The Evolution of the Commerce Clause (Part III)

The 1946 case between North American Company v. Securities and Exchange Commission the Court held that the Public Utility Holding Company Act (PUHCA) was constitutional citing the commerce clause. The North America Company trust contained over 80 communications companies in 17 states. PUHCA laws forced North America Company to divest its holdings into just one company in an effort to break up electricity trusts and monopolies. This was similar to how Teddy Roosevelt used the Sherman Anti-Trust Act to break up the beef trusts in the early 1900s.

The Boynton v. Virginia case in 1960 was a civil rights case over African-Americans being barred from a bus terminal. The Court ruled that the law violated the Interstate Commerce Act of 1887. The purpose of the Interstate Commerce Act was to prevent railroad monopolies as well as price discrimination against farmers. The Boynton case is a simple Fourteenth Amendment equal protection clause violation. It is difficult to rationalize why the Supreme Court decided this issue based on the commerce clause. In a similar case Atlanta Hotel v. United States the Court upheld the Civil Rights Act of 1964 via the commerce clause. In this case the Atlanta hotel refused to rent rooms to African-Americans and since it this affected the travels of people it violated the commerce clause. The Court conceded there were other and probably more effective ways for Congress to abolish racial discrimination – i.e. the equal protection clause – other than the commerce clause. Also, in 1964 the Court held in the case Katzenbach v. McClung that Congress could use the commerce clause to stop racial discrimination at restaurants. Title II of the 1964 Civil Rights Act granted African Americans full access to public facilities including hotels and restaurants. The Court cited one of the worst possible cases when defending this ruling: Wickard v. Filburn. Once again, why not use the equal protection clause for what it was intended to be used: to stop racial discrimination.

Edison Company v. Montana was decided in 1981 and the Court held a state severance tax on coal did not violate the interstate commerce clause. Taxes under the commerce clause were decided on the standards set in the 1977 case Auto Transit v. Brady: 1. a clear relationship between state and taxpayer, 2. Interstate and intrastate taxes do not discriminate against each other, 3. there is a fair apportionment within the tax jurisdiction and 4. There is a fair relationship of service provided by the state to apply a tax. Justice Blackmun dissented because of his concern over a few items: Montana controlled about 25% of coal production and most of Montana coal came from federal lands.

The 1985 case Garcia v. San Antonio Metropolitan Transit Authority held that Congress had the power via the commerce clause to extend the Fair Labor Standards Act (FLSA) to the States. The FLSA was passed in 1938 and requires that state governments pay employees a minimum wage and overtime. In 1968 the Court held in Maryland v. Wirtz that Congress had the authority via the commerce clause to regulate wages and overtime for hospital and school employees (obviously, this is intrastate and not interstate commerce – the expansion of the commerce clause continues under the Warren Court). Justice Blackmun wrote the majority opinion and said that Congress could use the Constitution’s supremacy clause to preempt any state laws that conflict with FLSA standards. In her dissent, Justice Sandra Day O’Connor expressed concern over how interstate commerce power of Congress can be used to control every economic aspect in society. Justice Powell dissented saying “The State’s role in our system of government is a matter of Constitutional law, not legislative grace”. In the 1995 case United States v. Lopez, Justice Rehnquist did not overturn Garcia but emphasized the need to regulate or set standards for interstate commerce. The Garcia ruling overturned the 1976 case National League v. Usery where the Court claimed the FLSA could NOT be applied to the states. In Lopez, Justice Rehnquist concluded economic decision such as wages, overtime pay, and compensation were best decided by the states. For instance, a national minimum wage does not consider the cost of living in all of the states. In some states with a high cost of living, the minimum wage may not be enough, but in states with a low cost of living, the minimum wage could be detrimental to businesses and employment (commerce). For these reasons, the Federal government and Court have no business deciding economic decisions for the states: One size does not fit all.

By the 1990s some of the power of Congressional coercion and the commerce clause began to dwindle. In the 1992 decision for New York v. United States the court held that the Low-Level Radioactive Waste Policy (LLRWP) of 1985 exceeded Congress’s power under the commerce clause. However, only one of three provisions of LLRWP was found unconstitutional. Justice O’Connor found that the provision in question of the LLRWP attempted to “commandeer” or coerce state governments to participate in the program.