Today in 1936: Supreme Court begins to adopt expansive view of Commerce Clause powers

April 12, 2013

Today in Legal HistoryWhen the Supreme Court decided National Federation of Independent Business v. Sebelius (a.k.a. the Obamacare case) last June, the vast majority of the coverage of the ruling focused on the immediate political implications – that President Obama’s centerpiece legislation  of his first term was upheld.

When constitutional law textbooks evaluate the ruling’s impact in the years to come, however, these political implications will be but a footnote, overshadowed by the significant impact that the ruling had on Commerce Clause jurisprudence.

The decision continued the recent Supreme Court trend of hostility toward congressional Commerce Clause authority, and in a not so insignificant way.

After all, the general consensus among most constitutional law scholars – prior to the decision, that is – was that the “individual mandate” was well within the previously established boundaries of Congress’ power under the Commerce Clause to “regulate commerce…among the several states.”

Although a majority holding technically failed to emerge that would have created precedent to the contrary (since the four dissenting justices refused to join in the Chief Justice’s opinion on the issue), the case will be widely regarded as another in a long line of new restrictions on congressional powers.

This “long line” is, as mentioned above, a relatively recent phenomenon that began with 1995’s U.S. v. Lopez.  Lopez struck down the Gun-Free School Zones Act, which made it a federal crime for any individual to possess firearm within a “school zone,” as exceeding Congress’ authority under the Commerce Clause.

Although it may seem quite attenuated that Congress would seek to prohibit guns in schools under the guise of regulating commerce among the several states, Lopez was actually the first time that the Supreme Court struck down an act of Congress in almost 60 years.

The ruling that started the Supreme Court down its earlier path of a broader reading of Commerce Clause authority is National Labor Relations Board v. Jones & Laughlin Steel Corporation, decided on April 12, 1936.

The 77 year old decision upheld the National Labor Relations Act of 1935, an expansive law that regulated labor relations in the private sector (and also created the National Labor Relations Board (NLRB)).

The Act was challenged by major steel producer Jones & Laughlin Steel.  Jones & Laughlin brought the challenge in response to action taken against it by the NLRB, which brought charges against the company accusing it of discriminating against employees that wanted to join a labor union.

After the NLRB ruled against Jones & Laughlin, the company contested the ruling, claiming that “the act is in reality a regulation of labor relations and not of interstate commerce.”

The Supreme Court eventually heard the case, and ruled against Jones & Laughlin 5-4, finding that the Commerce Clause did not limit Congress to regulating interstate commerce only directly, but also those activities that indirectly affected commerce, regardless of whether, “when considered separately,” they may be “intrastate in character.”

Although a staple of any constitutional analysis today, this Commerce Clause interpretation of allowing Congress to regulate activities that had a direct effect on commerce, instead of limiting regulation strictly to commerce itself, was brand new at the time of the ruling.

In fact, just under two years earlier, in A.L.A. Schechter Poultry Corp. v. United States, the Supreme Court held that another federal labor law was unconstitutional for attempting to regulate “intrastate transactions which affect interstate commerce only indirectly.”

The shift in direction seen in Jones & Laughlin Steel is likely attributable to changing political winds which saw the judiciary become less willing to interfere with the legislative powers of Congress.

Congress proceeded to use its broadened powers unfettered for the next 59 years, even invoking the Commerce Clause to help dismantle segregation.

In 1995, however, the political winds shifted again towards the use of the courts as a means to keep the regulatory powers of the other two branches of government under increasing scrutiny, eventually leading us to the unprecedented level of judicial oversight found in NFIB.

Whether the political winds change yet again and in what direction remains to be seen.