 Stat. 881, 15 U.S.C. §§ 77b et seq.
- 49 Stat. 803, 15 U.S.C. §§ 79–79z–6.
- Electric Bond Co. v. SEC, 303 U.S. 419 (1938); North American Co. v. SEC, 327 U.S. 686 (1946); American Power & Light Co. v. SEC, 329 U.S. 90 (1946).
- Appalachian Coals, Inc. v. United States, 288 U.S. 344, 372 (1933).
- 48 Stat. 195.
- 295 U.S. 495 (1935).
- 295 U.S. at 548. See also id. at 546.
- In United States v. Sullivan, 332 U.S. 689 (1948), the Court interpreted the Federal Food, Drug, and Cosmetic Act of 1938 as applying to the sale by a retailer of drugs purchased from his wholesaler within the State nine months after their interstate shipment had been completed. The Court, speaking by Justice Black, cited United States v. Walsh, 331 U.S. 432 (1947); Wickard v. Filburn, 317 U.S. 111 (1942); United States v. Wrightwood Dairy Co., 315 U.S. 110 (1942); United States v. Darby, 312 U.S. 100 (1941). Justice Frankfurter dissented on the basis of FTC v. Bunte Bros., 312 U.S. 349 (1941). It is apparent that the Schechter case has been thoroughly repudiated so far as the distinction between “direct” and “indirect” effects is concerned. Cf. Perez v. United States, 402 U.S. 146 (1971). See also McDermott v. Wisconsin, 228 U.S. 115 (1913), which preceded Schechter by more than two decades. The NIRA, however, was found to have several other constitutional infirmities besides its disregard, as illustrated by the Live Poultry Code, of the “fundamental” distinction between “direct” and “indirect” effects, namely, the delegation of standard-less legislative power, the absence of any administrative procedural safeguards, the absence of judicial review, and the dominant role played by private groups in the general scheme of regulation.
- 48 Stat. 31.
- United States v. Butler, 297 U.S. 1, 63–64, 68 (1936).
- 49 Stat. 991.
- Carter v. Carter Coal Co., 298 U.S. 238 (1936).
- 298 U.S. at 308–09.
- 48 Stat. 1283.
- 295 U.S. 330 (1935).
- 295 U.S. at 374.
- 295 U.S. at 379, 384.
- 326 U.S. 446 (1946). Indeed, in a case decided in June 1948, Justice Rutledge, speaking for a majority of the Court, listed the Alton case as one “foredoomed to reversal,” though the formal reversal has never taken place. See Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 230 (1948). Cf. Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 19 (1976).
- 301 U.S. 1 (1937). A major political event had intervened between this decision and those described in the preceding pages. President Roosevelt, angered at the Court’s invalidation of much of his depression program, proposed a “reorganization” of the Court by which he would have been enabled to name one new Justice for each Justice on the Court who was more than 70 years old, in the name of “judicial efficiency.” The plan was defeated in the Senate, in part, perhaps, because in such cases as Jones & Laughlin a Court majority began to demonstrate sufficient “judicial efficiency.” See Leuchtenberg, The Origins of Franklin D. Roosevelt’s ‘Court-Packing’ Plan, 1966 SUP. CT. REV. 347 (P. Kurland ed.); Mason, Harlan Fiske Stone and FDR’s Court Plan, 61 YALE L. J. 791 (1952); 2 M. PUSEY, CHARLES EVANS HUGHES 759–765 (1951).
- 49 Stat. 449, as amended, 29 U.S.C. §§ 151 et seq.
- The NLRA was enacted against the backdrop of depression, although obviously it went far beyond being a mere antidepression measure, and Congress could find precedent in railway labor legislation. In 1898, Congress passed the Erdman Act, 30 Stat. 424, which attempted to influence the unionization of railroad workers and facilitate negotiations with employers through mediation. The statute fell largely into disuse because the railroads refused to mediate. Additionally, in Adair v. United States, 208 U.S. 161 (1908), the Court struck down a section of the law outlawing “yellow-dog contracts,” by which employers exacted promises of workers to quit or not to join unions as a condition of employment. The Court held the section not to be a regulation of commerce, there being no connection between an employee’s membership in a union and the carrying on of interstate commerce. Cf. Coppage v. Kansas, 236 U.S. 1 (1915). In Wilson v. New, 243 U.S. 332 (1917), the Court did uphold a congressional settlement of a threatened rail strike through the enactment of an eight-hour day and a time-and-a-half for overtime for all interstate railway employees. The national emergency confronting the Nation was cited by the Court, but with the implication that the power existed in more normal times, suggesting that Congress’s powers were not as limited as some judicial decisions had indicated. Congress’s enactment of the Railway Labor Act in 1926, 44 Stat. 577, as amended, 45 U.S.C. §§ 151 et seq., was sustained by a Court decision admitting the connection between interstate commerce and union membership as a substantial one. Texas & N.L.R. Co. v. Brotherhood of Railway Clerks, 281 U.S. 548 (1930). A subsequent decision sustained the application of the Act to “back shop” employees of an interstate carrier who engaged in making heavy repairs on locomotives and cars withdrawn from service for long periods, the Court finding that the activities of these employees were related to interstate commerce. Virginian Ry. v. System Federation No. 40, 300 U.S. 515 (1937).
- NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 38, 41–42 (1937).
- NLRB v. Fruehauf Trailer Co., 301 U.S. 49 (1937); NLRB v. Friedman-Harry Marks Clothing Co., 301 U.S. 58 (1937).
- NLRB v. Fainblatt, 306 U.S. 601, 606 (1939).
- Howell Chevrolet Co. v. NLRB, 346 U.S. 482 (1953).
- Journeymen Plumbers’ Union v. County of Door, 359 U.S. 354 (1959).
- NLRB v. Reliance Fuel Oil Co., 371 U.S. 224 (1963).
- 371 U.S. at 226. See also Guss v. Utah Labor Bd., 353 U.S. 1, 3 (1957); NLRB v. Fainblatt, 306 U.S. 601, 607 (1939).
- NLRB v. Reliance Fuel Oil Co., 371 U.S. 224, 225 n.2 (1963); Liner v. Jafco, 375 U.S. 301, 303 n.2 (1964).
- 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. §§ 201 et seq. See 29 U.S.C. §§ 203(r), 203(s), 206(a), 207(a).
- United States v. Darby, 312 U.S. 100, 115 (1941).
- 312 U.S. at 113, 114, 118.
- 312 U.S. at 123–24.
- 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).
- Cf. Mitchell v. H.B. Zachry Co., 362 U.S. 310, 316–318 (1960).
- 75 Stat. 65.
- 80 Stat. 830.
- 29 U.S.C. §§ 203(r), 203(s).
- 392 U.S. 183 (1968).
- 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).
- 50 Stat. 246, 7 U.S.C. §§ 601 et seq.
- 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).
- 315 U.S. at 118–19.
- 317 U.S. 111 (1942).
- 52 Stat. 31, 7 U.S.C. §§ 612c, 1281–1282 et seq.
- 317 U.S. at 128–29.
- 317 U.S. at 120, 123–24. In United States v. Rock Royal Co-operative, Inc., 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. Justice Reed wrote 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. at 568–69.
- United States v. The William, 28 Fed. Cas. 614, 620–623 (No. 16,700) (D. Mass. 1808). See also Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 191 (1824); United States v. Marigold, 50 U.S. (9 How.) 560 (1850).
- 289 U.S. 48 (1933).
- 289 U.S. at 57, 58.
- Ch. 270, § 28, 5 Stat. 566.
- 9 Stat. 237 (1848).
- 24 Stat. 409.
- 35 Stat. 614; 38 Stat. 275.
- 29 Stat. 605.
- 192 U.S. 470 (1904).
- 223 U.S. 166 (1912); cf. United States v. California, 332 U.S. 19 (1947).
- 239 U.S. 325 (1915).
- 239 U.S. at 329.
- 236 U.S. 216 (1915).
- Groves v. Slaughter, 40 U.S. (15 Pet.) 449, 488–89 (1841).
- 312 U.S. 100 (1941).
- The judicial history of the argument may be examined in the majority and dissenting opinions in Hammer v. Dagenhart, 247 U.S. 251 (1918), a five-to-four decision, in which the majority held Congress not to be empowered to ban from the channels of interstate commerce goods made with child labor, since Congress’s power was to prescribe the rule by which commerce was to be carried on and not to prohibit it, except with regard to those things the character of which—diseased cattle, lottery tickets—was inherently evil. With the majority opinion, compare Justice Stone’s unanimous opinion in United States v. Darby, 312 U.S. 100, 112–24 (1941), overruling Hammer v. Dagenhart. See also Corwin, The Power of Congress to Prohibit Commerce, 3 SELECTED ESSAYS ON CONSTITUTIONAL LAW 103 (1938).
- 23 Stat. 31.
- 32 Stat. 791.
- 33 Stat. 1264.
- 33 Stat. 1269.
- 37 Stat. 315.
- 39 Stat. 1165.
- Illinois Central R.R. v. McKendree, 203 U.S. 514 (1906). See also United States v. DeWitt, 76 U.S. (9 Wall.) 41 (1870).
- Lottery Case (Champion v. Ames), 188 U.S. 321 (1903).
- 28 Stat. 963.
- 143 U.S. 110 (1892).
- 22 U.S. (9 Wheat.) 1, 227 (1824).
- 114 U.S. 622, 630 (1885).
- Hoke v. United States, 227 U.S. 308, 322 (1913).
- United States v. Hill, 248 U.S. 420, 425 (1919).
- 267 U.S. 432 (1925).
- 41 Stat. 324 (1919), 18 U.S.C., §§ 2311–2313.
- 267 U.S. at 436–39. See also Kentucky Whip & Collar Co. v. Ill. Cent. R.R., 299 U.S. 334 (1937).
- 29 U.S.C. §§ 201–219.
- United States v. Darby, 312 U.S. 100 (1941).
- 247 U.S. 251 (1918).
- 312 U.S. at 116–17.
- E.g., Brooks v. United States, 267 U.S. 432, 436–437 (1925); United States v. Darby, 312 U.S. 100, 114 (1941). See Cushman, The National Police Power Under the Commerce Clause, 3 SELECTED ESSAYS ON CONSTITUTIONAL LAW 62 (1938).
- New York v. United States, 505 U.S. 144, 158 (1992).
- United States v. Lopez, 514 U.S. 549, 558–59 (1995) (citations omitted).
- 537 U.S. 129, 147 (2003).
- Examples of laws addressing instrumentalities of commerce include prohibitions on the destruction of an aircraft, 18 U.S.C. § 32, or on theft from interstate shipments. Accord Perez v. United States, 402 U.S. 146, 150 (1971).
- Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964); Katzenbach v. McClung, 379 U.S. 294 (1964); Daniel v. Paul, 395 U.S. 298 (1969).
- Katzenbach v. McClung, 379 U.S. 294, 298, 300–02 (1964); Daniel v. Paul, 395 U.S. 298, 305 (1969).
- Scarborough v. United States, 431 U.S. 563 (1977); Barrett v. United States, 423 U.S. 212 (1976). However, because such laws reach far into the traditional police powers of the states, the Court insists Congress clearly speak to its intent to cover such local activities. United States v. Bass, 404 U.S. 336 (1971). See also Rewis v. United States, 401 U.S. 808 (1971); United States v. Enmons, 410 U.S. 396 (1973). A similar tenet of construction has appeared in the Court’s recent treatment of federal prosecutions of state officers for official corruption under criminal laws of general applicability. E.g., McDonnell v. United States, 579 U.S. ___, No. 15–474, slip op. at 24 (2016) (narrowly interpreting the term “official act” to avoid a construction of the Hobbs Act and federal honest-services fraud statute that would “raise significant federalism concerns” by intruding on a state’s “prerogative to regulate the permissible scope of interactions between state officials and their constituents.”); McCormick v. United States, 500 U.S. 257 (1991); McNally v. United States, 483 U.S. 350 (1987). Congress has overturned the latter case. 102 Stat. 4508, § 7603, 18 U.S.C. § 1346.
- 332 U.S. 689 (1948).
- 332 U.S. at 698–99.
- 317 U.S. 111 (1942).
- Fry v. United States, 421 U.S. 542, 547 (1975).
- See Maryland v. Wirtz, 392 U.S. 183, 188–93 (1968).
- Hodel v. Indiana, 452 U.S. 314, 323–24 (1981).
- 452 U.S. at 324.
- Hodel v. Virginia Surface Mining & Recl. Ass’n, 452 U.S. 264 (1981) (quoting United States v. Wrightwood Dairy Co., 315 U.S. 110, 119 (1942)).
- 452 U.S. at 276, 277. The scope of review is restated in Preseault v. ICC, 494 U.S. 1, 17 (1990). Then-Justice Rehnquist, concurring in the two Hodel cases, objected that the Court was making it appear that no constitutional limits existed under the Commerce Clause, whereas in fact it was necessary that a regulated activity must have a substantial effect on interstate commerce, not just some effect. He thought it a close case that the statutory provisions here met those tests. 452 U.S. at 307–13.
- 402 U.S. 146 (1971).
- Russell v. United States, 471 U.S. 858, 862 (1985). In a later case the Court avoided the constitutional issue by holding the statute inapplicable to the arson of an owner-occupied private residence.
- Summit Health, Ltd. v. Pinhas, 500 U.S. 322 (1991). See also Jones v. United States, 529 U.S. 848 (2000) (an owner-occupied building is not “used” in interstate commerce within the meaning of the federal arson statute).
- 500 U.S. at 330–32. The decision was 5-to-4, with the dissenters of the view that, although Congress could reach the activity, it had not done so.
- 514 U.S. 549 (1995). The Court was divided 5-to-4, with Chief Justice Rehnquist writing the opinion of the Court, joined by Justices O’Connor, Scalia, Kennedy, and Thomas, with dissents by Justices Stevens, Souter, Breyer, and Ginsburg.
- Carter v. Carter Coal Co., 298 U.S. 238 (1936) (striking down regulation of mining industry as outside of Commerce Clause).
- 18 U.S.C. § 922(q)(1)(A). Congress subsequently amended the section to make the offense jurisdictionally to turn on possession of “a firearm that has moved in or that otherwise affects interstate or foreign commerce.” Pub. L. 104–208, 110 Stat. 3009–370.
- 514 U.S. at 556–57, 559.
- 514 U.S. at 558–59. For an example of regulation of persons or things in interstate commerce, see Reno v. London, 528 U.S. 141 (2000) (information about motor vehicles and owners, regulated pursuant to the Driver’s Privacy Protection Act, and sold by states and others, is an article of commerce)
- 514 U.S. at 559.
- 514 U.S. at 559–61.
- 514 U.S. at 561.
- 514 U.S. at 563–68.
- 514 U.S. at 564.
- “Not every epochal case has come in epochal trappings.” 514 U.S. at 615 (Justice Souter dissenting) (wondering whether the case is only a misapplication of established standards or is a veering in a new direction).
- 529 U.S. 598 (2000). Once again, the Justices were split 5–4, with Chief Justice Rehnquist’s opinion of the Court being joined by Justices O’Connor, Scalia, Kennedy, and Thomas, and with Justices Souter, Stevens, Ginsburg, and Breyer dissenting.
- For an expansive interpretation in the area of economic regulation, decided during the same Term as Lopez, see Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995). Lopez did not “purport to announce a new rule governing Congress’s Commerce Clause power over concededly economic activity.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 58 (2003).
- 529 U.S. at 613.
- Dissenting Justice Souter pointed to a “mountain of data” assembled by Congress to show the effects of domestic violence on interstate commerce. 529 U.S. at 628–30. The Court has evidenced a similar willingness to look behind congressional findings purporting to justify exercise of enforcement power under section 5 of the Fourteenth Amendment. See discussion under “enforcement,” infra. In Morrison itself, the Court determined that congressional findings were insufficient to justify the VAWA as an exercise of Fourteenth Amendment power. 529 U.S. at 619–20.
- 529 U.S. at 614.
- 529 U.S. at 615–16. Applying the principle of constitutional doubt, the Court in Jones v. United States, 529 U.S. 848 (2000), interpreted the federal arson statute as inapplicable to the arson of a private, owner-occupied residence. Were the statute interpreted to apply to such residences, the Court noted, “hardly a building in the land would fall outside [its] domain,” and the statute’s validity under Lopez would be squarely raised. 529 U.S. at 857.
- 529 U.S. at 618.
- 545 U.S. 1 (2005).
- 84 Stat. 1242, 21 U.S.C. §§ 801 et seq.
- 545 U.S. at 19.
- 545 U.S. at 25, quoting Webster’s Third New International Dictionary 720 (1966).
- See also Taylor v. United States, 579 U.S. ___, No. 14–6166, slip op. at 3 (2016) (rejecting the argument that the government, in prosecuting a defendant under the Hobbs Act for robbing drug dealers, must prove the interstate nature of the drug activity). The Taylor Court viewed this result as following necessarily from the Court’s earlier decision in Raich, because the Hobbs Act imposes criminal penalties on robberies that affect “all . . . commerce over which the United States has jurisdiction,” 18 U.S.C. § 1951(b)(3) (2012), and Raich established the precedent that the market for marijuana, “including its intrastate aspects,” is “commerce over which the United States has jurisdiction.” Taylor, slip op. at 6–7. Taylor was, however, expressly “limited to cases in which a defendant targets drug dealers for the purpose of stealing drugs or drug proceeds.” Id. at 9. The Court did not purport to resolve what federal prosecutors must prove in Hobbs Act robbery cases “where some other type of business or victim is targeted.” Id.
- 545 U.S. at 18, 22.
- 545 U.S. at 23–25.
- 545 U.S. at 34–35 (Scalia, J., concurring).
- 567 U.S. ___, No. 11–393, slip op. (2012).
- Patient Protection and Affordable Care Act (ACA), Pub. L. 111–148, as amended. This mandate was necessitated by the Act’s “guaranteed-issue” and “community-rating” provisions, under which insurance companies are prohibited from denying coverage to those with such conditions or charging unhealthy individuals higher premiums than healthy individuals. Id. at §§ 300gg, 300gg–1, 300gg–3, 300gg–4. As these requirements provide an incentive for individuals to delay purchasing health insurance until they become sick, this would impose new costs on insurers, leading them to significantly increase premiums on everyone.
- Although no other Justice joined Chief Justice Robert’s opinion, four dissenting Justices reached similar conclusions regarding the Commerce Clause and the Necessary and Proper Clause. NFIB, No. 11–393, slip op. at 4–16 (joint opinion of Scalia, Kennedy, Thomas and Alito, dissenting).
- See, e.g., Lopez, 514 U.S. at 573 (“Where economic activity substantially affects interstate commerce, legislation regulating that activity will be sustained”).
- NFIB, No. 11–393, slip op. at 20, 26.
- NFIB, No. 11–393, slip op. at 30.
- Boynton v. Virginia, 364 U.S. 454 (1960); Henderson v. United States, 339 U.S. 816 (1950); Mitchell v. United States, 313 U.S. 80 (1941); Morgan v. Virginia, 328 U.S. 373 (1946).
- Civil Rights Act of 1964, Title II, 78 Stat. 241, 243, 42 U.S.C. §§ 2000a et seq.
- 42 U.S.C. § 2000a(b).
- Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964).
- Katzenbach v. McClung, 379 U.S. 294 (1964).
- Daniel v. Paul, 395 U.S. 298 (1969).
- Heart of Atlanta Motel v. United States, 379 U.S. 241, 258 (1964); Katzenbach v. McClung, 379 U.S. 294, 301–04 (1964).
- Heart of Atlanta Motel v. United States, 379 U.S. 241, 257 (1964).
- 379 U.S. at 252–53; Katzenbach v. McClung, 379 U.S. 294, 299–301 (1964).
- Civil Rights Cases, 109 U.S. 3 (1883); United States v. Reese, 92 U.S. 214 (1876); Collins v. Hardyman, 341 U.S. 651 (1951).
- The Fair Housing Act (Title VIIII of the Civil Rights Act of 1968), 82 Stat. 73, 81, 42 U.S.C. §§ 3601 et seq., was based on the Commerce Clause, but, in Jones v. Alfred H. Mayer Co., 392 U.S. 409 (1968), the Court held that legislation that prohibited discrimination in housing could be based on the Thirteenth Amendment and made operative against private parties. Similarly, the Court has concluded that, although § 1 of the Fourteenth Amendment is judicially enforceable only against “state action,” Congress is not so limited under its enforcement authorization of § 5. United States v. Guest, 383 U.S. 745, 761, 774 (1966) (concurring opinions); Griffin v. Breckenridge, 403 U.S. 88 (1971).
- E.g., Barrett v. United States, 423 U.S. 212 (1976); Scarborough v. United States, 431 U.S. 563 (1977); Lewis v. United States, 445 U.S. 55 (1980); McElroy v. United States, 455 U.S. 642 (1982).
- 18 U.S.C. § 2421.
- 18 U.S.C. § 2312.
- 18 U.S.C. § 1201.
- 18 U.S.C. § 1951. See also 18 U.S.C. § 1952.
- See Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 428 (1821).
- See Luna Torres v. Lynch, 578 U.S. ___, No. 14–1096, slip op. at 4.
- Title II, 82 Stat. 159 (1968), 18 U.S.C. §§ 891 et seq.
- Perez v. United States, 402 U.S. 146 (1971). Taylor v. United States, 579 U.S. ___, No. 14–6166, slip op. at 3 (2016); Russell v. United States, 471 U.S. 858, 862 (1985).
- Thus, by Article I, § 10, cl. 2, States are denied the power to “lay any Imposts or Duties on Imports or Exports” except by the consent of Congress. The clause applies only to goods imported from or exported to another country, not from or to another State, Woodruff v. Parham, 75 U.S. (8 Wall.) 123 (1869), which prevents its application to interstate commerce, although Chief Justice Marshall thought to the contrary, Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 449 (1827), and the contrary has been strongly argued. W. CROSSKEY, POLITICS AND THE CONSTITUTION IN THE HISTORY OF THE UNITED STATES 295–323 (1953).
- THE FEDERALIST No. 32 (J. Cooke ed. 1961), 199–203. Note that in connection with the discussion that follows, Hamilton avowed that the taxing power of the States, save for imposts or duties on imports or exports, “remains undiminished.” Id. at 201. The States “retain [the taxing] authority in the most absolute and unqualified sense[.]” Id. at 199.
- 22 U.S. (9 Wheat.) 1, 11 (1824). Justice Johnson’s assertion, concurring, was to the same effect. Id. at 226. Late in life, James Madison stated that the power had been granted Congress mainly as “a negative and preventive provision against injustice among the States.” 4 LETTERS AND OTHER WRITINGS OF JAMES MADISON 14–15 (1865).
- It was evident from THE FEDERALIST that the principal aim of the Commerce Clause was the protection of the national market from the oppressive power of individual States acting to stifle or curb commerce. Id. at No. 7, 39–41 (Hamilton); No. 11, 65–73 (Hamilton); No. 22, 135–137 (Hamilton); No. 42, 283–284 (Madison); No. 53, 362–364 (Madison). See H. P. Hood & Sons v. Du Mond, 336 U.S. 525, 533 (1949). For a comprehensive history of the adoption of the Commerce Clause, which does not indicate a definitive answer to the question posed, see Abel, The Commerce Clause in the Constitutional Convention and in Contemporary Comment, 25 MINN. L. REV. 432 (1941). Professor Abel discovered only nine references in the Convention records to the Commerce Clause, all directed to the dangers of interstate rivalry and retaliation. Id. at 470–71 & nn. 169–75.
- The strongest suggestion of exclusivity found in the Convention debates is a remark by Madison. “Whether the States are now restrained from laying tonnage duties depends on the extent of the power ‘to regulate commerce.’ These terms are vague but seem to exclude this power of the States.” 2 M. FARRAND, THE RECORDS OF THE FEDERAL CONVENTION OF 1787 625 (rev. ed. 1937). However, the statement is recorded during debate on the clause, Art. I, § 10, cl. 3, prohibiting states from laying tonnage duties. That the Convention adopted this clause, when tonnage duties would certainly be one facet of regulating interstate and foreign commerce, casts doubt on the assumption that the commerce power itself was intended to be exclusive.
- Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 203 (1824).
- 22 U.S. at 210–11.
- The writings detailing the history are voluminous. See, e.g., F. FRANKFURTER, THE COMMERCE CLAUSE UNDER MARSHALL, TANEY, AND WHITE (1937); B. GAVIT, THE COMMERCE CLAUSE OF THE UNITED STATES CONSTITUTION (1932) (usefully containing appendices cataloguing every Commerce Clause decision of the Supreme Court to that time); Sholleys, The Negative Implications of the Commerce Clause, 3 U. CHI. L. REV. 556 (1936). Among the recent writings, see Sedler, The Negative Commerce Clause as a Restriction on State Regulation and Taxation: An Analysis in Terms of Constitutional Structure, 31 WAYNE L. REV. 885 (1985) (a disputed conceptualization arguing the Court followed a consistent line over the years), and articles cited, id. at 887 n.4.
- 22 U.S. (9 Wheat.) at 13–14, 16.
- 22 U.S. at 17–18, 209. In Sturges v. Crowninshield, 17 U.S. (4 Wheat.) 122, 193–96 (1819), Chief Justice Marshall denied that the grant of the bankruptcy power to Congress was exclusive. See also Houston v. Moore, 18 U.S. (5 Wheat.) 1 (1820) (militia).
- 27 U.S. (2 Pet.) 245, 252 (1829).
- 53 U.S. (12 How.) 299 (1851). The issue of exclusive federal power and the separate issue of the dormant commerce clause was present in the License Cases, 46 U.S. (5 How.) 504 (1847), and the Passenger Cases, 48 U.S. (7 How.) 283 (1849), but, despite the fact that much ink was shed in multiple opinions discussing the questions, nothing definitive emerged. Chief Justice Taney, in contrast to Marshall, viewed the clause only as a grant of power to Congress, containing no constraint upon the states, and the Court’s role was to void state laws in contravention of federal legislation. 46 U.S. (5 How.) at 573; 48 U.S. (7 How.) at 464.
- 48 U.S. at 317–20. Although Chief Justice Taney had formerly taken the strong position that Congress’s power over commerce was not exclusive, he acquiesced silently in the Cooley opinion. For a modern discussion of Cooley, see Goldstein v. California, 412 U.S. 546, 552–60 (1973), in which, in the context of the Copyright Clause, the Court, approving Cooley for Commerce Clause purposes, refused to find the Copyright Clause either fully or partially exclusive.
- Just a few years earlier, the Court, in an opinion that merged Commerce Clause and Import-Export Clause analyses, had seemed to suggest that it was a discriminatory tax or law that violates the Commerce Clause and not simply a tax on interstate commerce. Woodruff v. Parham, 75 U.S. (8 Wall.) 123 (1869).
- Reading R.R. v. Pennsylvania, 82 U.S. (15 Wall.) 232 (1873). For cases in which the Commerce Clause basis was intermixed with other express or implied powers, see Crandall v. Nevada, 73 U.S. (6 Wall.) 35 (1868); Steamship Co. v. Portwardens, 73 U.S. (6 Wall.) 31 (1867); Woodruff v. Parham, 75 U.S. (8 Wall.) 123 (1868). Chief Justice Marshall, in Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 488–89 (1827), indicated, in dicta, that a state tax might violate the Commerce Clause.
- “Where the subject matter requires a uniform system as between the States, the power controlling it is vested exclusively in Congress, and cannot be encroached upon by the States.” Leisy v. Hardin, 135 U.S. 100, 108–09 (1890). The Commerce Clause “remains in the Constitution as a grant of power to Congress . . . and as a diminution pro tanto of absolute state sovereignty over the same subject matter.” Carter v. Virginia, 321 U.S. 131, 137 (1944). The Commerce Clause, the Court has said, “does not say what the states may or may not do in the absence of congressional action, nor how to draw the line between what is and what is not commerce among the states. Perhaps even more than by interpretation of its written word, this Court has advanced the solidarity and prosperity of this Nation by the meaning it has given these great silences of the Constitution.” H. P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 534–35 (1949). Subsequently, the Court stated that the Commerce Clause “has long been recognized as a self-executing limitation on the power of the States to enact laws imposing substantial burdens on such commerce.’ ” Dennis v. Higgins, 498 U.S. 439, 447 (1991) (quoting South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87 (1984) (emphasis added)).
- 91 U.S. 275 (1876).
- 91 U.S. at 282. In Steamship Co. v. Portwardens, 73 U.S. (6 Wall.) 31, 33 (1867), the Court suggested that congressional silence with regard to matters of “local” concern may in some circumstances signify a willingness that the states regulate. These principles were further explained by Chief Justice Stone, writing for the Court in Graves v. New York ex rel. O’Keefe, 306 U.S. 466, 479 n.1 (1939). “The failure of Congress to regulate interstate commerce has generally been taken to signify a Congressional purpose to leave undisturbed the authority of the states to make regulations affecting the commerce in matters of peculiarly local concern, but to withhold from them authority to make regulations affecting those phases of it which, because of the need of a national uniformity, demand that their regulation, if any, be prescribed by a single authority.” The fullest development of the “silence” rationale was not by the Court but by a renowned academic, Professor Dowling. Interstate Commerce and State Power, 29 VA. L. REV. 1 (1940); Interstate Commerce and State Power: Revisited Version, 47 COLUM. L. REV. 546 (1947).
- Southern Pacific Co. v. Arizona, 325 U.S. 761, 768 (1945).
- 325 U.S. at 769. See also California v. Zook, 336 U.S. 725, 728 (1949).
- 91 U.S. 275, 277, 278, 279, 280, 281, 282 (1876).
- 91 U.S. at 280–81; Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 446 (1827) (Chief Justice Marshall); Guy v. City of Baltimore, 100 U.S. 434, 440 (1879); Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 550, 552 (1935); Maryland v. Louisiana, 451 U.S. 725, 754 (1981).
- E.g., Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434, 440 (1939); McLeod v. J. E. Dilworth Co., 322 U.S. 327, 330–31 (1944); Freeman v. Hewit, 329 U.S. 249, 252, 256 (1946); H. P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 538, 539 (1949); Dennis v. Higgins, 498 U.S. 439, 447–50 (1991). “[W]e have steadfastly adhered to the central tenet that the Commerce Clause ‘by its own force created an area of trade free from interference by the States.’ ” American Trucking Ass’ns v. Scheiner, 483 U.S. 266, 280 (1987) (quoting Boston Stock Exchange v. State Tax Comm’n, 429 U.S. 318, 328 (1977)).
- E.g., Fort Gratiot Sanitary Landfill, Inc. v. Michigan Natural Resources Dep’t, 504 U.S. 353, 359 (1992); Quill Corp. v. North Dakota, 504 U.S. 298 (1992); Wyoming v. Oklahoma, 502 U.S. 437, 455 (1992). Indeed, the Court, in Dennis v. Higgins, 498 U.S. 439, 447–50 (1991), broadened its construction of the clause, holding that it confers a “right” upon individuals and companies to engage in interstate trade. With respect to the exercise of the power, the Court has recognized Congress’s greater expertise to act and noted its hesitancy to impose uniformity on state taxation. Moor-man Mfg. Co. v. Bair, 437 U.S. 267, 280 (1978). Cf. Quill Corp., 504 U.S. at 318.
- In McCarroll v. Dixie Lines, 309 U.S. 176, 183 (1940), Justice Black, for himself and Justices Frankfurter and Douglas, dissented, taking precisely this view. See also Adams Mfg. Co. v. Storen, 304 U.S. 307, 316 (1938) (Justice Black dissenting in part); Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434, 442 (1939) (Justice Black dissenting); Southern Pacific Co. v. Arizona, 325 U.S. 761, 784 (1945) (Justice Black dissenting); id. at 795 (Justice Douglas dissenting). Justices Douglas and Frankfurter subsequently wrote and joined opinions applying the dormant commerce clause. In Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U.S. 157, 166 (1954), the Court rejected the urging that it uphold all not-patently discriminatory taxes and let Congress deal with conflicts. More recently, Justice Scalia has taken the view that, as a matter of original intent, a “dormant” or “negative” commerce power cannot be justified in either taxation or regulation cases, but, yielding to the force of precedent, he will vote to strike down state actions that discriminate against interstate commerce or that are governed by the Court’s precedents, without extending any of those precedents. CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 94 (1987) (concurring); Tyler Pipe Indus. v. Washington State Dep’t of Revenue, 483 U.S. 232, 259 (1987) (concurring in part and dissenting in part); Bendix Autolite Corp. v. Midwesco Enterprises, Inc., 486 U.S. 888 (1988) (concurring in judgment); American Trucking Assn’s v. Smith, 496 U.S. 167 (1990) (concurring); Itel Containers Int’l Corp. v. Huddleston, 507 U.S. 60, 78 (1993) (Justice Scalia concurring) (reiterating view); Oklahoma Tax Comm’n v. Jefferson Lines, Inc.., 514 U.S. 175, 200–01 (1995) (Justice Scalia, with Justice Thomas joining) (same). Justice Thomas has written an extensive opinion rejecting both the historical and jurisprudential basis of the dormant commerce clause and expressing a preference for reliance on the imports-exports clause. Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 609 (1997) (dissenting; joined by Justice Scalia entirely and by Chief Justice Rehnquist as to the Commerce Clause but not the Imports-Exports Clause).
- Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 805 (1976).
- 426 U.S. at 808.
- Reeves, Inc. v. Stake, 447 U.S. 429 (1980).
- 447 U.S. at 436–37; see also McBurney v. Young, 569 U.S. ___, No. 12–17, slip op. at 14 (2013) (to the extent that the Virginia Freedom of Information Act created a market for public documents in Virginia, the Commonwealth was the sole manufacturer of the product, and therefore did not offend the Commerce Clause when it limited access to those documents under the Act to citizens of the Commonwealth).
- See also White v. Massachusetts Council of Construction Employers, 460 U.S. 204 (1983) (city may favor its own residents in construction projects paid for with city funds); South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82 (1984) (illustrating the deep divisions in the Court respecting the scope of the exception).
- Ch. 111, 10 Stat. 112, § 6.
- Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. (13 How.) 518 (1852), statute sustained in Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421 (1856). The latter decision seemed facially contrary to a dictum of Justice Curtis in Cooley v. Board of Wardens of Port of Philadelphia, 53 U.S. (12 How.) 299, 318 (1851), and cf. Tyler Pipe Indus., Inc. v. Washington State Dept. of Revenue, 483 U.S. 232, 263 n.4 (1987) (Justice Scalia concurring in part and dissenting in part), but if indeed the Court is interpreting the silence of Congress as a bar to action under the dormant commerce clause, then when Congress speaks it is enacting a regulatory authorization for the states to act.
- Transportation Co. v. Parkersburg, 107 U.S. 691, 701 (1883).
- The Court had developed the “original package” doctrine to restrict application of a state tax on imports from a foreign country in Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 449 (1827). Although Chief Justice Marshall had indicated in dictum in Brown that the same rule would apply to imports from sister states, the Court had refused to follow that dictum in Woodruff v. Parham, 75 U.S. (8 Wall.) 123 (1869).
- Mugler v. Kansas, 123 U.S. 623 (1887). Relying on the distinction between manufacture and commerce, the Court soon applied this ruling to authorize states to prohibit manufacture of liquor for an out-of-state market. Kidd v. Pearson, 128 U.S. 1 (1888).
- 125 U.S. 465 (1888).
- Leisy v. Hardin, 135 U.S. 100 (1890).
- Ch. 728, 26 Stat. 313 (1890), upheld in In re Rahrer, 140 U.S. 545 (1891).
- Rhodes v. Iowa, 170 U.S. 412 (1898).
- Ch. 90, 37 Stat. 699 (1913), sustained in Clark-Distilling Co. v. Western Md. Ry., 242 U.S. 311 (1917). See also Department of Revenue v. Beam Distillers, 377 U.S. 341 (1964).
- Granholm v. Heald, 544 U.S. 460, 487 (2005). See also Bacchus Imports Ltd. v. Dias, 468 U.S. 263 (1984); Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573 (1986); Healy v. The Beer Institute, 491 U.S. 324 (1989), and the analysis of section 2 under Discrimination Between Domestic and Imported Products.
- 322 U.S. 533 (1944).
- 59 Stat. 33, 15 U.S.C. §§ 1011–15.
- 328 U.S. 408 (1946).
- 328 U.S. at 429–30.
- 328 U.S. at 434–35. The Act restored state taxing and regulatory powers over the insurance business to their scope prior to South-Eastern Underwriters. Discriminatory state taxation otherwise cognizable under the Commerce Clause must, therefore, be challenged under other provisions of the Constitution. See Western & Southern Life Ins. Co. v. State Bd. of Equalization, 451 U.S. 648 (1981). An equal protection challenge was successful in Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869 (1985), invalidating a discriminatory tax and stating that a favoring of local industries “constitutes the very sort of parochial discrimination that the Equal Protection Clause was intended to prevent.” Id. at 878. In Northeast Bancorp, Inc. v. Board of Governors of the Federal Reserve System, 472 U.S. 159, 176–78 (1985), the Court declined to follow Ward where state statutes did not, as in Ward, favor local corporations at the expense of out-of-state corporations, but instead “favor[ed] out-of-state corporations domiciled within the New England region over out-of-state corporations from other parts of the country.” The Court noted that the statutes in Northeast Bancorp were concerned with “preserv[ing] a close relationship between those in the community who need credit and those who provide credit,” and with protecting “the independence of local banking institutions”; they did not, like the statutes in Ward, discriminate against “nonresident corporations solely because they were nonresidents.”
- Northeast Bancorp, Inc. v. Board of Governors of the Federal Reserve System, 472 U.S. 159, 174 (1985) (interpreting a provision of the Bank Holding Company Act, 12 U.S.C. § 1842(d), permitting regional interstate bank acquisitions expressly approved by the state in which the acquired bank is located, as authorizing state laws that allow only banks within the particular region to acquire an in-state bank, on a reciprocal basis, since what the states could do entirely they can do in part).
- South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 90 (1984).
- 467 U.S. at 92. See also Hillside Dairy, Inc. v. Lyons, 539 U.S. 59 (2003) (authorization of state laws regulating milk solids does not authorize milk pricing and pooling laws). Earlier cases had required express statutory sanction of state burdens on commerce but under circumstances arguably less suggestive of congressional approval. E.g., Sporhase v. Nebraska ex rel. Douglas, 458 U.S. 941, 958–60 (1982) (congressional deference to state water law in 37 statutes and numerous interstate compacts did not indicate congressional sanction for invalid state laws imposing a burden on commerce); New England Power Co. v. New Hampshire, 455 U.S. 331, 341 (1982) (disclaimer in Federal Power Act of intent to deprive a State of “lawful authority” over interstate transmissions held not to evince a congressional intent “to alter the limits of state power otherwise imposed by the Commerce Clause”). But see White v. Massachusetts Council of Construction Employers, 460 U.S. 204 (1983) (Congress held to have sanctioned municipality’s favoritism of city residents through funding statute under which construction funds were received).
- Maine v. Taylor, 477 U.S. 131 (1986) (holding that Lacey Act’s reinforcement of state bans on importation of fish and wildlife neither authorizes state law otherwise invalid under the Clause nor shifts analysis from the presumption of invalidity for discriminatory laws to the balancing test for state laws that burden commerce only incidentally).
- Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 457–58 (1959) (quoting Miller Bros. Co. v. Maryland, 347 U.S. 340, 344 (1954)). Justice Frankfurter was similarly skeptical of definitive statements. “To attempt to harmonize all that has been said in the past would neither clarify what has gone before nor guide the future. Suffice it to say that especially in this field opinions must be read in the setting of the particular cases and as the product of preoccupation with their special facts.” Freeman v. Hewit, 329 U.S. 249, 251–52 (1946). The comments in all three cases dealt with taxation, but they could just as well have included regulation.
- See J. HELLERSTEIN & W. HELLERSTEIN, STATE AND LOCAL TAXATION: CASES AND MATERIALS (8th ed. 2005), ch. 5.
- In addition to the sources previously cited, see J. HELLERSTEIN & W. HELLERSTEIN (8th ed.), ch. 5, supra. For a succinct description of the history, see Hellerstein, State Taxation of Interstate Business: Perspectives on Two Centuries of Constitutional Adjudication, 41 TAX LAW. 37 (1987).
- Reading R.R. v. Pennsylvania, 82 U.S. (15 Wall.) 232 (1873).
- 82 U.S. at 275.
- 82 U.S. at 275–76, 279.
- 82 U.S. at 279–80.
- 82 U.S. at 280.
- 82 U.S. at 281–82.
- Reading R.R. v. Pennsylvania, 82 U.S. (15 Wall.) 284 (1872).
- 82 U.S. at 293.
- 82 U.S. at 294. This case was overruled 14 years later, when the Court voided substantially the same tax in Philadelphia Steamship Co. v. Pennsylvania, 122 U.S. 326 (1887).
- See The Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 398–412 (1913) (reviewing and summarizing at length both taxation and regulation cases). See also Missouri ex rel. Barrett v. Kansas Natural Gas Co., 265 U.S. 298, 307 (1924).
- Robbins v. Shelby County Taxing Dist., 120 U.S. 489, 497 (1887); Leloup v. Port of Mobile, 127 U.S. 640, 648 (1888).
- The Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 400–401 (1913).
- The Delaware R.R. Tax, 85 U.S. (18 Wall.) 206, 232 (1873). See Cleveland, Cincinnati, Chicago & St. Louis Ry. Co. v. Backus, 154 U.S. 439 (1894); Postal Telegraph Cable Co. v. Adams, 155 U.S. 688 (1895). See cases cited in J. HELLERSTEIN & W. HELLERSTEIN (8th ed.), supra, at 195 et seq.
- E.g., Welton v. Missouri, 91 U.S. 275 (1875); Robbins v. Shelby County Taxing District, 120 U.S. 489 (1887); Darnell & Son Co. v. City of Memphis, 208 U.S. 113 (1908); Bethlehem Motors Co. v. Flynt, 256 U.S. 421 (1921).
- Western Live Stock v. Bureau of Revenue, 303 U.S. 250 (1938); McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33 (1940); International Harvester Co. v. Department of Treasury, 322 U.S. 340 (1944); International Harvester Co. v. Evatt, 329 U.S. 416 (1947).
- E.g., Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434 (1939); Joseph v. Carter & Weekes Stevedoring Co., 330 U.S. 422 (1947); Central Greyhound Lines v. Mealey, 334 U.S. 653 (1948). Notice the Court’s distinguishing of Central Greyhound in Oklahoma Tax Comm’n v. Jefferson Lines, 514 U.S. 175, 188–91 (1995).
- Freeman v. Hewit, 329 U.S. 249 (1946); Spector Motor Serv. v. O’Connor, 340 U.S. 602 (1951).
- Thus, the states carefully phrased tax laws so as to impose on interstate companies not a license tax for doing business in the state, which was not permitted, Railway Express Agency v. Virginia, 347 U.S. 359 (1954), but as a franchise tax on intangible property or the privilege of doing business in a corporate form, which was permissible. Railway Express Agency v. Virginia, 358 U.S. 434 (1959); Colonial Pipeline Co. v. Traigle, 421 U.S. 100 (1975). Also, the Court increasingly found the tax to be imposed on a local activity in instances it would previously have seen to be an interstate activity. E.g., Memphis Natural Gas Co. v. Stone, 335 U.S. 80 (1948); General Motors Corp. v. Washington, 377 U.S. 436 (1964); Standard Pressed Steel Co. v. Department of Revenue, 419 U.S. 560 (1975).
- Sedler, The Negative Commerce Clause as a Restriction on State Regulation and Taxation: An Analysis in Terms of Constitutional Structure, 31 WAYNE L. REV. 885, 924–925 (1985). In addition to the sources already cited, see the Court’s summaries in The Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 398–412 (1913), and Southern Pacific Co. v. Arizona, 325 U.S. 761, 766–70 (1945). In the latter case, Chief Justice Stone was reconceptualizing the standards under the clause, but the summary represents a faithful recitation of the law.
- See Di Santo v. Pennsylvania, 273 U.S. 34 (1927) (Justice Stone dissenting). The dissent was the precursor to Chief Justice Stone’s reformulation of the standard in 1945. DiSanto was overruled in California v. Thompson, 313 U.S. 109 (1941).
- Bank of Augusta v. Earle, 38 U.S. (13 Pet.) 519 (1839); Hanover Fire Ins. Co. v. Harding, 272 U.S. 494 (1926); Union Brokerage Co. v. Jensen, 322 U.S. 202 (1944).
- Crutcher v. Kentucky, 141 U.S. 47 (1891); International Textbook Co. v. Pigg, 217 U.S. 91 (1910).
- Dahnke-Walker Co. v. Bondurant, 257 U.S. 282 (1921); Allenberg Cotton Co. v. Pittman, 419 U.S. 20 (1974). But see Eli Lilly & Co. v. Sav-on Drugs, 366 U.S. 276 (1961).
- Wabash, S. L. & P. Ry. v. Illinois, 118 U.S. 557 (1886). The power of the states generally to set rates had been approved in Chicago, B. & Q. R.R. v. Iowa, 94 U.S. 155 (1877), and Peik v. Chicago & N.W. Ry., 94 U.S. 164 (1877). After the Wabash decision, states retained power to set rates for passengers and freight taken up and put down within their borders. Wisconsin R.R. Comm’n v. Chicago, B. & Q. R.R., 257 U.S. 563 (1922).
- Generally, the Court drew the line at regulations that provided for adequate service, not any and all service. Thus, one class of cases dealt with requirements that trains stop at designated cities and towns. The regulations were upheld in such cases as Gladson v. Minnesota, 166 U.S. 427 (1897), and Lake Shore & Mich. South. Ry. v. Ohio, 173 U.S. 285 (1899), and invalidated in Illinois Cent. R.R. v. Illinois, 163 U.S. 142 (1896). See Chicago, B. & Q. R.R. v. Wisconsin R.R. Comm’n, 237 U.S. 220, 226 (1915); St. Louis & S. F. Ry. v. Public Service Comm’n, 254 U.S. 535, 536–537 (1921). The cases were extremely fact-specific.
- E.g., Smith v. Alabama, 124 U.S. 465 (1888) (required locomotive engineers to be examined and licensed by the state, until Congress should deem otherwise); New York, N.H. & H. R.R. v. New York, 165 U.S. 628 (1897) (forbidding heating of passenger cars by stoves); Chicago, R.I. & P. Ry. v. Arkansas, 219 U.S. 453 (1911) (requiring three brakemen on freight trains of more than 25 cars).
- E.g., Terminal Ass’n v. Trainmen, 318 U.S. 1 (1943) (requiring railroad to provide caboose cars for its employees); Hennington v. Georgia, 163 U.S. 299 (1896) (forbidding freight trains to run on Sundays). But see Seaboard Air Line Ry. v. Blackwell, 244 U.S. 310 (1917) (voiding as too onerous on interstate transportation a law requiring trains to come to almost a complete stop at all grade crossings, when there were 124 highway crossings at grade in 123 miles, doubling the running time).
- Four cases over a lengthy period sustained the laws. Chicago, R.I. & Pac. Ry. Co. v. Arkansas, 219 U.S. 453 (1911); St. Louis, I. Mt. & So. Ry. v. Arkansas, 240 U.S. 518 (1916); Missouri Pacific R.R. v. Norwood, 283 U.S. 249 (1931); Brotherhood of Locomotive Firemen & Enginemen v. Chicago, R.I. & P. R.R., 382 U.S. 423 (1966). In the latter case, the Court noted the extensive and conflicting record with regard to safety, but it then ruled that with the issue in so much doubt it was peculiarly a legislative choice.
- Hendrick v. Maryland, 235 U.S. 610 (1915); Kane v. New Jersey, 242 U.S. 160 (1916).
- E.g., Bradley v. Public Utility Comm’n, 289 U.S. 92 (1933) (state could deny an interstate firm a necessary certificate of convenience to operate as a common carrier on the basis that the route was overcrowded); Welch Co. v. New Hampshire, 306 U.S. 79 (1939) (maximum hours for drivers of motor vehicles); Eichholz v. Public Service Comm’n, 306 U.S. 268 (1939) (reasonable regulations of traffic). But compare Michigan Comm’n v. Duke, 266 U.S. 570 (1925) (state may not impose common-carrier responsibilities on business operating between states that did not assume them); Buck v. Kuykendall, 267 U.S. 307 (1925) (denial of certificate of convenience under circumstances was a ban on competition).
- E.g., Mauer v. Hamilton, 309 U.S. 598 (1940) (ban on operation of any motor vehicle carrying any other vehicle above the head of the operator). By far, the example of the greatest deference is South Carolina Highway. Dep’t v. Barnwell Bros., 303 U.S. 177 (1938), in which the Court upheld, in a surprising Stone opinion, truck weight and width restrictions prescribed by practically no other state (in terms of the width, no other).
- E.g., Transportation Co. v. City of Chicago, 99 U.S. 635 (1879); Willamette Iron Bridge Co. v. Hatch, 125 U.S. 1 (1888). See Kelly v. Washington, 302 U.S. 1 (1937) (upholding state inspection and regulation of tugs operating in navigable waters, in absence of federal law).
- E.g., Western Union Tel Co. v. Foster, 247 U.S. 105 (1918); Lemke v. Farmers Grain Co., 258 U.S. 50 (1922); State Comm’n v. Wichita Gas Co., 290 U.S. 561 (1934).
- Milk Control Board v. Eisenberg Co., 306 U.S. 346 (1939) (milk); Parker v. Brown, 317 U.S. 341 (1943) (raisins).
- 91 U.S. 275 (1875).
- 136 U.S. 313 (1890).
- E.g., Brimmer v. Rebman, 138 U.S. 78 (1891) (law requiring postslaughter inspection in each county of meat transported over 100 miles from the place of slaughter); Dean Milk Co. v. City of Madison, 340 U.S. 349 (1951) (city ordinance preventing selling of milk as pasteurized unless it had been processed and bottled at an approved plant within a radius of five miles from the central square of Madison). As the latter case demonstrates, it is constitutionally irrelevant that other Wisconsin producers were also disadvantaged by the law. For a modern application of the principle of these cases, see Fort Gratiot Sanitary Landfill v. Michigan Nat. Res. Dep’t, 504 U.S. 353 (1992) (forbidding landfills from accepting out-of-county wastes). See also C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 391 (1994) (discrimination against interstate commerce not preserved because local businesses also suffer).
- 294 U.S. 511 (1935). See also Polar Ice Cream & Creamery Co. v. Andrews, 375 U.S. 361 (1964). With regard to products originating within the state, the Court had no difficulty with price fixing. Nebbia v. New York, 291 U.S. 502 (1934).
- 336 U.S. 525 (1949). For the most recent case in this saga, see West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994).
- And the Court does not permit a state to combat discrimination against its own products by admitting only products (here, again, milk) from states that have reciprocity agreements with it to protect its own dealers. Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366 (1976).
- Formulation of a balancing test was achieved in Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945), and was thereafter maintained more or less consistently. The Court’s current phrasing of the test was in Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).
- Indeed, scholars dispute just when the modern standard was firmly adopted. The conventional view is that it was articulated in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), but there also seems little doubt that the foundation of the present law was laid in Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450 (1959).
- Compare Freeman v. Hewit, 329 U.S. 249, 252–256 (1946), with Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 258, 260 (1938).
- 358 U.S. 450 (1959).
- 358 U.S. at 461–62. See Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 254 (1938). For recent reiterations of the principle, see Quill Corp. v. North Dakota ex rel. Heitkamp, 504 U.S. 298, 310 n.5 (1992) (citing cases).
- Hellerstein, State Taxation of Interstate Business: Perspectives on Two Centuries of Constitutional Adjudication, 41 TAX LAW. 37, 54 (1987).
- Spector Motor Service, Inc. v. O’Connor, 340 U.S. 602 (1951). The attenuated nature of the purported distinction was evidenced in Colonial Pipeline Co. v. Traigle, 421 U.S. 100 (1975), in which the Court sustained a nondiscriminatory, fairly apportioned franchise tax that was measured by the taxpayer’s capital stock, imposed on a pipeline company doing an exclusively interstate business in the taxing state, on the basis that it was a tax imposed on the privilege of conducting business in the corporate form.
- 430 U.S. 274 (1977).
- 430 U.S. at 279, 288. “In reviewing Commerce Clause challenges to state taxes, our goal has instead been to ‘establish a consistent and rational method of inquiry’ focusing on ‘the practical effect of a challenged tax.’ ” Commonwealth Edison Co. v. Montana, 453 U.S. 609, 615 (1981) (quoting Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425, 443 (1980)).
- 430 U.S. at 279. The rationale of these four parts of the test is set out in Quill Corp. v. North Dakota ex rel. Heitkamp, 504 U.S. 298, 312–13 (1992). A recent application of the four-part Complete Auto Transit test is Oklahoma Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175 (1995).
- Meadwestvaco Corp. v. Illinois Dept. of Revenue, 128 S. Ct. 1498, 1505 (2008) (citations and internal quotation marks omitted). “[T]he due process nexus analysis requires that we ask whether an individual’s connections with a State are substantial enough to legitimate the State’s exercise of power over him. . . . In contrast, the Commerce Clause and its nexus requirement are informed not so much by concerns about fairness for the individual defendant as by structural concerns about the effects of state regulation on the national economy.” Quill Corp. v. North Dakota ex rel. Heitkamp, 504 U.S. 298, 312 (1992).
- 128 S. Ct. at 1505 (internal quotation marks omitted). It had been thought, prior to the decision in Quill Corp. v. North Dakota ex rel. Heitkamp, 504 U.S. 298, 305 (1992), that the tests for nexus under the Commerce Clause and the Due Process Clause were identical, but the Court in that case, although stating that the two tests “are closely related” (citing National Bellas Hess, Inc. v. Dept. of Revenue of Illinois, 386 U.S. 753, 756 (1967)), held that they “differ fundamentally” and found a state tax to satisfy the Due Process Clause but to violate the Commerce Clause. Compare Quill at 325–28 (Justice White concurring in part and dissenting in part). However, the requirement for “some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax” probably survives the bifurcation of the tests in Quill. National Bellas Hess, Inc. v. Dept. of Revenue of Illinois, 386 U.S. 753, 756 (1967) (Commerce Clause), quoting Miller Bros. Co. v. Maryland, 347 U.S. 340, 344–45 (1954) (Due Process Clause).
- Scripto v. Carson, 362 U.S. 207 (1960); National Geographic Soc’y v. California Bd. of Equalization, 430 U.S. 551 (1977). In Scripto, the vendor’s agents that were in the state imposing the tax were independent contractors, rather than employees, but this distinction was irrelevant. See also Tyler Pipe Indus. v. Washington State Dept. of Revenue, 483 U.S. 232, 249–50 (1987) (reaffirming Scripto on this point). See also D. H. Holmes Co. v. McNamara, 486 U.S. 24 (1988) (upholding imposition of use tax on catalogs, printed outside state at direction of an in-state corporation and shipped to prospective customers within the state).
- National Bellas Hess, Inc. v. Dept. of Revenue of Illinois, 386 U.S. 753, 758 (1967), reaffirmed with respect to the Commerce Clause in Quill Corp. v. North Dakota ex rel. Heitkamp, 504 U.S. 298 (1992).
- Reacting to Northwestern States, Congress enacted Pub. L. 86–272, 15 U.S.C. § 381, providing that mere solicitation by a company acting outside the state did not support imposition of a state income tax on a company’s proceeds. See Heublein, Inc. v. South Carolina Tax Comm’n, 409 U.S. 275 (1972).
- Standard Pressed Steel Co. v. Department of Revenue, 419 U.S. 560 (1975). See also General Motors Corp. v. Washington, 377 U.S. 436 (1964).
- Tyler Pipe Indus. v. Dept. of Revenue, 483 U.S. 232, 249–51 (1987). The Court agreed with the state court’s holding that “the crucial factor governing nexus is whether the activities performed in this state on behalf of the taxpayer are significantly associated with the taxpayer’s ability to establish and maintain a market in this state for the sales.” Id. at 250.
- United Air Lines v. Mahin, 410 U.S. 623 (1973).
- Meadwestvaco Corp. v. Illinois Dept. of Revenue, 128 S. Ct. 1498, 1505–06 (2008) (citations and internal quotation marks omitted). The holding of this case was that the concept of “operational function,” which the Court had introduced in prior cases, was “not intended to modify the unitary business principle by adding a new ground for apportionment.” Id. at 1507–08. In other words, the Court declined to adopt a basis upon which a state could tax a non-unitary business.
- Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159, 165–66 (1983) (internal quotation marks omitted). See also ASARCO Inc. v. Id. State Tax Comm’n, 458 U.S. 307, 316–17 (1982); Hunt-Wesson, Inc. v. Franchise Tax Bd. of Cal., 528 U.S. 58 (2000) (interest deduction not properly apportioned between unitary and non-unitary business).
- E.g., Pullman’s Palace Car Co. v. Pennsylvania, 141 U.S. 18, 26 (1891); Maine v. Grand Trunk Ry., 142 U.S. 217, 278 (1891).
- See Allied-Signal, Inc. v. Dir., Div. of Taxation, 504 U.S. 768 (1992); Tyler Pipe Indus. v. Dep’t of Revenue, 483 U.S. 232, 251 (1987); Container Corp. of Amer. v. Franchise Tax Bd., 463 U.S. 159 (1983); F. W. Woolworth Co. v. N.M. Tax. & Revenue Dep’t, 458 U.S. 354 (1982); ASARCO Inc. v. Id. State Tax Comm’n, 458 U.S. 307 (1982); Exxon Corp. v. Wis. Dep’t of Revenue, 447 U.S. 207 (1980); Mobil Oil Corp. v. Comm’r of Taxes, 445 U.S. 425 (1980); Moorman Mfg. Co. v. Bair, 437 U.S. 267 (1978). Cf. Am. Trucking Ass’ns Inc. v. Scheiner, 483 U.S. 266 (1987).
- Comptroller of the Treasury of Md. v. Wynne, 575 U.S. ___, No. 13–485, slip op. at 13 (2015) (“The Due Process Clause allows a State to tax ‘all the income of its residents, even income earned outside the taxing jurisdiction.’ But ‘while a State may, consistent with the Due Process Clause, have the authority to tax a particular taxpayer, imposition of the tax may nonetheless violate the Commerce Clause.”) (internal citations omitted). The challenge in Wynne was brought by Maryland residents, whose worldwide income three dissenting Justices would have seen as subject to Maryland taxation based on their domicile in the state, even though it resulted in the double taxation of income earned in other states. Id. at 2 (Ginsburg, J., dissenting) (“For at least a century, ‘domicile’ has been recognized as a secure ground for taxation of residents’ worldwide income.”). However, the majority took a different view, holding that Maryland’s taxing scheme was unconstitutional under the dormant Commerce Clause because it did not provide a full credit for taxes paid to other states on income earned from interstate activities. Id. at 21–25 (majority opinion).
- Moorman Mfg. Co. v. Bair, 437 U.S. 267, 278–80 (1978).
- Goldberg v. Sweet, 488 U.S. 252, 261, 262 (1989) (citations omitted).
- 488 U.S. 252 (1989). The tax law provided a credit for any taxpayer who was taxed by another state on the same call. Actual multiple taxation could thus be avoided, the risks of other multiple taxation was small, and it was impracticable to keep track of the taxable transactions.
- American Trucking Ass’ns v. Scheiner, 483 U.S. 266 (1987).
- Comptroller of the Treasury of Md. v. Wynne, 575 U.S. ___, No. 13–485, slip op. at 22 (2015). The Court in Wynne expressly declined to distinguish between taxes on gross receipts and taxes on net income or between taxes on individuals and taxes on corporations. Id. at 7, 9. The Court also noted that Maryland could “cure the problem with its current system” by granting a full credit for taxes paid to other states, but the Court did “not foreclose the possibility” that Maryland could comply with the Commerce Clause in some other way. Id. at 25.
- Id. at 22–23.
- Indeed, there seemed to be a precedent squarely on point: Central Greyhound Lines v. Mealey, 334 U.S. 653 (1948). The Court in that case struck down a state statute that failed to apportion its taxation of interstate bus ticket sales to reflect the distance traveled within the state.
- Oklahoma Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175 (1995). Indeed, the Court analogized the tax to that in Goldberg v. Sweet, 488 U.S. 252 (1989), a tax on interstate telephone services that originated in or terminated in the state and that were billed to an in-state address.
- Fulton Corp. v. Faulkner, 516 U.S. 325 (1996). The state had defended on the basis that the tax was a “compensatory” one designed to make interstate commerce bear a burden already borne by intrastate commerce. The Court recognized the legitimacy of the defense, but it found the tax to meet none of the three criteria for classification as a valid compensatory tax. Id. at 333–44. See also South Central Bell Tel. Co. v. Alabama, 526 U.S. 160 (1999) (tax not justified as compensatory).
- Boston Stock Exchange v. State Tax Comm’n, 429 U.S. 318, 329 (1977) (quoting Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 457 (1959)). The principle, as we have observed above, is a long-standing one under the Commerce Clause. E.g., Welton v. Missouri, 91 U.S. 275 (1876).
- Maryland v. Louisiana, 451 U.S. 725, 753–760 (1981). But see Commonwealth Edison Co. v. Montana, 453 U.S. 609, 617–619 (1981). See also Oregon Waste Systems, Inc. v. Department of Environmental Quality, 511 U.S. 93 (1994) (surcharge on in-state disposal of solid wastes that discriminates against companies disposing of waste generated in other states invalid).
- 467 U.S. 638 (1984).
- The Court applied the “internal consistency” test here too, in order to determine the existence of discrimination. 467 U.S. at 644–45. Thus, the wholesaler did not have to demonstrate it had paid a like tax to another state, only that if other states imposed like taxes it would be subject to discriminatory taxation. See also Tyler Pipe Industries v. Dept. of Revenue, 483 U.S. 232 (1987); American Trucking Ass’ns, Inc. v. Scheiner, 483 U.S. 266 (1987); Amerada Hess Corp. v. Director, New Jersey Taxation Div., 490 U.S. 66 (1989); Kraft Gen. Foods v. Iowa Dep’t of Revenue, 505 U.S. 71 (1992).
- Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984).
- New Energy Co. of Indiana v. Limbach, 486 U.S. 269 (1988). Compare Fulton Corp. v. Faulkner, 516 U.S. 325 (1996) (state intangibles tax on a fraction of the value of corporate stock owned by in-state residents inversely proportional to the corporation’s exposure to the state income tax violated dormant commerce clause), with General Motors Corp. v. Tracy, 519 U.S. 278 (1997) (state imposition of sales and use tax on all sales of natural gas except sales by regulated public utilities, all of which were in-state companies, but covering all other sellers that were out-of-state companies did not violate dormant commerce clause because regulated and unregulated companies were not similarly situated).
- Comptroller of the Treasury of Md. v. Wynne, 575 U.S. ___, No. 13–485, slip op. at 23 (2015) (“[T]he internal consistency test reveals what the undisputed economic analysis shows: Maryland’s tax scheme is inherently discriminatory and operates as a tariff.”). In so doing, the Court noted that Maryland could “cure the problem with its current system” by granting a full credit for taxes paid to other states, but it did “not foreclose the possibility” that Maryland could comply with the Commerce Clause in some other way. Id. at 25.
- 520 U.S. 564 (1997). The decision was 5-to-4 with a strong dissent by Justice Scalia, id. at 595, and a philosophical departure by Justice Thomas. Id. at 609.
- 520 U.S. at 586.
- Commonwealth Edison Co. v. Montana, 453 U.S. 609, 620–29 (1981). Two state taxes imposing flat rates on truckers, because they did not vary directly with miles traveled or with some other proxy for value obtained from the state, were found to violate this standard in American Trucking Ass’ns, Inc. v. Scheiner, 483 U.S. 266, 291 (1987). But see American Trucking Ass’ns v. Michigan Pub. Serv. Comm’n, 545 U.S. 429 (2005), upholding imposition of a flat annual fee on all trucks engaged in intrastate hauling (including trucks engaged in interstate hauling that “top off ” loads with intrastate pickups and deliveries) and concluding that levying the fee on a per-truck rather than per-mile basis was permissible in view of the objectives of defraying costs of administering various size, weight, safety, and insurance requirements.
- 325 U.S. 761 (1945).
- E.g., DiSanto v. Pennsylvania, 273 U.S. 34, 43 (1927) (dissenting); California v. Thompson, 313 U.S. 109 (1941); Duckworth v. Arkansas, 314 U.S. 390 (1941); Parker v. Brown, 317 U.S. 341, 362–68 (1943) (alternative holding).
- Southern Pacific Co. v. Arizona, 325 U.S. 761, 768–69 (1941).
- 325 U.S. at 769.
- 325 U.S. at 770–71.
- 397 U.S. 137, 142 (1970) (citation omitted).
- Wyoming v. Oklahoma, 502 U.S. 437, 454 (1992) (quoting City of Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978)). See also Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 579 (1986). In Maine v. Taylor, 477 U.S. 131 (1986), the Court upheld a protectionist law, finding a valid justification aside from economic protectionism. The state barred the importation of out-of-state baitfish, and the Court credited lower-court findings that legitimate ecological concerns existed about the possible presence of parasites and nonnative species in baitfish shipments.
- Wyoming v. Oklahoma, 502 U.S. 437 (1992). See also Maryland v. Louisiana, 451 U.S. 725 (1981) (a tax case, invalidating a state first-use tax, which, because of exceptions and credits, imposed a tax only on natural gas moving out-of-state, because of impermissible discrimination).
- New England Power Co. v. New Hampshire, 455 U.S. 331 (1982). See also Hughes v. Oklahoma, 441 U.S. 322 (1979) (voiding a ban on transporting minnows caught in the state for sale outside the state); Sporhase v. Nebraska, 458 U.S. 941 (1982) (invalidating a ban on the withdrawal of ground water from any well in the state intended for use in another state). These cases largely eviscerated a line of older cases recognizing a strong state interest in protection of animals and resources. See Geer v. Connecticut, 161 U.S. 519 (1896). New England Power had rather old antecedents. E.g., West v. Kansas Gas Co., 221 U.S. 229 (1911); Pennsylvania v. West Virginia, 262 U.S. 553 (1923).
- 432 U.S. 333 (1977). Other cases in which a state was attempting to promote and enhance local products and businesses include Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) (state required producer of high-quality cantaloupes to pack them in the state, rather than in an adjacent state at considerably less expense, in order that the produce be identified with the producing state); Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1 (1928) (state banned export of shrimp from state until hulls and heads were removed and processed, in order to favor canning and manufacture within the state).
- That discriminatory effects will result in invalidation, as well as purposeful discrimination, is also drawn from Dean Milk Co. v. City of Madison, 340 U.S. 349 (1951).
- E.g., H. P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525 (1949). See also Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366 (1976) (state effort to combat discrimination by other states against its milk through reciprocity provisions). In West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994), the Court held invalidly discriminatory against interstate commerce a state milk pricing order, which imposed an assessment on all milk sold by dealers to in-state retailers, the entire assessment being distributed to in-state dairy farmers despite the fact that about two-thirds of the assessed milk was produced out of state. The avowed purpose and undisputed effect of the provision was to enable higher-cost in-state dairy farmers to compete with lower-cost dairy farmers in other states.
- Healy v. Beer Institute, Inc., 491 U.S. 324 (1989); Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573 (1986). See also Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984) (a tax case). But cf. Pharmaceutical Research and Mfrs. of America v. Walsh, 538 U.S. 644 (2003) (state prescription drug program providing rebates to participating companies does not regulate prices of out-of-state transactions and does not favor in-state over out-of-state companies).
- City of Philadelphia v. New Jersey, 437 U.S. 617, 629 (1978), reaffirmed and applied in Chemical Waste Management, Inc. v. Hunt, 504 U.S. 334 (1992), and Fort Gratiot Sanitary Landfill v. Michigan Natural Resources Dept., 504 U.S. 353 (1992).
- See also Oregon Waste Systems, Inc. v. Department of Envtl. Quality, 511 U.S. 93 (1994) (discriminatory tax).
- 511 U.S. 383 (1994).
- 511 U.S. at 392. The Court added: “Discrimination against interstate commerce in favor of local business or investment is per se invalid, save in a narrow class of cases in which the municipality can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate state interest.” Id.
- 511 U.S. at 393.
- 511 U.S. at 393–94.
- 511 U.S. at 394.
- See The Supreme Court, Leading Cases, 1993 Term, 108 HARV. L. REV. 139, 149–59 (1994). Weight was given to this consideration by Justice O’Connor, 511 U.S. at 401 (concurring) (local law an excessive burden on interstate commerce), and by Justice Souter, id. at 410 (dissenting).
- 550 U.S. 330 (2007).
- 550 U.S. at 334. The Commerce Clause test referred to is the test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137 (1970). “Under the Pike test, we will uphold a nondiscriminatory statute . . . ‘unless the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits.’ ” Id. at 1797 (quoting Pike, 397 U.S. at 142). The fact that a state is seeking to protect itself from economic or other difficulties, is not, by itself, sufficient to justify barriers to interstate commerce. Edwards v. California, 314 U.S. 160 (1941) (striking down California effort to bar “Okies”—persons fleeing the Great Plains dust bowl during the Depression). Cf. Crandall v. Nevada, 73 U.S. (6 Wall.) 35 (1867) (without tying it to any particular provision of Constitution, Court finds a protected right of interstate movement). The right of travel is now an aspect of equal protection jurisprudence.
- 128 S. Ct. 1801 (2008).
- This exemption from state taxes is also generally made available to bonds issued by local governmental entities within a state.
- 128 S. Ct. at 1810–11. The Court noted that “[t]here is no forbidden discrimination because Kentucky, as a public entity, does not have to treat itself as being ‘substantially similar’ to the other bond issuers in the market.” Id. at 1811. Three members of the Court would have also found this taxation scheme constitutional under the “market participant” doctrine, despite the argument that the state, in this instance, was acting as a market regulator, not as a market participant. Id. at 1812–14 (Justice Souter, joined by Justices Stevens and Breyer).
- 128 S. Ct. at 1817.
- 449 U.S. 456, 470–74 (1981).
- 437 U.S. 117 (1978).
- 437 U.S. at 125.
- 437 U.S. at 125.
- 437 U.S. at 126.
- 325 U.S. 761 (1945). Interestingly, Justice Stone had written the opinion for the Court in South Carolina State Highway Dep’t v. Barnwell Bros., 303 U.S. 177 (1938), in which, in a similar case involving regulation of interstate transportation and proffered safety reasons, he had eschewed balancing and deferred overwhelmingly to the state legislature. Barnwell Bros. involved a state law that prohibited use on state highways of trucks that were over 90 inches wide or that had a gross weight over 20,000 pounds, with from 85% to 90% of the Nation’s trucks exceeding these limits. This deference and refusal to evaluate evidence resurfaced in a case involving an attack on railroad “full-crew” laws. Brotherhood of Locomotive Firemen & Enginemen v. Chicago, R.I. & P. Railroad Co., 393 U.S. 129 (1968).
- The concern about the impact of one state’s regulation upon the laws of other states is in part a reflection of the Cooley national uniformity interest and partly a hesitation about the autonomy of other states. E.g., CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 88–89 (1987); Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 583–84 (1986).
- Southern Pacific Co. v. Arizona, 325 U.S. 761, 771–75 (1945).
- 325 U.S. at 775–79, 781–84.
- 359 U.S. 520 (1959).
- Raymond Motor Transp., Inc. v. Rice, 434 U.S. 429 (1978); Kassel v. Consolidated Freightways Corp., 450 U.S. 662 (1981).
- Kassel v. Consolidated Freightways Corp., 450 U.S. 662, 670–71 (1981), (quoting Raymond Motor Transp. v. Rice, 434 U.S. 429, 441, 443 (1978)). Both cases invalidated state prohibitions of the use of 65-foot single-trailer trucks on state highways.
- Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).
- Lewis v. BT Investment Managers, Inc., 447 U.S. 27 (1980).
- 457 U.S. 624 (1982) (plurality opinion).
- CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987).
- E.g., Northwest Central Pipeline Corp. v. Kansas Corp. Comm’n, 489 U.S. 493, 525–26 (1989); Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 472–74 (1981); Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 127–28 (1978). But see Bendix Autolite Corp. v. Midwesco Enterprises, Inc., 486 U.S. 888 (1988).
- 25 U.S. (12 Wheat.) 419 (1827).
- Article I, § 10, cl. 2. This aspect of the doctrine of the case was considerably expanded in Low v. Austin, 80 U.S. (13 Wall.) 29 (1872), and subsequent cases, to bar states from levying nondiscriminatory, ad valorem property taxes upon goods that are no longer in import transit. This line of cases was overruled in Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976).
- See, e.g., Halliburton Oil Well Co. v. Reily, 373 U.S. 64 (1963); Minnesota v. Blasius, 290 U.S. 1 (1933). After the holding in Michelin Tire, the two clauses are now congruent. The Court has observed that the two clauses are animated by the same policies. Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 449–50 n.14 (1979).
- 441 U.S. 434 (1979).
- Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977). A state tax failed to pass the nondiscrimination standard in Kraft General Foods, Inc. v. Iowa Dept. of Revenue and Finance, 505 U.S. 71 (1992). Iowa imposed an income tax on a unitary business operating throughout the United States and in several foreign countries. It taxed the dividends that a corporation received from its foreign subsidiaries, but not the dividends it received from its domestic subsidiaries. Therefore, there was a facial distinction between foreign and domestic commerce.
- 441 U.S. at 446, 448. See also Itel Containers Int’l Corp. v. Huddleston, 507 U.S. 60 (1993) (sustaining state sales tax as applied to lease of containers delivered within the state and used in foreign commerce).
- 441 U.S. at 451–57. For income taxes, the test is more lenient, accepting not only the risk but the actuality of some double taxation as something simply inherent in accounting devices. Container Corp. of America v. Franchise Tax Board, 463 U.S. 159, 187–192 (1983).
- Wardair Canada v. Florida Dep’t of Revenue, 477 U.S. 1, 10 (1986).
- Container Corp. of America v. Franchise Tax Board, 463 U.S. 159 (1983). The validity of the formula as applied to domestic corporations with foreign parents or to foreign corporations with foreign parents or foreign subsidiaries, so that some of the income earned abroad would be taxed within the taxing state, is a question of some considerable dispute.
- 512 U.S. 298 (1994).
- Reliance could not be placed on Executive statements, the Court explained, because “the Constitution expressly grants Congress, not the President, the power to ‘regulate Commerce with foreign Nations.’ ” 512 U.S. at 329. “Executive Branch communications that express federal policy but lack the force of law cannot render unconstitutional California’s otherwise valid, congressionally condoned, use of world-wide combined reporting.” Id. at 330. Dissenting Justice Scalia noted that, although the Court’s ruling correctly restored preemptive power to Congress, “it permits the authority to be exercised by silence. Id. at 332.”
- The Supreme Court, Leading Cases, 1993 Term, 108 HARV. L. REV. 139, 139–49 (1993).
- 25 U.S. (12 Wheat.) 419, 443–44 (1827).
- New York City v. Miln, 36 U.S. (11 Pet.) 102 (1837) (upholding reporting requirements imposed on ships’ masters), overruled by Henderson v. Mayor of New York, 92 U.S. 259 (1876); Passenger Cases, 48 U.S. (7 How.) 283 (1849)(1849); Chy Lung v. Freeman, 92 U.S. 275 (1876).
- Campagnie Francaise De Navigation a Vapeur v. Louisiana State Bd. of Health, 186 U.S. 380 (1902); Louisiana v. Texas, 176 U.S. 1 (1900); Morgan v. Louisiana, 118 U.S. 455 (1886).
- New York ex rel. Silz v. Hesterberg, 211 U.S. 31 (1908).
- Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 456 n.20 (1979) (construing Bob-Lo Excursion Co. v. Michigan, 333 U.S. 28 (1948)).
- 22 U.S. (9 Wheat.) 1 (1824).
- A modern application of Gibbons v. Ogden is Douglas v. Seacoast Products, Inc., 431 U.S. 265 (1977), in which the Court, relying on the present version of the licensing statute used by Chief Justice Marshall, struck down state laws curtailing the operations of federally licensed vessels. In the course of the Douglas opinion, the Court observed that, “[a]lthough it is true that the Court’s view in Gibbons of the intent of the Second Congress in passing the Enrollment and Licensing Act is considered incorrect by commentators, its provisions have been repeatedly re-enacted in substantially the same form. We can safely assume that Congress was aware of the holding, as well as the criticism, of a case so renowned as Gibbons. We have no doubt that Congress has ratified the statutory interpretation of Gibbons and its progeny.” Id. at 278–79.
- Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211 (1824). See also McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 436 (1819). Although preemption is basically constitutional in nature, deriving its forcefulness from the Supremacy Clause, it is much more like statutory decisionmaking, in that it depends upon an interpretation of an act of Congress in determining whether a state law is ousted. E.g., Douglas v. Seacoast Products, Inc., 431 U.S. 265, 271–72 (1977). See also Swift & Co. v. Wickham, 382 U.S. 111 (1965). “Any such pre-emption or conflict claim is of course grounded in the Supremacy Clause of the Constitution: if a state measure conflicts with a federal requirement, the state provision must give way. The basic question involved in these cases, however, is never one of interpretation of the Federal Constitution but inevitably one of comparing two statutes.” Id. at 120.
- Cases considered under this heading are overwhelmingly about federal legislation based on the Commerce Clause, but the principles enunciated are identical whatever source of power Congress uses. Therefore, cases arising under legislation based on other powers are cited and treated interchangeably.
- Amalgamated Ass’n of Street Employees v. Lockridge, 403 U.S. 274, 285–86 (1971).
- Hines v. Davidowitz, 312 U.S. 52, 67 (1941). This case arose under the immigration power of clause 4.
- Cramton, Pennsylvania v. Nelson: A Case Study in Federal Preemption, 26 U. CHI. L. REV. 85, 87–88 (1956). “The [Court] appears to use essentially the same reasoning process in a case nominally hinging on preemption as it has in past cases in which the question was whether the state law regulated or burdened interstate commerce. [The] Court has adopted the same weighing of interests approach in pre-emption cases that it uses to determine whether a state law unjustifiably burdens interstate commerce. In a number of situations the Court has invalidated statutes on the preemption ground when it appeared that the state laws sought to favor local economic interests at the expense of the interstate market. On the other hand, when the Court has been satisfied that valid local interests, such as those in safety or in the reputable operation of local business, outweigh the restrictive effect on interstate commerce, the Court has rejected the preemption argument and allowed state regulation to stand.” Note, Preemption as a Preferential Ground: A New Canon of Construction, 12 STAN. L. REV. 208, 217 (1959) (quoted approvingly as a “thoughtful student comment” in G. GUNTHER, CONSTITUTIONAL LAW 297 (12th ed. 1991)).
- E.g., Charleston & W. Car. Ry. v. Varnville Co., 237 U.S. 597, 604 (1915). But see Corn Products Refining Co. v. Eddy, 249 U.S. 427, 438 (1919).
- E.g., Hines v. Davidowitz, 312 U.S. 52 (1941); Cloverleaf Butter v. Patterson, 315 U.S. 148 (1942); Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947); California v. Zook, 336 U.S. 725 (1949).
- Gade v. National Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 96 (1992) (internal quotation marks and case citations omitted). Conversely, a state’s intentions with regard to its own law “is relevant only as it may relate to ‘the scope of the state law that Congress understood would survive”’ the preemptive effect of federal law or “the nature of the effect of state law on” on the subject matter Congress is regulating. Gobeille v. Liberty Mut. Ins. Co., 577 U.S. ___, No. 14–181, slip op. at 11 (2016) (internal quotations omitted).
- Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977); FMC Corp. v. Holliday, 498 U.S. 52 (1990); Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 604–605 (1991).
- Gade v. National Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 98 (1992) (internal quotation marks and case citations omitted). The same or similar language is used throughout the preemption cases. E.g., Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992); id. at 532–33 (Justice Blackmun concurring and dissenting); id. at 545 (Justice Scalia concurring and dissenting); Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 604–05 (1991); English v. General Electric Co., 496 U.S. 72, 78–80 (1990); Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248 (1984); Pacific Gas & Elec. Co. v. State Energy Resources Comm’n, 461 U.S. 190, 203–04 (1983); Fidelity Fed. Savings & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 153 (1982); Florida Lime & Avocado Growers v. Paul, 373 U.S. 132, 142 (1963); Hines v. Davidowitz, 312 U.S. 52, 67 (1941).
- Florida Lime & Avocado Growers v. Paul, 373 U.S. 132, 142 (1963); Chicago & Northwestern Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 317 (1981). Where Congress legislates in a field traditionally occupied by the States, courts should “start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Pacific Gas & Electric Co. v. State Energy Resources Conservation & Dev. Comm., 461 U.S. 190, 206 (1983) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). Nonetheless, this assumption may go only so far. See, e.g., Pliva, Inc. v. Mensing, 564 U.S. ___, No. 09–993, slip op. at 15 (2011) (Thomas, J., plurality opinion) (“[T]he text of the Clause—that federal law shall be supreme, ‘any Thing in the Constitution or Laws of any State to the Contrary notwithstanding’—plainly contemplates conflict pre-emption by describing federal law as effectively repealing contrary state law.”).
- Free v. Bland, 369 U.S. 663 (1962).
- Union Brokerage Co. v. Jensen, 322 U.S. 202, 211 (1944) (per Justice Frankfurter).
- Regulations as well as statutes can preempt. Agency regulations, when Congress has expressly or implied empowered these bodies to preempt, are “the supreme law of the land” and can displace state law. E.g., Smiley v. Citibank, 517 U.S. 735 (1996); City of New York v. FCC, 486 U.S. 57, 63–64 (1988); Louisiana Public Service Comm’n v. FCC, 476 U.S. 355 (1986); Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691 (1984); Fidelity Fed. Savings & Loan Ass’n v. de la Cuesta, 458 U.S. 141 (1982). Federal common law, i.e., law applied by the courts in the absence of explicit statutory directive, and respecting uniquely federal interests, can also displace state law. See Boyle v. United Technologies Corp., 487 U.S. 500 (1988) (Supreme Court promulgated common-law rule creating government-contractor defense in tort liability suits, despite Congress’s having considered and failed to enact bills doing precisely this); Westfall v. Erwin, 484 U.S. 292 (1988) (civil liability of federal officials for actions taken in the course of their duty). Finally, ordinances of local governments are subject to preemption under the same standards as state law. Hillsborough County v. Automated Medical Laboratories, 471 U.S. 707 (1985).
- Thus, § 408 of the Federal Meat Inspection Act, as amended by the Wholesome Meat Act, 21 U.S.C. § 678, provides that “[m]arking, labeling, packaging, or ingredient requirements in addition to, or different than, those made under this chapter may not be imposed by any state . . . .” See Jones v. Rath Packing Co., 430 U.S. 519, 528–32 (1977). See also National Meat Ass’n v. Harris, 565 U.S. ___, No. 10–224, slip op. (2012) (broad preemption of all state laws on slaughterhouse activities regardless of conflict with federal law). Similarly, much state action is saved by the Securities Exchange Act of 1934, 15 U.S.C. § 78bb(a), which states that “[n]othing in this chapter shall affect the jurisdiction of the securities commissioner (or any agency or officer performing like functions) of any State over any security or any person insofar as it does not conflict with the provisions of this chapter or the rules and regulations thereunder.” For examples of other express preemptive provisions, see Norfolk & Western Ry. v. American Train Dispatchers’ Ass’n, 499 U.S. 117 (1991); Exxon Corp. v. Hunt, 475 U.S. 355 (1986). See also Department of Treasury v. Fabe, 508 U.S. 491 (1993).
- For example, in Coventry Health Care of Missouri, Inc. v. Nevils, the Court noted that it has “ ‘repeatedly recognized’ that the phrase ‘relate to’ in a preemption clause ‘express[es] a broad pre-emptive purpose.’ Congress characteristically employs the phrase to reach any subject that has ‘a connection with, or reference to,’ the topics the statute enumerates.” 581 U.S. ___, No. 16–149, slip op. at 7 (2017) (quoting Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383–84 (1992)) (internal citation omitted). Coventry Health Care involved an express preemption provision of the Federal Employees Health Benefits Act of 1959 (FEHBA) under which any terms of contracts with private carriers for federal employees’ health insurance that “relate to the nature, provision, or extent of coverage of benefits (including payments with respect to benefits) . . . supersede and preempt any State or local law . . . which relates to health insurance or plans.” Id. at 1 (quoting 5 U.S.C. § 8902(m)(1)) (internal quotation marks omitted; emphasis added). A federal employee brought an action alleging violations of a Missouri consumer protection law against a private carrier that asserted a lien against the employee’s personal injury settlement under the subrogation and reimbursement terms of a health insurance contract. While there was no dispute that the Missouri law “relates to health insurance,” the Court examined whether the contractual subrogation and reimbursement terms “relate to . . . payments with respect to benefits.” Id. at 2. Based on the statutory language, including “Congress’ use of the expansive phrase ‘relate to,’ ” the Court held that such contractual provisions do “ ‘relate to . . . payments with respect to benefits’ because subrogation and reimbursement rights yield just such payments. When a carrier exercises its right to either reimbursement or subrogation, it receives from either the beneficiary or a third party ‘payment’ respecting the benefits the carrier had previously paid.” Id. at 6–7. The Court also rejected the respondent’s argument that allowing a contract to preempt state law violated the Supremacy Clause, which by its terms provides preemptive effect to the “laws of the United States.” Id. at 9. The Court held “that the regime Congress enacted is compatible with the Supremacy Clause”, id. at 1–2, because, like “[m]any other federal statutes,” FEHBA provides that certain contract terms have preemptive force only to the extent that the contract “fall[s] within the statute’s preemptive scope.” Id. at 9. In this way, the Court concluded that the “statute, not a contract, strips state law of its force.” Id. For a discussion of preemption in the context of the Supremacy Clause, see infra Article VI: Clause 2.
- Aloha Airlines v. Director of Taxation, 464 U.S. 7, 13–14 (1983).
- Morales v. TWA, 504 U.S. 374 (1992). The section, 49 U.S.C. § 1305(a)(1), was held to preempt state rules on advertising. See also American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995); Nw, Inc. v. Ginsberg, 572 U.S. ___, No. 12–462, slip op. (2014) (holding that the Airline Deregulation Act’s preemption provision applied to state common law claims, including an airline customer’s claim for breach of the implied covenant of good faith and fair dealing). But see Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. ___, No. 12–52, slip op. (2013) (provision of Federal Aviation Administration Authorization Act of 1994 preempting state law “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property” held not to preempt state laws on the disposal of towed vehicles by towing companies).
- 8 U.S.C. § 1324a(h)(2).
- 563 U.S. 582 (2011). The Whiting majority notably began its analysis of whether the challenged Arizona statute was preempted by federal law with a statement that “[w]hen a federal law contains an express preemption clause, we ‘focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.’ ” Id. at 594. Subsequently, in writing for the majority in Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust, Justice Thomas cited this language from Whiting in support of the proposition that no presumption against preemption is to be applied when a congressional enactment includes an express preemption clause. See 579 U.S. ___, No. 15–233, slip op. at 9 (2016) (declining to apply a presumption against preemption in finding that the federal Bankruptcy Code preempts a Puerto Rico bankruptcy law).
- Whiting, 563 U.S. at 612 (Breyer, J., dissenting); id. at 631 (Sotomayor, J., dissenting).
- 563 U.S. ___, No. 09–893, slip op. (2011).
- 9 U.S.C. § 2.
- Writing for the Court, Justice Scalia held, inter alia, that the saving clause was not intended to open arbitration provisions themselves to possible scrutiny. 563 U.S. ___, No. 09–893, slip op. (2011). The four dissenting Justices interpreted the saving clause as allowing use of the California law to attack the anti-class arbitration contract provision. Id. (Breyer, J. dissenting).
- City of Columbus v. Ours Garage and Wrecker Serv., 536 U.S. 424, 429 (2002).
- Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 (1985), repeated in FMC Corp. v. Holliday, 498 U.S. 52, 58 (1991).
- 29 U.S.C. §§ 1144(a), 1144(b)(2)(A), 1144(b)(2)(B). The Court has described this section as a “virtually unique pre-emption provision.” Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 24 n.26 (1983). See Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138–139 (1990); see also id. at 142–45 (describing and applying another preemption provision of ERISA).
- Gobeille v. Liberty Mut. Ins. Co., 577 U.S. ___, No. 14–181, slip op. at 9 (2016) (holding that ERISA—with its extensive reporting, disclosure, and recordkeeping requirements that are “central to, and an essential part of,” its uniform plan administration system—preempted a Vermont law requiring certain entities, including health insurers, to report health care related information to a state agency); Aetna Health, Inc. v. Davila, 542 U.S. 200 (2004) (suit brought against HMO under state health care liability act for failure to exercise ordinary care when denying benefits is preempted); Boggs v. Boggs, 520 U.S. 833 (1997) (decided not on the basis of the express preemption language but instead by implied preemption analysis); De Buono v. NYSA–ILA Med. & Clinical Servs. Fund, 520 U.S. 806 (1997); Cal. Div. of Labor Standards Enf ’t v. Dillingham Constr., Inc., 519 U.S. 316 (1997); N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) (no pre-emption of statute that required hospitals to collect surcharges from patients covered by a commercial insurer but not from patients covered by Blue Cross/Blue Shield plan); John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86 (1993) (ERISA’s fiduciary standards, not conflicting state insurance laws, apply to insurance company’s handling of general account assets derived from participating group annuity contract); District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125 (1992) (law requiring employers to provide health insurance coverage, equivalent to existing coverage, for workers receiving workers’ compensation benefits); Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990) (ERISA preempts state common-law claim of wrongful discharge to prevent employee attaining benefits under plan covered by ERISA); FMC Corp. v. Holliday, 498 U.S. 52 (1990) (provision of state motor-vehicle financial-responsibility law barring subrogation and reimbursement from claimant’s tort recovery for benefits received from a self-insured health-care plan preempted by ERISA); Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987) (state law requiring employers to provide a one-time severance payment to employees in the event of a plant closing held not preempted by 5–4 vote); Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985) (state law mandating that certain minimum mental-health-care benefits be provided to those insured under general health-insurance policy or employee health-care plan is a law “which regulates insurance” and is not preempted); Shaw v. Delta Air Lines, 463 U.S. 85 (1983) (state law forbidding discrimination in employee benefit plans on the basis of pregnancy not pre-empted, because of another saving provision in ERISA, and provision requiring employers to pay sick-leave benefits to employees unable to work because of pregnancy not preempted under construction of coverage sections, but both laws “relate to” employee benefit plans); Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981) (state law prohibiting plans from reducing benefits by amount of workers’ compensation awards “relates to” employee benefit plan and is preempted).
- Cipollone v. Liggett Group, 505 U.S. 504 (1992). The decision relied on two controversial rules of construction. First, the courts should interpret narrowly provisions that purport to preempt state police-power regulations, and, second, that when a law has express preemption language courts should look only to that language and presume that when the preemptive reach of a law is defined Congress did not intend to go beyond that reach, so that field and conflict preemption will not be found. Id. at 517; and id. at 532–33 (Justice Blackmun concurring and dissenting). Both parts of this canon are departures from established law. Narrow construction when state police powers are involved has hitherto related to implied preemption, not express preemption, and courts generally have applied ordinary-meaning construction to such statutory language; further, courts have not precluded the finding of conflict preemption, though perhaps field preemption, because of the existence of some express preemptive language. See id. at 546–48 (Justice Scalia concurring and dissenting).
- 505 U.S. at 518–19 (opinion of the court), 533–34 (Justice Blackmun concurring).
- 505 U.S. at 520–30 (plurality opinion), 535–43 (Justice Blackmun concurring and dissenting), 548–50 (Justice Scalia concurring and dissenting).
- 518 U.S. 470 (1996). See also CSX Transportation, Inc. v. Easterwood, 507 U.S. 658 (1993) (under Federal Railroad Safety Act, a state common-law claim alleging negligence for operating a train at excessive speed is preempted, but a second claim alleging negligence for failure to maintain adequate warning devices at a grade crossing is not preempted); Norfolk So. Ry. v. Shanklin, 529 U.S. 344 (2000) (applying Easterwood).
- 21 U.S.C. § 350k(a).
- The dissent, by Justice O’Connor and three others, would have held pre-empted the latter claims, 518 U.S. at 509, whereas Justice Breyer thought that common-law claims would sometimes be preempted, but not here. Id. at 503 (concurring).
- 518 U.S. at 484–85. See also id. at 508 (Justice Breyer concurring); Freightliner Corp. v. Myrick, 514 U.S. 280, 288–89 (1995); Barnett Bank v. Nelson, 517 U.S. 25, 31 (1996); California Div. of Labor Standards Enforcement v. Dillingham Construction, Inc., 519 U.S. 316, 334 (1997) (Justice Scalia concurring); Boggs v. Boggs, 520 U.S. 833 (1997) (using “stands as an obstacle” preemption analysis in an ERISA case, having express preemptive language, but declining to decide when implied pre-emption may be used despite express language), and id. at 854 (Justice Breyer dissenting) (analyzing the preemption issue under both express and implied standards).
- 529 U.S. 861 (2000).
- The Court focused on the word “exempt” to give the saving clause a narrow application—as “simply bar[ring] a special kind of defense, . . . that compliance with a federal safety standard automatically exempts a defendant from state law, whether the Federal Government meant that standard to be an absolute requirement or only a minimum one.” 529 U.S. at 869. But cf. Sprietsma v. Mercury Marine, 537 U.S. 51 (2002) (interpreting preemption language and saving clause in Federal Boat Safety Act as not precluding a state common law tort action).
- Compare Williamson v. Mazda Motor of America, Inc., 562 U.S. ___, No. 08–1314, slip op. (2011) (applying same statute as Geir, and later version of same regulation, no conflict preemption found of common law suit based on rear seat belt type, because giving manufacturers a choice on the type of rear seat belt to install was not a “significant objective” of the statute or regulation). For a decision applying express preemption language to a variety of state common law claims, see Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005) (interpreting FIFRA, the federal law governing pesticides).
- Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). The case also is the source of the oft-quoted maxim that when Congress legislates in a field traditionally occupied by the states, courts should “start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Id.
- 312 U.S. 52 (1941).
- In Arizona v. United States, the Court struck down state penalties for violating federal alien registration requirements, emphasizing that “[w]here Congress occupies an entire field, . . . even complementary state regulation is impermissible.” 567 U.S. ___, No. 11–182, slip op. at 10 (2012) The same case also struck down on preemption grounds state sanctions on unauthorized aliens who work or seek employment, id. at 12–15, and authority for state officers to make warrantless arrests based on possible deportability under federal immigration law. Id. By contrast, a regime of state immigration status checks with federal authorities was found not to be preempted on its face because the regime was supported by federal law facilitating federal-state cooperation in immigration enforcement.
- The Court also said that courts must look to see whether under the circumstances of a particular case, the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” 312 U.S. at 67. That standard is obviously drawn from conflict preemption, for the two standards are frequently intermixed. See AT&T Mobility, LLC v. Concepcion, 563 U.S. ___, No. 09–893, slip op. at 9–18 (2011) (Scalia, J.). Nonetheless, not all state regulation is precluded. De Canas v. Bica, 424 U.S. 351 (1976) (upholding a state law penalizing the employment of an illegal alien, the case arising before enactment of the federal law doing the same thing).
- 350 U.S. 497 (1956).
- 350 U.S. at 502–05. Obviously, there is a noticeable blending into conflict preemption.
- Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947).
- See Kurns v. Railroad Friction Products Corp., 565 U.S. ___, No. 10–879, slip op. (2012) (state suit by the estate of maintenance engineer alleging manufacturer’s defective design of locomotive components and failure to warn of accompanying dangers held preempted by the Locomotive Inspection Act; the subject of the Act held to be the regulation of locomotive equipment generally, including its manufacture, and not limited to regulating activities of locomotive operators or regulating locomotives while in use for transporation). Compare Campbell v. Hussey, 368 U.S. 297 (1961) (state law requiring tobacco of a certain type to be marked by white tags, ousted by federal regulation that occupied the field and left no room for supplementation), with Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963) (state law setting minimum oil content for avocados certified as mature by federal regulation is complementary to federal law, because federal standard was a minimum one, the field having not been occupied). One should be wary of assuming that a state law that has dual purposes and impacts will not, just for the duality, be held to be preempted. See Gade v. National Solid Wastes Mgmt. Ass’n, 505 U.S. 88 (1992); Perez v. Campbell, 402 U.S. 637 (1971) (under Bankruptcy Clause).
- Pacific Gas & Elec. Co. v. Energy Resources Comm’n, 461 U.S. 190 (1983). Neither does the same reservation of exclusive authority to regulate nuclear safety preempt imposition of punitive damages under state tort law, even if based upon the jury’s conclusion that a nuclear licensee failed to follow adequate safety precautions. Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984). See also English v. General Electric Co., 496 U.S. 72 (1990) (employee’s state-law claim for intentional infliction of emotional distress for her nuclear-plant employer’s actions retaliating for her whistleblowing is not preempted as relating to nuclear safety).
- Huron Portland Cement Co. v. City of Detroit, 362 U.S. 440 (1960).
- Askew v. American Waterways Operators, 411 U.S. 325 (1973).
- Ray v. Atlantic Richfield Co., 435 U.S. 151 (1978). United States v. Locke, 529 U.S. 89 (2000) (applying Ray). See also Exxon Corp. v. Eagerton, 462 U.S. 176 (1983) (preempting a state ban on pass-through of a severance tax on oil and gas, because Congress has occupied the field of wholesale sales of natural gas in interstate commerce); Schneidewind v. ANR Pipeline Co., 485 U.S. 293 (1988) (Natural Gas Act preempts state regulation of securities issuance by covered gas companies); Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989) (under Patent Clause, state law extending patent-like protection to unpatented designs invades an area of pervasive federal regulation).
- City of Burbank v. Lockheed Air Terminal, 411 U.S. 624 (1973).
- Oneok, Inc. v. Learjet, Inc., 575 U.S. ___, No. 13–271, slip op. at 10–12 (2015).
- Cf. Hughes v. Talen Energy Mktg., LLC, 578 U.S. ___, No. 14–614, slip op. at 12–13 (2016) (holding that while “States . . . may regulate within the domain Congress assigned to them even when their laws incidentally affect areas” within the federal regulatory field, “States may not seek to achieve ends, however legitimate, through regulatory means that intrude on” the federal government’s authority over the field in question) (citing to Oneok, Inc., slip op. at 11).
- See Oneok, Inc., slip op. at 3, 10.
- Id. at 3.
- Id. at 13.
- Id. at 10.
- Id. at 11.
- Id. at 13.
- Id. at 14.
- Id. at 15–16.
- Transcontinental Gas Pipe Line Corp. v. Mississippi Oil & Gas Board, 474 U.S. 409 (1986); Puerto Rico Dept. of Consumer Affairs v. Isla Petroleum Corp., 485 U.S. 495 (1988).
- 479 U.S. 1 (1986).
- For similar examples of conflict preemption, see Wos v. E.M.A., 568 U.S. ___, No. 12–98, slip op. (2013) (holding that a North Carolina statute allowing the state to collect up to one-third of the amount of a tort settlement as reimbursement for state-paid medical expenses under Medicaid conflicted with anti-lien provisions of the federal Medicaid statute where the settlement designated an amount less than one-third as the medical expenses award). See also Doctor’s Assoc.’s, Inc. v. Casarotto, 517 U.S. 681 (1996) (federal arbitration law preempts state statute that conditioned enforceability of arbitration clause on compliance with special notice requirement); Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995) (federal arbitration law preempts state law invalidating predispute arbitration agreements that were not entered into in contemplation of substantial interstate activity).
- Fidelity Fed. Savings & Loan Assn. v. de la Cuesta, 458 U.S. 141 (1982).
- 564 U.S. ___, No. 09–993, slip op. (2011).
- 564 U.S. ___, No. 09–993, slip op. (2011) (Thomas, J.).
- Justice Thomas, joined on point by three others, characterized the Supremacy Clause phrase “any [state law] to the Contrary notwithstanding” as a non obtstante provision that “suggests that federal law should be understood to impliedly repeal conflicting state law” and indicates limits on the extent to which courts should seek to reconcile federal and state law in preemption cases. 564 U.S. ___, No. 09–993, slip op. at 15–17 (2011) (Thomas, J.).
- 564 U.S. ___, No. 09–993, slip op. (2011) (Sotomayor, J., dissenting).
- 570 U.S. ___, No. 12–142, slip op. (2013).
- Id. at 1–2.
- 555 U.S. ___, No. 06–1249, slip op. (2009).
- California Federal Savings & Loan Ass’n v. Guerra, 479 U.S. 272 (1987). Compare Cloverleaf Butter Co. v. Patterson, 315 U.S. 148 (1942) (federal law preempts more exacting state standards, even though both could be complied with and state standards were harmonious with purposes of federal law).
- Florida Lime & Avocado Growers v. Paul, 373 U.S. 132 (1963).
- The standard is drawn from Hines v. Davidowitz, 312 U.S. 52, 67 (1941), which often is held out as a leading example of field preemption analysis. When “frustration of purpose” predominates in an opinion, it may be fairer to characterize the issue as one of conflict preemption, rather than field preemption, for the possibility of a limited state role would appear to be implicitly recognized. Arizona v. United States, in which the Court found three of the four Arizona immigration provisions it examined to be preempted, illustrates the continuum from field to conflict analysis. In overturning state penalties for violations of federal alien registration requirements, the Court found the sweep and detail of the federal law to leave no room whatsoever for state regulation. In overturning state sanctions against unauthorized aliens seeking employment or working, the Court emphasized that the comprehensive system of federal employer sanctions eschewed employee sanctions, and allowing states to impose them would upset the careful policy balance struck by Congress. In overturning state authority to arrest individuals believed to be deportable on criminal grounds, the Court did not examine whether state officers have any inherent arrest authority in deportation cases, but rather found that allowing states to engage in such arrests as a general matter creates an obstacle to congressional objectives. And finally, the Court declined to overturn on its face a state policy of checking the immigration status of individuals stopped by the police for general law enforcement purposes, finding that federal law facilitated status checks and only implementation of the status check policy would disclose whether federal enforcement policy ultimately would be frustrated. 567 U.S. ___, No. 11–182, slip op. (2012). See also Barnett Bank of Marion County v. Nelson, 517 U.S. 25 (1996) (federal law empowering national banks in small towns to sell insurance preempts state law prohibiting banks from dealing in insurance; despite explicit preemption provision, state law stands as an obstacle to accomplishment of federal purpose); Hillman v. Maretta, 569 U.S. ___, No. 11–1221, slip op. (2013) (state law cause of action against ex-spouse for life insurance proceeds paid under a designation of beneficiary in a federal employee policy held to be preempted by a federal employee insurance statute giving employees the right to designate a beneficiary; beyond administrative convenience, Congress intended that the proceeds actually belong to the named beneficiary). Unsurprisingly, the Justices at times disagree on what Congress’s primary objectives and purposes were in passing particular legislation, and such a disagreement can end with different conclusions about whether state law has been pre-empted. See AT&T Mobility, LLC v. Concepcion, 563 U.S. ___, No. 09–893, slip op. (2011).
- Geier v. American Honda Motor Co., 529 U.S. 861 (2000).
- Jones v. Rath Packing Co., 430 U.S. 519, 532–543 (1977).
- 487 U.S. 131 (1988).
- Philco Aviation v. Shacket, 462 U.S. 406 (1983).
- 520 U.S. 833 (1997).
- 520 U.S. at 841. The dissent, id. at 854 (Justice Breyer), agreed that conflict analysis was appropriate, but he did not find that the state law achieved any result that ERISA required.
- Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000).
- 530 U.S. at 374 n.8.
- Michigan Canners & Freezers Ass’n v. Agricultural Marketing & Bargaining Bd., 467 U.S. 461 (1984). See also Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953 (1986) (state allocation of costs for purposes of setting retail electricity rates, by disallowing costs permitted by FERC in setting wholesale rates, frustrated federal regulation by possibly preventing the utility from recovering in its sales the costs of paying the FERC-approved wholesale rate); Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691 (1984) (state ban on cable TV advertising frustrates federal policy in the copyright law by which cable operators pay a royalty fee for the right to retransmit distant broadcast signals upon agreement not to delete commercials); International Paper Co. v. Ouellette, 479 U.S. 481 (1987) (damage action based on common law of downstream state frustrates Clean Water Act’s policies favoring permitting state in interstate disputes and favoring predictability in permit process).
- California v. FERC, 495 U.S. 490 (1990). The savings clause was found inapplicable on the basis of an earlier interpretation of the language in First Iowa Hydro-Electric Cooperative v. FPC, 328 U.S. 152 (1946).
- Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 614–16 (1991).
- California v. ARC America Corp., 490 U.S. 93 (1989).
- Hayfield Northern Ry. v. Chicago & N.W. Transp. Co., 467 U.S. 622 (1984). See also CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987) (federal law’s broad purpose of protecting shareholders as a group is furthered by state anti-takeover law); Rose v. Rose, 481 U.S. 619 (1987) (provision governing veterans’ disability benefits protects veterans’ families as well as veterans, hence state child-support order resulting in payment out of benefits is not preempted).
- Throughout the ups and downs of federal labor-law preemption, it remains the rule that the Board remains preeminent and almost exclusive. See, e.g., Wisconsin Dep’t of Industry v. Gould, Inc., 475 U.S. 282 (1986) (states may not supplement Board enforcement by debarring from state contracts persons or firms that have violated the NLRA); Golden Gate Transit Corp. v. City of Los Angeles, 475 U.S. 608 (1986) (city may not condition taxicab franchise on settlement of strike by set date, because this intrudes into collective-bargaining process protected by NLRA). On the other hand, the NLRA’s protection of associational rights is not so strong as to outweigh the Social Security Act’s policy permitting states to determine whether to award unemployment benefits to persons voluntarily unemployed as the result of a labor dispute. New York Tel. Co. v. New York Labor Dep’t, 440 U.S. 519 (1979); Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471 (1977); Baker v. General Motors Corp., 478 U.S. 621 (1986).
- Allen-Bradley Local No. 1111 v. WERB, 315 U.S. 740 (1942).
- United Automobile Workers v. WERB, 336 U.S. 245 (1949), overruled by Machinists & Aerospace Workers v. WERC, 427 U.S. 132 (1976).
- Algoma Plywood Co. v. WERB, 336 U.S. 301 (1949).
- Hill v. Florida ex rel. Watson, 325 U.S. 538 (1945). More recently, the Court has held that Hill’s premise that the NLRA grants an unqualified right to select union officials has been removed by amendments prohibiting some convicted criminals from holding union office. Partly because the federal disqualification standard was itself dependent upon application of state law, the Court ruled that more stringent state disqualification provisions, also aimed at individuals who had been involved in racketeering and other criminal conduct, were not inconsistent with federal law. Brown v. Hotel Employees, 468 U.S. 491 (1984).
- United Automobile Workers v. O’Brien, 339 U.S. 454 (1950); Bus Employees v. WERB, 340 U.S. 383 (1951). See also Bus Employees v. Missouri, 374 U.S. 74 (1963).
- Weber v. Anheuser-Busch, Inc., 348 U.S. 468 (1955); Garner v. Teamsters Local 776, 346 U.S. 485 (1953);Bethlehem Steel Co. v. New York Employment Relations Bd., 330 U.S. 767 (1947). See also Livadas v. Bradshaw, 512 U.S. 107 (1994) (finding a practice of a state labor commissioner preempted because it stood as an obstacle to the achievement of the purposes of NLRA). Of course, where Congress clearly specifies, the Court has had no difficulty. Thus, in the NLRA, Congress provided, 29 U.S.C. § 164(b), that state laws on the subject could override the federal law on union security arrangements and the Court sustained those laws. Lincoln Federal Labor Union v. Northwestern Iron & Metal Co., 335 U.S. 525 (1949); AFL v. American Sash & Door Co., 335 U.S. 538 (1949). When Congress in the Railway Labor Act, 45 U.S.C. § 152, Eleventh, provided that the federal law on union security was to override contrary state laws, the Court sustained that determination. Railway Employes’ Dep’t v. Hanson, 351 U.S. 225 (1956). The Court has held that state courts may adjudicate questions relating to the permissibility of particular types of union security arrangements under state law even though the issue involves as well an interpretation of federal law. Retail Clerks Int’l Ass’n v. Schermerhorn, 375 U.S. 96 (1963).
- Garner v. Teamsters Local 776, 346 U.S. 485 (1953); United Mine Workers v. Arkansas Flooring Co., 351 U.S. 62 (1956); Meat Cutters v. Fairlawn Meats, 353 U.S. 20 (1957); Construction Laborers v. Curry, 371 U.S. 542 (1963).
- San Diego Building Trades Council v. Garmon, 353 U.S. 26 (1957).
- Guss v. Utah Labor Board, 353 U.S. 1 (1957).
- Teamsters Union v. Oliver, 358 U.S. 283 (1959).
- Weber v. Anheuser-Busch, Inc., 348 U.S. 468 (1955).
- 359 U.S. 236 (1959).
- 359 U.S. at 245. The rule is followed in, e.g., Radio & Television Technicians v. Broadcast Service of Mobile, 380 U.S. 255 (1965); Hattiesburg Building & Trades Council v. Broome, 377 U.S. 126 (1964); Longshoremen’s Local 1416 v. Ariane Shipping Co., 397 U.S. 195 (1970); Amalgamated Ass’n of Street Employees v. Lockridge, 403 U.S. 274 (1971). Cf. Nash v. Florida Industrial Comm., 389 U.S. 235 (1967).
- United Automobile Workers v. WERB, 351 U.S. 266 (1956); Youngdahl v. Rainfair, 355 U.S. 131 (1957).
- United Automobile Workers v. Russell, 356 U.S. 634 (1958); United Construction Workers v. Laburnum Constr. Corp., 347 U.S. 656 (1954).
- International Ass’n of Machinists v. Gonzales, 356 U.S. 617 (1958).
- Journeymen & Plumbers’ Union 100 v. Borden, 373 U.S. 690 (1963); Iron Workers Local 207 v. Perko, 373 U.S. 701 (1963). Applying Perko, the Court held that a state court action by a supervisor alleging union interference with his contractual relationship with his employer is preempted by the NLRA. Local 926, Int’l Union of Operating Engineers v. Jones, 460 U.S. 669 (1983).
- 373 U.S. at 697 (Borden), and 705 (Perko).
- Amalgamated Ass’n of Street Employees v. Lockridge, 403 U.S. 274 (1971).
- 403 U.S. at 296.
- 383 U.S. 53 (1966).
- 418 U.S. 264 (1974).
- Farmer v. Carpenters, 430 U.S. 290 (1977). Following this case, the Court held that a state court action for misrepresentation and breach of contract, brought by replacement workers promised permanent employment when hired during a strike, was not preempted. The action for breach of contract by replacement workers having no remedies under the NLRA was found to be deeply rooted in local law and of only peripheral concern under the Act. Belknap, Inc. v. Hale, 463 U.S. 491 (1983). See also Int’l Longshoremen’s Ass’n v. Davis, 476 U.S. 380 (1986).
- 436 U.S. 180 (1978).
- San Diego Building Trades Council v. Garmon, 359 U.S. 236, 244 (1959).
- Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180, 190–98 (1978).
- 436 U.S. at 199–207.
- 61 Stat. 156 (1947), 29 U.S.C. § 185(a).
- Charles Dowd Box Co. v. Courtney, 368 U.S. 502 (1962). The state courts must, however, apply federal law. Local 174, Teamsters Union v. Lucas Flour Co., 369 U.S. 95 (1962).
- Smith v. Evening News Ass’n, 371 U.S. 195 (1962); Humphrey v. Moore, 375 U.S. 335 (1964); Vaca v. Sipes, 386 U.S. 171 (1967).
- See the analysis in Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399 (1988) (state tort action for retaliatory discharge for exercising rights under a state workers’ compensation law is not preempted by § 301, there being no required interpretation of a collective-bargaining agreement).
- Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985). See also Int’l Brotherhood of Electric Workers v. Hechler, 481 U.S. 851 (1987) (state-law claim that union breached duty to furnish employee a reasonably safe workplace preempted); United Steelworkers of America v. Rawson, 495 U.S. 362 (1990) (state-law claim that union was negligent in inspecting a mine, the duty to inspect being created by the collective-bargaining agreement preempted).
- Brotherhood of R.R. Trainmen v. Jacksonville Terminal Co., 394 U.S. 369 (1969); Machinists & Aerospace Workers v. WERC, 427 U.S. 132 (1976); Golden Gate Transit Corp. v. City of Los Angeles, 475 U.S. 608 (1986). Cf. New York Telephone Co. v. New York Labor Dept., 440 U.S. 519 (1979).
- Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985) (upholding a state requirement that health-care plans, including those resulting from collective bargaining, provide minimum benefits for mental-health care).
- United States v. Kagama, 118 U.S. 375 (1886). Rejecting the Commerce Clause as a basis for congressional enactment of a system of criminal laws for Indians living on reservations, the Court nevertheless sustained the act on the ground that the Federal Government had the obligation and thus the power to protect a weak and dependent people. Cf. United States v. Holiday, 70 U.S. (3 Wall.) 407 (1866); United States v. Sandoval, 231 U.S. 28 (1913). This special fiduciary responsibility can also be created by statute. E.g., United States v. Mitchell, 463 U.S. 206 (1983).
- 16 Stat. 544, 566, 25 U.S.C. § 71.
- E.g., Puyallup Tribe v. Washington Game Dep’t, 433 U.S. 165 (1977); Washington v. Washington State Commercial Passenger Fishing Vessel Ass’n, 443 U.S. 658 (1979); Montana v. United States, 450 U.S. 544 (1981).
- McClanahan v. Arizona Tax Comm’n, 411 U.S. 164, 172 n.7 (1973). See also Morton v. Mancari, 417 U.S. 535, 551–553 (1974); United States v. Mazurie, 419 U.S. 544, 553–56 (1974); Bryan v. Itasca County, 426 U.S. 373, 376 n.2 (1976); White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 142 (1980); Ramah Navajo School Bd. v. Bureau of Revenue of New Mexico, 458 U.S. 832, 837 (1982); United States v. Lara, 541 U.S. 193, 200 (2004).
- White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 142–143 (1980); Ramah Navajo School Board v. Bureau of Revenue of New Mexico, 458 U.S. 832, 837–838 (1982). “The two barriers are independent because either, standing alone, can be a sufficient basis for holding state law inapplicable to activity undertaken on the reservation or by tribal members.” Id. at 837 (quoting White Mountain, 448 U.S. at 143).
- Ramah Navajo School Board v. Bureau of Revenue of New Mexico, 458 U.S. 832, 838 (1982). See also New Mexico v. Mescalero Apache Tribe, 462 U.S. 324 (1983).
- Three Affiliated Tribes v. Wold Engineering, 467 U.S. 138 (1984) (upholding state-court jurisdiction to hear claims of Native Americans against non-Indians involving transactions that occurred in Indian country). However, attempts by states to retrocede jurisdiction favorable to Native Americans may be held to be pre-empted. Three Affiliated Tribes v. Wold Engineering, 476 U.S. 877 (1986).
- Rice v. Rehner, 463 U.S. 713 (1983).
- McClanahan v. Arizona Tax Comm’n, 411 U.S. 164, 165 (1973).
- Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148 (1973); McClanahan v. Arizona Tax Comm’n, 411 U.S. 164 (1973); Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463 (1976); Bryan v. Itasca County, 426 U.S. 373 (1976); Washington v. Confederated Colville Tribes, 447 U.S. 134 (1980); Montana v. Blackfeet Tribe, 471 U.S. 759 (1985). See also Oklahoma Tax Comm’n v. Citizen Band Potawatomi Indian Tribe, 498 U.S. 505 (1991). A discernable easing of the reluctance to find congressional cession is reflected in more recent cases. See County of Yakima v. Confederated Tribes & Bands of the Yakima Indian Nation, 502 U.S. 251 (1992).
- Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148–149 (1973).
- White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980); Central Machinery Co. v. Arizona State Tax Comm’n, 448 U.S. 160 (1980); Ramah Navajo School Board v. Bureau of Revenue of New Mexico, 458 U.S. 832 (1982).
- 490 U.S. 163 (1989).
- Held permissible in Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982).
- 490 U.S. at 185 (distinguishing Bracker and Ramah Navaho School Bd).
- County of Yakima v. Confederated Tribes & Bands of the Yakima Indian Nation, 502 U.S. 251, 265 (1992). To be sure, this response was in the context of the reading of statutory texts and giving effect to them, but the unqualified designation is suggestive. For recent tax controversies, see Oklahoma Tax Comm’n v. Sac & Fox Nation, 508 U.S. 114 (1993); Department of Taxation & Finance v. Milhelm Attea & Bros., 512 U.S. 61 (1994); Oklahoma Tax Comm’n v. Chickasaw Nation, 515 U.S. 450 (1995).
- E.g., New Mexico v. Mescalero Apache Tribe, 462 U.S. 324 (1983).
- 31 U.S. (6 Pet.) 515 (1832). See also Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1 (1831). Under this doctrine, tribes possess sovereign immunity from suit in the same way that the United States and the states do. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978); United States v. United States Fidelity & Guaranty Co., 309 U.S. 506, 512–13 (1940). The Court has repeatedly rejected arguments to abolish tribal sovereign immunity or at least to curtail it. Oklahoma Tax Comm’n v. Citizen Band Potawatomi Indian Tribe, 498 U.S. 505, 510 (1991).
- United States v. Wheeler, 435 U.S. 313 (1978) (inherent sovereign power to punish tribal offenders). Compare California v. Cabazon Band of Mission Indians, 480 U.S. 202 (1987) (state regulation of on-reservation bingo is preempted as basically civil/regulatory rather than criminal/prohibitory), with Brendale v. Confederated Tribes & Bands of the Yakima Indian Nation, 492 U.S. 408 (1989) (extensive ownership of land within “open areas” of reservation by non-members of tribe precludes application of tribal zoning within such areas). See also Hagen v. Utah, 510 U.S. 399 (1994). Among the fundamental attributes of sovereignty which a tribe possesses unless divested of it by federal law is the power to tax non-Indians entering the reservation to engage in economic activities. Washington v. Confederated Colville Tribes, 447 U.S. 134 (1980); Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982).
- United States v. Kagama, 118 U.S. 375, 381 (1886); United States v. Wheeler, 435 U.S. 313, 323 (1978).
- United States v. Wheeler, 435 U.S. 313, 323 (1978). See South Dakota v. Bourland, 508 U.S. 679 (1993) (abrogation of Indian treaty rights and reduction of sovereignty). Congress may also remove restrictions on tribal sovereignty. The Court has held that, absent authority from federal statute or treaty, tribes possess no criminal authority over non-Indians. Oliphant v. Suquamish Indian Tribe, 435 U.S. 191 (1978). The Court also held, in Duro v. Reina, 495 U.S. 676 (1990), that a tribe has no criminal jurisdiction over non-tribal Indians who commit crimes on the reservation; jurisdiction over members rests on consent of the self-governed, and absence of consent defeats jurisdiction. Congress, however, quickly enacted a statute recognizing inherent authority of tribal governments to exercise criminal jurisdiction over non-member Indians, and the Court upheld congressional authority to do so in United States v. Lara, 541 U.S. 193 (2004).
- 470 U.S. 226 (1985).
- 1 Stat. 379 (1793).
- 470 U.S. at 246–48.
- 470 U.S. at 255, 257 (Justice Stevens).
- “The power of Congress over Indian affairs may be of a plenary nature; but it is not absolute.” United States v. Alcea Bank of Tillamooks, 329 U.S. 40, 54 (1946) (plurality opinion) (quoted with approval in Delaware Tribal Business Comm. v. Weeks, 430 U.S. 73, 84 (1977)).
- Morton v. Mancari, 417 U.S. 535, 555 (1974). The Court applied the standard to uphold a statutory classification that favored Indians over non-Indians. But in Delaware Tribal Business Comm. v. Weeks, 430 U.S. 73 (1977), the same standard was used to sustain a classification that disfavored, although inadvertently, one group of Indians as against other groups. While Indian tribes are unconstrained by federal or state constitutional provisions, Congress has legislated a “bill of rights” statute covering them. See Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978).
- United States v. Sioux Nation, 448 U.S. 371 (1980). See also Solem v. Bartlett, 465 U.S. 463, 472 (1984) (there must be “substantial and compelling evidence of congressional intention to diminish Indian lands” before the Court will hold that a statute removed land from a reservation); Nebraska v. Parker, 577 U.S. ___, No. 14–1406, slip op. at 5–6 (2016) (noting that “only Congress can divest a reservation of its land and diminish its boundaries,” but finding that the statute in question did not clearly indicate Congress’s intent to effect such a diminishment of the Omaha reservation).