Regulating Commerce: What Can We Do?


The Supreme Court will soon be deciding if all or part of the 2010 federal health care act went too far under the Congressional power to regulate interstate commerce. The question is to what extent does the “commerce clause” give Congress the power to regulate?

Art. I, Sec 8 (3) of the Constitution provides: “Congress shall have power…to regulate commerce…among the several states.” The first significant “commerce clause” case involved a challenge to a state law in Gibbons v Ogden (1824), where Chief Justice Marshall held Congress has the power to regulate every aspect of commercial intercourse, including every transaction not wholly carried out within the boundaries of a single state.

During the nation’s first 100 years, despite a federal power to regulate commerce, Congress passed no significant law in that regard, and instead most legislation was at the state level. Congress first used the “commerce clause” in 1887 to create the Interstate Commerce Commission (ICC) to regulate the railroads. Three years later, they added the Sherman Antitrust Act (1890).

An activist conservative Supreme Court however went right to work limiting any federal expansion of the power to regulate commerce. They held in 1895, while Congress could control railroads and common carriers, manufacturing conducted wholly within the confines of a single state, was outside their reach. In Hammer v Dagenhart (1918), Congress tried to eliminate child labor by establishing a minimum work age, but a conservative Court held the act exceeded their constitutional powers, because manufacturing was outside the reach of the “commerce clause.”

The interpretation of the “commerce clause” changed significantly during the Great Depression, when a new Court held in NLRB v Jones & Laughlin Steel 301 U.S. (1937), Congress could regulate manufacturing, even if it is based within one state. The Court abandoned the old distinction that kept manufacturing beyond the reach of federal regulation. The new test was any activity “affecting” interstate commerce could be subjected to regulation. In a challenge to the 1938 Fair Labor Standards Act, which regulated wages and hours, a progressive court in U.S. v Darby (1941), finally overruled the old 1918 Hammer decision above.

In Wickard v Filburn 317 U.S. (1942), the Court upheld the power of the federal government to regulate local farmers, who never did any business outside their state, on the grounds their production nevertheless affected aggregate national supplies and prices. In Heart of Atlanta Motel v U.S. 379 U.S. (1964), a local motel in Georgia that discriminated against blacks was subjected to the federal Civil Rights Act of 1964, because they accepted guests from out-of-state, and therefore engaged in interstate commerce.

The question now is whether the Supreme Court will limit the national power to regulate health care providers, businesses that provide health insurance to workers, as well as the powerful health insurance industry. Will they exclude the “individual mandate” from the reach of the commerce clause? The answer is there are five conservative votes on a 9-member Supreme Court, and though we have no crystal ball, at least 4 or 5 of them will vote to overturn at least part of the new law.

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