To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

Guest Essayist: Dr. John S. Baker, Jr., Professor Emeritus, Louisiana State University Law Scho

Article 1, Section 8, Clause 3

3:  To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

During the Ratification Debates, the power of Congress under Clause 3 of Article I, Section  8  “To regulate Commerce with foreign Nations, and among the several States, and with Indian Tribes” was not controversial.  It was generally recognized that the lack of such a power in the Articles of Confederation had damaged trade and finance among the states.  Moreover, without a power to superintend commerce moving from state-to-state, the United States as a confederation was hampered in negotiating trade treaties. Other nations, notably Great Britain, had experienced the inability of the Confederation to prevent States from violating treaty obligations of the United States.

Since the adoption of the Constitution, the Commerce Clause has been much more controversial.  Two early foundational cases in the Supreme Court, McCulloch v. Maryland (1819) and Gibbons v. Ogden (1824, address the Commerce Clause in the context of the broad issues of constitutional structure.  Later cases in the Nineteenth century, particularly following the Civil War, deal primarily with what is known as the “dormant commerce clause.” This doctrine involves the limits implied by the Constitution on the ability of the states to affect commerce, e.g. Cooley v. Board of Wardens (1852). Since the beginning of the 20th Century, the Supreme Court’s jurisprudence concerning both Congress’s power under the Commerce Clause and the limits on the states’ powers to affect interstate commerce has undergone occasional, significant shifts.

The political divide over the regulation of commerce came to the fore soon after the creation of the government under the Constitution. During the Presidency of George Washington, Treasury Secretary Alexander Hamilton promoted federal legislation designed to develop an active commerce built around manufacturing. His most controversial success was creation of the Bank of the United States, a corporation chartered by the federal government. Hamilton and Secretary of State Thomas Jefferson squared off over the authority of Congress to create a corporation.

The Hamilton-Jefferson debate was not simply one over a policy. The two men had radically different ideas about the role of commerce in the United States. Jefferson’s vision of an agrarian America opposed Hamilton’s promotion of a commercial republic, driven by finance as epitomized in the Bank of the United States. Jefferson favored a more passive commerce which served mainly as a means for selling agricultural production, especially abroad. This debate involved a fundamental disagreement about the nature and the extent of the federal government’s powers under the Constitution.

Long before the Supreme Court had the opportunity of addressing the issue, these two great statesmen publicly debated the constitutionality of the Bank. Their positions rested on opposing views regarding interpretation of the Constitution. Jefferson focused on the fact that the Constitution contained no power to create a corporation. He employed “strict construction” of the Constitution to argue that neither the Commerce Clause nor the “Necessary and Proper” Clause authorized creation of the Bank. Jefferson’s position was that Congress could rely on the “Necessary and Proper” Clause only to do that which was “absolutely necessary” to carry out one of the listed powers. Hamilton, on the other hand, justified creation of the Bank as a legitimate exercise of the federal government’s enumerated powers. His position coincided with his own explanation of federal powers laid out in Federalist #23. That is to say, the position of Hamilton and The Federalist, later embodied in McCulloch v. Maryland (to be analyzed later in the section addressing the “Necessary and Proper” Clause), was that the Constitution gives Congress a limited number of powers, but places no limit on the powers actually given.

The term “strict construction,” as used by Jefferson, differs from what the public apparently understands to be the meaning of that term. By “strict construction,” Jefferson means a narrow construction of the words in the Constitution. According to Jefferson, for example, the “Necessary and Proper” Clause only authorizes that which is “absolutely” necessary. The Constitution, however, does not include the word “absolutely” to modify “necessary.”

Today, those who refer to “strict construction” do not necessarily adopt Jefferson’s narrow construction. Generally, those who use the term mean simply this: following the text of the Constitution. For them, the term “strict construction” is the opposite of a “liberal” interpretation,” which involves going beyond the words of the Constitution.  Those, on the other hand, who support liberal construction justify doing so under the banner of “a living Constitution” which they contend must be “updated” by the Supreme Court. Justice Scalia, who opposes the notion of “the living Constitution,” surprises many when he says he is not a “strict constructionist.” Rather, the Justice describes himself both as an “Originalist” and a “textualist,” a methodology he explains as one which gives to the words of the Constitution the original meaning of the particular text.

Chief Justice Marshall’s opinion in Gibbons v. Ogden (often referred to as “the Steamboat case”) definitely rejected the Jeffersonian version of “strict construction.” Rather, Marshall’s reading of the Commerce Clause involved what today could best be described as “originalist” and “textualist.” The case addressed two issues: 1) whether, under the Commerce Clause, Congress had the power to enact legislation regulating river transportation; and 2) whether a New York statute granting a monopoly on steamboat traffic was constitutional.

On the first issue, the Court analyzed the text as follows: a) the federal law “regulates”; b) river transportation falls within the meaning of “commerce”; and c) the commerce, being between the states of New York and New Jersey is “among the states.” The federal statute, thus, fell within Congress’s power to “regulate Commerce … among the Several States.”  The Court accordingly held that the federal law to be constitutional. On the second issue of the state monopoly which conflicted with the federal statute, the state statute had to give way under the Constitution’s Supremacy Clause.

The challenger to the New York monopoly argued the power over commerce given to Congress was an exclusive one which could not be exercised by the states. Gibbons found it unnecessary to decide that issue. A later Supreme Court opinion, Cooley v. Board of Wardens (1852), addressing primarily the power of a state to regulate matters related to a harbor, decided that the Commerce power was not exclusive to the federal government. Unfortunately, Cooley did not pay particular attention to the text of the Commerce Clause, which does not give Congress power to regulate all commerce, but “commerce among the States.” Instead, the Court took it upon itself to divide commerce between what is “national” and what is “local,” a distinction not grounded in the text. As a result of Cooley and later cases, the Court followed several theories to decide when a state could regulate commerce and when the federal government could do so.

In the course of things, the Court conflated the tests for what states could do and what the federal government could do. From cases involving state regulation, the Court looked to whether the law was “affecting” or “substantially affecting” interstate commerce. If what the state did was deemed to impede “interstate commerce,” then the statute was held to be unconstitutional as a violation of the “dormant commerce clause.”  While the Court’s authority to imply a “dormant commerce clause” is itself debatable in terms of an originalist or textualist interpretation, transferring that text to the Congress’s power under the Commerce Clause clearly conflicts with an originalist or textualist interpretation of the clause, which nowhere mentions “interstate commerce.”

The Court’s departure from the text of the Commerce Clause has involved two wild swings. Prior to 1937, the Court declared certain pieces of federal legislation unconstitutional which it said did not actually regulate interstate commerce. In the view of the Court’s majority, the unconstitutional law had the purpose of regulating something else, e.g., manufacturing, and therefore fell within the powers of the states to regulate. The extreme case on this side was Hammer v. Dagenhart (1918), a case which held Congress could not enact a child-labor law. During the early years of the presidency of Franklin Roosevelt, the Court declared unconstitutional several key pieces of New Deal legislation which created a serious constitutional conflict between the Court and the two political branches.

In 1937, however, a majority of the Court began to uphold New Deal legislation on the theory that Congress’s purpose in enacting the law was to regulate some activity which “substantially affected,” and eventually simply “affected,” interstate commerce. The extreme example was Wickard v. Fillburn (1942), a case in which the Court upheld the power of the federal government to regulate how much wheat a farmer could grow. Even though some of the wheat was for self-consumption and specifically not for commerce, it was said to “affect interstate commerce” by with-holding wheat from the wheat market. Under this approach, Congress came to expect that the Court would uphold almost any legislation that simply claimed to regulate some activity which “affected interstate commerce.”

Since the mid-1990s, and for the first time since the mid-1930s, the Supreme Court has declared unconstitutional two acts of Congress which were purportedly passed pursuant to the Commerce Clause.  U.S. v. Lopez (1995) held that Congress could not enact a law prohibiting possession of a weapon within a school-zone because the activity regulated was not commerce.  In U.S. v. Morrison (2000), the Court declared unconstitutional the “Violence Against Women Act.” More recently, however, in Gonzales v. Raich (2005), the Court upheld the ability of the federal government to punish the growing at home of marijuana for personal medical purposes. In doing so, the Court re-affirmed Wickard and the notion that, under the “Necessary and Proper” Clause, Congress can regulate activities otherwise beyond its power in order effectively to regulate a nationwide market.

As of this writing, the Supreme Court has not addressed the Healthcare Reform legislation enacted in 2010. When it does so, the federal government will rely on Wickard and Raich and the states and individuals challenging the law will rely on Lopez and Morrison.

Dr. John S. Baker, Jr. is Professor Emeritus at Louisiana State University Law School.

Guest Essayist: John S. Baker, Jr., the Dale E. Bennett Professor of Law at Louisiana State University

Article 1, Section 8, Clause 1
1:  The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Article 1, Section 8 enumerates the powers of Congress.  Listing those powers indicates that the federal government is one of limited powers.  Unlike a unitary sovereign which has all the general powers of government, the federal government has only limited sovereignty.  At the same time, the federal government possesses the fullness of any power actually given to it. As Federalist #23 makes plain, on those matters for which the Constitution has delegated responsibility to the federal government, i.e., national defense, foreign relations, regulation of national and foreign commerce, and preserving the public peace against insurrection, the federal government’s “powers ought to exist without limitation.”  All of which is to say that the powers of the federal government are limited in number, not that a listed power itself is limited beyond what is stated in the text of the Constitution.

As a result, it becomes essential to determine the meaning of the text for each enumerated power. Improper interpretation through either expansion or contraction does damage to the legitimate role of the federal government.  Giving the federal government a power not enumerated moves it closer to possessing full sovereignty. Limiting a given power enfeebles, at least partially, the ability of the federal government to carry out its legitimate responsibilities. Experience has also taught that the federal government can be enfeebled in the exercise of its legitimate powers because it expends resources illegitimately exercising powers not enumerated in the Constitution.  The built-in efficiency of the Constitution’s federal design is that it gave to the federal government, and left to the states, those responsibilities which each level of government was best able to perform.

The federal government has in large measure been able to exercise non-enumerated power through misconstruction of the first clause in Article 1, Section 8.  This clause illustrates the interpretive challenge.  To understand the challenge, it is necessary closely to inspect the text of this clause which reads as follows: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;”

Notice that after the word “Power” the word “To” is capitalized. Then notice that “to” before “pay” is not capitalized. Every enumerated power thereafter begins with “To,” without repeating “The Congress shall have the Power.” In other words, each clause beginning with a capitalized “To” states a separate, enumerated power. Nevertheless, books on Constitutional Law routinely treat this first clause as having two distinct powers: to tax and to spend. Textually, however, the clause states only one power which is the power to tax (in order) to pay debts and provide for the common defense and general welfare of the United States.

The Supreme Court has, at times, had to struggle with whether congressional legislation which purports to impose a tax  is in fact a tax when its purpose appears to be regulatory, e.g., a tax on gambling which was illegal at the time.  If the clause in fact grants a single power which ties taxes to paying debts and providing for the common defense and general welfare, then the issue changes.  Rather than an issue of whether the tax is really a tax, the question becomes whether – even if it is a tax — it meets the purpose language of the text.  If so read, regulatory taxes that do not raise revenue to pay government expenses would become constitutionally questionable. In other words, a reading of only the taxing language of the text – I suggest – has resulted in giving Congress regulatory powers it does not possess under a reading of the language as a single power.

Incidentally, this kind of careful attention to the text is not “strict” or “narrow” construction. It is textualism of the kind that Justice Scalia writes and practices.  As he says, he is not a “strict constructionist.” He attempts to give words in the Constitution their full meaning without either narrowing or broadening their legitimate sense.

Another mischaracterization of this clause refers to it as “the General Welfare Clause.” If Congress had a power simply to legislate for the “general welfare,” there would be no need to list any other powers.  Under such a construction of the Constitution, the federal government would in no way be a limited one.  Few, if any, students of the Constitution, however, would openly claim Congress has such unlimited power.  Nevertheless, the spending language in the clause – viewed as distinct from the taxing language –can be distorted to achieve the same unlimited power.

As discussed in United States v. Butler (1936), one of the few Supreme Court cases to address the spending language of the clause, the clause has been a matter of dispute nearly since the beginning when Madison and Hamilton disagreed over its interpretation. (The legislation addressed in Butler also involved a tax collected to fund the spending.) Madison contended that the power to tax and spend for the general welfare had to be tied to one of the other enumerated powers.  Hamilton, and later Justice Joseph Story, disagreed. They said the power was a separate power, limited only by the requirement that its exercise be for “the general welfare.” Although Butler adopted the Hamilton-Story position, it declared the particular legislation unconstitutional.

If the discussion above regarding the use of “To” and “to” means that the clause does not contain two powers, it should also establish that the clause contains a power separate from those which follow, as Hamilton and Story contended. If then Madison was incorrect, does this clause create a power so broad that it makes the enumeration of other powers superfluous? Both Justice Story and the Butler opinion recognize that there must be some limits on spending for the general welfare, but Butler did not elaborate.

The Supreme Court has since ignored Butler’s notion that the clause contains any justiciable limits.  A year after Butler, the Court upheld the parts of the Social Security Act dealing with unemployment compensation, Steward Machine Co. v. Davis (1937), and old-age benefits, Helvering v. Davis (1937). In Buckley v. Valeo (1976), the Court rejected a challenge to federal spending that financed presidential campaigns, saying “[i]t is for Congress to decide which expenditures will promote the general welfare.”

It may be that the term “general welfare” has acquired a meaning that, at least in Congress, extends well beyond the interpretation of Hamilton and Story.  For Hamilton who promoted infrastructure spending on canals and bridges, the spending was not for local “pet projects” or so-called “earmarks.” Rather, such spending was to promote economic development generally; it benefitted more than a single state. Underlying the term “general welfare” seemed to be the idea that the federal government could spend on matters that generally benefitted the whole country. It was assumed not only that state governments would tax and spend on projects that benefitted their own state, but that they would not and should not tax and spend on projects to benefit other states.  As with the original understanding of the Commerce Clause and other provisions in the Constitution, Congress was given the taxing and spending power for the general welfare in order to do for the states as a whole what none of them individually could do.

Congress’s idea of spending for the general welfare has often been used to “persuade” states to accept policy regulations which Congress lacks any power directly to impose.  Congress achieves the regulatory end through conditioning receipt of the funds.  Certain conditions attached to spending are not only reasonable, but required. Accordingly, the federal government ensures the proper use of funds by imposing accounting and reporting requirements and establishing other standards for spending the money.  Congress, however, also manipulates conditions in what amounts to a form of “bait and switch;” it adds new conditions after states have become dependent on federal funding for such programs as highways and Medicaid. These new conditions are ones that a number of the states likely would not have accepted when the program began because they impose burdensome obligations or infringe on a state’s legislative powers.  States, nevertheless, almost always accept the new conditions because they claim to have “no choice” — that is, except to drop the program or pay for it with state funds.

Rather than raise their own state taxes, with no diminution in federal taxes, states take the money because other states do and/or they get some return on the federal taxes paid by their citizens.  Thus, the states at least acquiesce in – if not lobby for – high levels of federal spending with the accompanying federal taxes and/or deficits to support that spending. With almost all states participating in those spending programs directed to the states, the Congress can claim that those programs address the “general welfare.”

States have not been successful before the Supreme Court in claiming Congress’s imposition of new conditions is unconstitutional because they “coerce” states which have “no choice” other than to agree to the new conditions.  In South Carolina v. Dole (1987), the Court rejected a constitutional challenge to Congress’s direction that the Transportation Department withhold 5% of the highway funds due to a state if the state did not prohibit persons under the age of 21 from purchasing or possessing alcoholic beverages.  Congress certainly had no power under which it could directly establish a national drinking age.  The Constitution left such police power issues with the states.  Nevertheless, the Court determined, inter alia, that drunk driving was a “national concern.” Of course, it was not a concern that each state was incapable of addressing individually.  Justice O’Connor argued in dissent that the condition was an unconstitutional infringement on state powers and noted that the Court’s discussion of federal spending in United States v. Butler (as distinct from other reasoning in the case) remains valid.

The last part of the clause (“all Duties, Imposts and Excises shall be uniform throughout the United States;”) guarantees that one region of the country having more voting power in Congress cannot use that power to disadvantage other states economically.  This provision ties in with the prohibition on taxing exports (Art. 1, Sect. 9, cl. 5) and the power over commerce among the states and with foreign nations (Art. 1, Sect. 8, cl. 3). It represents one example of how the Constitution, as finally drafted, coordinates its different parts into a comprehensive and consistent plan of government.

Professor John S. Baker is the Dale E. Bennett Professor of Law at Louisiana State University.