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Response to a Question about the Commerce Clause

by Professor Will Huhn on October 17, 2009

in Constitutional Law,Wilson Huhn

     Yesterday Dave, a frequent commenter, in response to a column by my colleague Lynn Lenart, challenged the constitutionality of the Environmental Protection Act.  Specifically, he argued that Congress lacks the authority under the Commerce Clause of the Constitution to regulate air and water pollution that occurs entirely within the state of Ohio.  I disagree.

     Dave writes:

As long as this is a law forum, can we speak of the legitimacy of the EPA? I don't mean the Ohio EPA, we have the right to do to ourselves whatever we want.

But the legitimacy of the EPA comes from the commerce clause. Congress has the authority to regulate interstate commerce. But this authority gets stretched and twisted over time.

If we have a soot problem in the area, but the problem does not extend east to Geauga or Ashtabula counties, then I think it is reasonable to assume that it is not making it to Pennsylvania. If these are not interstate problems, why is the Federal Government involving itself?

     Like Supreme Court Justice Clarence Thomas, Dave wishes to return to the day when the states, and not the federal government, had principal responsibility for regulating the economy.  He and the Justice would limit the federal government to the role of regulating the movement of goods interstate, and would not confer upon the federal government the authority to legislate with respect to the production of goods and services.

     The Commerce Clause states:

"The Congress shall have Power … To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes …."

     As a textual matter, one could argue either that "commerce" is limited to buying, selling, and transporting goods, or that it includes the manufacture of goods as well.  Dave and Justice Thomas would adopt the narrow construction of the Commerce Clause, and their argument would have had great merit when the Constitution was written in 1787.  The Framers of the Constitution and the people of America at that time probably did not intend to give Congress the power to regulate the entire economy, but only the movement of goods interstate. 

     At that time the word "commerce" had a very limited meaning.  Most of the population lived and worked on family farms.  It is true that there was a blossoming textile industry in the north, but in the south the economy was almost feudal in nature – goods were processed and produced on the large plantations, to which the surrounding small farmers brought raw materials and received finished goods in return.  On the whole what happened in one part of the country had very little if any impact on other parts of the country or the economy as a whole.

     Compare that to the world we live in now.  There is hardly an item that we purchase that has not originated in different states or countries, sometimes with elements and components from dozens of different sources.  Regional, national, and international businesses extract, grow, or make raw materials, fashion or assemble them into finished products, and ship them both locally and to distant shores. 

     Franklin Delano Roosevelt recognized the inescapable fact that "commerce" is no longer in the horse and buggy stage, and while he was President the Supreme Court accepted this reality.  The standard that the Supreme Court adopted in the late 1930s and early 1940s is that Congress has the power to regulate all economic activity that "substantially affects" interstate commerce.  And this test is applied not only to individual, isolated acts, but to classes of activity.  It is no doubt true that a single act of polluting the environment, by itself, does not "substantially affect" interstate commerce.  But pollution as a whole does.  Similarly, a single act of racial or gender discrimination, a single act of paying someone less than a minimum wage, a single act constituting an unfair labor practice, would not, by itself, affect the economy or the movement of goods among the states.  However, taken as a whole, discrimination, unfair wages, and refusals to engage in collective bargaining each have a profound effect on the economy, and abuses in any one of these areas could destroy interstate commerce.  Accordingly Congress may enact laws that prohibit actions that pollute the environment, discriminate against classes of persons, or exploit workers.

     Chief Justice John Marshall recognized this principle in 1824 in the case of Gibbons v. Ogden.  He said that Congress has the power to regulate activities that occur within the states only if those activities "affect other states":

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. The completely internal commerce of a State, then, may be considered as reserved for the State itself.

     At that time neither Justice Marshall nor anyone else conceived that there would come a time when our economy would become so interrelated that problems or abuses in one area would affect the entire country – but that has come to pass.  While the law itself does not change, in applying the law the courts must take into account how society has changed since the law was written.  Actions and even classes of activites that did not affect interstate commerce in 1787 now profoundly affect commerce. 

     Furthermore there is a practical problem with Dave's argument.  The states are utterly powerless to address the issues that we face.  Imagine the State of Connecticut attempting to regulate the insurance or pharmaceutical industries.  Imagine the State of Georgia regulating labor practics on its peach farms.  Imagine the State of Michigan setting emission standards or safety requirements for automobiles.  The simple fact is that even if our elected officials in state government were inclined to adopt laws preserving the environment and protecting workers and consumers, they lack the political muscle to regulate big business.  States and localities, desperate for jobs and economic investment, fall all over themselves to subsidize private investment with tax abatements and public improvements.  They are concerned with perserving and growing their own economies – not with what is best for the nation as a whole. 

     Furthermore, the laws of economics militate against economic regulation at the level of the states.   The history of the progressive movement in America bears witness to the fact  that, while labor and consumers occasionally were successful in enacting limited reforms within some states, other states would lure business away by refusing to enact those reforms.  If one state adopted an unemployment tax to protect laid-off workers, another state without such a tax would become more attractive to business.  If one state required employers to recognize trade unions, another state could undercut that reform by outawing unions.  Today, if only one state had environmental laws, businesses would flee that state for places that did not place as high a premium on clean air and clean water.  In the absence of a broad interpretation of the Commerce Clause vesting regulatory power in Congress, there would be "race to the bottom" among the states.

     And this process is not yet complete.  The problem today is not that the federal government has taken the power to regulate business away from the states.  The problem that we face is that the American government may not be powerful enough to regulate the activities of multinational companies operating in a global marketplace.  If we are in economic competition with countries that produce goods more cheaply because they despoil the environment or because their workers cannot bargain collectively, our industries and our ecomomy will suffer.  And while we may refuse to import goods from such countries, they will inevitably gain an unfair advantage over us in the global marketplace unless we create international bodies that will have both the power and the authority to enact and enforce laws that will protect consumers, preserve the environment, and ensure fair compensation and safe conditions for all workers everywhere.

     I don't necessarily like that prospect.  But I think that it is inevitable unless we are willing to go back to lives of subsistence farming.