The Commerce Clause - Sept. 19, 21, and 26

Question 1

If Congress, under its Commerce Clause power, passes a law that does not specifically exclude the states from its reach, does that law automatically apply to the states? (Q)

Answer 1

No. If Congress, under its Commerce Clause power, passes a law that does not specifically exclude the states from its reach, the law does not automatically apply to the states. Congress must affirmatively include a plain statement that unambiguously indicates that the regulation applies to the states.

For laws passed under Congress’s Commerce Clause powers, courts will not assume that Congress meant to invade the area of state sovereignty. If the law is silent, or if there is any ambiguity about whether Congress meant for a law passed under its Commerce Clause power to apply to the states, then that law does not apply to the states.

Question 2

Does the Tenth Amendment to the U.S. Constitution prevent the federal government from regulating the states as market participants that buy or sell goods and services? (Q)

Answer 2

No. The Tenth Amendment does not prevent the federal government from regulating the states as market participants that buy or sell goods and services. For a law to apply to the states as market participants, Congress must include an unambiguous and plain statement indicating that the law is meant to apply to state market participants. As long as the federal law contains that clear, plain statement, the federal law governs both private and state entities that participate in the market.

However, the Tenth Amendment does prevent Congress from regulating the states in their sovereign capacities. If a state is acting to regulate a market, then the state is acting in its sovereign capacity rather than as a market participant.

Question 3

Congress enacted a new disclosure statute. Under this new statute, any entities that sold bonds to the public must have made certain mandatory disclosures in the bond-offering prospectus. Congress included a plain and unambiguous statement in the statute which stated that the law’s disclosure provisions applied to states that sold bonds to the public. One state sold bonds to the general public but it did not make the mandated disclosures in the bond-offering prospectus. The federal government sought to enforce the new mandatory-disclosure requirement against the state. The state argued that the Tenth Amendment to the U.S. Constitution gave the state immunity from having to comply with this federal law.

Is the state correct? (Q)

Answer 3

No. The state is incorrect. The Tenth Amendment prevents Congress from regulating the states in their sovereign capacities. However, the Tenth Amendment does not prevent the federal government from regulating the states as market participants that buy or sell goods and services. For a law to apply to the states as market participants, Congress must include an unambiguous and plain statement indicating that the law is meant to apply to state market participants. If the law contains such a statement, then the Tenth Amendment does not apply.

Here, the federal law does not regulate the states in their sovereign capacities. Rather, the law regulates the states only as participants in the bond market. Further, the law contains a plain statement that makes it clear that the law is meant to apply to state bond market participants. The Tenth Amendment does not apply. Thus, the state is incorrect.

Question 4

In addition to the federal government’s immunity from state taxation and regulation, what are the main federalism-based limits on state authority? (Q)

Answer 4

In addition to the federal government’s immunity from state taxation and regulation, the main federalism-based limits on state authority are:

the Dormant Commerce Clause, which limits the states’ ability to burden interstate commerce; and,
the preemption doctrine, under which federal law generally trumps conflicting state laws.
All three federalism-based limits on state authority derive from the Supremacy Clause.

Question 5

What does the Dormant Commerce Clause prohibit? (Q)

Answer 5

The Dormant Commerce Clause, also called the negative Commerce Clause, prohibits states from unjustifiably burdening or discriminating against interstate commerce. The Commerce Clause provides that the federal government has the power to regulate interstate commerce. The negative implication is that the states generally do not have the power to regulate interstate commerce.

The dormant aspect of the Commerce Clause means that a state cannot:

impede or interfere with interstate commerce (i.e., burden) or
favor local, in-state commerce over out-of-state commerce (i.e., discriminate).

Question 6

In the context of the Dormant Commerce Clause, what is a legitimate local objective that a state law may serve? (Q)

Answer 6

In the context of the Dormant Commerce Clause, legitimate local objectives include the subjects of the state’s police power—the general health, safety, and welfare of the state’s citizens. A state may pass regulations that affect interstate commerce, if, among other requirements, those regulations serve legitimate local objectives.

Protection of local economic interests is not a legitimate objective. State laws serving no purpose other than economic protectionism are invalid per se.

Question 7

If a state law facially discriminates against out-of-state interests, what requirements must be met for the law to be constitutional under the dormant aspect of the Commerce Clause? (Q)

Answer 7

To be constitutional under the Dormant Commerce Clause, a state law that facially discriminates against out-of-state interests must:

advance a legitimate local purpose and
be the least discriminatory way of achieving that purpose.

Pure economic protectionism (i.e., shielding in-state interests from out-of-state competition) is never a legitimate purpose. Purely protectionist laws are virtually per se invalid. Even if a state has a purportedly legitimate interest in discriminating against out-of-state interests, that interest will be given the strictest scrutiny. To meet the second half of the test, discriminating against out-of-state interests must be essential to achieving the state’s objective. Like the first part of the test, whether there are any possible nondiscriminatory alternatives will be given the strictest scrutiny.

Question 8

Concerned about the survival of local wild mountain trout, a state government prohibited selling locally caught wild mountain trout to out-of-state purchasers. A restaurant operated just across the state line and regularly purchased wild mountain trout from suppliers in the state. However, the ban on sales to out-of-state purchasers caused the restaurant a significant trout-supply problem that impacted the restaurant’s business. The restaurant sued, arguing that the ban violated the Dormant Commerce Clause.

Does the ban violate the Dormant Commerce Clause? (Q)

Answer 8

Yes. The ban violates the Dormant Commerce Clause. The ban facially discriminates against out-of-state interests and is virtually per se invalid. States cannot unjustifiably burden or discriminate against interstate commerce. A law that facially burdens or discriminates against out-of-state interests is constitutional only if the regulation:

advances a legitimate local purpose and
is the least discriminatory way of achieving that purpose.
This test creates a rule of virtually per se invalidity that requires the strictest scrutiny.

Here, the ban facially discriminates against out-of-state interests. The conservation of a native fish population is a legitimate local purpose that is advanced by the ban. However, because less discriminatory means also exist to advance this purpose, such as limiting the total number of fish that can be caught, the ban violates the Dormant Commerce Clause.

Question 9

What must a state seeking to defend a state law against a Dormant Commerce Clause challenge prove if the challenged law does not facially discriminate against interstate commerce? (Q)

Answer 9

If a state law does not facially discriminate against interstate commerce, a state defending the law from a Dormant Commerce Clause challenge must show that:

the law advances a legitimate local objective,
the law is rationally related to the objective, and
the burdens imposed on interstate commerce are not clearly excessive as compared to the local benefits.

In determining whether the state interest outweighs the effect of the regulation, courts consider the extent of the burden on interstate commerce; the local benefits to the state; and the availability of reasonable, adequate, and nondiscriminatory alternatives. State laws imposing severe burdens on interstate commerce tend to be unconstitutional, even if they advance legitimate local interests. State laws imposing incidental burdens tend to be upheld, unless the burdens are clearly excessive in relation to the putative local benefits.

Question 10

In a Dormant Commerce Clause case, how does the court weigh the state’s interest against the burden on interstate commerce imposed by the state law? (Q)

Answer 10

In a Dormant Commerce Clause case, to determine whether the state’s interest outweighs the burden on interstate commerce imposed by the state law, the court will consider:

the extent of the burden or discrimination on interstate commerce;
the local benefits to the state, and
the availability of reasonable, adequate, and nondiscriminatory alternatives.

The state must prove is that its interest in the legitimate local objective is not outweighed by the law’s discriminatory effect on interstate commerce. State laws imposing severe burdens on interstate commerce tend to be unconstitutional under the Dormant Commerce Clause, even if they advance legitimate local interests. In contrast, state laws imposing only incidental burdens on interstate commerce tend to be upheld, unless the burdens are clearly excessive in relation to the putative local benefits.

Question 11

If a state regulation only incidentally impacts interstate commerce, what elements will a court balance to determine whether the regulation violates the dormant aspect of the Commerce Clause? (Q)

Answer 11

If a state regulation only incidentally impacts interstate commerce, a court will balance the regulation’s burden on interstate commerce against its legitimate local benefits to determine whether the regulation violates the dormant aspect of the Commerce Clause.

The court will find a violation if the burden imposed on interstate commerce is clearly excessive when weighed against legitimate local benefits. Health, safety, and welfare benefits are local benefits that are legitimate.

Question 12

A state government enacted a law limiting the length of trains to no more than 100 total cars. Trains longer than 100 cars needed to be reconfigured before entering the state or else be re-routed to avoid entering the state at all. The law’s legislative history said that the legislature believed shorter trains were safer because shorter trains required shorter braking times to stop. However, safety data showed that the most dangerous aspect of freight-train operation was the initial crossing of a train on a street or highway, not the inability to brake quickly. Having more short trains entering crossings was more dangerous than having fewer long trains because of the increased risk of automobile-train collisions.

Does the state law violate the Dormant Commerce Clause? (Q)

Answer 12

Yes. The state law violates the Dormant Commerce Clause. If a facially neutral state law incidentally impacts interstate commerce, the law will violate the Dormant Commerce Clause if the burden the law places on interstate commerce is clearly excessive when weighed against legitimate local benefits.

Here, because the law does not distinguish between interstate and intrastate trains, it is not facially discriminatory. However, forcing all trains in a multi-state region to reconfigure or re-route is a serious burden on interstate train transportation. These burdens are weighed against any legitimate local benefits. However, this law increases the risk of automobile-train collisions. The local benefits are, at most, minimal. The law’s burden on interstate commerce is clearly excessive relative to any local benefits. Thus, the law violates the Dormant Commerce Clause.

Question 13

May states ever pass laws that affect interstate commerce? (Q)

Answer 13

Yes. States may pass laws that affect interstate commerce if those laws are rationally related to a legitimate local objective, and the state’s interests in those local objectives are not outweighed by the burden or discrimination the laws place on interstate commerce. In determining whether the state interest outweighs the effect of the regulation, courts consider:

the extent of the burden or discrimination on interstate commerce;
the local benefits to the state; and
the availability of reasonable, adequate, and nondiscriminatory alternatives.

State laws imposing severe burdens on interstate commerce tend to be unconstitutional, even if they advance legitimate local interests. State laws imposing incidental burdens tend to be upheld, unless the burdens are clearly excessive in relation to the putative local benefits.

Question 14

May a state adopt policies governing the state’s direct participation in a market that favor local interests over out-of-state interests without violating the Dormant Commerce Clause? (Q)

Answer 14

Yes. A state may adopt policies governing the state’s direct participation in a market that favor local interests over out-of-state interests without violating the Dormant Commerce Clause. Under the market-participant exception, if a state is acting as a market participant rather than as a sovereign regulator, then the state can adopt and enforce policies that burden or discriminate against interstate commerce without violating the dormant Commerce Clause. This exception applies to both state and local governments.

However, the state may only regulate direct transactions in the immediate market in which it is buying or selling. The state may not attempt to regulate indirect transactions occurring before its sale or purchase in upstream markets or occurring after its sale or purchase in downstream markets.

Question 15

A state operated its own colleges. The state also provided a property-tax exemption for a private college if 51 percent of its students were in-state residents. However, the law denied the exemption to all other private colleges because at least 50 percent of the students at those private colleges were not in-state residents. A private college in the state sought to claim the property-tax exemption, but it was denied because 75 percent of its students were from out-of-state. The college sued the state arguing that this denial violated the Dormant Commerce Clause. The state responded that it was in the market of providing college services. The state claimed that this meant the market-participant exception protected it from any Dormant Commerce Clause liability.

Does the market-participant exception to the Dormant Commerce Clause apply to the state? (Q)

Answer 15

No. The market-participant exception does not apply. The Dormant Commerce Clause generally prohibits states from discriminating against out-of-state interests. However, under the market-participant exception, a state can adopt and enforce policies as part of its direct participation in a market that discriminate against out-of-state interests without violating the Dormant Commerce Clause. This exception only applies to actions taken as an ordinary market participant, like preferring in-state suppliers. Imposing a tax is virtually always a sovereign action.

Here, the state is in the market of providing college services. However, most colleges do not impose taxes on other colleges. This tax was imposed by the state in its sovereign capacity, not in its role as fellow provider in the market of college services. Therefore, the market-participant exception does not apply.

Question 16

For state regulations that impact interstate commerce, does the market-participant exception apply to both direct markets and related markets that are downstream from the direct market? (Q)

Answer 16

For state regulations that impact interstate commerce, does the market-participant exception apply to both direct markets and related markets that are downstream from the direct market?

Question 17

In the context of evaluating a state tax on interstate commerce under the Dormant Commerce Clause, under what circumstances does a taxed person or entity have a substantial nexus with the state? (Q)

Answer 17

A taxed person or entity has a substantial nexus with the state if the business on which the tax is based constitutes a substantial availment of the privilege of conducting business within the state. Substantial availment can be based on the volume of business conducted, and may include both physical delivery of goods and a significant online presence. The validity of the tax does not depend on whether the taxpayer has an actual physical presence within the state. The substantial nexus requirement limits the reach of the state’s taxing authority to prevent undue or unnecessary burdens on interstate commerce.

Question 18

May a state tax interstate commerce without violating the Dormant Commerce Clause? (Q)

Answer 18

Yes. A state government may impose a tax on interstate commerce without violating the Dormant Commerce Clause if the tax:

is applied to a person or activity that has a substantial nexus with the state,
is fairly apportioned,
does not discriminate against interstate commerce, and
is fairly related to the services provided by the state.

The U.S. Supreme Court has reasoned that the fair apportionment and nondiscrimination requirements prohibit taxes that impose an unfair share of the tax burden on interstate commerce. The substantial nexus and fairly related requirements limit the reach of a state’s taxing authority to prevent undue burden on interstate commerce.

Question 19

Does the existence of the Dormant Commerce Clause stem from the Supremacy Clause? (Q)

Answer 19

Yes. The Supremacy Clause is essentially the rationale behind the Dormant Commerce Clause. The supremacy of federal laws on interstate commerce over state laws yielded the Dormant Commerce Clause’s restrictions on state laws burdening or discriminating against interstate commerce.

Question 20

What was the rule from United States v. Lopez (1995)? (Q)

Answer 20

While Congress has broad lawmaking authority under the Commerce Clause, this power does not extend so far as to authorize the regulation of the carrying of handguns (near schools), particularly when doing so has no clear effect on the economy overall.

The Court held that Congress has power under the commerce clause to regulate only the channels, instrumentalities, and actions that substantially affect interstate commerce. Id. The Court further found that the issue of guns in schools is “truly local” and strictly within the bounds of the states’ police powers.

Question 21

What was the rule from Gonzales v. Raich (2005)? (Q)

Answer 21

Congress may regulate the use and production of home-grown marijuana as this activity, taken in the aggregate, could rationally be seen as having a substantial economic effect on interstate commerce.

Question 22

What was the rule from Gibbons v. Ogden (1824)? (Q)

Answer 22

If a state and Congress both pass conflicting laws regulating interstate commerce, the federal law governs pursuant to Congress’s constitutional grant of power to regulate interstate commerce.

Question 23

What was the rule from United States v. Darby (1941)? (Q)

Answer 23

Congress may regulate the labor standards involved in the manufacture of goods for interstate commerce and may exclude from interstate commerce any goods produced under substandard labor conditions.

Question 24

What was the rule from Wickard v. Filburn? (1942) (Q)

Answer 24

Congress may regulate local activity if that activity exerts a substantial economic effect on interstate commerce. Under the cumulative-effect theory, homegrown wheat was rationally related to the interstate wheat market.

Question 25

What was the rule from Heart of Atlanta Motel, Inc. v. United States (1964)? (Q)

Answer 25

Congress may enact regulations that prevent racially discriminatory policies in hotel accommodations because of the negative effects of those policies on interstate commerce.

Question 26

What was the rule from Katzenbach v. McClung (1964)? (Q)

Answer 26

Congress may regulate the discriminatory policies of restaurants through Title II of the Civil Rights Act if those policies have a substantial effect on interstate commerce.

Question 27

What was the rule from NFIB v. Sebelius (2012)? (Q)

Answer 27

Congress could not, as part of its power to regulate commerce, require individuals to maintain a minimum level of health insurance. Although the consumption of medical services by uninsured Americans unquestionably has a substantial effect on interstate commerce, the Court held that this type of inaction wasn’t the kind of commerce that Congress was allowed to regulate.

Question 28

What was the rule from NLRB v. Jones & Laughlin Steel Corp. (1937)? (Q)

Answer 28

SCOTUS found that the National Labor Relations Act (NLRA) was constitutional as applied to a manufacturer operating solely in Pennsylvania, because the manufacturer did a substantial amount of business outside of Pennsylvania, and therefore its activities had a substantial effect on interstate commerce.

Question 29

What was the rule from Perez v. United States? (1971)? (Q)

Answer 29

SCOTUS ruled that the commerce clause empowers Congress to regulate loan sharking because it falls within a class of criminal activity largely controlled by organized crime with a substantially adverse effect on interstate commerce.

Question 30

What was the rule from National Fed’n of Indep. Bus. v. Sebelius (2012)? (Q)

Answer 30

The court held that the individual mandate of the Patient Protection and Affordable Care Act (ACA) requiring citizens to purchase insurance exceeded Congress’s powers under the commerce clause because it forced citizens to engage in commerce.

Question 31

What does the Commerce Clause give Congress the power to do? (Q)

Answer 31

The Commerce Clause gives Congress expansive powers. Under this clause, Congress may regulate three broad categories of activities: (1) the channels of interstate commerce, (2) the instrumentalities of interstate commerce (e.g., the people or things involved in interstate commerce), and (3) activities that substantially affect or substantially relate to interstate commerce. However, one of the few limitations on the powers granted by the Commerce Clause is that it does not allow Congress to regulate non-economic activity.

Question 32

What is interstate commercial activity? (Q)

Answer 32

Interstate commercial activity is any conduct carried on for business purposes that crosses state lines. Interstate commercial activity includes the use of the channels or instrumentalities of interstate commerce. Congress has authority to regulate interstate commercial activity pursuant to its Commerce Clause powers.

Question 33

What powers does Congress have under the Commerce Clause? (Q)

Answer 33

The Commerce Clause grants Congress the power to regulate commerce:

with foreign nations (also known as foreign commerce),
among the several states (also known as interstate commerce), and
with the Indian tribes (also known as Indian commerce).
The most important power granted by this clause is the power to regulate interstate commerce.

Question 34

What are the channels of interstate commerce? (Q)

Answer 34

The channels of interstate commerce are the means or conduits that allow for the movement of goods, people, or communications between states. Channels of interstate commerce include railroads, highways, waterways, airspace, phone lines, and the Internet. The Commerce Clause gives Congress the authority to regulate channels of interstate commerce.

Question 35

What are the instrumentalities of interstate commerce? (Q)

Answer 35

The instrumentalities of interstate commerce are those instruments used to carry out commerce between states. Instrumentalities of interstate commerce include trains, planes, boats, and other vehicles. Congress may regulate instrumentalities of interstate commerce pursuant to its authority under the Commerce Clause.

Question 36

What are the three main areas of interstate commerce that Congress can regulate under the Commerce Clause? (Q)

Answer 36

Under the Commerce Clause, the three main areas of interstate commerce that Congress can regulate are:

the instrumentalities of interstate commerce, including trains, planes, and other vehicles;
the channels of interstate commerce, including roads, railroads, airways, and navigable waterways; and
economic activity that, if aggregated across the national economy, substantially affects interstate commerce.

Question 37

What is intrastate commercial activity? (Q)

Answer 37

Intrastate commercial activity is any conduct carried out for business purposes that occurs entirely within a single state. This is in contrast to interstate commercial activity, which crosses state lines.

The Commerce Clause does not grant Congress the power to regulate intrastate commercial activity unless it has a substantial economic effect on interstate commerce.

Question 38

May Congress regulate some intrastate commercial activity? (Q)

Answer 38

Yes. Congress may regulate some intrastate commercial activity. Although the Commerce Clause specifically grants Congress the power to regulate interstate commerce, not intrastate commerce, Congress may also regulate any intrastate commercial activity that has a substantial economic effect on interstate commerce.

Question 39

What are the bases of Congress’s power to regulate wholly intrastate commerce? (Q)

Answer 39

Congress can regulate wholly intrastate commercial activity if:

the activity is within the stream of commerce, as opposed to outside the stream of commerce, or
the activity has a close, substantial relationship with interstate commerce, as opposed to a remote relationship with interstate commerce.
The U.S. Supreme Court has built upon these analytical frameworks in formulating its modern approach to evaluating Commerce Clause challenges to federal statutes.

Question 40

What is the stream-of-commerce theory of Congress’s commerce power? (Q)

Answer 40

The stream-of-commerce theory of Congress’s commerce power assumes that any activity in the chain of events that leads to or follows from trade or business dealings crossing state lines is subject to congressional commerce power.

Intrastate activity therefore becomes part of the current or stream of commerce—and subject to Congressional regulation—if, at some point in the commercial lifespan of a good or service, the good or service crosses state lines.

Question 41

Under what circumstances will a court find that intrastate commercial activity has a substantial effect on interstate commerce? (Q)

Answer 41

The Supreme Court has not quantified what constitutes a substantial effect on commerce. However, the Court generally will uphold the regulation of intrastate commercial activity that either has or might have some identifiable effect on interstate commerce.

Ostensibly, the substantial-effects doctrine only applies to economic activity. However, the Court has defined economic activity broadly to include both commercial transactions and the non-commercial production and consumption of commodities. The Court has held that gun possession in school zones and violence against women are not economic activity because the only way to connect those activities to interstate commerce is through a lengthy, speculative chain of causes and effects. Absent such an attenuated connection to commerce, the courts are likely to uphold the regulation of virtually any intrastate commercial activity.

Question 42

Under what circumstances does wholly intrastate commercial activity have a close and substantial relationship with interstate commerce? (Q)

Answer 42

Wholly intrastate commercial activity has a close and substantial relationship with interstate commerce when control of the intrastate activity is essential or appropriate to the security, efficiency, and maintenance of conditions under which interstate commerce is conducted.

A close and substantial relationship exists when governing the interstate commerce would necessarily require governing the intrastate commercial activity because the two are so related.

Question 43

For purposes of the Commerce Clause, what is the aggregation principle? (Q)

Answer 43

The aggregation principle is a standard that courts use to evaluate whether intrastate commercial activity has a substantial economic effect on interstate commerce. Under the aggregation principle, a court may evaluate not only the effect of one individual’s action, but also the cumulative effect of similar actions within the entire class of regulated conduct.

Even if the single individual’s actions would not have a substantial effect on interstate commerce, Congress may regulate the activity if the activity, in the aggregate, does have a substantial effect on interstate commerce.

Question 44

Concerned about the large numbers of states legalizing the recreational use of marijuana, Congress enacted a new criminal law that imposed a tough criminal sentence on anyone who grew marijuana. A glaucoma patient found that smoking marijuana relieved the symptoms of his disease. Federal agents raided the patient’s home. The agents seized and destroyed two large marijuana plants on the patient’s patio. The government indicted the patient for violating the federal ban on growing marijuana. The patient argued that Congress cannot regulate growing marijuana for personal, non-commercial use, especially because there was no legal, national market for marijuana.

Is the patient correct? (Q)

Answer 44

No. The patient is incorrect. The law is a valid exercise of Congress’s Commerce Clause power. Under the Commerce Clause, Congress can regulate any economic activity that, if aggregated across the national economy, substantially affects interstate commerce.

Here, it is irrelevant that the patient grew the marijuana for personal use and did not intend to sell marijuana to others. If the production of all marijuana for personal use across the national economy is considered together, the aggregated production substantially affects both the availability and the price of marijuana. Thus, despite the absence of a legal national market for marijuana, producing personal marijuana is an economic activity that substantially affects interstate commerce. Congress can regulate marijuana plants grown exclusively for non-commercial, personal use under the Commerce Clause. Thus, the patient is incorrect.

Question 45

Under what circumstances may Congress use its commerce power to regulate intrastate commercial activity that has no substantial effect on interstate commerce? (Q)

Answer 45

Congress may use its commerce power to regulate intrastate commercial activity that has no substantial effect on interstate commerce itself if the activity is an essential part of a larger regulation of economic activity, in which the regulatory scheme would be undercut unless the intrastate activity were regulated.

Question 46

What is rational basis review? (Q)

Answer 46

Rational basis review is a standard of judicial review in which the court upholds legislation if it is rationally related to a legitimate government interest.

Question 47

What standard of review does a district court use when a claimant raises a Commerce-Clause challenge to a federal statute regulating wholly intrastate activity? (Q)

Answer 47

A district court uses a rational basis standard of review when a claimant raises a Commerce-Clause challenge to a federal statute regulating wholly intrastate activity. In evaluating a Commerce Clause challenge to a federal statute regulating wholly intrastate activity, the district court asks whether Congress had a rational basis for concluding that the regulated activity has a substantial effect on interstate commerce.

A rational basis exists if it was reasonable for Congress to conclude that the regulated activity had a significant effect on interstate commerce. If the court concludes that Congress’s judgment on the substantial effects of the intrastate activity was reasonable, then the court will uphold the statute if the regulatory means Congress chose in the statute are reasonably adapted to the statute’s end or goal.

Question 48

For purposes of the Commerce Clause, what is economic activity? (Q)

Answer 48

Economic activity is any activity related to the production, distribution, and consumption of commodities. The U.S. Supreme Court derived this definition from the dictionary meaning of economics.

This definition is expansive, but it does have limits. Activities with no connection whatsoever to the production or consumption of goods or services are noneconomic. Although the Court has stated that it applies the same rational basis review regardless of how the activity is classified, in practice, it has proven much more difficult for statutes regulating noneconomic activities to withstand constitutional challenge.

Question 49

Does the U.S. Supreme Court use the same standard of review to evaluate economic and noneconomic activity? (Q)

Answer 49

Yes. The U.S. Supreme Court has stated that it applies the same rational basis standard of review to statutes regulating noneconomic activity as it does to statutes regulating economic activity.

Question 50

Under what circumstances may Congress regulate wholly intrastate noneconomic activities under its commerce power? (Q)

Answer 50

Congress may regulate wholly intrastate noneconomic activity under its commerce power if the activity has a substantial effect on interstate commerce or is an essential part of a larger scheme regulating economic activity.

In practice, the U.S. Supreme Court has not upheld a statute regulating noneconomic activity against a Commerce Clause challenge. In those cases, the Court has concluded that the connection between the regulated activity and the substantial effect on commerce is too tenuous and the regulation would intrude on the state’s power to regulate local matters.

Question 51

May Congress use its power to regulate interstate commerce to require individuals to enter a given market? (Q)

Answer 51

No. Congress may not use its power to regulate interstate commerce to require individuals to enter a given market. In other words, Congress may not use its commerce powers to force individuals to purchase a good or service that they would not have purchased otherwise.

The Commerce Clause grants Congress the power to regulate interstate commerce, not to create commerce. The power to regulate commerce presupposes the existence of commerce to be regulated.