Commerce Clause

Question 1

What are the three questions to keep in mind regarding the commerce clause?

Answer 1

1. What is commerce?
2. What’s does “between the states” mean?
3. Does the 10th amendment restricted this power in any way?

Question 2

What’s does commerce mean?

Answer 2

Commerce describes the commercial intercourse between nations or states, and is regulated by prescribing rules for carrying on that intercourse

Includes good and services.

Commerce must and does include navigation.
(Gibbons v. Ogden)

Question 3

What are the two views of the 10th amendment?

Answer 3

1. Congress can only act under enumerated power.

2. Creates a zone of interest were states can regulate (more power to the states).

Question 4

U.S. v. E.C. Knight

Answer 4

Sugar company attempted to acquire other sugar companies giving it 98% of the sugar refining capacity in the US. Sherman act was designed to try and stop monopolies.

Court said you cannot stop the first company from acquiring the other companies and getting a monopoly. Not trying to regulate commerce, trying to stop production, or ultimately trying to stop the purchase of stock.

Question 5

What is the indirect versus direct to test in E. C. Knight

Answer 5

Court asks does this act have a direct effect on commerce, or doesn’t have an indirect effect?
Indirect effects do not fall under the commerce clause (later overruled).

Court found the Sherman act was indirect because it only affected manufacturing, and that is in the domain of the states.

Question 6

Shreveport rate case – what is the substantial economic effects test?

Answer 6

Congress can regulate intrastate activities that affect interstate commerce.

Congress limited rates for a railroad company that do not travel outside the state. Ruled constitutional.

Question 7

What is the stream of commerce test?

Answer 7

The federal government can regulate local activities when the products are expected to enter another state during the course of commerce.

Swift & Co. v. U.S. - meat dealers fixing the price of beef.

Question 8

NLRB v. Jones & Laughlin Steel Corp.

Answer 8

Significant shift in the court’s view of the commerce clause, changed his mind from previous cases.

Eliminated the distinction between production commerce.

NLRB regulated hours and wages for workers. Court says this does have an effect on interstate commerce and Congress can regulate.

Question 9

Wicked v. Filburn

Answer 9

Wheat case.

Even though the trivial amount of commerce affected by one person through growing wheat for personal consumption, the “substantial effect” of many people growing their own wheat can have a negative impact on interstate commerce.

Question 10

U.S. v. Lopes

Answer 10

Gun Free School Zones@made it a federal offense to possess a firearm in a school zone.

Government claimed guns in school affected commerce by increasing crime in the area and lowering the educational opportunities of schoolchildren, which negatively affected commerce. Court ruled the law was unconstitutional and would turn the commerce clause into a general police power which should be retained by the states.

Question 11

Gonzales v. Raich

Answer 11

California allows individuals to grow and use their own marijuana for medicinal purposes. Raich filed suit to seek declaratory relief against enforcement of the federal Controlled Substance Act.

production of a commodity meant for home consumption has a substantial affect on supply and demand in the national market for that economy. There is a potential that their plants might enter the stream of commerce, and Congress has the power to prohibit possession or manufacture of an article of commerce.

Question 12

National Federation of Independent Businesses case (healthcare)

Answer 12

Congress cannot regulate non-activity under the commerce clause.

Congress does have the power to them place taxes on non-activity. Authority to regulate health insurance through a tax imposed on individuals who do not have or purchase health insurance. (Tax, not the penalty)

Question 13

How do you distinguish a tax from a penalty?

Answer 13

Is the amount proportional to the infraction? If no, it’s leans towards penalty.

Is there a scienter requirement? (State of mind, did you “knowingly”…) If yes, more of a penalty.

Do the proceeds go directly to the IRS?

Question 14

South Dakota v. Cole (Conditions on States)

Answer 14

Congress enacted a law that any state to had a drinking limit of less than 21 years of age would lose 10% of the federal highway funds.

The federal government can impose conditions on grants to states if:
– Congress is acting for the general welfare
- the conditions are clear
- they are related to the purpose of the spending program
– they do not violate another part of the Constitution

the conditions may not be overly coercive.

Question 15

What is the dormant commerce clause?

Answer 15

State and local laws are unconstitutional if they place an undue burden on interstate commerce. Even if not directly in contravention to congressional/federal law.

Question 16

What are three ways a state law can discriminate against out-of-staters?

Answer 16

1. Facially – the law clearly states that an out-of-state person will be treated differently.
2. In purpose – the intent is clearly to discriminate, even though the law does not state it.
3. In effect – the law does not intend to discriminate but in actuality it does

Question 17

What is the standard of review for state statutes that are facially discriminatory?

Answer 17

Strict scrutiny.

Question 18

What is a requirement freight facially discriminatory law to be upheld?

Answer 18

Must be necessary to achieve an important interest. Necessary means the least restrictive alternative, and no less restrictive way. (City of Philadelphia v. New Jersey, New Jersey law prohibited the import of most solid or liquid waste that was collected outside of the state.)

Question 19

What are the exceptions to the dormant commerce clause?

Answer 19

Congressional approval – if Congress says the law is okay, then the law will stand. Example regulation of alcohol.

Market Participant – a state can favor its own citizens in receiving government benefits or dealing with government owned businesses.
- Exception to the exception – the state cannot impose conditions on commerce downstream of the market in which it participates. (South-central timber development)

Question 20

Washington Apple case

Answer 20

Washington state enacted a law that added a second sticker requirement to be placed on apples. Law applied to all states equally and was not racially discriminatory.

A law with a discriminatory effect on out-of-state or’s must provide local benefits and the state must demonstrate that there were inadequate nondiscriminatory alternatives. (Law overruled)

Question 21

Minnesota v. Clover Leaf Creamery Company

Answer 21

Laws with a discriminatory effect or purpose will be upheld if they impose only an incidental burden on out of staters.

Benefits verse burdens test
– benefits to the in staters
– burdens to the out of staters

Question 22

What is the analysis for the dormant commerce clause?

Answer 22

1. Is the regulation facially discriminatory? If yes, other important reasons, and is this regulation the only way to accomplish those reasons.
2. What type of discrimination is it? (effect or purpose)