On
Confidence

Other books in this series:

Why You Will Marry the Wrong Person

Why We Hate Cheap Things

How to Find Love

Self-Knowledge

The Sorrows of Work

The Sorrows of Love

On
Confidence

The School of Life

Published in 2017 by The School of Life

70 Marchmont Street, London WC1N 1AB

Copyright © The School of Life 2017

Designed and typeset by Marcia Mihotich

Printed in Latvia by Livonia Print

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ISBN 978-1-9997471-0-7

Contents

I Introduction

II Idiocy and Confidence

III Impostor Syndrome

IV Trust in the System

V History is Now

VI Experience

VII Death

VIII Enemies

IX Self-Sabotage

X Confidence in Confidence

I
Introduction

It can be humbling to realise just how many great achievements have not been the result of superior talent or technical know-how, merely that strange buoyancy of the soul we call confidence.

We spend vast amounts of time acquiring confidence in narrow technical fields: quadratic equations or bioengineering; economics or pole vaulting. But we overlook the primordial need to acquire a more free-ranging variety of confidence – one that can serve us across a range of tasks: speaking to strangers at parties, asking someone to marry us, suggesting a fellow passenger turn down their music, changing the world.

We so often lack confidence because we implicitly regard its possession as a matter of slightly freakish and irreplicable good luck. Some people simply are very confident, for reasons that neuroscientists may one day uncover. But, we tell ourselves, there isn’t much we can do about our particular situation. We are stuck with the confidence levels we were born with.

In fact, the opposite is true. Confidence is a skill, not a gift from the gods. And it is a skill founded on a set of ideas about the world and our natural place within it.

These ideas can be systematically studied and gradually learnt, so that the roots of excessive hesitancy and compliance can be overcome. We can school ourselves in the art of confidence.

II
Idiocy and
Confidence

In well-meaning attempts to boost our confidence ahead of challenging moments, people often try to draw our attention to our strengths: our intelligence, our competence, our experience. However, this can have awkward consequences. There is a type of underconfidence that arises specifically when we grow too attached to our own dignity and become anxious around any situation that might seem to threaten it. We hold back from challenges in which there is any risk of ending up looking ridiculous – which comprises, of course, almost all the most interesting situations.

In a foreign city, we grow reluctant to ask anyone to guide us to the nice bars, because they might think us an ignorant, pitiable lost tourist. We might long to kiss someone, but never let on, in case they dismiss us as a predatory loser. At work, we don’t apply for a promotion, in case the senior management deems us delusionally arrogant. In a concerted bid never to look foolish, we don’t venture very far from our cocoon. Consequently – from time to time, at least – we miss out on the best opportunities of our lives.

At the heart of our underconfidence is a skewed picture of how dignified a normal person can be. We imagine that it might be possible, after a certain age, to place ourselves beyond mockery. We trust that it is an option to lead a good life without regularly making a complete idiot of ourselves.

One of the most charming books written in early modern Europe was In Praise of Folly (1509), by the Dutch scholar and philosopher Erasmus. In its pages, Erasmus advances a hugely liberating argument. In a warm tone, he reminds us that everyone, however important and learned they might seem, is a fool. No one is spared, not even the author. However well-schooled he himself was, Erasmus remained – he insists – as much of a nitwit as anyone else: his judgement is faulty; his passions get the better of him; he is prey to superstition and irrational fear; he is shy whenever he has to meet new people; he drops things at elegant dinners. This is deeply cheering, for it means that our own repeated idiocies do not have to exclude us from the best company. Looking like a prick, making blunders, and doing bizarre things in the night does not render us unfit for society; it makes us a little more like the greatest scholar of the northern European Renaissance.

There is a similarly uplifting message to be drawn from the work of Pieter Bruegel. His painting Dutch Proverbs presents a comically disenchanted view of human nature. Everyone, he suggests, is pretty much deranged: here’s a man throwing his money into the river; there’s a soldier squatting on the fire and burning his trousers; someone is intently bashing his head against a brick wall, someone else is biting a pillar. Importantly, the painting is not an attack on just a few unusually awful people: it is a picture of parts of all of us.

Pieter Bruegel the Elder, Nederlandse Spreekwoorden (Dutch Proverbs), 1559.

Bruegel and Erasmus’s work proposes that the way to greater confidence is not to reassure ourselves of our own dignity; it’s to come to peace with our inevitable ridiculousness. We are idiots now, we have been idiots in the past, and we will be idiots again in the future – and that’s OK. There aren’t any other available options for human beings.

We grow timid when we allow ourselves to be overexposed to the respectable sides of others. Such are the pains people take to appear normal, we collectively create a phantasm that suggests that normality might be possible, and this is problematic for everyone.

Once we learn to see ourselves as already, and by nature, foolish, it won’t matter so much if we do one more thing that might look stupid. The person we try to kiss could indeed think us ridiculous. The individual from whom we asked directions in a foreign city might regard us with contempt. But if these people did so, it wouldn’t be news to us. They would only be confirming what we had already gracefully accepted long ago: that we, like them – and every other person on the earth – are a nitwit. The risk of trying and failing would have its sting substantially removed. The fear of humiliation would no longer stalk us in the shadows of our minds. We would grow free to try things by accepting that failure was the norm. And every so often, amid the many rebuffs we would have factored in from the outset, it would work: we’d get a kiss, we’d make a friend, we’d get a raise.

The road to greater confidence begins with a ritual of telling oneself solemnly every morning, before heading out for the day, that one is a muttonhead, a cretin, a dumbbell and an imbecile. A few more acts of folly should, thereafter, not matter very much.

III
Impostor
Syndrome

Faced with challenges, we often leave the possibility of success to others, because we don’t seem to ourselves to be the sort of people who win. When we approach the idea of acquiring responsibility or prestige, we quickly become convinced that we are ‘impostors’, like an actor in the role of a pilot, wearing the uniform and making sunny cabin announcements while incapable of even starting the engines.

The root cause of impostor syndrome is a hugely unhelpful picture of what people at the top of society are really like. We feel like impostors not because we are uniquely flawed, but because we can’t imagine how deeply flawed the elite must also be beneath a more or less polished surface.

The impostor syndrome has its roots far back in childhood – specifically in the powerful sense children have that their parents are very different from them. To a four-yearold, it is incomprehensible that their mother was once their age and unable to drive a car, tell the plumber what to do, decide other people’s bedtimes and go on trips with colleagues. The gulf in status appears absolute and unbridgeable. The child’s passionate loves – bouncing on the sofa, Pingu, Toblerone – have nothing to do with those of adults, who like to sit at a table talking for hours and drinking beer that tastes like rusty metal. We start out in life with a very strong impression that competent and admirable people are not like us at all.

This childhood experience dovetails with a basic feature of the human condition. We know ourselves from the inside, but others only from the outside. We are aware of all our anxieties and doubts from within, yet all we know of others is what they happen to do and tell us – a far narrower and more edited source of information.

We are often left to conclude that we must be at the more freakish and revolting end of human nature. Really, however, we’re just failing to imagine that others are every bit as fragile as we are. Without knowing what it is that troubles or wracks outwardly impressive people, we can be sure that it will be something. We might not know exactly what they regret, but there will be agonising feelings of some kind. We won’t be able to say exactly what kind of sexual kink obsesses them, but there will be one. And we can know this because vulnerabilities and compulsions cannot be curses that have descended upon us uniquely; they are universal features of the human mental equipment.

The solution to the impostor syndrome lies in making a crucial leap of faith: that others’ minds work in much the same way as ours do. Other people must be as anxious, uncertain and wayward as we are.

Traditionally, being a member of the aristocracy provided a fast track to confidence-giving knowledge about the true characters of the elite. In 18th-century England, an admiral of the Fleet would have looked deeply impressive to outsiders (more or less everyone), with his splendid uniform (cockaded hat, loads of gold) and thousands of subordinates to do his bidding. But to a young earl or marquis, who had moved in the same social circles all his life, the admiral would appear in a very different light. He would have seen him losing money at cards in the club the night before; he would know that his pet name in the nursery had been ‘Sticky’ because of his inept way of eating jam tarts; his aunt would still tell the story of the ridiculous way the admiral had tried to proposition her sister in the Yew Walk; he would know the admiral was in debt to his grandfather, who regarded him as pretty dim. Through acquaintance, the aristocrat would have reached a wise awareness that being an admiral was not an unattainable position reserved for gods; it was the sort of thing Sticky could do.

The other traditional release from underconfidence of this type came from the opposite end of the social spectrum: being a servant. ‘No man is a hero to his valet,’ remarked the 16th-century French essayist Montaigne – a lack of respect that may at points prove deeply encouraging, given how much our awe can sap our will to rival or match our heroes. Great public figures aren’t ever so impressive to those who look after them, who see them drunk in the early hours, examine the stains on their underpants, hear their secret misgivings about matters on which they publicly hold firm views and witness them weeping with shame over the strategic blunders they officially deny.

The valet and the aristocrat reasonably and automatically grasp the limitations of the authority of the elite. Fortunately, we don’t have to be either one to liberate ourselves from inhibiting degrees of respect for the powerful; imagination will serve just as well. One of the tasks that works of art should ideally accomplish is to take us more reliably into the minds of people we are intimidated by and show us the more average, muddled and fretful experiences unfolding inside.

At another point in his Essays of 1580, Montaigne playfully informed his readers in plain French that: ‘Kings and philosophers shit and so do ladies’. Montaigne’s thesis is that, for all the evidence that exists about this shitting, we might not guess that grand people ever had to squat on a toilet. We never see distinguished types doing this – while we, of course, are immensely well informed of our own digestive activities. Therefore, we build up a sense that because we have crude and sometimes rather desperate bodies, we can’t be philosophers, kings or ladies; and that if we set ourselves up in these roles, we’d just be impostors.

With Montaigne’s guidance, we are invited to take on a saner sense of what powerful people are actually like. But the real target isn’t just an underconfidence about bodily functions; it is psychological timidity. Montaigne might have said that kings, philosophers and ladies are wracked by self-doubt and feelings of inadequacy, sometimes bump into doors and have weird lustful thoughts about members of their own families. Furthermore, instead of considering only the big figures of 16th-century France, we could update the example and refer to CEOs, corporate lawyers, news presenters and successful startup entrepreneurs. They too can’t cope, feel they might buckle under pressure and look back on certain decisions with shame and regret. No less than shitting, such feelings belong to us all. Our inner frailties don’t cut us off from doing what they do. If we were in their roles, we’d not be impostors, we would simply be normal.

Making a leap of faith around what other people are like helps to humanise the world. Whenever we encounter a stranger, we are not really encountering such a person; we are encountering someone who is in basic ways very much like us, despite surface evidence to the contrary. Therefore, nothing fundamental stands between us and the possibility of responsibility, success and fulfilment.

IV
Trust in the
System

When we take our ideas out into the world, there is no more common response than to hear a ‘no’ in return.

We develop a proposal at work that seems pretty good to us. We do some research, put together strategic options and hand it to a senior colleague who agrees to give it some thought. Then, after six weeks, a message comes back: the firm is grateful for the suggestion, but won’t be taking the plan further. There is no very precise explanation, just a general view: the timing is wrong; it doesn’t fit with general policy; it’s not the kind of thing that’s right for the team. We may be disappointed, but we take the comments on the chin. Our suggestion couldn’t really have been a good one. Perhaps we should be more careful in the future.

Or maybe we’ve hit upon an idea for a new kind of product. It looks to us as if there might be a significant gap in the market. We call in a business advisor and talk it through. But they tell us, with a striking degree of sarcasm, that it’s not going to work. They wear very elegant spectacles and once worked with BMW and Google. Later, we delete the whole presentation from our laptop.

Or, perhaps for years, we’ve been happily using our old phone. It’s not terribly sophisticated but it does just the things we want. Unfortunately, we leave it on a train. At the shop, they’re not at all helpful. They tell us our model is absurdly outdated, equipped with a stone-age processor and a 960 x 540-pixel resolution display that doesn’t respond well to any of the new swipe commands. There’s nothing to be done. We accept the suggestion of a phone we don’t like so much. Then, a few weeks later, at a conference, we see someone happily using exactly the phone we wanted.

In big and small instances, we cave in to the judgements of The System, beside whose might and invincibility our own hopes seem feeble and disposable. The root of our underconfidence is a touching, but ultimately hugely dangerous, degree of trust – a legacy of times in our lives when those in charge had our best interests in mind and took the time to assess every one of our needs. When a parent told us we couldn’t use the computer in our bedroom or that it wasn’t advisable for us to go on the school trip to Spain, we could trust that they weren’t being merely mean or unimaginative; they were the bearers of bad news out of mature benevolence.

From such experiences, we may develop a more generalised belief in the open-heartedness of those who frustrate us. The senior manager, business advisor or sales assistant are, we feel, in their own ways as careful about their judgements as our own families. But this, of course, can’t be true.

At the end of the Classical period, on the cusp of the 4th and 5th centuries of the modern era, as the Roman Empire in the West was collapsing, the Christian philosopher St. Augustine tried to describe the essential, unavoidable flaws of all human systems. He drew a fundamental contrast between two realms. One he called the City of God, an imagined ideal in which institutions could be exactly the way we’d like them to be: wise, altruistic and benign. On the other hand, there was what he called the City of Man, a realm that described institutions as they actually were: occasionally well-meaning, but frequently lazy, casual, corrupt or indifferent.

The dark brilliancy of Augustine’s diagnosis was his conviction that it would by nature be impossible for human institutions ever to meet our hopes. They could never be the wise and kindly organisations that they presented themselves as being. Such aspirations belonged to what he thought of as the afterlife – or, as we might now more reasonably put it, to nowhere.

Children have great trouble imagining the inner lives of those in authority. A young school child can be deeply puzzled to see their teacher on a Sunday morning at the shops or jogging round the park. In their minds, this mighty person is simply and exclusively ‘the teacher’. Their whole life (the child thinks) revolves around the classroom and the large desk they stand behind. They have no history; they couldn’t have been a child themselves; they have no problems or frustrated dreams or wakeful nights. Our childish selves struggle to flesh out the reality of adult existence.

However, maturity means, ideally, going from the myth of a person, however high their status in a system, to a full recognition of their humanity. We finally pay others a strange but valid compliment when we accept them as versions of the same complex and imperfect creatures we know ourselves to be. This may feel like disenchantment, but it is also a crucial vehicle for a future in which the word ‘no’ seems just a little less impartial and beyond question.

V
History is Now

One of the things that separates confident from diffident people is their approach to history. Broadly speaking, the unconfident believe that history is over; conversely, the confident trust that history is still in the process of being made – and possibly by themselves one day.

The way we enter the world carries with it an inherent bias towards an impression that history has been settled. Everything around us conspires to convey a sense that the status quo is entrenched. We are surrounded by people far taller than us, who follow traditions that have been in place for decades – centuries, even. Our understanding of time hugely overprivileges the immediate moment. To a five-year-old, last year feels like a century ago. The house we live in appears as immutable as an ancient temple; the school we go to looks as though it has been performing the same rituals since the earth began. We are constantly told why things are the way they are and encouraged to accept that reality is not made according to our wishes. We come to trust that human beings have fully mapped the range of the possible. If something hasn’t happened, it’s either because it can’t happen, or it shouldn’t.

The result is a deep wariness around imagining alternatives. There is no point starting a new business (the market must be full already), pioneering a new approach to the arts (everything is already set in a fixed pattern), or giving loyalty to a new idea (it either exists or is mad).

When we study history, however, the picture changes sharply. Once time is speeded up and we climb up a mountain of minutes to survey the centuries, change appears constant. New continents are discovered; alternative ways of governing nations are pioneered; ideas of how to dress and who to worship are transformed. Once people wore strange cloaks and tilled the land with clumsy instruments. A long time ago, they chopped off a king’s head. Way back, people got around in fragile ships, ate the eyeballs of sheep, used chamber pots and didn’t know how to fix teeth.

We come away from all this knowing, in theory at least, that things do change. However, in practice, and almost without noticing, we tend to distance ourselves and our own societies from a day-to-day belief that we belong to the same ongoing turbulent narrative and are, at present, its central actors. History, we feel, is what used to happen; it can’t really be what is happening around us in the here and now. In our vicinity at least, things have settled down.

To attenuate this insensitivity to the omnipresence of change, and by extension the passivity it breeds, we might turn to some striking lines in T.S. Eliot’s cycle of poems, The Four Quartets (1943):

So, while the light fails
On a winter’s afternoon, in a secluded chapel
History is now and England.

Winter afternoons, around 4pm, have a habit of feeling particularly resolved and established, especially in quiet English country chapels, many of which date back to the middle ages. The air in such chapels is still and musty. The heavy stone floors have been slowly worn away by the feet of the faithful. There might be a leaflet advertising an upcoming concert and a charity box hoping to catch our eye. Over the altar, a stained-glass window of the saints (Peter and John, holding a lamb each) glows from the last of the light. These are not places and times to think about changing the world; everything hints that we would be wiser to accept the way things are, walk back home across the fields, light a fire and settle down for the evening. Hence the surprise of Eliot’s third line, his resonant: ‘History is now and England.’

In other words, everything that we associate with history – the impetuous daring of great people, the dramatic alterations in values, the revolutionary questioning of long-held beliefs, the upturning of the old order – is still going on, even at this very moment, in outwardly peaceful, apparently unchanging places like the countryside near Shamley Green, in Surrey, where Eliot wrote the poem. We don’t see it only because we are standing too close to it. The world is being made and remade in every instant. Therefore, any one of us has a theoretical chance of being an agent in history, on a big or a small scale. It is open to our own times to build a new city as beautiful as Venice; to change ideas as radically as the Renaissance; to start an intellectual movement as resounding as Buddhism.

The present has all the contingency of the past, and is every bit as malleable. It should not intimidate us. How we love, travel, approach the arts, govern, educate ourselves, run businesses, age and die are all up for further development. Current views may appear firm, but only because we exaggerate their fixity. The majority of what exists is arbitrary, neither inevitable nor right, simply the result of muddle and happenstance. We should be confident, even at sunset on winter afternoons, of our power to join the stream of history and, however modestly, change its course.

VI
Experience

One of the greatest sources of despair is the belief that things should have been easier than they have turned out to be. We give up not simply because events are difficult, but because we hadn’t expected them to be so. The struggle is interpreted as humiliating proof that we do not have the talent required to carry out our wishes. We grow subdued and timid and eventually surrender, because a struggle this great seems impossibly rare.

The capacity to remain confident is, therefore, to a significant extent a matter of having internalised a correct narrative about what difficulties we are likely to encounter. Unfortunately, the narratives we have to hand are deeply misleading, for a range of reasons. We are surrounded by stories that conspire to make success seem easier than it is, and therefore that unwittingly destroy the confidence we can muster in the face of our obstacles.

Some of the explanations for the preponderance of optimistic narratives are benign. If we told a small child what lay in store for them – the loneliness, the fractious relationships, the unfulfilling jobs – they might cave in and give up. We prefer to read them the adventures of Miffy, the adorable bunny.

At other points, the reasons for the silence around difficulty are slightly more self-serving: we are trying to impress people. The successful artist or skilled entrepreneur go to great lengths to disguise their labours and make their work appear simple, natural and obvious. ‘Art lies in concealing art,’ opined the Roman poet Horace.

The great stand-up comic does not reveal the time spent agonising over every detail of their performance. They will not tell us of the anxieties around whether it was best to deliver the last line sitting, to convey an impression of stunned passivity, or standing, to imply a stifled energy about to be released; or whether it was preferable to use the word ‘tiny’ or simply go with ‘very, very small’ as the punchline to the opening joke. Appearing to say the first thing that comes into one’s head is the result of decades of rehearsal.

As customers, we pay to have news of struggle kept from us. We don’t wish to read the novelist’s early drafts; we don’t want to hear about the company’s difficulties in setting up the hotel or the engineer’s complaints about the hydraulic system. We want to admire the polished surface of the gadget without reminder of the cramped circuits beneath.

But there comes a point, when we move from consumers to producers, that we start to pay in heightened currency for our ignorance; the currency of confidence and self-respect. We see our early failures as proof of conclusive ineptness rather than as the inevitable stages on every path to mastery. Without an accurate developmental map, we can’t position ourselves properly with regards to our defeats. We have not seen enough of the rough drafts of those we admire, and therefore cannot forgive ourselves the horror of our own early attempts.

Certain societies have been wiser than our own in communicating the challenges of all noble endeavours. For instance, the ancient temple dedicated to the Goddess Aphaia, on the Greek island of Aegina, was decorated with prominent pieces of sculpture that set out to portray a very precise idea of what your life would be like as a warrior. Someone would try to stab you with a spear; the person standing next to you in the phalanx would collapse; you’d be pushed over backwards, bash your head with your own sword and a determined adversary would probably fire an arrow in your back as you turned to flee.

The statues in Aegina’s Temple of Aphaia showed the gritty realities of warfare to prepare soldiers for the battlefield.

Those who commissioned the temple were deliberately preparing their people for the hardships of battle, so they would be ready when they entered the field. At the same time, they were dignifying the lives of those who dared undergo these titanic struggles. The warriors deserved prestige, the temple builders were saying, because war was never a route to easy glory. It was imperative that such statuary not be hidden away but displayed right in the centre of town, so that one would encounter it on serious and important occasions from youth onwards. Despite their limited resources, ancient Greek communities went to astonishing lengths to remind themselves of what the most prestigious job available actually involved: namely, a lot of hardship.

We are, by contrast, recklessly short on detailed, honest and compelling accounts of what to expect around key aspects of our professional lives. To shore up our confidence, we would need regularly to encounter the modern equivalents of the works of the classical sculptors: films, poems, songs and novels that would represent for us the agonies that unfold in the unglamorous but hugely representative hubs of modern capitalism; the world’s distribution centres, tax offices, airport lounges, HR conferences and management retreats.

The confidence-boosting artists would show us, without reserve or coyness, what a successful life truly involves. They would take us through the tears we will shed in office cubicles; the meetings in which our ideas will be rejected and our projections thwarted; the mocking articles we will read about ourselves in newspapers; the hours we’ll spend in lonely foreign hotel rooms while we miss out on our children’s school plays; the sense that our best insights have arrived far too late; the inability to sleep from worry and confusion.

Thereby, we’d be better placed to meet our own eventual experiences against a realistic set of expectations. Our setbacks would take on a different meaning. Instead of looking like confidence-destroying evidence of our incapacities, they would much more readily strike us as proof that we were on the standard path to what we admire. We’d interpret our worries, reversals and troubles as unavoidable landmarks, not aberrations or fateful warnings.

Confidence isn’t the belief that we won’t meet obstacles: it is the recognition that difficulties are an inescapable part of all worthwhile contributions. We need to ensure we have plenty of narratives to hand that normalise the role of pain, anxiety and disappointment in even the best and most successful lives.

VII
Death

There is so much that we put off every day: the relationship that, for the sake of both participants, it would be better to end; the new person it would be thrilling to get close to; the alternative career that promises to utilise our deepest talents; the house with the beautiful views over water. And yet we do nothing. There may be distressed moments of recognition at three in the morning, but in the light of day we bury our longings and muddle on. We find ourselves musing on the interesting things we’ll do when we retire. We let life leak away.

Our hesitation is grounded in a sense of risk. Every move presents us with appalling dangers. The new house might not be right; the change of career might lead to ruin; the beloved might reject us; we could regret leaving the old relationship. But our inaction is not in itself cost-free, for in the wings, out of regular conscious awareness, there is something arguably even more frightening than failure: the tragedy of wasting our lives.

We too easily ignore the most stupid yet deepest fact about our existence: that it will end. The brutal fact of our mortality seems so implausible that we live in practical terms like immortals, as if we will always have the opportunity to address our stifled longings one day.

Frans Hals, Young Man Holding a Skull, 1626. This painting typifies the genre of the Vanitas – a reminder of the fleetingness of life, usually featuring a skull.

There will be time next year, or the year after. But by hyping up the dangers of failure in action, we underrate the seriousness of the dangers lurking within passivity. In comparison with the horror of our final exit, the pains and troubles of our bolder moves and riskier ventures do not, in the end, seem so terrifying. We should learn to frighten ourselves a bit more in one area to be less scared in others.

It is hardly surprising that we struggle with the notion of how long we will be here. At first, life seems quite endless. At seven, it feels like an eternity till Christmas. At eleven, it is almost impossible to imagine what it might be like to be twenty-two. At twenty-two, thirty feels absurdly remote. Time does us a disservice in seeming so long, and yet turning out to be so resolutely short. Typically, people only become gripped by the idea of mortality at a few select points in their lives. Turning forty or fifty can bring a sudden reversal of perspective. We panic or become morose. We buy a new car or take up a musical instrument. However, what this really indicates is a dramatic failure of anticipation. The extraordinary aspect is not that we’re dying, but that the reality of the nature of existence did not get fixed firmly enough in our brains at an earlier, more appropriate, moment. A mid-life crisis is not a legitimate awakening; it’s a sign of being shamefully ill prepared.

We should never need to be awoken. In an ideal culture, our mortality would be systematically impressed upon us from the earliest age. There would be a specific day each month when everyone attended a stranger’s funeral. Every news bulletin would be followed by a live feed from a hospice. Career guidance would start with a brief meditation on the preponderance of heart attacks and pancreatic cancers. We’d have impressively grim monuments across our cities (in supermarket car parks and around football stadia): ‘To Those Who Wasted Their Lives’. Worrying about where life was going would be treated as an admirable and important characteristic. You’d often overhear people saying: ‘I really like X; they’re so concerned about wasting their life.’

Even without this ideal society-wide support there are moves we can make ourselves to usefully intensify our awareness of our own limited spans: we should assemble our own repertoire of reminders, perhaps a skull, a set of cancer statistics or a close-up of the sort of capillary that can unleash a stroke.

We need regular, forceful encounters with reminders that there is something else we should be far more frightened of than embarrassment around holding someone’s hand or a bit of trouble as we change the subject of our university degree.

VIII
Enemies

Learning that someone hates us deeply, even though we have done nothing ostensibly to provoke them, can be one of the most alarming situations we face. At a bar after work, we might be told, via a malevolent third party, that two people in the office deem us arrogant and disrespectful and that, for the last few months, they haven’t lost a chance to do us down behind our backs. Or we might learn that a friend of a friend, a senior professor, has forceful objections to a paper of ours; they called it ‘naive’ and ‘stuck in the 1970s’ and made sarcastic jokes at our expense at a conference. Furthermore, because of technology, we’re now aware of a vast new range of potential enemies scattered around the digital universe. We are only ever a few seconds of online searching away from pitiless, personally targeted assessments of all that we are.

For the underconfident among us, enemies are a catastrophe. In our psychological make-up, the approval of the world effectively supports our approval of ourselves. Consequently, when enemies agitate against us, we lose faith not in them (they continue to exert a mesmeric authority over us), but, more alarmingly, in ourselves. We may, when with our friends, casually profess to hate the haters (and curse their names with bravado), but in private, over the ensuing months, we simply cannot dismiss their judgements, because we have accorded them a status logically prior to our own in our deep minds. Their objections may feel unbearable, like a physical discomfort we cannot correct, but we can’t reject them as unwarranted either. In despair, it feels as if we do not know how to carry on, not only because we’ve been called idiots or egotists, but because, as a result, we must simply be idiots and egotists.

The judgements of others have been given a free pass to enter all the rooms of our minds. There is no one manning the border between them and us: the enemies are freely in us, wandering wildly and destructively through the caverns of our inner selves, ripping items off the shelves and mocking everything we are. In our distress, we may keep harping back to the idea (it brings tears to our eyes) that the situation is profoundly ‘unfair’: we did nothing especially wrong, our intentions are benevolent and our work is acceptable. Why, therefore, has our name been trampled upon and our reputation trashed? Either because we truly are fools (which is an unendurable truth) or because we’re not fools (in which case the hatred is an unendurable error). Whatever is right, we can’t just walk away and get on with our lives. We feel compelled to take some kind of corrective action to scrub away the stain our enemies have applied. In the middle of the night, we contemplate a range of responses: angry, passive-aggressive, self-harming, charming, begging.... Our partner might implore us to drop it and return to bed. We cannot: the enemy refuses to leave our heads.

Where does such underconfidence around enemies come from? We should, as ever, begin with parents and sketch an imaginary portrait of types who could unwittingly create such tortured mindsets. However ostensibly loving these parents might have been, they are also likely to have felt a high degree of trust in the system. If the police were investigating one of their friends, their guess would be that the authorities were correct in their suspicions. When reading a newspaper, if they were to read a destructive review of a novel, even one by an author whose work they’d much enjoyed in the past, it would seem evident that the author had lost his talent and was now kidding the public. If the parents were friends with an architect who was up for a major prize that was then awarded to somebody else, they’d feel the friend – whose buildings they admired – must have lacked talent in comparison with the winner, whose dark asymmetrical structures they would vow at once to take a second, more respectful, look at.

When it came to their own children, these underconfidence-generating parents would have applied a similar method of judgement: the issue of how much and where to love would have been to a large extent determined externally. If the world felt the baby was adorable, they probably were (and if not, then not so much). Later, if the child won a maths prize, it was a sign not just of competence at algebra but of being, far more broadly, a love-worthy person. Conversely, if the school report described the child as an easily distracted dreamer who looked as if he would flunk his exams, that might mean the offspring didn’t quite deserve to exist. The lovability of the child in the eyes of the parents rose and fell in accordance with the respect, interest and approval of the world.

To be on the receiving end of such parenting is a heavy burden. We, the recipients of conditional love, have no option but to work manically to fulfil the conditions set up by parental and worldly expectations. Success isn’t simply a pleasant prize to stumble upon when we enjoy a subject or a task interests us; it is a psychological necessity, something we must secure in order to feel we have the right to be alive. We don’t have any memories of success-independent affection and therefore constantly need to recharge our batteries from the external power source of the world’s flickering and wilful interest. Unsurprisingly, when enemies come on the horizon, we are quickly in deep trouble, for we have no ability to hold in our minds the concept that they might be wrong and we right; that our achievements are not our being, and that the failure of our actions does not presuppose failure of our entire selves. Rendered defenceless by our upbringing, we have no border post between inside and out. We are at the mercy of pretty much anyone who might decide to hate us.

Contrast this with the blessed childhood of the confident. Their parents would have maintained a vigorously sceptical relationship to the system. The world might sometimes be right, but then again, on key occasions, it could be gravely and outrageously wrong. Everyone was, in their eyes, endowed with their own capacity to judge. It is not because the crowd is jeering that the accused is guilty, or vice versa. The chief of police, the lead reviewer of The Times, or the head of the Pritzker Architecture Prize might well be idiotic; these things happen. In their role as parents, the messages of the confidence-inducing were no less generous in their scepticism: ‘You are loved in and of yourself because of what you are, not what you do.

You aren’t always admirable or even likeable, but you are always deserving of affection and charity of interpretation. It doesn’t matter to me if you end up the president or the street cleaner. You will always be something more important: my child. If they don’t have the wisdom to be kind, fuck them!’. Without necessarily intending this, the parents set up a soothing voice that still plays on a loop in the recesses of the mind, especially at moments of greatest challenge. It is the voice of love.

We cannot go back and change the past that made us. However, by understanding the structure of what we are missing, we may at least strive to integrate emotionally healthier voices into our agitated interiors. The verdict of the system is never totally wrong, but nor is it ever more than occasionally right: police forces get muddled; reviewers redirect their disappointments onto innocent targets; prize committees fall under the sway of fashion. The world doesn’t reliably ‘know’. We cannot change the presence of an enemy, but we can change what an enemy means to us. These figures can shift from being devoted, impartial agents of truth about one’s right to exist to being – more sanely – people who have an opinion, probably only ever a bit right, about something we once did, and never about who we are (that is something we decide).

Panicking about having acquired a few enemies can be a symptom of a dangerous trust in human beings as a whole. Underconfident types work with the assumption that almost everyone they encounter will be sane, measured, intelligent, judicious, and in command of themselves. If, despite these attributes, certain people still write nasty things online or describe us as a nuisance, the attacks simply have to be true. Yet the more psychologically robust are saved from such dispiriting assumptions by a highly useful skill: fierce pessimism. They assume from the start that most people, even grand and supposedly intelligent ones, are riddled with prejudice, beset by low motives, and capable of deliberate cattiness and meanness better suited to a playground of the under-fives. They lie, they slander, they project, they say things to make themselves feel better, they are envious and inadequate, cruel and close to evil. Why should we be surprised and disturbed if a few people happen to be nasty to us, given that nastiness is more or less the fundamental truth of human nature? The benefit of thinking a lot less of everyone can be a calmer attitude towards the specific meanness of a few.

Armed with darker thoughts, the confident know that every decent and interesting person is going to accumulate a string of enemies as they make their way through life. It would be impossible for it to be otherwise, given human nature. The specific reasons will be varied and somewhat random: some of these enemies will flare up because they have vested interests in a status quo we are challenging; some may be uncomfortably reminded of their own renounced ambitions when they encounter our skills; some may find our achievements humiliating to their sense of self-worth; some are people who might have wanted to be our friends or even our lovers, and then turned sour when this proved impossible. We will constantly be the target of anger, but we don’t have to believe ourselves to be its true cause.

Ludolf Bakhuysen, Warships in a Heavy Storm, c. 1695.

In the 17th century, the Dutch developed a tradition of painting ships in violent storms. These works, which hung in private homes and in municipal buildings around the Dutch republic, were not mere decoration. They had an explicitly therapeutic purpose: they delivered a moral to their viewers, who lived in a nation critically dependent on maritime trade, about confidence in seafaring and life more broadly. The sight of a tall sailing ship being tossed to a twenty-degree angle in a rough sea looks like a catastrophe to an inexperienced person. But there are many situations that look and feel much more dangerous than they really are, especially when the crew is prepared and the ship internally sound. Consider Ludolf Bakhuysen’s work Warships in a Heavy Storm. The scene looks chaotic in the extreme: how could they possibly survive? But the ships were well designed for just such situations. Their hulls had been minutely adapted through long experience to withstand the tempests of the northern oceans. The crews practised again and again the manoeuvres that could keep their vessels safe: they knew how to take down sails at speed and ensure that the wind would not shred the mast. They understood about shifting cargo in the hull, tacking to the left and then abruptly to the right, and pumping out water from the inner chambers. They knew how to remain coolly scientific in responding to the storm’s wilful, frantic motions. The picture pays homage to decades of planning and experience. One can imagine the older sailors on the ship saying to a terrified novice, with a laugh, that just last year off the coast of Jutland there was an even bigger storm – and slapping him on the back with paternal playfulness as the youth was sick overboard. Bakhuysen wanted us to feel proud of humanity’s resilience in the face of apparently dreadful challenges. His painting enthuses us with the message that we can all cope far better than we think; that what appears immensely threatening may be highly survivable.

What is true of storms in the North Sea may be no less true of enemies at the office. Their aggression can be terrifying, like the giant waves off Den Helder, yet in reality – with deft emotional skill and internal reorganisation – can prove eminently manageable. The storms are not really about us, and we can survive them by refusing to let the verdicts of others become our verdicts on ourselves. We should keep in mind a confident distinction between the hater and the critic, aim to correct our genuine flaws, and otherwise forgive the injured, roaring winds that seek to punish us for pressures that have nothing to do with us. The storms will die down, we will be battered, a few things will be ripped, but eventually we will return to safer shores – as the sun rises over the spires of Alkmaar.

IX
Self-Sabotage

It is normal to expect that we will always – almost by nature – actively seek our own happiness, especially in two big areas of potential satisfaction: relationships and careers.

It is therefore odd and a little unnerving to find how often many of us act as if we were deliberately out to ruin our chances of getting what we want. When going on dates with candidates we are keen on, we may lapse into unnecessarily opinionated and antagonistic behaviour. When we are in a relationship with someone we love, we may drive them to distraction through repeated unwarranted accusations and angry explosions, as if we were somehow willing to bring on the sad day when, exhausted and frustrated, the beloved would be forced to walk away, still sympathetic but unable to take our elevated degree of suspicion and drama.

Similarly, we might be led to destroy our chances of a major promotion at work when, just after giving a particularly convincing presentation to the board, we grow bizarrely strident with the CEO or become drunk and insulting at a crucial client dinner.

Such behaviour can’t be put down to mere bad luck. It deserves a stronger, more intentional term: self-sabotage. We are familiar enough with the fear of failure, but it appears that success can sometimes bring about as many anxieties, which may ultimately culminate in a desire to scupper our chances in a bid to restore our peace of mind.

What could possibly explain this suspicion of success? In certain cases, an unconscious desire to protect those who love us, particularly those who cared for us in childhood, from a sense of envy and inadequacy that might be triggered by our gains. The beautiful new partner or the promotion to a senior role may prove silently devastating to those around us, prompting them to wonder about how little they have achieved by comparison and to fear that they will be deemed no longer good enough to merit our company.

It can feel odd to accept that those who loved us as children could harbour envious feelings towards us, especially when they might be devoted to us in most other ways. Yet these caregivers may nevertheless be carrying a private layer of regret within them about the course of their own lives and attendant fears of being neglected and thought unimportant by others, even their own children. As we were growing up, there might have been telling reminders about not getting too big for one’s boots and not forgetting where one came from, disguised pleas not to be forgotten and overlooked. We can end up in a bind: the success we long for threatens to hurt the feelings of those we love.

The solution, once we discover the impasse, is not to sabotage ourselves; it is to grow deeply generous and proactive around the real reasons why our caregivers could have ended up feeling so apprehensive about our achievements. We should recognise that these caregivers are not, ultimately, afraid of our success so much as they are afraid of being abandoned and reminded of their own inadequacies. The task, therefore, isn’t to ruin our chances; it is to try to reassure our nervous companions of our essential loyalty and of their primordial value.

A second common type of self-saboteur is one who finds the price of hope too high to pay. When we were younger, we may have been exposed to exceptionally brutal disappointments at a time when we were too fragile to withstand them. Perhaps we hoped our parents would stay together and they didn’t. Or we hoped our father would eventually come back from another country and stay. Perhaps we dared to love someone and, after a few weeks of happiness, they swiftly and oddly changed their attitude and mocked us in front of our peers. Somewhere in our characters, a deep association has been forged between hope and danger, along with a corresponding preference to live quietly with disappointment rather than more freely with hope.

The solution is to remind ourselves that we can, despite our fears, survive the loss of hope. We are no longer those who suffered the disappointments responsible for our present timidity. The conditions that forged our caution are no longer those of adult reality. The unconscious mind may, as is its wont, be reading the present through the lenses of decades ago, but what we fear will happen has, in truth, already happened; we are projecting into the future a catastrophe that belongs to a past we have not had the chance to fathom and mourn adequately.

Furthermore, what fundamentally distinguishes adulthood from childhood is that the adult has access to a great many more sources of hope than the child. We can survive a letdown here or there, because we no longer inhabit a closed province, bounded by the family, the neighbourhood and the school. We can use the whole world as an orchard in which to nurture a diversity of hopes that will always outstrip the inevitable, yet only ever occasional and survivable, crushing disappointment.

Lastly, we may destroy success from touching modesty: from the sense that we cannot really deserve the bounty we have received. We may turn to consider our new job or lover in the light of all the sides of ourselves that we know to be less than perfect – our laziness, cowardice, stupidity and immaturity – and conclude that there must have been a mistake and that we must therefore return our gifts to the more deserving. But this is kindly, though balefully, to misunderstand the way success and pain are allotted. The universe does not distribute its gifts and its horrors with divinely accurate knowledge of the good and bad within each of us. Most of what we win is not quite deserved and most of what we suffer isn’t either. Cancer wards are not filled with the exceptionally wicked.

When we feel oppressed by a sense of not meriting our favours, we need only remind ourselves that we will soon enough not deserve our maledictions either. Our diseases, public falls from grace and romantic abandonments will in time be as undeserved as our beauty, elevations and loving partners might now be. We should not worry so much about the latter, nor complain quite so bitterly about the former. We should accept from the start, with good grace and dark premonition, the sheer randomness and amorality of fate.

It can be useful to keep the concept of self-sabotage in mind when interpreting our and others’ odder antics. We should start to get suspicious when we catch ourselves pulling off erratic performances around people we deep down really like or need to impress.

Furthermore, faced with certain kinds of viciousness and unreliability in others, we should dare to imagine that things are not quite as they seem; we might have on our hands not a malevolent opponent, but an almost touchingly wounded self-saboteur, who chiefly deserves a little patience and should gently be coaxed out of doing themselves further harm.

We should come to terms with, and help others to see, just how hard and unnerving it can sometimes be to get close to the things we truly want.

X
Confidence in
Confidence

Although we assume that we, like everyone else, must want to be confident, we may harbour private suspicions that confidence is in fact an unappealing state of mind. We might, without fully realising it, find the idea of being truly confident strangely offensive, and secretly remain attached to hesitancy and modesty.

We may take quiet pride in the fact that we aren’t the types to complain in restaurants. We don’t kick up a fuss about our salary. We don’t ask all our friends to rearrange their holidays for our sakes. We don’t play our music loudly. Our meekness protects us from some deeply off-putting associations around self-assertion. These might have been forged early on in our lives in the presence of people who were both hugely unpleasant and highly certain of their right to exist. They may have been terrifyingly demanding, impatient, dismissive and brash. They might have shouted in service situations and slammed the phone down on people they believed didn’t respect them enough. We may have started to think that this is how people needed to behave in order to succeed and that if this were the case, then conspicuous success wouldn’t be for us.

We shouldn’t forget that suspicion of confidence has traditionally enjoyed immense cultural endorsement. Christianity, for centuries the greatest influence on the mindset of the West, was highly sceptical about those might think too well of themselves. While the meek basked in divine favour, the arrogant would be the last to enter the kingdom of heaven. The political theory of Karl Marx (1818–1883) added to this argument a set of theories apparently proving that economic success was always founded upon the exploitation of others. No wonder it may feel as if, to be moral citizens, we should steer clear of all overly robust assertions of our own interests.

Yet this attitude too can carry dangers. We may lack the confidence not to be cruel and promote idiocy, but to fight for kindness and wisdom. Our lack of confidence in confidence may allow degraded versions of self-assertion to thrive.

Out attitude may also be unfair. Our negative view of confidence may be overly dependent on the quirks of our own histories, on the sort of people we first encountered confidence in who were not its best or most reliable representatives. Our real problem may not be confidence so much as a lack of other virtues such as manners, charm, wit and generosity. We may be wrongly diagnosing the root of our objections. There may be a few people at risk of growing into braggarts, self-seekers and blowhards. But confidence is in its essence entirely compatible with remaining sensitive, kind, witty and softly-spoken. It might be brutishness, not confidence, that we hate.

Furthermore, our attraction to meekness may mask some cowardly resentment against self-assertion. We might not so much admire timidity as fear trying confidence. It was this species of self-protective deception that particularly fascinated the German philosopher Nietzsche (1844–1900). He thought it a typical error of many Christians, who might pride themselves on their ‘forgiveness’ while in reality simply trying to excuse their ‘inability to take revenge’. We should take care not to dress up our base deficiencies as godly virtues.

Unfortunately it isn’t enough to be kind, interesting, intelligent and wise inside: we need to develop the skill that allows us to make our talents active in the world at large. Confidence is what translates theory into practice. It should never be thought of as the enemy of good things; it is their crucial and legitimate catalyst. We should allow ourselves to develop confidence in confidence.

Credits

p.17
Nederlandse Spreekwoorden (Dutch Proverbs), 1559, Pieter Bruegel the Elder, bpk / Gemäldegalerie, SMB / Volker-H. Schneider

p.43
Exerpt from ‘Little Gidding’ from Four Quartets, 1942, T.S. Eliot. Copyright 1942 T.S. Eliot; Copyright © renewed 1970 by Esme Valerie Eliot. Reprinted by permission of Houghton Mifflin Harcourt Publishing Company and Faber and Faber, Ltd. All rights reserved.

p.53
(top) Sculpture of a warrior from the east pediment of the Temple of Aphaia II, ca. 505–500 BC, Glyptothek, Munich by Carole Raddato, Creative Commons License. https://www.flickr.com/photos/carolemage/26593973831/

(bottom) © Staatliche Antikensammlungen and Glyptothek München Photograph by Renate Kuehling

p.60
Young Man holding a Skull (Vanitas), 1626-8, Frans Hals, © The National Gallery, London 2017

p.75
Warships in a Heavy Storm, c. 1695, Ludolf Bakhuysen Rijksmuseum, Amsterdam. Purchased with the support of the Vereniging Rembrandt.

The School of Life is dedicated to developing emotional intelligence – believing that a range of our most persistent problems are created by a lack of self-understanding, compassion and communication. We operate from ten physical campuses around the world, including London, Amsterdam, Seoul and Melbourne. We produce films, run classes, offer therapy and make a range of psychological products. The School of Life Press publishes books on the most important issues of emotional life. Our titles are designed to entertain, educate, console and transform.

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6 Federalism

DURING THE 1960s Congress amended the Fair Labor Standards Act (FLSA) of 1938 to require state governments to pay virtually all their employees a specified minimum wage and to compensate them for overtime work. Were these amendments constitutional, or had Congress interfered with state authority and autonomy? The answer depends on how we view the letter and spirit of the Constitution. We would reach very different conclusions depending on whether we subscribed to the dual or cooperative approach to nation–state relations (see table 6-1).

Proponents of dual federalism would want the Court to strike down the law. As advocates of states’ rights, they would argue that the Constitution represents an agreement between the states and the federal government in which the states empower the central government and that, therefore, states are not subservient to the federal government. In other words, because each state is supreme within its own sphere, the federal government could no more impose minimum wage requirements on states than the states could impose them on the federal government. To back their theory, dual federalists invoke the Tenth Amendment, arguing that it creates an “enclave” of states’ rights that Congress may not invade—especially if Congress encroaches on a traditional state function.1

Cooperative federalism takes the opposite view. Proponents argue that the people, not the states, created and animated the federal government. This view holds that the supremacy clause and the necessary and proper clause, not the Tenth Amendment, control the balance of power between the federal government and the states. That amendment, according to cooperative federalism, grants no additional powers to the states. It serves only to emphasize that the federal government is limited to the powers the Constitution assigns to it. As long as Congress bases the law regulating wages and hours on an enumerated (or implied) power, the law passes constitutional muster. The Tenth Amendment creates no bar, or so the argument goes.

The history of nation–state relations issues before the Supreme Court has been characterized by swings back and forth between variants of cooperative federalism and dual federalism. In fact, a sharply divided Supreme Court voted 5 to 4 to strike down the amendments to the Fair Labor Standards Act (FLSA) of 1976. The case was National League of Cities v. Usery, in which the majority held that the provisions violated the Tenth Amendment and were an unconstitutional interference with states. Just nine years later, however, in another 5–4 decision, the Court upheld the maximum hours and minimum wage provisions of the law in Garcia v. San Antonio Metropolitan Transit Authority (1985), which effectively overruled the 1976 decision.

In this chapter we explore four aspects of the constitutional division of power between the federal government and the states. First, we examine the doctrinal cycle of nation–state relations, tracing the historical swings between cooperative and dual federalism. Second, we look at the Eleventh Amendment and the doctrine of sovereign immunity, which promote the status of the states by shielding them from lawsuits. Next, we address new judicial federalism, an approach to the division of authority between state and federal judiciaries that arose during the 1980s and strengthened the role of state courts. We end the chapter with a discussion of a recurring issue of federalism: What happens when both the states and the federal government want to regulate the same activity?

THE DOCTRINAL CYCLE OF NATION–STATE RELATIONS

The Court’s about-face from National League of Cities to Garcia is not an anomaly in this area of the law; rather, it is a symptom of the general confusion that has surrounded American federalism since the eighteenth century. As depicted in table 6-2, throughout U.S. history the Supreme Court’s allegiance has shifted from cooperative federalism to dual federalism (or one of their variants) and back again. As a consequence the justices have moved between states’ rights and national supremacy positions over time. (See table 6-2.)

From our introduction to this part of the book, you learned that the Tenth Amendment was included in the Bill of Rights to allay concerns that the national government would run roughshod over the states. Vexing from the start, however, has been the question of how to interpret its words: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” As the discussion above suggests, to dual federalists it is a states’ rights amendment—one that creates an enclave that protects states from unwarranted federal intrusions. To cooperative federalists, it does little more than confirm that the Constitution created a federal government limited to its “delegated” powers. Disputes over these competing views raise questions that implicate the very nature of the Constitution.

As we review the doctrinal cycles in the following pages, we highlight those disputes where a state has claimed that actions of the federal government directly impinge on the constitutional authority of the state or where the federal government had similar complaints about state actions. In chapters 7 and 8 we broaden our discussion by exploring federalism’s effects on the regulation of commerce and the exercise of the fiscal powers of taxation and spending. It has been within these policy areas that some of the most significant federalism battles have been fought.

The Marshall Court and the Rise of National Supremacy

An ardent Federalist, Chief Justice John Marshall was true to his party’s tenets over the course of his long career on the Court. In case after case (in particular, Cohens v. Virginia, 1821), he was more than willing to elevate the powers of the federal government above those of the states—even when he knew that some states were questioning the authority of the Court or failing to respect its decisions.

Such behavior may not be unusual in new democracies, as our discussion of the problems of the Russian Constitutional Court demonstrates (see box 6-1). But that did not deter Marshall from making a number of important statements on national supremacy—with perhaps the most significant coming in McCulloch v. Maryland (1819). In chapter 3 we saw how Marshall used this case to assert that Congress has implied powers. Here, we shall see that McCulloch also served as Marshall’s vehicle to expound the notion of national supremacy; note in particular his view of the Tenth Amendment. We offer a brief review of the essential facts to remind you of the issues in this case.

Constitutional scholars regard McCulloch as an unequivocal statement of national power over the states. Its strength lies in Marshall’s treatment of the three relevant constitutional provisions: the necessary and proper clause, the Tenth Amendment, and the supremacy clause.

First, as you may recall from chapter 3, according to McCulloch the necessary and proper clause permits Congress to pass legislation implied by its enumerated functions, bounded chiefly in this way: “Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”3

Second, because the Tenth Amendment reserves to the states or to the people only power that has not been delegated (expressly or otherwise) to Congress, it stands as no significant bar to Congress’s exercise of its powers, including those that are implied. Given Marshall’s treatment of the necessary and proper clause, implied powers seem quite expansive. This also seems to be an explicit rejection of the “enclave” approach to the Tenth Amendment.

Third, the supremacy clause places the national government at the top within its sphere of operation, a sphere that again, according to Marshall’s interpretation of the necessary and proper clause, is expansive. If the supremacy clause means anything, it means that no state may “retard, impede, burden, or in any manner control the operations of the constitutional laws enacted by Congress.” Note, too, Marshall’s view of the constitutional arrangement. As one would expect, he fully endorses the position that the charter represents a contract between the federal government and the people—not the states.

McCulloch’s holdings—supporting congressional creation of the bank and negating state taxation of it—were not particularly surprising. Most observers thought the Marshall Court would rule the way it did. It was the chief justice’s language and the constitutional theories he offered that sparked a serious debate in a states’ rights newspaper, the Richmond Enquirer. The argument started just weeks after McCulloch was decided, as a barrage of states’ rights advocates wrote letters to the newspaper’s editor condemning the ruling. Apparently concerned that if their views took hold, the Union would revert back to its form under the Articles of Confederation, Marshall took an unusual step for a Supreme Court justice: he responded to his critics. Initially, he wrote two articles, carried by a Philadelphia newspaper, defending McCulloch. But when an old enemy, Spencer Roane, the Virginia Supreme Court judge who was the target of the Court’s decision in Martin v. Hunter’s Lessee (1816), launched an unbridled attack, Marshall responded with nine essays published under the pseudonym “A Friend of the Constitution.”4

McCulloch v. Maryland

17 U.S. (4 Wheat.) 316 (1819)

http://laws.findlaw.com/us/17/316.html

Vote: 6 (Duvall, Johnson, Livingston, Marshall, Story, Washington)

0

OPINION OF THE COURT: Marshall

NOT PARTICIPATING: Todd

Facts:

Congress established the Second Bank of the United States in 1816. Because of inefficiency and corruption, the bank was very unpopular, and many blamed it for the nation’s economic problems. To show its displeasure, the Maryland legislature passed a law saying that banks operating in the state that were not chartered by the state—in other words, the national bank—could issue banknotes only on special paper, which the state taxed. The Maryland law was clearly a state attack on an operation of the federal government. Was it constitutional for the state to use its authority to block a federal program? This question became a legal dispute when James McCulloch, the cashier of the Baltimore branch of the Bank of the United States, refused to pay the tax and Maryland took legal action to enforce its law. The United States challenged the constitutionality of the Maryland tax, and in return Maryland disputed the constitutionality of the bank.2

Arguments:

For the plaintiff in error, James McCulloch:

The necessary and proper clause justifies the establishment of the bank. It allows Congress to use all usual and suitable means of executing its constitutional powers. Congress has the power to raise revenue to support the government, and a bank is a suitable means to exercise that power.

Under the supremacy clause, the laws of the United States are supreme and control all state constitutions and legislation.

Allowing states to tax the bank implicitly allows them to control the federal government, even to the point of its destruction. That possibility was precisely the situation the framers wished to avoid. They did not intend for the federal government to operate upon the discretion of the states.

For the defendant in error, state of Maryland et al.:

The Tenth Amendment ensures that all powers not expressly enumerated to the federal government are reserved to the states. The federal government has enumerated powers to collect taxes, borrow money, and pay public debts, but a bank fulfills none of those ends. Therefore, it is beyond the scope of congressional power and is a power reserved to the states.

This interpretation of the Tenth Amendment is supported by the history of the Constitution, which was ratified as a compact between states, not by the people as one aggregate mass.

The necessary and proper clause should be interpreted as a restriction on Congress’s power to choose the means of executing its enumerated powers. The framers said “necessary and proper,” instead of “necessary or proper,” to avoid granting general and unlimited discretion to the federal government.

Taxation is an acknowledged power of the states, and states have sovereign power to tax, independent of the Constitution. The Constitution prohibits states only from taxing imposts or tonnage duties, and therefore states may tax anything else.

MR. CHIEF JUSTICE MARSHALL delivered the opinion of the court.

The constitution of our country, in its most interesting and vital parts, is to be considered; the conflicting powers of the government of the Union and of its members, as marked in that constitution, are to be discussed; and an opinion given, which may essentially influence the great operations of the government. . . .

In discussing this . . . the counsel for the state of Maryland have deemed it of some importance, in the construction of the constitution, to consider that instrument not as emanating from the people, but as the act of sovereign and independent states. The powers of the general government, it has been said, are delegated by the states, who alone are truly sovereign; and must be exercised in subordination to the states, who alone possess supreme dominion.

It would be difficult to sustain this proposition. The convention which framed the constitution was indeed elected by the state legislatures. But the instrument, when it came from their hands, was a mere proposal, without obligation, or pretensions to it. It was reported to the then existing Congress of the United States, with a request that it might “be submitted to a convention of delegates, chosen in each state by the people thereof, under the recommendation of its legislature, for their assent and ratification.” This mode of proceeding was adopted; and by the convention, by Congress, and by the state legislatures, the instrument was submitted to the people. They acted upon it in the only manner in which they can act safely, effectively, and wisely, on such a subject, by assembling in convention. It is true, they assembled in their several states—and where else should they have assembled? No political dreamer was ever wild enough to think of breaking down the lines which separate the states, and of compounding the American people into one common mass. Of consequence, when they act, they act in their states. But the measures they adopt do not, on that account, cease to be the measures of the people themselves, or become the measures of the state governments. . . .

The government of the Union, then . . . is, emphatically, and truly, a government of the people. . . .

It is the government of all; its powers are delegated by all; it represents all, and acts for all. Though any one state may be willing to control its operations, no state is willing to allow others to control them. The nation, on those subjects on which it can act, must necessarily bind its component parts. But this question is not left to mere reason; the people have, in express terms, decided it by saying, “this constitution, and the laws of the United States, which shall be made in pursuance thereof,” “shall be the supreme law of the land,” and by requiring that the members of the state legislatures, and the officers of the executive and judicial departments of the states shall take the oath of fidelity to it. The government of the United States, then, though limited in its powers, is supreme; and its laws, when made in pursuance of the constitution, form the supreme law of the land, “anything in the constitution or laws of any State to the contrary notwithstanding.”

Among the enumerated powers, we do not find that of establishing a bank or creating a corporation. But there is no phrase in the instrument which, like the articles of confederation, excludes incidental or implied powers; and which requires that everything granted shall be expressly and minutely described. Even the 10th amendment, which was framed for the purpose of quieting the excessive jealousies which had been excited, omits the word “expressly,” and declares only that the powers “not delegated to the United States, nor prohibited to the states, are reserved to the states or to the people”; thus leaving the question, whether the particular power which may become the subject of contest has been delegated to the one government, or prohibited to the other, to depend on a fair construction of the whole instrument. The men who drew and adopted this amendment had experienced the embarrassments resulting from the insertion of this word in the articles of confederation, and probably omitted it to avoid those embarrassments. A constitution, to contain an accurate detail of all the subdivisions of which its great powers will admit, and of all the means by which they may be carried into execution, would partake of a prolixity of a legal code, and could scarcely be embraced by the human mind. It would probably never be understood by the public. Its nature, therefore, requires, that only its great outlines should be marked, its important objects designated, and the minor ingredients which compose those objects be deduced from the nature of the objects themselves. That this idea was entertained by the framers of the American constitution, is not only to be inferred from the nature of the instrument, but from the language. . . .

After this declaration, it can scarcely be necessary to say that the existence of state banks can have no possible influence on the question. No trace is to be found in the constitution of an intention to create a dependence of the government of the Union on those of the states, for the execution of the great powers assigned to it. Its means are adequate to its ends; and on those means alone was it expected to rely for the accomplishment of its ends. To impose on it the necessity of resorting to means which it cannot control, which another government may furnish or withhold, would render its course precarious; the result of its measures uncertain, and create a dependence on other governments, which might disappoint its most important designs and is incompatible with the language of the constitution. But were it otherwise, the choice of means implies a right to choose a national bank in preference to state banks, and Congress alone can make the election.

After the most deliberate consideration, it is the unanimous and decided opinion of this court that the act to incorporate the bank of the United States is a law made in pursuance of the constitution, and is part of the supreme law of the land. . . .

It being the opinion of the court, that the act incorporating the bank is constitutional; and that the power of establishing a branch in the State of Maryland might be properly exercised by the bank itself, we proceed to inquire . . . whether the State of Maryland may, without violating the constitution, tax that branch? . . .

The argument on the part of the State of Maryland, is, not that the States may directly resist a law of Congress, but that they may exercise their acknowledged powers upon it, and that the constitution leaves them this right in the confidence that they will not abuse it.

That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create; that there is a plain repugnance, in conferring on one government a power to control the constitutional measures of another, which other, with respect to those very measures, is declared to be supreme over that which exerts the control, are propositions not to be denied. But all inconsistencies are to be reconciled by the magic of the word Confidence. Taxation, it is said, does not necessarily and unavoidably destroy. To carry it to the excess of destruction would be an abuse, to presume which, would banish that confidence which is essential to all government.

But is this a case of confidence? Would the people of any one State trust those of another with a power to control the most insignificant operations of their State government? We know they would not. Why, then, should we suppose that the people of any one State should be willing to trust those of another with a power to control the operations of a government to which they have confided their most important and most valuable interests? In the legislature of the Union alone, are all represented. The legislature of the Union alone, therefore, can be trusted by the people with the power of controlling measures which concern all, in the confidence that it will not be abused. This, then, is not a case of confidence, and we must consider it as it really is.

If we apply the principle for which the State of Maryland contends, to the constitution generally, we shall find it capable of changing totally the character of that instrument. We shall find it capable of arresting all the measures of the government, and of prostrating it at the foot of the States. The American people have declared their constitution, and the laws made in pursuance thereof, to be supreme; but this principle would transfer the supremacy, in fact, to the States.

If the States may tax one instrument, employed by the government in the execution of its powers, they may tax any and every other instrument. They may tax the mail; they may tax the mint; they may tax patent rights; they may tax the papers of the custom-house; they may tax judicial process; they may tax all the means employed by the government, to an excess which would defeat all the ends of government. This was not intended by the American people. They did not design to make their government dependent on the States. . . .

It has also been insisted, that, as the power of taxation in the general and State governments is acknowledged to be concurrent, every argument which would sustain the right of the general government to tax banks chartered by the States, will equally sustain the right of the States to tax banks chartered by the general government.

But the two cases are not on the same reason. The people of all the States have created the general government, and have conferred upon it the general power of taxation. The people of all the States, and the States themselves, are represented in Congress, and, by their representatives, exercise this power. When they tax the chartered institutions of the States, they tax their constituents; and these taxes must be uniform. But, when a State taxes the operations of the government of the United States, it acts upon institutions created, not by their own constituents, but by people over whom they claim no control. It acts upon the measures of a government created by others as well as themselves, for the benefit of others in common with themselves. The difference is that which always exists, and always must exist, between the action of the whole on a part, and the action of a part on the whole—between the laws of a government declared to be supreme, and those of a government which, when in opposition to those laws, is not supreme.

But if the full application of this argument could be admitted, it might bring into question the right of Congress to tax the State banks, and could not prove the right of the States to tax the Bank of the United States.

The court has bestowed on this subject its most deliberate consideration. The result is a conviction that the states have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government. This is, we think, the unavoidable consequence of that supremacy which the constitution has declared.

We are unanimously of opinion that the law passed by the legislature of Maryland, imposing a tax on the Bank of the United States, is unconstitutional and void.

BOX 6-1 FEDERALISM AND JUDICIAL POWER IN GLOBAL PERSPECTIVE

AS OUR DISCUSSIONS of McCulloch v. Maryland in this chapter and in Chapter 2 illustrate, the states of the United States zealously guarded their power from federal encroachment during Chief Justice Marshall’s tenure. The justices were well aware of the possibility that at least some states would disregard their decisions, and, in fact, some did.

As it turns out, the U.S. Supreme Court is not the only judicial tribunal to face such challenges. Quite early in its history, the Russian Constitutional Court confronted a similar lack of respect from its country’s republics.

Created in 1991, the Russian court was given substantial powers, including the ability to review the constitutionality of all state (republic) actions (in the absence of a concrete dispute) at the request of various executive and legislative bodies. In other words, if a member of Russia’s parliament or even the president believed that a republic was violating constitutional mandates, he or she could bring the claim directly to the court, which could then issue a ruling.

In March 1992 a group of Russian legislators took advantage of this right to challenge an action of Tatarstan, a republic within the Russian Federation. Specifically, they argued that a referendum Tatarstan hoped to put to its citizens was unconstitutional. The referendum asked whether the citizens agreed or disagreed “that the Tatarstan Republic is a sovereign state and a party to international law, basing its relations with the Russian Federation as partners.”

The justices accepted the case and scheduled hearings, which Tatarstan officials refused to attend. After hearing the arguments, the justices held that, in fact, the referendum violated several constitutional provisions, especially those establishing national supremacy: “The denial of the supremacy of federal laws over the laws of members of the federation is contrary to the constitutional status of the republics in a federated state and precludes the establishment of a law-governed state.”

When the Tatar government decided to ignore the ruling, the justices requested that their chair (chief justice), Valerii Zor’kin, persuade parliament to seek compliance with their decision. The parliament issued a resolution that supported the court’s ruling and requested that the president enforce it. That was insufficient, however, to deter Tatarstan from going ahead with its referendum about a week later, and a majority of the voters cast ballots in favor of the measure.

To be sure, the U.S. Supreme Court continues to confront challenges from the states, but blatant disregard for its decisions is unusual today. Whether the Russian Constitutional Court will be able to attain a similar status is a question only time can answer. As of this writing, however, the court remains a relatively weak institution. A recent dissertation concluded that the court’s authority has actually decreased over time, “particularly with the regions in the Russian federal system.”

SOURCES: Herman Schwartz, The Struggle for Constitutional Justice in Post-Communist Europe (Chicago: University of Chicago Press, 2000); Robert Sharlet, “The Russian Constitutional Court: The First Term,” Post-Soviet Affairs 9 (1993): 1–39; Julia Wishnevsky, “Russian Constitutional Court: A Third Branch of Government?,” RFE/RL Research Report 2 (1993): 1; Sabrina Lyne Pinnell, “The Russian Constitutional Court: An Analysis of Its Evolution within a Developing Federal System” (PhD dissertation, University of California, Santa Barbara, 2007).

The Taney Court and States’ Rights

While Marshall was chief justice of the United States, it was his view of nation–state relations, not Roane’s, that prevailed. But their dispute foreshadowed a series of events that took place from the 1830s through the 1860s, events that would change the country forever (see table 6-3). The first occurred in November 1832. After Congress passed a tariff act that the South thought unfairly burdensome, South Carolina adopted an ordinance that nullified the federal law. Several days later, the state said it was prepared to enforce its nullification by military force and, if necessary, secession from the Union. It is not surprising that South Carolina took the lead in the battle for state sovereignty. The state was the home of John C. Calhoun, a former vice president of the United States and an outspoken proponent of slavery and states’ rights. Indeed, Calhoun is best remembered as an advocate of the doctrine of concurrent majorities, a view that would provide states with a veto over federal policies. This doctrine was the underpinning for South Carolina’s ordinance of nullification.

The president, Andrew Jackson, was no great nationalist; rather, he believed that states’ rights were not incompatible with the powers of the federal government. But even he took issue with South Carolina’s ordinance. Just a month after the state acted, as table 6-3 illustrates, Jackson issued a proclamation warning the state that it could not secede from the Union. The president’s action infuriated South Carolina, but it temporarily averted a major crisis, as no other state attempted to act on the nullification doctrine.

Another event that would have major implications was Chief Justice Marshall’s death in 1835 and Roger Taney’s ascension to the chief justiceship. In some ways, Marshall and Taney were alike. Both had begun their political careers in their respective states—Virginia and Maryland—and then held major positions within the executive branch of the national government. Both were committed partisan activists. The difference was that they were committed to opposing conceptions of government structure, particularly of nation–state relations. In contrast to Marshall’s Federalist sentiments, Taney was a Jacksonian Democrat, a full believer in the ideas espoused by President Jackson, under whom he had served as attorney general, secretary of war, and secretary of the Treasury, and who had appointed him chief justice. The two chief justices’ views on the Bank of the United States provide a clear example of their political ideas in action. In 1819 Marshall lent his full support to the bank; in 1832 Taney helped write President Jackson’s veto message on the bank’s recharter:

It is maintained by the advocates of the bank that its constitutionality in all its features ought to be considered as settled by precedent and by the decision of the Supreme Court. To this conclusion I can not assent. Mere precedent is a dangerous source of authority, and should not be regarded as deciding questions of constitutional power except where the acquiescence of the people and the States can be considered as well settled.

Had Taney been Jackson’s only appointment to the Court, the course of federalism might not have been altered. But that was not the case. Table 6-4 shows that by 1841 Joseph Story was the only justice remaining from the Marshall Court that decided McCulloch. The others, like Taney, were schooled in Jacksonian democracy. It was, as R. Kent Newmyer has noted, no longer “the Marshall Court. But, then again it was not the age of Marshall.”5 This observation holds on two levels: doctrinally and politically. The Taney Court ushered in substantial legal changes, especially in federal–state relations. Although there is no true Taney corollary to Marshall’s opinion in McCulloch, examples of Taney’s views abound. In many opinions he explicated the doctrine of dual federalism, that national and state governments are equivalent sovereigns within their own spheres of operation. Unlike Marshall, he read the Tenth Amendment in a broad sense, asserting that it did, in fact, reserve to the states certain powers and limited the power of the federal government over the states.

Early Taney Court decisions were not politically controversial. They may have represented a break from previous doctrine, but they matched the tenor of the times. Although Jackson had his feuds with the states (as his battle with South Carolina illustrates), his general philosophical approach to federalism and governance aligned with popular opinion. The issue of slavery was another matter. It had been the cause of acrimony at the Philadelphia convention in 1787, and animosity between the North and the South had continued. The country remained united only through compromises, such as the “three-fifths” plan in the U.S. Constitution, by which a slave was counted as three-fifths of a person for purposes of determining state populations, and the Missouri Compromise of 1820, which provided a plan for slavery in newly admitted states and the territories. By the 1850s old battles were heating up; for example, after California was admitted to the Union as a free state, South Carolina once again issued a secession call.

Dred Scott

Library of Congress

Slavery, therefore, represented the most immediate concern of the day, splitting the nation into two ideological camps. On a different level, however, it was a symptom of a larger problem: the growing resistance of Southern states to federal supremacy. As the North’s criticism of slavery became more vocal, calls for secession or, at the very least, for adoption of Calhoun’s “concurrent majority” doctrine, became more widespread in the South.

It was at this critical moment that the Taney Court interceded in both issues—slavery and federal supremacy—by planting its feet firmly in the states’ rights camp. With its decision in the infamous case of Scott v. Sandford, the Court may have contributed to the collapse of the Union. Also, as you read Taney’s opinion in this case, note his theory of the nature of the constitutional contract. How do his views differ from Marshall’s in McCulloch?

Taney’s opinion held that Scott was still a slave for the following reasons: First, although Scott could become a citizen of a state, he could not be considered, in a legal sense, to be a citizen of the United States; the nation’s history and the words of the Constitution and other documents foreclosed that possibility. As a result, Scott could not sue in federal courts. Second, Congress had no constitutional power to regulate slavery in the territories (in reaching this result, the Court struck down the Missouri Compromise, which Congress had already repealed); the Constitution protects the right to property, a category that, according to Taney, included slaves. Third, the status of slaves depended on the law of the state to which they voluntarily returned, regardless of where they had been. Because the Missouri Supreme Court ruled that Scott was a slave, the U.S. Supreme Court would follow suit. Embedded in these holdings is a strong commitment to dual federalism. Although Taney did not explicitly cite the Tenth Amendment, his use of its language made clear that he viewed it as a brake on the federal government.

Scott was decided as the nation was on the verge of collapse (see table 6-3). Taney’s holding, coupled with his vision of the nature of the federal–state relationship, rather than calming matters, probably added fuel to the fire. From the perspective of Northerners and abolitionists, the opinion was among the most evil and heinous the Court ever issued. Opponents of slavery used the ruling to rally support for their position; they took aim at Taney and the Court, claiming that the institution was so pro-South that it could not be taken seriously. Northern newspapers aroused anti-Court sentiment around the country with stories about the decision. As one wrote,

The whole slavery agitation was reopened by the proceedings in the Supreme Court today, and that tribunal voluntarily introduced itself into the political arena. . . . Much feeling is excited by this decree, and the opinion is freely expressed that a new element of sectional strife has been wantonly imposed upon the country.10

Members of Congress lambasted the Court for the raw and unnecessary display of judicial power it had exercised in striking down the Missouri Compromise. A history on the period asserted, “Never has the Supreme Court been treated with such ineffable contempt, and never has that tribunal so often cringed before the clamor of the mob.”11 As for the chief justice, his reputation was forever tarnished. Even after his death, Congress resisted commissioning a bust of him to sit beside those of other chief justices in the Capitol’s Supreme Court room. At the time, Senator Charles Sumner said, “I object to that; that now an emancipated country should make a bust to the author of the Dred Scott decision. . . . [T]he name of Taney is to be hooted down the page of history. Judgment is beginning now; and an emancipated country will fasten upon him the stigma which he deserves.”12

To Southerners, Scott was a cause for celebration. Indeed, Taney’s notions of slavery and dual federalism appeared in a more energized form just a few years later when South Carolina issued its Declaration of the Causes of Secession. President Abraham Lincoln presented precisely the opposite view—the Marshall approach—in his 1861 inaugural address, but his words could not prevent the outbreak of war.

At its core the Civil War was not only about slavery but also about the supremacy of the national government over the states. It was the culmination of the debates between the Federalists and Anti-Federalists, between Marshall and Roane, and so forth. When the Union won the war, it seemed to have also won the debate over the nature of federal–state relations. In the immediate aftermath of the battle, the Court acceded, though not willingly, to congressional power over the defeated region.

Scott v. Sandford

60 U.S. (19 How.) 393 (1857)

http://laws.findlaw.com/us/60/393.html

Vote: 7 (Campbell, Catron, Daniel, Grier, Nelson, Taney, Wayne)

2 (Curtis, McLean)

OPINION OF THE COURT: Taney

CONCURRING OPINIONS: Campbell, Catron, Daniel, Grier, Nelson, Wayne

DISSENTING OPINIONS: Curtis, McLean

Facts:

Dred Scott was born into slavery in Virginia about 1795.6 His original owner was Peter Blow, a plantation owner. Although the title to Scott would be transferred several times, Blow’s family remained connected to Scott throughout his life.

Blow moved to St. Louis with his family and slaves in 1827. In 1833, after Blow’s death, Scott was sold to John Emerson, a surgeon in the U.S. Army. The following year Emerson took Scott to the free state of Illinois, and in 1836 to the Upper Louisiana Territory, which was to remain free of slavery under the Missouri Compromise of 1820. While in the Wisconsin Territory, Scott married Harriet Robinson, also a slave. They had two daughters.

Eventually, Scott and Emerson returned to Missouri, but the doctor died shortly thereafter, and title to Scott transferred to his widow, E. Irene Sanford Emerson.7 She had little need for a slave and hired him out to other families in St. Louis. Scott, however, was a poor worker and produced little income. Irene Emerson then moved to Massachusetts, leaving Scott and his family behind. She married Calvin Clifford Chaffee, a New England abolitionist, without telling him that she held title to a slave in St. Louis.8

In 1846 Henry T. Blow, wealthy son of Scott’s original owner, initiated a lawsuit in Missouri state courts to gain Scott’s freedom. Blow and Scott believed that Scott no longer had slave status because he had lived on free soil. While the courts considered this petition, Scott remained in the custody of the St. Louis sheriff and was hired out at $5 per month.

Scott received a favorable decision at the trial court level but lost in the Missouri Supreme Court. When state courts rejected Scott’s bid for emancipation, Blow arranged for Scott’s ownership to be transferred to Irene Chaffee’s brother, John Sanford of New York. This sale allowed Scott to take his case to federal court under diversity of citizenship jurisdiction—Scott was a citizen of Missouri and Sanford was a citizen of New York. Sanford argued that the suit should be dismissed because members of the “African race” could not be citizens. The lower federal courts seemed perplexed by the issue. In the end, they ruled in favor of Sanford but suggested that for legal purposes Scott may be a citizen. From 1854 to 1857, while the federal courts considered his cause, Scott lived in St. Louis with virtually no restraints on his freedom.

By the time the case arrived at the U.S. Supreme Court for final judgment in 1856, the facts and the political situation had become increasingly complex. In 1854, under mounting pressure, Congress had repealed the Missouri Compromise, replacing it with legislation declaring congressional neutrality on the issue of slavery. Given this new law and the growing tensions between the North and the South and the free and slave states, some observers speculated that the Court would decline to decide the case: it had become too controversial and political.

For at least a year, the Court chose that route. Historians, in fact, have suggested that after hearing the case the justices wanted simply to affirm the state court’s decision, thereby evading the issue of slavery and citizenship for blacks. But when Justice James Wayne, a Jackson appointee from Georgia, insisted that the Court deal with these concerns, the majority of the others—including Chief Justice Taney, a former slaveholder—went along. Waiting until after the presidential election, a very divided Court (nine separate opinions were written) announced its decision.

Arguments:9

For the plaintiff in error, Dred Scott:

Scott is entitled to freedom under the Missouri Compromise, the congressional emancipation act that prohibited citizens from holding and owning slaves in the Louisiana Purchase territories. Because he was living in emancipated territories, Congress emancipated him.

Scott is also entitled to freedom under Illinois state emancipation law. He was taken to Illinois and thereupon was made free, and the mere fact that he was taken back to Missouri does not revert him back to a state of slavery.

Art. IV, Sect. 3, Cl. 2, of the Constitution gives Congress the power to “to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States,” which includes regulating slavery in all territories of the nation.

For the defendant in error, John F. A. Sanford:

Considering the debates during the drafting of the Constitution, it is clear that the framers did not intend for the word citizen to encompass people of the African race. Even if Scott were a citizen of a state, he would not be a citizen of the United States under the Constitution. Therefore, he does not have the right to sue in a court of the United States, and the Court has no jurisdiction over this case.

The Supreme Court had previously set precedent establishing that the freedom or servitude of a slave returning to a slave state from a free state depends on the laws of the original home state. Following precedent, the Court has no jurisdiction to revise state court holdings on state law.

The plain text of the Constitution protects the right to slave ownership, and for this reason, the Missouri Compromise is unconstitutional.

MR. CHIEF JUSTICE TANEY delivered the opinion of the Court.

The question is simply this: can a negro whose ancestors were imported into this country and sold as slaves, become a member of the political community formed and brought into existence by the Constitution of the United States, and as such become entitled to all the rights, and privileges, and immunities, guarantied by that instrument to the citizen. One of which rights is the privilege of suing in a court of the United States in the cases specified in the Constitution. . . .

The words “people of the United States” and “citizens” are synonymous terms, and mean the same thing. They both describe the political body, who, according to our republican institutions, form the sovereignty, and who hold the power and conduct the government through their representatives. . . . The question before us is, whether [“negroes”] compose a portion of this people, and are constituent members of this sovereignty. We think they are not, and that they are not included, and were not intended to be included, under the word “citizens” in the Constitution, and can, therefore, claim none of the rights and privileges which that instrument provides for and secures to citizens of the United States. On the contrary, they were at that time considered as a subordinate and inferior class of beings, who had been subjugated by the dominant race, and whether emancipated or not, yet remained subject to their authority, and had no rights or privileges but such as those who held the power and the government might choose to grant them.

It is not the province of the court to decide upon the justice or injustice, the policy or impolicy of these laws. The decision of that question belonged to the political or lawmaking power; to those who formed the sovereignty and framed the Constitution. The duty of the court is to interpret the instrument they have framed, with the best lights we can obtain on the subject, and to administer it as we find it, according to its true intent and meaning when it was adopted. . . .

. . . [We] must not confound the rights of citizenship which a State may confer within its own limits and the rights of citizenship as a member of the Union. It does not by any means follow, because he has all the rights and privileges of a citizen of a State, that he must be a citizen of the United States. He may have all of the rights and privileges of the citizen of a State and yet not be entitled to the rights and privileges of a citizen in any other State. . . . Each State may still confer them upon an alien, or anyone it thinks proper, or upon any class or description of persons, yet he would not be a citizen in the sense in which that word is used in the Constitution of the United States. . . .

It becomes necessary, therefore, to determine who were citizens of the several States when the Constitution was adopted. . . .

In the opinion of the court, the legislation and histories of the times, and the language used in the Declaration of Independence, show, that neither the class of persons who had been imported as slaves, nor their descendants, whether they had become free or not, were then acknowledged as a part of the people, nor intended to be included in the general words used in that memorable instrument.

It is difficult at this day to realize the state of public opinion in relation to that unfortunate race, which prevailed in the civilized and enlightened portions of the world at the time of the Declaration of Independence, and when the Constitution of the United States was framed and adopted. . . .

They had for more than a century before been regarded as beings of an inferior order, and altogether unfit to associate with the white race, either in social or political relations; and so far inferior, that they had no rights which the white man was bound to respect; and that the negro might justly and lawfully be reduced to slavery for his benefit. He was bought and sold, and treated as an ordinary article of merchandise and traffic, whenever a profit could be made by it. This opinion was at that time fixed and universal in the civilized portion of the white race. . . .

The legislation of the different colonies furnishes positive and indisputable proof of this fact. . . .

. . . [T]hese laws . . . [which] were still in force when the Revolution began and are a faithful index to the state of feeling towards the class of persons of whom they speak, show that a perpetual and impassable barrier was intended to be erected between the white race and the one which they had reduced to slavery, and governed as subjects with absolute and despotic power, and which they then looked upon as so far below them in the scale of created beings, that intermarriages between white persons and negroes or mulattoes were regarded as unnatural and immoral, and punished as crimes, not only in the parties, but in the person who joined them in marriage. And no distinction in this respect was made between the free negro or mulatto and the slave, but this stigma, of the deepest degradation, was fixed upon the whole race. . . .

This state of public opinion had undergone no change when the Constitution was adopted, as is equally evident from its provisions and language. . . .

. . . [T]here are two clauses in the Constitution which point directly and specifically to the negro race as a separate class of persons, and show clearly that they were not regarded as a portion of the people or citizens of the Government then formed.

One of these clauses reserves to each of the thirteen States the right to import slaves until the year 1808, if it thinks proper. . . . And by the other provision the States pledge themselves to each other to maintain the right of property of the master, by delivering up to him any slave who may have escaped from his service, and be found within their respective territories. By the first above-mentioned clause, therefore, the right to purchase and hold this property is directly sanctioned and authorized for twenty years by the people who framed the Constitution. And by the second, they pledge themselves to maintain and uphold the right of the master in the manner specified, as long as the Government they then formed should endure. And these two provisions show, conclusively, that neither the description of persons therein referred to, nor their descendants, were embraced in any of the other provisions of the Constitution; for certainly these two clauses were not intended to confer on them or their posterity the blessings of liberty, or any of the personal rights so carefully provided for the citizen. . . .

No one, we presume, supposes that any change in public opinion or feeling, in relation to this unfortunate race, in the civilized nations of Europe or in this country, should induce the court to give to the words of the Constitution a more liberal construction in their favor than they were intended to bear when the instrument was framed and adopted. Such an argument would be altogether inadmissible in any tribunal called on to interpret it. If any of its provisions are deemed unjust, there is a mode prescribed in the instrument itself by which it may be amended; but while it remains unaltered, it must be construed now as it was understood at the time of its adoption. It is not only the same in words, but the same in meaning, and delegates the same powers to the Government, and reserves and secures the same rights and privileges to the citizen; and as long as it continues to exist in its present form, it speaks not only in the same words, but with the same meaning and intent with which it spoke when it came from the hands of its framers, and was voted on and adopted by the people of the United States. . . .

What the construction was at that time we think can hardly admit of doubt. . . .

And upon a full and careful consideration of the subject, the court is of opinion that, upon the facts stated in the plea in abatement, Dred Scott was not a citizen of Missouri within the meaning of the Constitution of the United States, and not entitled as such to sue in its courts; and, consequently, that the Circuit Court had no jurisdiction of the case, and that the judgment on the plea in abatement is erroneous. . . .

We proceed, therefore, to inquire whether the facts relied on by the plaintiff entitled him to his freedom. . . .

. . . [T]he difficulty which meets us at the threshold of this part of the inquiry is whether Congress was authorized to pass [the Missouri Compromise] under any of the powers granted to it by the Constitution; for if the authority is not given by that instrument, it is the duty of this court to declare it void and inoperative, and incapable of conferring freedom upon any one who is held as a slave under the laws of any one of the States.

The counsel for the plaintiff has laid much stress upon that article in the Constitution which confers on Congress the power “to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States”; but, in the judgment of the court, that provision has no bearing on the present controversy, and the power there given, whatever it may be, is confined, and was intended to be confined, to the territory which at that time belonged to, or was claimed by, the United States, and was within their boundaries as settled by the Treaty with Great Britain, and can have no influence upon a territory afterwards acquired from a foreign government. It was a special provision for a known and particular Territory, and to meet a present emergency, and nothing more. . . .

The language used in the clause, the arrangement and combination of the powers, and the somewhat unusual phraseology it uses when it speaks of the political power to be exercised in the government of the territory, all indicate the design and meaning of the clause to be such as we have mentioned. It does not speak of any territory, nor of Territories, but uses language which, according to its legitimate meaning, points to a particular thing. The power is given in relation only to the territory of the United States—that is, to a territory then in existence, and then known or claimed as the territory of the United States. It begins its enumeration of powers by that of disposing, in other words, making sale of the lands, or raising money from them, which, as we have already said, was the main object of the cession, and which is accordingly the first thing provided for in the article. It then gives the power which was necessarily associated with the disposition and sale of the lands—that is, the power of making needful rules and regulations respecting the territory. And whatever construction may now be given to these words, everyone, we think, must admit that they are not the words usually employed by statesmen in giving supreme power of legislation. They are certainly very unlike the words used in the power granted to legislate over territory which the new Government might afterwards itself obtain by cession from a State, either for its seat of Government or for forts, magazines, arsenals, dockyards, and other needful buildings.

This brings us to examine by what provision of the Constitution the present Federal Government under its delegated and restricted powers, is authorized to acquire territory outside of the original limits of the United States, and what powers it may exercise therein over the person or property of a citizen of the United States, while it remains a territory, and until it shall be admitted as one of the States of the Union. . . .

There is certainly no power given by the Constitution to the Federal Government to establish or maintain colonies bordering on the United States or at a distance to be ruled and governed at its own pleasure, nor to enlarge its territorial limits in any way except by the admission of new States.

Taking this rule to guide us, it may be safely assumed that citizens of the United States who migrate to a Territory belonging to the people of the United States cannot be ruled as mere colonists, dependent upon the will of the General Government and to be governed by any laws it may think proper to impose. The principle upon which our Governments rest and upon which alone they continue to exist, is the union of States, sovereign and independent within their own limits in their internal and domestic concerns, and bound together as one people by a General Government, possessing certain enumerated and restricted powers delegated to it by the people of the several States, and exercising supreme authority within the scope of the powers granted to it throughout the dominion of the United States. A power, therefore, in the General Government to obtain and hold colonies and dependent territories over which they might legislate without restriction would be inconsistent with its own existence in its present form. Whatever it acquires, it acquires for the benefit of the people of the several States who created it. It is their trustee acting for them, and charged with the duty of promoting the interests of the whole people of the Union in the exercise of the powers specifically granted.

Upon these considerations, it is the opinion of the court that the Act of Congress which prohibited a citizen from holding and owning property of this kind in the territory of the United States north of the line therein mentioned, is not warranted by the Constitution, and is therefore void; and that neither Dred Scott himself, nor any of his family, were made free by being carried into this territory; even if they had been carried there by the owner, with the intention of becoming a permanent resident. . . .

Upon the whole, therefore, it is the judgment of this court, that it appears by the record before us that the plaintiff in error is not a citizen of Missouri, in the sense in which that word is used in the Constitution; and that the Circuit Court of the United States, for that reason, had no jurisdiction in the case, and could give no judgment in it.

Its judgment for the defendant must, consequently, be reversed, and a mandate issued directing the suit to be dismissed for want of jurisdiction.

Mr. Justice CURTIS, dissenting.

To determine whether any free persons, descended from Africans held in slavery, were citizens of the United States under the Confederation, and consequently at the time of the adoption of the Constitution of the United States, it is only necessary to know whether any such persons were citizens of either of the States under the Confederation, at the time of the adoption of the Constitution.

Of this there can be no doubt. At the time of the ratification of the Articles of Confederation, all free native-born inhabitants of the States of New Hampshire, Massachusetts, New York, New Jersey, and North Carolina, though descended from African slaves, were not only citizens of those States, but such of them as had the other necessary qualifications possessed the franchise of electors, on equal terms with other citizens. . . .

Did the Constitution of the United States deprive them or their descendants of citizenship?

That Constitution was ordained and established by the people of the United States, through the action, in each State, of those persons who were qualified by its laws to act thereon, in behalf of themselves and all other citizens of that State. In some of the States, as we have seen, colored persons were among those qualified by law to act on this subject. These colored persons were not only included in the body of “the people of the United States,” by whom the Constitution was ordained and established, but in at least five of the States they had the power to act, and doubtless did act, by their suffrages, upon the question of its adoption. It would be strange, if we were to find in that instrument anything which deprived of their citizenship any part of the people of the United States who were among those by whom it was established.

I can find nothing in the Constitution which, proprio vigore [by its own force], deprives of their citizenship any class of persons who were citizens of the United States at the time of its adoption, or who should be native-born citizens of any State after its adoption; nor any power enabling Congress to disfranchise persons born on the soil of any State, and entitled to citizenship of such State by its Constitution and laws. And my opinion is, that, under the Constitution of the United States, every free person born on the soil of a State, who is a citizen of that State by force of its Constitution or laws, is also a citizen of the United States.

The Post–Civil War Era and the Return of Dual Federalism

Once the Civil War concluded Congress moved swiftly to embed into the Constitution the victories that Union armies had won on the battlefield. Three constitutional amendments were proposed and ratified. The Thirteenth and Fifteenth Amendments focused on issues of slavery and race. The Thirteenth (1865) put an official end to slavery and the Fifteenth (1870) barred the denial voting rights on account of race. The Fourteenth Amendment (1968) shifted much governmental authority from the states to the federal government. It also directly overruled Taney’s Dred Scott opinion by declaring, “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” As a consequence, United States citizenship became superior to state citizenship. Constitutionally, the dual federalism of the Jacksonian era had ended.

Did the conclusion of the Civil War and the rise of national supremacy mean that Taney’s dual federalism had seen its last days? Indeed, it remained under wraps for several decades but then resurfaced in a somewhat different form as the nation became engulfed in the Industrial Revolution and the rise of big business. From the 1890s to the 1930s laissez-faire economic philosophies ruled the day. The Supreme Court’s decisions during this period generally favored business interests by invalidating laws that regulated commerce and the economy. The Tenth Amendment was frequently relied on to justify striking down federal legislation.

Even outside the sphere of commerce and business, the Court once again began articulating the philosophy of dual federalism. Take, for example, the justices’ decision in Coyle v. Smith (1911). This dispute involved a congressional directive telling a newly admitted state where it must locate its capital. Did Congress’s power to admit new states extend to placing such conditions on statehood? Or was the congressional order an unconstitutional intrusion into state sovereignty? As you read Justice Lurton’s opinion note the vivid language of dual federalism, including the position that the national government is a “union of states” and that the states must be “equal in power, dignity and authority, each competent to exert that residuum of sovereignty not delegated to the United States by the Constitution itself.” Lurton goes so far to declare that “without the States in union, there could be no such political body as the United States.” Finally, notice the Court’s narrow interpretation of Congress’s implied powers.

The immediate dispute in Coyle v. Smith was a relatively narrow one. The admission of a new state, after all, is an uncommon occurrence. Importantly, however, the dual federalism principles articulated in Coyle, including an elevated protection of states’ rights and a narrow construction of federal authority, can be readily found in other areas of constitutional importance during this era. Most significant were the Court’s decisions on the regulation of commerce.

Article I grants Congress the power “to regulate commerce . . . among the several States,” leaving purely intrastate commerce to be governed by the states. Although this division of authority appears to be a logical one, the distinction between interstate commerce and intrastate commerce is subject to interpretation. From the 1890s into the 1930s, the Supreme Court narrowly constructed the meaning of interstate commerce and under the Tenth Amendment vigorously protected the authority of the states to regulate commercial activity outside that definition. Underlying these dual federalism rulings, of course, was a strong adherence to the antiregulatory, laissez-faire philosophy of that era.

In United States v. E. C. Knight Co. (1895), for example, the Court struck down a federal antitrust effort in the sugar industry on the ground that enterprises such as manufacturing and refining take place within state boundaries and therefore qualify as intrastate commerce not subject to federal regulation. This was true, the Court said, in spite of the fact that the manufactured products may subsequently be shipped to other states. Interstate commerce does not begin, according to Chief Justice Fuller’s opinion for the Court, until the manufactured goods “commence their final movement from the State of their origin to that of their destination.” The manufacturing stage, therefore, remained under the regulatory powers of the states.

In Hammer v. Dagenhardt (1918) the justices applied these same principles in considering the constitutionality of the Federal Child Labor Act of 1915. The law prohibited the shipment in interstate commerce of factory goods made by children under the age of fourteen or by children ages fourteen to sixteen who worked more than eight hours a day. Congress had attempted to keep child labor within its constitutional authority by targeting the interstate shipment of such goods, but the Court saw the statute for what it really was: an effort intended to eliminate child labor in the manufacturing stage. Writing for a divided Court, Justice William R. Day stated that the law was “repugnant to the Constitution” in two ways: “It not only transcends the authority delegated to Congress over commerce, but also exerts a power as to a purely local matter to which the Federal authority does not extend.” Taking an enclave approach to the Tenth Amendment, Day wrote,

In interpreting the Constitution it must never be forgotten that the nation is made up of states, to which are intrusted the powers of local government. And to them and to the people the powers not expressly delegated to the national government are reserved. The power of the states to regulate their purely internal affairs by such laws as seem wise to the local authority is inherent, and has never been surrendered to the general government. To sustain this statute would not be, in our judgment, a recognition of the lawful exertion of congressional authority over interstate commerce, but would sanction an invasion by the Federal power of the control of a matter purely local in its character, and over which no authority has been delegated to Congress in conferring the power to regulate commerce among the states.

Day’s opinion was a clear endorsement of dual federalism, but to some commentators its analysis of the Tenth Amendment rests on tenuous grounds. First, in its adoption of the enclave approach to the amendment it rejects Marshall’s logic in McCulloch: if the federal government is exercising one of its enumerated or implied powers, the Tenth Amendment has no role to play; it does not provide additional protections to the states. And second, as C. Herman Pritchett points out, Justice Day misstated the Tenth Amendment: it does not contain the word expressly. In so doing, he not only ignored Marshall’s reasoning in McCulloch—it was critical to Marshall’s interpretation of congressional powers that the word expressly did not appear—but he also might have ignored the history surrounding the Tenth Amendment. When Congress considered it, one representative proposed to “add the word ‘expressly’ so as to read ‘the powers not expressly delegated by this Constitution.’” James Madison and others objected, and the motion was defeated.13 So Day assumed “a position that was historically inaccurate.”14

Decisions such as E. C. Knight and Hammer were compatible with the legal and political opinion of the day. The Court’s willingness to embrace a free enterprise philosophy reflected the general mood of Americans, many of whom were benefiting financially from the vigorous growth of the economy. By the 1930s, however, the Court’s laissez-faire, dual federalism philosophy met stiff opposition. When the Great Depression seized the nation following the stock market crash of 1929, the people demanded government action to solve the economic crisis. In 1932 they elected President Franklin Roosevelt and Democratic majorities in Congress. Roosevelt promoted his “New Deal” program that included unprecedented federal control of commerce and the economy. Many elements of the New Deal were inconsistent with the Court’s view of interstate commerce and the role of the Tenth Amendment. The result was an inevitable clash between the Supreme Court and the political branches.

Between 1935 and 1936 the Court struck down a number of major legislative enactments, including codes of fair completion for various industries (Schechter Poultry v. United States, 1935); production, price, and labor regulations for the nation’s mines (Carter v. Carter Coal, 1936); and limitations on agricultural acreage planted (United States v. Butler, 1936). These decisions were based on specific violations of congressional authority along with Tenth Amendment intrusions into the powers reserved for the states.

This exercise of judicial review led to a historic confrontation between the Court and the president, during which Roosevelt even proposed to alter the structure of the Court in order to appoint new justices with philosophies more consistent with the president’s view of federal authority. The battle ended in 1937 when, in National Labor Relations Board v. Jones & Laughlin Steel Corporation, the Court shifted position and began taking a more generous view of the role of the federal government in economic regulation and a narrower view of the powers reserved to the states. (The conflict between the Court and the political branches and how that conflict was resolved is covered in detail in chapter 7.)

The year 1937 marks the end of a nearly half-century of Court adherence to a dual federalism philosophy. It is important to understand, however, that the dual federalism of this period differed from the dual federalism of the Taney Court. For Chief Justice Taney dual federalism was a means of equalizing state and federal power. During the 1890s through the 1930s dual federalism was seen as part of a laissez-faire philosophy to curtail federal regulation and promote free enterprise capitalism.

Coyle v. Smith

221 U.S. 559 (1911)

http://laws.findlaw.com/us/221/559.html

Vote: 7 (Day, Harlan, Hughes, Lamar, Lurton, Van Devanter, White)

2 (Holmes, McKenna)

OPINION of the Court: Lurton

Facts:

Article IV, section 3 of the Constitution authorizes Congress to admit new states. On June 16, 1906, Congress exercised this power by passing the Enabling Act inviting the Oklahoma territory to join the Union. The invitation, however, came with certain conditions. One of those conditions required that the state capital be in Guthrie, where territorial capital was located, and that the state refrain from relocating the capital or making any provisions for relocation before 1913. The terms of the Enabling Act were to be “irrevocable.”

Why this restriction was imposed is a bit uncertain, but it seemingly had to do with a Republican-dominated Congress granting statehood to a heavily Democratic territory. The city of Guthrie, however, was Oklahoma’s lone Republican stronghold.

The territory accepted the terms of the invitation, and in 1907 Oklahoma became the forty-sixth state. But just three years later the state’s voters supported a measure to move the capital to Oklahoma City. Democratic governor Charles Haskell and the state legislature did not wait until 1913 to take action on the voters’ wishes, but immediately enacted implementing legislation and began securing the necessary funds to effect the relocation.

W. H. Coyle, a large Guthrie landowner who would suffer economic losses if the capital were to be moved, filed suit against Oklahoma secretary of state Thomas Smith to block the relocation. Oklahoma’s supreme court upheld the state’s actions, and Coyle requested Supreme Court review.

ARGUMENTS:

For the petitioner, W. H. Coyle:

Congress’s constitutional authority to admit states is absolute, and in its discretion it can impose whatever conditions it deems appropriate.

Congress has a history of imposing such conditions, often doing so to ensure that new states adhere to the constitutional obligation to have a “republican form of government.”

Oklahoma freely agreed to the provisions of the Enabling Act. Those provisions are irrevocable.

For the respondent, Thomas P. Smith, Oklahoma secretary of state:

In requiring Oklahoma to yield a portion of its state sovereignty, Congress violated the constitutional principle of state equality under which all states stand on equal footing.

Congress cannot deny a state its police powers, which include the authority to locate the state capital where it can most effectively serve the state’s citizens.

A state cannot be bound by unconstitutional provisions contained in an agreement imposed by Congress.

MR. JUSTICE LURTON delivered the opinion of the court.

The only question for review by us is whether the provision of the enabling act was a valid limitation upon the power of the State after its admission which overrides any subsequent state legislation repugnant thereto.

The power to locate its own seat of government and to determine when and how it shall be changed from one place to another, and to appropriate its own public funds for that purpose, are essentially and peculiarly state powers. That one of the original thirteen States could now be shorn of such powers by an act of Congress would not be for a moment entertained. The question then comes to this: can a State be placed upon a plane of inequality with its sister States in the Union if the Congress chooses to impose conditions which so operate at the time of its admission? . . .

The power of Congress in respect to the admission of new States is found in the third section of the fourth Article of the Constitution. That provision is that “New States may be admitted by the Congress into this Union.” The only expressed restriction upon this power is that no new State shall be formed within the jurisdiction of any other State, nor by the junction of two or more States, or parts of States, without the consent of such States, as well as of the Congress.

But what is this power? It is not to admit political organizations which are less or greater, or different in dignity or power, from those political entities which constitute the Union. It is, as strongly put by counsel, a “power to admit States.”

The definition of “a State” is found in the powers possessed by the original States which adopted the Constitution, a definition emphasized by the terms employed in all subsequent acts of Congress admitting new States into the Union. The first two States admitted into the Union were the States of Vermont and Kentucky, one as of March 4, 1791, and the other as of June 1, 1792. No terms or conditions were exacted from either. Each act declares that the State is admitted “as a new and entire member of the United States of America.” Emphatic and significant as is the phrase admitted as “an entire member,” even stronger was the declaration upon the admission in 1796 of Tennessee, as the third new State, it being declared to be “one of the United States of America,” “on an equal footing with the original States in all respects whatsoever,” phraseology which has ever since been substantially followed in admission acts, concluding with the Oklahoma act, which declares that Oklahoma shall be admitted “on an equal footing with the original States.”

The power is to admit “new States into this Union.”

“This Union” was and is a union of States, equal in power, dignity and authority, each competent to exert that residuum of sovereignty not delegated to the United States by the Constitution itself. To maintain otherwise would be to say that the Union, through the power of Congress to admit new States, might come to be a union of States unequal in power, as including States whose powers were restricted only by the Constitution, with others whose powers had been further restricted by an act of Congress accepted as a condition of admission. Thus, it would result, first, that the powers of Congress would not be defined by the Constitution alone, but in respect to new States, enlarged or restricted by the conditions imposed upon new States by its own legislation admitting them into the Union; and, second, that such new States might not exercise all of the powers which had not been delegated by the Constitution, but only such as had not been further bargained away as conditions of admission.

The argument that Congress derives from the duty of “guaranteeing to each State in this Union a republican form of government” power to impose restrictions upon a new State which deprives it of equality with other members of the Union, has no merit. . . . [I]t obviously does not confer power to admit a new State which shall be any less a State than those which compose the Union. . . .

. . . The constitutional provision concerning the admission of new States is not a mandate, but a power to be exercised with discretion. From this alone, it would follow that Congress may require, under penalty of denying admission, that the organic laws of a new State at the time of admission shall be such as to meet its approval. A constitution thus supervised by Congress would, after all, be a constitution of a State, and, as such, subject to alteration and amendment by the State after admission. Its force would be that of a state constitution, and not that of an act of Congress. . . .

So far as this court has found occasion to advert to the effect of enabling acts as affirmative legislation affecting the power of new States after admission, there is to be found no sanction for the contention that any State may be deprived of any of the power constitutionally possessed by other States, as States, by reason of the terms in which the acts admitting them to the Union have been framed. . . .

. . . [W]hen a new State is admitted into the Union, it is so admitted with all of the powers of sovereignty and jurisdiction which pertain to the original States, and that such powers may not be constitutionally diminished, impaired or shorn away by any conditions, compacts or stipulations embraced in the act under which the new State came into the Union which would not be valid and effectual if the subject of congressional legislation after admission. . . .

. . . The legislation in the Oklahoma enabling act relating to the location of the capital of the State, if construed as forbidding a removal by the State after its admission as a State, is referable to no power granted to Congress over the subject, and if it is to be upheld at all, it must be implied from the power to admit new States. If power to impose such a restriction upon the general and undelegated power of a State be conceded as implied from the power to admit a new State, where is the line to be drawn against restrictions imposed upon new States? The insistence finds no support in the decisions of this court. . . .

Has Oklahoma been admitted upon an equal footing with the original States? If she has, she, by virtue of her jurisdictional sovereignty as such a State, may determine for her own people the proper location of the local seat of government. She is not equal in power to them if she cannot.

In Texas v. White [1869] Chief Justice Chase said in strong and memorable language that, “the Constitution, in all of its provisions, looks to an indestructible Union, composed of indestructible States.”

In Lane County v. Oregon [1869], he said:

“The people of the United States constitute one nation, under one government, and this government, within the scope of the powers with which it is invested, is supreme. On the other hand, the people of each State compose a State having its own government, and endowed with all the functions essential to separate and independent existence. The States disunited might continue to exist. Without the States in union, there could be no such political body as the United States.”

To this we may add that the constitutional equality of the States is essential to the harmonious operation of the scheme upon which the Republic was organized. When that equality disappears, we may remain a free people, but the Union will not be the Union of the Constitution.

Judgment affirmed.

The (Re)Emergence of National Supremacy: Cooperative Federalism

Although the Court’s abandonment of dual federalism began in 1937, the death knell rang most loudly with the decision in United States v. Darby (1941). For reasons we explain in chapter 7, Darby is a significant modern-day statement of Congress’s power under the commerce clause, but here we focus on Darby’s equally important interpretation of the Tenth Amendment.

Darby involved a challenge to an important piece of New Deal legislation, the Fair Labor Standards Act (FLSA). Passed in 1938 under Congress’s power to regulate interstate commerce, the law provided that all employers “engaged in interstate commerce, or in the production of goods for that commerce” must pay all their employees a minimum wage of twenty-five cents per hour and not permit employees to work longer than forty-four hours per week without paying them one and one-half times their regular pay for their overtime hours. Fred W. Darby, the owner of a lumber company, was indicted for violating the law.

Darby did not dispute the charges. Rather, invoking the logic of Hammer, he argued against a broad interpretation of congressional powers and a narrow approach to the Tenth Amendment. The government responded that the Tenth Amendment merely reserves to the states “the powers not delegated to the United States.” This, the government argued, is merely a statement of fact that adds no new powers to the states and does not limit the authority that has been given to the federal government.

Writing for a unanimous Court, Justice Stone agreed with the government’s position. Not only did he uphold the FLSA, but he also overruled Hammer:

The conclusion is inescapable that Hammer v. Dagenhart was a departure from the principles which have prevailed in the interpretation of the Commerce Clause both before and since the decision and that such vitality, as a precedent, as it then had has long since been exhausted. It should be and now is overruled.

As for Darby’s Tenth Amendment argument, Stone wrote,

Our conclusion is unaffected by the Tenth Amendment which provides: “The powers not delegated to the United States by the Constitution nor prohibited by it to the states are reserved to the states respectively or to the people.” The amendment states but a truism that all is retained which has not been surrendered. There is nothing in the history of its adoption to suggest that it was more than declaratory of the relationship between the national and state governments as it had been established by the Constitution before the amendment or that its purpose was other than to allay fears that the new national government might seek to exercise powers not granted, and that the states might not be able to exercise fully their reserved powers.

From the beginning and for many years the amendment has been construed as not depriving the national government of authority to resort to all means for the exercise of a granted power which are appropriate and plainly adapted to the permitted end.

Justice Stone’s opinion in Darby brought the Court back full circle to Marshall’s view of nationalism. Not only did Darby explicitly overrule Hammer and uphold the FLSA, but it also gutted attempts to use the Tenth Amendment as an enclave of states’ rights. The Court denied that the amendment constituted a tool that litigants could wield to build up state authority that they could then use to challenge the federal government’s proper exercise of enumerated and implied powers. According to Justice Stone, and supported by a surprisingly unanimous Court, the Tenth Amendment was “but a truism.”

For the next thirty-five years dual federalism was out and Stone’s version of cooperative federalism was in. Under this doctrine, at least theoretically, the various levels of government shared policy-making responsibilities. In practice, it meant, as Stone’s opinion implies, that the national government took the lead in formulating many policy goals, which it expected state and local officials to implement. Consistent with this new approach, the Court generally deferred to Congress in establishing economic regulatory policy. By the 1960s the federal government reigned supreme.

But change was in the wind. The election of Richard Nixon to the presidency in 1968 was an indication of growing dissatisfaction with an increasingly expansive federal government. Although Nixon was not a strong supporter of dual federalism, he favored increased state participation in federal programs. When it came to judicial appointments, Nixon desired justices who exercised judicial restraint generally and leaned toward a law-and-order posture in particular. Such individuals also tended to have greater sympathy for the role of state governments than did the post–New Deal era justices who preceded them. Nixon had the good fortune of being able to appoint a new chief justice, Warren Burger, and three associate justices, enough to alter the ideological makeup of the Court.

The first significant sign of change occurred with the announcement of the Court’s ruling in National League of Cities v. Usery (1976), the case with which we introduced this chapter. National League centered once again on the FLSA, which the Court had upheld in United States v. Darby. This case crystallized when Congress in 1974 expanded the scope of the FLSA to require the state governments to pay all their employees the minimum wage and to disallow them from working in excess of maximum hours requirements. This, of course, represented a major change in the scope of the law. It was one thing for Congress to use its commerce power authority to regulate wages and hours for workers in the private sector, but it was a much different matter for the federal government to dictate how state governments must treat their own state employees.

Various cities and states challenged the constitutionality of the new amendments. In particular, they argued that the amendments represented a “collision” between federal expansion and states’ rights in violation of the Tenth Amendment.

In their scrutiny of the FLSA, the four Nixon appointees plus Justice Potter Stewart provided an undeniable signal that dual federalism—in the form of a revival of the Tenth Amendment enclave—was far from dead. Writing for the Court, Justice Rehnquist struck down the new extension of the FLSA as impinging on state sovereignty. Rehnquist’s opinion did not question the validity of federal regulation of private employers. He concluded, however, that when Congress is regulating the states as states—even if the law falls within one of Congress’s enumerated or implied powers—the Tenth Amendment enclave comes into play. “There are attributes of sovereignty attaching to every state government,” he wrote, “which may not be impaired by Congress, not because Congress may lack an affirmative grant of legislative authority to reach the matter, but because the Constitution prohibits it from exercising the authority in that manner.”

Where is the line separating constitutional from unconstitutional federal intrusions into state business? Rehnquist provided an answer when he wrote, “Congress may not exercise that power so as to force directly upon the States its choices as to how essential decisions regarding the conduct of integral governmental functions are to be made.” “While clearly not delineating these functions,” Joseph Kobylka has observed, “the Court did say that they must be ‘essential to [the] separate and independent existence of the states.’”15 Examples of functions outside congressional authority and “well within the area of traditional operations of state and local governments” included firefighting, police protection, sanitation, public health, and parks and recreation.

Writing in dissent, Justice Brennan took great issue with Rehnquist’s analysis. He accused Rehnquist of ignoring Darby and subsequent cases when he used the Tenth Amendment to protect states. Brennan argued that as long as Congress is not interfering with individual rights and liberties and is properly exercising one of its constitutional powers—here to regulate commerce among the states—the Court should uphold the regulation; the Tenth Amendment provides no additional rights to the states. This approach made sense to Brennan because states are already protected in Congress, which, of course, is composed of representatives from the states.

As it turned out, Brennan, and not Rehnquist, would win the battle (at least in the short term) when the Court overruled National League of Cities in Garcia v. San Antonio Metropolitan Transit Authority (1985). Part of the problem with National League, as Justice Blackmun explained, was that it was difficult for the Court to distinguish traditional and essential state functions from those that are nontraditional and less essential. But, in upholding the federal law, did Blackmun give too much deference to Congress?

After Garcia, with the Tenth Amendment relegated back to “truism” status, it looked as if this contentious area of law was, at long last, settled. National League was but an anomalous blip; Garcia was now the law of the land. But it was not to remain so. Garcia proved to be the last major articulation of cooperative federalism of the post–New Deal period. Though National League of Cities would not return in full form, neither would the Court fully abide by Garcia’s highly deferential approach to congressional power, nor would it completely discard the Tenth Amendment enclave.

Garcia v. San Antonio Metropolitan Transit Authority

469 U.S. 528 (1985)

http://laws.findlaw.com/us/469/528.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Blackmun, Brennan, Marshall, Stevens, White)

4 (Burger, O’Connor, Powell, Rehnquist)

OPINION OF THE COURT: Blackmun

DISSENTING OPINIONS: Powell, O’Connor, Rehnquist

Facts:

Garcia was virtually a carbon copy of National League of Cities. That latter case arose when Congress in 1974 expanded the scope of the FLSA and brought virtually all state public employees, who were excluded in the original legislation, under its reach. Various cities and states and two organizations representing their collective interests, the National League of Cities and the National Governors’ Conference, challenged the constitutionality of the new amendments. In particular, they argued that the amendments represented a “collision” between federal expansion and states’ rights in violation of the Tenth Amendment. The Court, in National League of Cities, agreed.

Garcia, too, centered on amendments to the FLSA, in this case amendments that obligated states to meet minimum wage and overtime requirements for almost all public employees. The facts, however, were a bit more complicated than those in National League of Cities.

The San Antonio Transit System (SATS) began operation in 1959. At first the mass transit system was a moneymaking venture, but by 1969 it was operating at a loss and turned to the federal government for assistance. The federal Urban Mass Transit Administration (UMTA) provided it with a $4 million grant. In 1978 the city replaced SATS with the San Antonio Metropolitan Transit Authority (SAMTA), which also was subsidized by federal grants. Between 1970 and 1980 the transit system received more than $51 million, or 40 percent of its costs, from the federal government. The case started in 1979 when, “in response to a specific inquiry about the applicability of the FLSA to employees of SAMTA,” the U.S. Department of Labor issued an opinion holding that SAMTA must abide by the act’s wage provisions. SAMTA filed a challenge to the department’s holding, and Joe G. Garcia and other SAMTA employees, in turn, initiated a suit against their employer for overtime pay.

When this case and a companion, Donovan v. San Antonio Metropolitan Transit Authority, reached the U.S. Supreme Court, SAMTA relied heavily on National League of Cities. It argued that “transit is a traditional [city] function,” and, as the operator of that function, it was not covered by FLSA amendments. The U.S. government and Garcia countered by arguing that National League of Cities was not necessarily applicable. In their view, application of the FLSA to public transit did not violate the Tenth Amendment because (1) operation of a transit system is not a traditional government function, and (2) operation of a transit system is not a core government function that must be exempted from federal commerce power legislation to preserve the states’ independence.

Arguments:

For the appellant, Joe G. Garcia:

Transit is not a traditional government function; instead it is traditionally a private business enterprise that has always been subject to federal labor regulation. Exempting state-run transit systems from regulation because of the Tenth Amendment would encourage state takeover of all transit systems in order to avoid regulation. That is clearly not the intended purpose of the Tenth Amendment.

National League of Cities v. Usery limits federal authority only to the extent necessary to preserve state sovereignty in essential state functions. State sovereignty is most directly expressed in lawmaking and law enforcement powers, not in the state’s provision of particular goods and services. In this case, the provision of service is in question, not lawmaking or law enforcement powers.

Funding from the federal government made possible the state’s entry into the public transit arena. Therefore, the public transit systems are cooperative efforts of the federal government and the state. It would be illogical to conclude that the very federal aid that helped create this system is not subject to federal regulation.

For the appellee, San Antonio Metropolitan Transit Authority:

National League of Cities v. Usery established precedent that state power to determine wages and hours is an attribute of state sovereignty. In this case, the very same act that threatened state sovereignty in National League is again in question. The Tenth Amendment protects against this.

Transit is a traditional state function because it is purely local, has a long history of state and local regulation through their power to regulate street transportation, and historically has not been subject to federal regulation any more than any of the activities protected in National League.

The transit system is indistinguishable from the hospitals that were exempted from federal regulation in National League. Both have roots in the private sector, and both receive significant funding from the government.

The federal government is really making an argument about its spending power, not its commerce clause power. It is clear from National League that federal funding is irrelevant in determining whether an activity is protected.

JUSTICE BLACKMUN delivered the opinion of the Court.

We revisit in these cases an issue raised in National League of Cities v. Usery (1976). In that litigation, this Court, by a sharply divided vote, ruled that the Commerce Clause does not empower Congress to enforce the minimum-wage and overtime provisions of the Fair Labor Standards Act (FLSA) against the States “in areas of traditional government functions.” Although National League of Cities supplied some examples of “traditional governmental functions,” it did not offer a general explanation of how a “traditional” function is to be distinguished from a “nontraditional” one. Since then, federal and state courts have struggled with the task, thus imposed, of identifying a traditional function for purposes of state immunity under the Commerce Clause.

In the present cases, a Federal District Court concluded that municipal ownership and operation of a mass-transit system is a traditional governmental function and thus, under National League of Cities, is exempt from the obligations imposed by the FLSA. Faced with the identical question, three Federal Courts of Appeals and one state appellate court have reached the opposite conclusion.

Our examination of this “function” standard applied in these and other cases over the last eight years now persuades us that the attempt to draw the boundaries of state regulatory immunity in terms of “traditional governmental function” is not only unworkable but is also inconsistent with established principles of federalism and, indeed, with those very federalism principles on which National League of Cities purported to rest. That case, accordingly, is overruled. . . .

The central theme of National League of Cities was that the States occupy a special position in our constitutional system and that the scope of Congress’ authority under the Commerce Clause must reflect that position. Of course, the Commerce Clause by its specific language does not provide any special limitation on Congress’ actions with respect to the States. It is equally true, however, that the text of the Constitution provides the beginning rather than the final answer to every inquiry into questions of federalism, for “[b]ehind the words of the constitutional provisions are postulates which limit and control.” National League of Cities reflected the general conviction that the Constitution precludes “the National Government [from] devour[ing] the essentials of state sovereignty.” In order to be faithful to the underlying federal premises of the Constitution, courts must look for the “postulates which limit and control.”

What has proved problematic is not the perception that the Constitution’s federal structure imposes limitations on the Commerce Clause, but rather the nature and content of those limitations. One approach to defining the limits on Congress’ authority to regulate the States under the Commerce Clause is to identify certain underlying elements of political sovereignty that are deemed essential to the States’ “separate and independent existence.” This approach obviously underlay the Court’s use of the “traditional governmental function” concept in National League of Cities. It also has led to the separate requirement that the challenged federal statute “address matters that are indisputably ‘attribute[s] of state sovereignty.’” . . . The opinion did not explain what aspects of such decisions made them such an “undoubted attribute,” and the Court since then has remarked on the uncertain scope of the concept. The point of the inquiry, however, has remained to single out particular features of a State’s internal governance that are deemed to be intrinsic parts of state sovereignty.

We doubt that courts ultimately can identify principled constitutional limitations on the scope of Congress’ Commerce Clause powers over the States merely by relying on a priori definitions of state sovereignty. In part, this is because of the elusiveness of objective criteria for “fundamental” elements of state sovereignty, a problem we have witnessed in the search for “traditional governmental functions.” There is, however, a more fundamental reason: the sovereignty of the States is limited by the Constitution itself. A variety of sovereign powers, for example, are withdrawn from the States by Article I, §10. Section 8 of the same Article works an equally sharp contraction of state sovereignty by authorizing Congress to exercise a wide range of legislative powers and (in conjunction with the Supremacy Clause of Article VI) to displace contrary state legislation. . . .

The States unquestionably do “retai[n] a significant measure of sovereign authority.” They do so, however, only to the extent that the Constitution has not divested them of their original powers and transferred those powers to the Federal Government. . . .

As a result, to say that the Constitution assumes the continued role of the States is to say little about the nature of that role. . . . With rare exceptions, like the guarantee, in Article IV, §3, of state territorial integrity, the Constitution does not carve out express elements of state sovereignty that Congress may not employ its delegated powers to displace. . . . The power of the Federal Government is a “power to be respected” as well, and the fact that the States remain sovereign as to all powers not vested in Congress or denied them by the Constitution offers no guidance about where the frontier between state and federal power lies. In short, we have no license to employ freestanding conceptions of state sovereignty when measuring congressional authority under the Commerce Clause.

When we look for the States’ “residuary and inviolable sovereignty,” The Federalist No. 39 (J. Madison), in the shape of the constitutional scheme, rather than in predetermined notions of sovereign power, a different measure of state sovereignty emerges. Apart from the limitation on federal authority inherent in the delegated nature of Congress’ Article I powers, the principal means chosen by the Framers to ensure the role of the States in the federal system lies in the structure of the Federal Government itself. It is no novelty to observe that the composition of the Federal Government was designed in large part to protect the States from overreaching by Congress. The Framers thus gave the States a role in the selection both of the Executive and the Legislative Branches of the Federal Government. The States were vested with indirect influence over the House of Representatives and the Presidency by their control of electoral qualifications and their role in Presidential elections. U.S. Const., Art. I, §2, and Art. II, §1. They were given more direct influence in the Senate, where each State received equal representation and each Senator was to be selected by the legislature of his State. Art. I, §3. The significance attached to the States’ equal representation in the Senate is underscored by the prohibition of any constitutional amendment divesting a State of equal representation without the State’s consent. Art. V. . . .

The effectiveness of the federal political process in preserving the States’ interests is apparent even today in the course of federal legislation. . . . [T]he States have been able to direct a substantial proportion of federal revenues into their own treasuries in the form of general and program-specific grants in aid. . . . As a result, federal grants now account for about one-fifth of state and local government expenditures. The States have obtained federal funding for such services as police and fire protection, education, public health and hospitals, parks and recreation, and sanitation. . . . The fact that some federal statutes such as the FLSA extend general obligations to the States cannot obscure the extent to which the political position of the States in the federal system has served to minimize the burdens that the States bear under the Commerce Clause.

We realize that changes in the structure of the Federal Government have taken place since 1789, not the least of which has been the substitution of popular election of Senators by the adoption of the Seventeenth Amendment in 1913, and that these changes may work to alter the influence of the States in the federal political process. Nonetheless, against this background, we are convinced that the fundamental limitation that the constitutional scheme imposes on the Commerce Clause to protect the “States as States” is one of process, rather than one of result. Any substantive restraint on the exercise of Commerce Clause powers must find its justification in the procedural nature of this basic limitation, and it must be tailored to compensate for possible failings in the national political process, rather than to dictate a “sacred province of state autonomy.”

Insofar as the present cases are concerned, then, we need go no further than to state that we perceive nothing in the overtime and minimum-wage requirements of the FLSA, as applied to SAMTA, that is destructive of state sovereignty or violative of any constitutional provision. SAMTA faces nothing more than the same minimum-wage and overtime obligations that hundreds of thousands of other employers, public as well as private, have to meet. . . .

Of course, we continue to recognize that the States occupy a special and specific position in our constitutional system and that the scope of Congress’ authority under the Commerce Clause must reflect that position. But the principal and basic limit on the federal commerce power is that inherent in all congressional action—the built-in restraints that our system provides through state participation in federal governmental action. The political process ensures that laws that unduly burden the States will not be promulgated. In the factual setting of these cases the internal safeguards of the political process have performed as intended. . . .

We do not lightly overrule recent precedent. We have not hesitated, however, when it has become apparent that a prior decision has departed from a proper understanding of congressional power under the Commerce Clause. Due respect for the reach of congressional power within the federal system mandates that we do so now.

National League of Cities v. Usery (1976) is overruled. The judgment of the District Court is reversed, and these cases are remanded to that court for further proceedings consistent with this opinion.

It is so ordered.

JUSTICE POWELL, with whom THE CHIEF JUSTICE, JUSTICE REHNQUIST, and JUSTICE O’CONNOR join, dissenting.

Whatever effect the Court’s decision may have in weakening the application of stare decisis, it is likely to be less important than what the Court has done to the Constitution itself. A unique feature of the United States is the federal system of government guaranteed by the Constitution and implicit in the very name of our country. Despite some genuflecting in the Court’s opinion to the concept of federalism, today’s decision effectively reduces the Tenth Amendment to meaningless rhetoric when Congress acts pursuant to the Commerce Clause. . . .

Today’s opinion does not explain how the States’ role in the electoral process guarantees that particular exercises of the Commerce Clause power will not infringe on residual state sovereignty. Members of Congress are elected from the various States, but once in office, they are Members of the Federal Government. Although the States participate in the Electoral College, this is hardly a reason to view the President as a representative of the States’ interest against federal encroachment. . . . The Court offers no reason to think that this pressure will not operate when Congress seeks to invoke its powers under the Commerce Clause, notwithstanding the electoral role of the States.

The Court apparently thinks that the States’ success at obtaining federal funds for various projects and exemptions from the obligations of some federal statutes is indicative of the “effectiveness of the federal political process in preserving the States’ interests. . . .” But such political success is not relevant to the question whether the political processes are the proper means of enforcing constitutional limitations. The fact that Congress generally does not transgress constitutional limits on its power to reach state activities does not make judicial review any less necessary to rectify the cases in which it does do so. The States’ role in our system of government is a matter of constitutional law, not of legislative grace.

More troubling than the logical infirmities in the Court’s reasoning is the result of its holding, i.e., that federal political officials, invoking the Commerce Clause, are the sole judges of the limits of their own power. This result is inconsistent with the fundamental principles of our constitutional system. See, e.g., The Federalist No. 78 (Hamilton). At least since Marbury v. Madison (1803), it has been the settled province of the federal judiciary “to say what the law is” with respect to the constitutionality of Acts of Congress. In rejecting the role of the judiciary in protecting the States from federal overreaching, the Court’s opinion offers no explanation for ignoring the teaching of the most famous case in our history.

JUSTICE O’CONNOR, with whom JUSTICE POWELL and JUSTICE REHNQUIST join, dissenting.

It is worth recalling the . . . passage in McCulloch v. Maryland (1819) that lies at the source of the recent expansion of the commerce power. “Let the end be legitimate, let it be within the scope of the constitution,” Chief Justice Marshall said, “and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional” [emphasis added]. The spirit of the Tenth Amendment, of course, is that the States will retain their integrity in a system in which the laws of the United States are nevertheless supreme.

It is not enough that the “end be legitimate”; the means to that end chosen by Congress must not contravene the spirit of the Constitution. Thus many of this Court’s decisions acknowledge that the means by which national power is exercised must take into account concerns for state autonomy. . . . The operative language of these cases varies, but the underlying principle is consistent: state autonomy is a relevant factor in assessing the means by which Congress exercises its powers.

This principle requires the Court to enforce affirmative limits on federal regulation of the States to complement the judicially crafted expansion of the interstate commerce power. National League of Cities v. Usery represented an attempt to define such limits. The Court today rejects National League of Cities and washes its hands of all efforts to protect the States. In the process, the Court opines that unwarranted federal encroachments on state authority are and will remain “‘horrible possibilities that never happen in the real world.’” There is ample reason to believe to the contrary.

The last two decades have seen an unprecedented growth of federal regulatory activity, as the majority itself acknowledges. . . . Today, as federal legislation and coercive grant programs have expanded to embrace innumerable activities that were once viewed as local, the burden of persuasion has surely shifted, and the extraordinary has become ordinary. For example, recently the Federal Government has, with this Court’s blessing, undertaken to tell the States the age at which they can retire their law enforcement officers, and the regulatory standards, procedures, and even the agenda which their utilities commissions must consider and follow. The political process has not protected against these encroachments on state activities, even though they directly impinge on a State’s ability to make and enforce its laws. With the abandonment of National League of Cities, all that stands between the remaining essentials of state sovereignty and Congress is the latter’s underdeveloped capacity for self-restraint.

The problems of federalism in an integrated national economy are capable of more responsible resolution than holding that the States as States retain no status apart from that which Congress chooses to let them retain. The proper resolution, I suggest, lies in weighing state autonomy as a factor in the balance when interpreting the means by which Congress can exercise its authority on the States as States. It is insufficient, in assessing the validity of congressional regulation of a State pursuant to the commerce power, to ask only whether the same regulation would be valid if enforced against a private party. That reasoning, embodied in the majority opinion, is inconsistent with the spirit of our Constitution. It remains relevant that a State is being regulated, as National League of Cities and every recent case have recognized. . . .

It has been difficult for this Court to craft bright lines defining the scope of the state autonomy protected by National League of Cities. Such difficulty is to be expected whenever constitutional concerns as important as federalism and the effectiveness of the commerce power come into conflict. Regardless of the difficulty, it is and will remain the duty of this Court to reconcile these concerns in the final instance. That the Court shuns the task today by appealing to the “essence of federalism” can provide scant comfort to those who believe our federal system requires something more than a unitary, centralized government. I would not shirk the duty acknowledged by National League of Cities and its progeny, and I [along with Justice Rehnquist believe] that this Court will in time again assume its constitutional responsibility.

I respectfully dissent.

Return of (a Milder Form of) Dual Federalism

Given the cyclical history of debates over the proper form of American federalism, it should come as no surprise that Garcia did not settle the issue. Justice Sandra Day O’Connor’s predicted in Garcia that the principles of National League of Cities would return one day “to command the support of a majority of the Court.” Her forecast proved partially correct.

Change came about largely because of membership shifts on the Court. In the early 1990s five justices departed, including two members of the five-justice Garcia majority, William Brennan and Thurgood Marshall. In addition, William Rehnquist, a strong supporter of state authority, became chief justice. New members, appointed by Presidents Reagan and George H. W. Bush, sufficiently changed the makeup of the Court to prompt observers to look for a rekindling of the federalism debate.

The first indication that the balance of power had shifted occurred in New York v. United States (1992). This decision involved one of the most important federalism questions of the 1990s: May the federal government constitutionally command the states to carry out federal policy? The Court’s position was announced by Justice O’Connor. Consider the framework she lays out to resolve federalism disputes. Is this framework—especially her use of the Tenth Amendment—compatible with the Court’s decision in Garcia?

In New York v. United States the Supreme Court once again explicated the delicate relationship between the federal government and the states, a relationship that becomes more complex with the growth of problems as serious as the disposal of nuclear waste. The majority clearly stated that the Constitution does not allow the federal government to command the states to pass legislation to implement federal policy. The federal government may provide incentives for the states to act, but the constitutional division of authority between the general government and the various states is offended when the states are compelled to act. The decision also indicated the presence of a majority concerned with preserving the traditional role of the states.

Still, O’Connor’s opinion was not a complete return to the logic of National League of Cities. Rather, O’Connor gave a narrow reading to Garcia, as Justice White’s dissent suggests. Under her interpretation, Garcia simply held the states to the same standards as private employers. But when a problem is “uniquely governmental,” as is the disposal of radioactive waste, the Tenth Amendment prohibits Congress from compelling the states to act, from “commandeering state legislatures.”

Seen in this way, the Court’s decision in New York signaled that those sympathetic to preserving the traditional role of the states now formed a majority. Five years later the same majority ruled when the Court handed down its decision in Printz v. United States (1997), another case concerning the proper relationship between the central government and the states.

The lawsuit involved the Brady Handgun Violence Prevention Act, a gun control act that Congress passed in 1993. A provision in that statute obligated local law enforcement officials to play a role in the law’s implementation. The case raised a question related to the one addressed in New York: May Congress compel local political officials to carry out federal legislation?

Because of the scheduled date for the national background check system to become operative, Printz had little impact on gun control. The decision, however, gave a clear indication of the Rehnquist Court’s position on federalism. Five conservative justices, all appointees of Republican presidents, Ronald Reagan and George H. W. Bush, expressed their commitment to maintaining the view that the states are not merely administrative units of the federal government. Justice Antonin Scalia, for the majority, invoked the term dual sovereignty to describe the constitutionally mandated division of power between the central government and the states. Justice John Paul Stevens, writing for the four liberal justices in dissent, explicitly endorsed “cooperative federalism.” (As we shall see, precisely this same pattern of voting emerged in the Rehnquist Court’s interpretation of the Eleventh Amendment.)

What of the Rehnquist Court’s successor, the Roberts Court? Although significant personnel changes have occurred since New York and Printz, the Court’s federalism jurisprudence seems to be relatively stable. Perhaps most instructive of this point is the Court’s complex ruling on the constitutionality of the Patient Protection and Affordable Care Act of 2010 (the federal health-care law widely known as “Obamacare”), National Federation of Independent Business v. Sebelius (2012). As we shall see in chapters 7 and 8, five justices (the conservatives) did not believe that the act’s requirement that most Americans purchase health insurance was a valid exercise of congressional commerce power, but five (the four liberals plus Roberts) nonetheless upheld the so-called individual mandate as within Congress’s power under the taxing clause of Article I.

At the same time, as we detail in chapter 8, seven justices (all but Ginsburg and Sotomayor) agreed that another section of the law—expanding Medicaid coverage—put too much coercive pressure on the states. As Chief Justice Roberts wrote, “Congress has no authority to order the States to regulate according to its instructions. Congress may offer the States grants and require the States to comply with accompanying conditions, but the States must have a genuine choice whether to accept the offer. The States are given no such choice in this case: They must either accept a basic change in the nature of Medicaid, or risk losing all Medicaid funding.” Though Roberts did not cite the Tenth Amendment, his opinion echoed the claim of the challenging states: that the threatened loss of all federal Medicaid funding violated the Tenth Amendment by coercing them into complying with the Medicaid expansion.

Still, the Supreme Court’s shift back toward dual federalism should not be interpreted as a return to the pre–Civil War days of Roger Taney or to the laissez-faire philosophies that were popular prior to the New Deal. Rather, in cases such as New York, Printz, and Sebelius, the majority sought to remind us that under the U.S. constitutional system the states retain significant independent sovereignty. Congress may achieve its goals by cooperating with the states or by providing incentives to encourage states to participate in the administration of federally established policies, but the federal government may not commandeer the states and order them to carry out federal directives.

New York v. United States

505 U.S. 144 (1992)

http://laws.findlaw.com/us/505/144.html

Oral arguments are available at https://www.oyez.org.

Vote: 6 (Kennedy, O’Connor, Rehnquist, Scalia, Souter, Thomas)

3 (Blackmun, Stevens, White)

OPINION OF THE COURT: O’Connor

DISSENTING OPINIONS: Stevens, White

FACTS:

In 1980 Congress passed the Low-Level Radioactive Waste Policy Act. The law was a response to the growing problem of the disposal of radioactive waste generated by private industry, government, hospitals, and research institutions. When the act was passed, disposal sites existed only in Nevada, South Carolina, and Washington, but these states were increasingly uncomfortable accepting radioactive waste from the other forty-seven. Moreover, the existing sites were approaching capacity. The 1980 statute and its subsequent 1985 amendments declared each state responsible for radioactive waste within its borders and encouraged states to develop disposal sites or enter into interstate compacts to develop regional disposal programs. To give the other states sufficient time to develop alternatives, the three existing sites were required to continue accepting out-of-state waste until 1992. The law allowed the Nevada, South Carolina, and Washington sites to impose a surcharge when accepting waste that originated in states that had not yet complied with the act.

Congress included in the act three types of incentives to encourage the states to comply with the law. First were monetary incentives: 25 percent of the surcharges collected at the three existing disposal sites would be transferred to the secretary of energy, who would distribute the funds to states that were complying with the statute. Second were access incentives: the longer a state failed to comply with the law, the higher the surcharge that would be imposed on that state’s waste brought to the existing sites. Ultimately, the operational sites could deny noncomplying states access to the sites. Third were what the Court deemed the “most severe” incentives—those that followed from the “take title” provision of the law: after 1996 any state that had not developed an in-state disposal site or had not entered into a regional compact for that purpose would be required to take title of radioactive waste generated inside the state and be fully responsible for it.

In 1990 New York filed suit challenging the constitutionality of the waste disposal law. The state claimed that the incentive provisions violated, among other provisions, the Tenth Amendment.16 The federal government defended the law and was supported by a group of states that were already participating in the program. Lower courts upheld the law.

Arguments:

For the petitioner, state of New York:

Judicial review is needed under the Tenth Amendment and the principles of federalism because the act, particularly the “take title” provision, imposes unconditional affirmative obligations on the states and only on the states.

This case is distinguishable from Garcia v. San Antonio Metropolitan Transit Authority, in which the law at issue applied to both private entities and states and concerned an activity that the states had voluntarily undertaken. Here, the act compels the states to act without their consent, depriving them of their sovereignty.

The states are deprived of the opportunity to make an independent choice as to whether the federal funds outweigh the burden compliance with the federal scheme.

For the respondents, United States et al.:

The 1985 act does not require the state to enact or enforce any federally mandated regulatory program and does not intrude impermissibly on state sovereignty. To the contrary, it leaves the states with a number of options. New York could contract with a regional interstate compact to ensure that its generators can dispose of the state’s waste elsewhere.

The act was the result of cooperative federalism, and New York was an active participant in its drafting and enactment. The process provided the state ample opportunity to contribute, and the resulting act generally conformed to New York’s recommendations. The state’s claim that the act leaves it politically powerless is baseless.

This Court’s decisions established that the Constitution permits some types of federal directives addressed directly to the states, especially in areas of intense federal interest. The serious issue of interstate disposal of radioactive waste, and the disputes among states which arose around this issue, qualify as areas of intense federal interest.

JUSTICE O’CONNOR delivered the opinion of the Court.

This case implicates one of our Nation’s newest problems of public policy and perhaps our oldest question of constitutional law. The public policy issue involves the disposal of radioactive waste: In this case, we address the constitutionality of three provisions of the Low-Level Radioactive Waste Policy Amendments Act of 1985. The constitutional question is as old as the Constitution: It consists of discerning the proper division of authority between the Federal Government and the States. We conclude that while Congress has substantial power under the Constitution to encourage the States to provide for the disposal of the radioactive waste generated within their borders, the Constitution does not confer upon Congress the ability simply to compel the States to do so. We therefore find that only two of the Act’s three provisions at issue are consistent with the Constitution’s allocation of power to the Federal Government. . . .

. . . At least as far back as Martin v. Hunter’s Lessee (1816), the Court has resolved questions “of great importance and delicacy” in determining whether particular sovereign powers have been granted by the Constitution to the Federal Government or have been retained by the States. . . .

These questions can be viewed in either of two ways. In some cases, the Court has inquired whether an Act of Congress is authorized by one of the powers delegated to Congress in Article I of the Constitution. See, e.g., McCulloch v. Maryland (1819). In other cases, the Court has sought to determine whether an Act of Congress invades the province of state sovereignty reserved by the Tenth Amendment. See, e.g., Garcia v. San Antonio Metropolitan Transit Authority (1985). In a case like this one, involving the division of authority between federal and state governments, the two inquiries are mirror images of each other. If a power is delegated to Congress in the Constitution, the Tenth Amendment expressly disclaims any reservation of that power to the States; if a power is an attribute of state sovereignty reserved by the Tenth Amendment, it is necessarily a power the Constitution has not conferred on Congress.

It is in this sense that the Tenth Amendment “states but a truism that all is retained which has not been surrendered.” United States v. Darby (1941). . . .

Congress exercises its conferred powers subject to the limitations contained in the Constitution. Thus, for example, under the Commerce Clause, Congress may regulate publishers engaged in interstate commerce, but Congress is constrained in the exercise of that power by the First Amendment. The Tenth Amendment likewise restrains the power of Congress, but this limit is not derived from the text of the Tenth Amendment itself, which, as we have discussed, is essentially a tautology. Instead, the Tenth Amendment confirms that the power of the Federal Government is subject to limits that may, in a given instance, reserve power to the States. The Tenth Amendment thus directs us to determine, as in this case, whether an incident of state sovereignty is protected by a limitation on an Article I power.

The benefits of this federal structure have been extensively catalogued elsewhere, but they need not concern us here. Our task would be the same even if one could prove that federalism secured no advantages to anyone. It consists not of devising our preferred system of government, but of understanding and applying the framework set forth in the Constitution.

This framework has been sufficiently flexible over the past two centuries to allow for enormous changes in the nature of government. The Federal Government undertakes activities today that would have been unimaginable to the Framers in two senses; first, because the Framers would not have conceived that any government would conduct such activities; and second, because the Framers would not have believed that the Federal Government, rather than the States, would assume such responsibilities. Yet the powers conferred upon the Federal Government by the Constitution were phrased in language broad enough to allow for the expansion of the Federal Government’s role. Among the provisions of the Constitution that have been particularly important in this regard, three concern us here.

First, the Constitution allocates to Congress the power “[t]o regulate Commerce . . . among the several States.” The volume of interstate commerce and the range of commonly accepted objects of government regulation have, however, expanded considerably in the last 200 years, and the regulatory authority of Congress has expanded along with them. As interstate commerce has become ubiquitous, activities once considered purely local have come to have effects on the national economy, and have accordingly come within the scope of Congress’ commerce power.

Second, the Constitution authorizes Congress “to pay the Debts and provide for the . . . general Welfare of the United States.” As conventional notions of the proper objects of government spending have changed over the years, so has the ability of Congress to “fix the terms on which it shall disburse federal money to the States.” While the spending power is “subject to several general restrictions articulated in our cases,” these restrictions have not been so severe as to prevent the regulatory authority of Congress from generally keeping up with the growth of the federal budget.

The Court’s broad construction of Congress’ power under the Commerce and Spending Clauses has of course been guided, as it has with respect to Congress’ power generally, by the Constitution’s Necessary and Proper Clause, which authorizes Congress “[t]o make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers.”

Finally, the Constitution provides that “the Laws of the United States . . . shall be the supreme Law of the Land . . . any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” As the Federal Government’s willingness to exercise power within the confines of the Constitution has grown, the authority of the States has correspondingly diminished to the extent that federal and state policies have conflicted.

The actual scope of the Federal Government’s authority with respect to the States has changed over the years, therefore, but the constitutional structure underlying and limiting that authority has not. In the end, just as a cup may be half empty or half full, it makes no difference whether one views the question at issue in this case as one of ascertaining the limits of the power delegated to the Federal Government under the affirmative provisions of the Constitution or one of discerning the core of sovereignty retained by the States under the Tenth Amendment. Either way, we must determine whether any of the three challenged provisions of the Low-Level Radioactive Waste Policy Amendments Act of 1985 oversteps the boundary between federal and state authority.

Petitioners do not contend that Congress lacks the power to regulate the disposal of low level radioactive waste. Space in radioactive waste disposal sites is frequently sold by residents of one State to residents of another. Regulation of the resulting interstate market in waste disposal is therefore well within Congress’ authority under the Commerce Clause. . . . Petitioners contend only that the Tenth Amendment limits the power of Congress to regulate in the way it has chosen. Rather than addressing the problem of waste disposal by directly regulating the generators and disposers of waste, petitioners argue, Congress has impermissibly directed the States to regulate in this field.

Most of our recent cases interpreting the Tenth Amendment have concerned the authority of Congress to subject state governments to generally applicable laws. The Court’s jurisprudence in this area has traveled an unsteady path. See National League of Cities v. Usery (1976) (state employers are not subject to Fair Labor Standards Act); Garcia v. San Antonio Metropolitan Transit Authority (1985) (overruling National League of Cities) This case presents no occasion to apply or revisit the holdings of any of these cases, as this is not a case in which Congress has subjected a State to the same legislation applicable to private parties.

This case instead concerns the circumstances under which Congress may use the States as implements of regulation; that is, whether Congress may direct or otherwise motivate the States to regulate in a particular field or a particular way. Our cases have established a few principles that guide our resolution of the issue.

As an initial matter, Congress may not simply “commandee[r] the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program.” . . .

. . . While Congress has substantial powers to govern the Nation directly, including in areas of intimate concern to the States, the Constitution has never been understood to confer upon Congress the ability to require the States to govern according to Congress’ instructions. . . .

Indeed, the question whether the Constitution should permit Congress to employ state governments as regulatory agencies was a topic of lively debate among the Framers. . . .

In the end, the Convention opted for a Constitution in which Congress would exercise its legislative authority directly over individuals, rather than over States. This choice was made clear to the subsequent state ratifying conventions. Oliver Ellsworth, a member of the Connecticut delegation in Philadelphia, explained the distinction to his State’s convention: “This Constitution does not attempt to coerce sovereign bodies, states, in their political capacity. . . . But this legal coercion singles out the . . . individual.” Charles Pinckney, another delegate at the Constitutional Convention, emphasized to the South Carolina House of Representatives that, in Philadelphia, “the necessity of having a government which should at once operate upon the people, and not upon the states, was conceived to be indispensable by every delegation present.” . . .

In providing for a stronger central government, therefore, the Framers explicitly chose a Constitution that confers upon Congress the power to regulate individuals, not States. . . . [T]he Court has consistently respected this choice. We have always understood that, even where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts. The allocation of power contained in the Commerce Clause, for example, authorizes Congress to regulate interstate commerce directly; it does not authorize Congress to regulate state governments’ regulation of interstate commerce. . . .

This is not to say that Congress lacks the ability to encourage a State to regulate in a particular way, or that Congress may not hold out incentives to the States as a method of influencing a State’s policy choices. Our cases have identified a variety of methods, short of outright coercion, by which Congress may urge a State to adopt a legislative program consistent with federal interests. Two of these methods are of particular relevance here.

First, under Congress’ spending power, “Congress may attach conditions on the receipt of federal funds.” Such conditions must (among other requirements) bear some relationship to the purpose of the federal spending; otherwise, of course, the spending power could render academic the Constitution’s other grants and limits of federal authority. Where the recipient of federal funds is a State, as is not unusual today, the conditions attached to the funds by Congress may influence a State’s legislative choices. [South Dakota v.] Dole was one such case: the Court found no constitutional flaw in a federal statute directing the Secretary of Transportation to withhold federal highway funds from States failing to adopt Congress’ choice of a minimum drinking age. Similar examples abound.

Second, where Congress has the authority to regulate private activity under the Commerce Clause, we have recognized Congress’ power to offer States the choice of regulating that activity according to federal standards or having state law pre-empted by federal regulation. This arrangement, which has been termed “a program of cooperative federalism,” is replicated in numerous federal statutory schemes [including] the Clean Water Act . . . (Clean Water Act “anticipates a partnership between the States and the Federal Government, animated by a shared objective”). . . .

By either of these two methods, as by any other permissible method of encouraging a State to conform to federal policy choices, the residents of the State retain the ultimate decision as to whether or not the State will comply. If a State’s citizens view federal policy as sufficiently contrary to local interests, they may elect to decline a federal grant. If state residents would prefer their government to devote its attention and resources to problems other than those deemed important by Congress, they may choose to have the Federal Government, rather than the State, bear the expense of a federally mandated regulatory program, and they may continue to supplement that program to the extent state law is not pre-empted. Where Congress encourages state regulation, rather than compelling it, state governments remain responsive to the local electorate’s preferences; state officials remain accountable to the people.

By contrast, where the Federal Government compels States to regulate, the accountability of both state and federal officials is diminished. If the citizens of New York, for example, do not consider that making provision for the disposal of radioactive waste is in their best interest, they may elect state officials who share their view. That view can always be pre-empted under the Supremacy Clause if it is contrary to the national view, but, in such a case, it is the Federal Government that makes the decision in full view of the public, and it will be federal officials that suffer the consequences if the decision turns out to be detrimental or unpopular. But where the Federal Government directs the States to regulate, it may be state officials who will bear the brunt of public disapproval, while the federal officials who devised the regulatory program may remain insulated from the electoral ramifications of their decision. Accountability is thus diminished when, due to federal coercion, elected state officials cannot regulate in accordance with the views of the local electorate in matters not preempted by federal regulation.

With these principles in mind, we turn to the three challenged provisions of the Low-Level Radioactive Waste Policy Amendments Act of 1985. . . .

The Act comprises three sets of “incentives” for the States to provide for the disposal of low level radioactive waste generated within their borders. We consider each in turn. . . .

[Justice O’Connor upheld the first set of incentives—the monetary incentives—as within congressional authority under the commerce and spending clauses. She wrote, “Because the first set of incentives is supported by affirmative constitutional grants of power to Congress, it is not inconsistent with the Tenth Amendment.” She also upheld the access incentives because they fall within Congress’s commerce power and “do not intrude on the sovereignty reserved to the States by the Tenth Amendment.” Justice O’Connor wrote: “The affected States are not compelled by Congress to regulate, because any burden caused by a State’s refusal to regulate will fall on those who generate waste and find no outlet for its disposal, rather than on the State as a sovereign. A State whose citizens do not wish it to attain the Act’s milestones may devote its attention and its resources to issues its citizens deem more worthy; the choice remains at all times with the residents of the State, not with Congress. The State need not expend any funds, or participate in any federal program, if local residents do not view such expenditures or participation as worthwhile. Nor must the State abandon the field if it does not accede to federal direction; the State may continue to regulate the generation and disposal of radioactive waste in any manner its citizens see fit.” She then moved to the take-title provision.]

The take-title provision is of a different character. This third so-called “incentive” offers States, as an alternative to regulating pursuant to Congress’ direction, the option of taking title to and possession of the low level radioactive waste generated within their borders and becoming liable for all damages waste generators suffer as a result of the States’ failure to do so promptly. In this provision, Congress has crossed the line distinguishing encouragement from coercion. . . .

The take-title provision offers state governments a “choice” of either accepting ownership of waste or regulating according to the instructions of Congress. Respondents do not claim that the Constitution would authorize Congress to impose either option as a freestanding requirement. On one hand, the Constitution would not permit Congress simply to transfer radioactive waste from generators to state governments. Such a forced transfer, standing alone, would in principle be no different than a congressionally compelled subsidy from state governments to radioactive waste producers. The same is true of the provision requiring the States to become liable for the generators’ damages. Standing alone, this provision would be indistinguishable from an Act of Congress directing the States to assume the liabilities of certain state residents. Either type of federal action would “commandeer” state governments into the service of federal regulatory purposes, and would, for this reason, be inconsistent with the Constitution’s division of authority between federal and state governments. On the other hand, the second alternative held out to state governments—regulating pursuant to Congress’ direction—would, standing alone, present a simple command to state governments to implement legislation enacted by Congress. . . . [T]he Constitution does not empower Congress to subject state governments to this type of instruction.

Because an instruction to state governments to take title to waste, standing alone, would be beyond the authority of Congress, and because a direct order to regulate, standing alone, would also be beyond the authority of Congress, it follows that Congress lacks the power to offer the States a choice between the two. Unlike the first two sets of incentives, the take-title incentive does not represent the conditional exercise of any congressional power enumerated in the Constitution. In this provision, Congress has not held out the threat of exercising its spending power or its commerce power; it has instead held out the threat, should the States not regulate according to one federal instruction, of simply forcing the States to submit to another federal instruction. A choice between two unconstitutionally coercive regulatory techniques is no choice at all. Either way, “the Act commandeers the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program,” an outcome that has never been understood to lie within the authority conferred upon Congress by the Constitution.

Respondents emphasize the latitude given to the States to implement Congress’ plan. The Act enables the States to regulate pursuant to Congress’ instructions in any number of different ways. States may avoid taking title by contracting with sited regional compacts, by building a disposal site alone or as part of a compact, or by permitting private parties to build a disposal site. States that host sites may employ a wide range of designs and disposal methods, subject only to broad federal regulatory limits. This line of reasoning, however, only underscores the critical alternative a State lacks: a State may not decline to administer the federal program. No matter which path the State chooses, it must follow the direction of Congress.

The take-title provision appears to be unique. No other federal statute has been cited which offers a state government no option other than that of implementing legislation enacted by Congress. Whether one views the take-title provision as lying outside Congress’ enumerated powers or as infringing upon the core of state sovereignty reserved by the Tenth Amendment, the provision is inconsistent with the federal structure of our Government established by the Constitution. . . .

. . . [T]he Constitution protects us from our own best intentions: it divides power among sovereigns and among branches of government precisely so that we may resist the temptation to concentrate power in one location as an expedient solution to the crisis of the day. The shortage of disposal sites for radioactive waste is a pressing national problem, but a judiciary that licensed extraconstitutional government with each issue of comparable gravity would, in the long run, be far worse.

States are not mere political subdivisions of the United States. State governments are neither regional offices nor administrative agencies of the Federal Government. The positions occupied by state officials appear nowhere on the Federal Government’s most detailed organizational chart. The Constitution instead “leaves to the several States a residuary and inviolable sovereignty,” reserved explicitly to the States by the Tenth Amendment.

Whatever the outer limits of that sovereignty may be, one thing is clear: the Federal Government may not compel the States to enact or administer a federal regulatory program. The Constitution . . . does not . . . authorize Congress simply to direct the States to provide for the disposal of the radioactive waste generated within their borders. While there may be many constitutional methods of achieving regional self-sufficiency in radioactive waste disposal, the method Congress has chosen is not one of them. The judgment of the Court of Appeals is accordingly

Affirmed in part and reversed in part.

JUSTICE WHITE, with whom JUSTICE BLACKMUN and JUSTICE STEVENS join, concurring in part and dissenting in part.

Curiously absent from the Court’s analysis is any effort to place the take-title provision within the overall context of the legislation. As . . . this opinion suggests, the 1980 and 1985 statutes were enacted against a backdrop of national concern over the availability of additional low-level radioactive waste disposal facilities. Congress could have pre-empted the field by directly regulating the disposal of this waste pursuant to its powers under the Commerce and Spending Clauses, but instead it unanimously assented to the States’ request for congressional ratification of agreements to which they had acceded. As the floor statements of Members of Congress reveal, the States wished to take the lead in achieving a solution to this problem and agreed among themselves to the various incentives and penalties implemented by Congress to ensure adherence to the various deadlines and goals. The chief executives of the States proposed this approach, and I am unmoved by the Court’s vehemence in taking away Congress’ authority to sanction a recalcitrant unsited State now that New York has reaped the benefits of the sited States’ concessions. . . .

I am convinced that, seen as a term of an agreement entered into between the several States, this measure proves to be less constitutionally odious than the Court opines. . . .

I would also submit, in this connection, that the Court’s attempt to carve out a doctrinal distinction for statutes that purport solely to regulate state activities is especially unpersuasive after Garcia. It is true that, in that case, we considered whether a federal statute of general applicability—the Fair Labor Standards Act—applied to state transportation entities, but our most recent statements have explained the appropriate analysis in a more general manner. Just last Term, for instance, Justice O’Connor wrote . . . that “this Court in Garcia has left primarily to the political process the protection of the States against intrusive exercises of Congress’ Commerce Clause powers.”

. . . [T]herefore, the more appropriate analysis should flow from Garcia, even if this case does not involve a congressional law generally applicable to both States and private parties. In Garcia, we stated the proper inquiry: “[W]e are convinced that the fundamental limitation that the constitutional scheme imposes on the Commerce Clause to protect the ‘States as States’ is one of process, rather than one of result. Any substantive restraint on the exercise of Commerce Clause powers must find its justification in the procedural nature of this basic limitation, and it must be tailored to compensate for possible failings in the national political process, rather than to dictate a ‘sacred province of state autonomy.’” Where it addresses this aspect of respondents’ argument, the Court tacitly concedes that a failing of the political process cannot be shown in this case, because it refuses to rebut the unassailable arguments that the States were well able to look after themselves in the legislative process that culminated in the 1985 Act’s passage. Indeed, New York acknowledges that its “congressional delegation participated in the drafting and enactment of both the 1980 and the 1985 Acts.” The Court rejects this process-based argument by resorting to generalities and platitudes about the purpose of federalism being to protect individual rights.

Ultimately, I suppose, the entire structure of our federal constitutional government can be traced to an interest in establishing checks and balances to prevent the exercise of tyranny against individuals. But these fears seem extremely far distant to me in a situation such as this. We face a crisis of national proportions in the disposal of low-level radioactive waste, and Congress has acceded to the wishes of the States by permitting local decisionmaking, rather than imposing a solution from Washington. New York itself participated and supported passage of this legislation at both the gubernatorial and federal representative levels, and then enacted state laws specifically to comply with the deadlines and timetables agreed upon by the States in the 1985 Act. For me, the Court’s civics lecture has a decidedly hollow ring at a time when action, rather than rhetoric, is needed to solve a national problem.

Printz v. United States

521 U.S. 898 (1997)

http://laws.findlaw.com/us/521/898.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Kennedy, O’Connor, Rehnquist, Scalia, Thomas)

4 (Breyer, Ginsburg, Souter, Stevens)

OPINION OF THE COURT: Scalia

CONCURRING OPINIONS: O’Connor, Thomas

DISSENTING OPINIONS: Breyer, Souter, Stevens

Facts:

The Gun Control Act of 1968 forbids firearms dealers to transfer firearms to convicted felons, unlawful users of controlled substances, fugitives from justice, persons judged to be mentally defective, persons dishonorably discharged from the military, persons who have renounced their citizenship, and persons who have committed certain acts of domestic violence. In 1993 Congress amended the Gun Control Act with the Brady Handgun Violence Prevention Act. This act required the attorney general to establish, by November 30, 1998, a national database allowing for an instant background check on anyone attempting to buy a handgun. In the interim, the Brady Act allowed gun dealers to sell firearms to buyers who already possessed state handgun permits or who lived in states with existing instant background check systems.

In states where these two alternatives were not possible, the act required certain actions by the local chief law enforcement officer (CLEO). It mandated that CLEOs receive firearm purchase forms from gun dealers and make a reasonable effort within five business days to verify that any proposed sale was not to a person unqualified under the law. Essentially, the act required local CLEOs to conduct background checks on all potential gun purchasers. When CLEOs determined that any particular proposed sale would violate the law, they were required upon request to submit a written report to the proposed purchaser stating the reasons for that determination. If CLEOs found no reason for objecting to a sale, they were required to destroy all records pertaining to it. These mandated responsibilities were to terminate in 1998 once the federal instant background check program became operative.

Jay Printz, sheriff of Ravalli County, Montana, and Richard Mack, sheriff of Graham County, Arizona, filed separate suits challenging the constitutionality of the Brady Act’s interim provisions. They argued that the federal government had no authority to command state or local officials to administer a federal program. In each case the district court declared the act unconstitutional to the extent that it forced state officers to carry out federal policies. Other provisions of the law were left untouched. The court of appeals disagreed, finding no provisions of the law to violate the Constitution. The Supreme Court accepted the cases for review. Although the decision immediately affected a temporary provision that was scheduled to expire in 1998, it involved a meaningful constitutional issue.

James S. Brady, former press secretary for President Reagan, who was wounded during an assassination attempt on the president, listens as President Clinton speaks before signing the Brady Bill gun control legislation in 1993.

Reuters/Gary Hershorn

Richard Mack, sheriff of Graham County, Arizona, who, along with Sheriff Jay Printz of Ravalli County, Montana, challenged the constitutionality of those provisions of the Brady Bill that required local law enforcement officials to conduct background checks on prospective handgun purchasers.

Stephanie Sinclair/VII

Arguments:

For the petitioner, Jay Printz, sheriff of Ravalli County:

New York v. United States established that Congress cannot order states to enact or administer a federal regulatory program without violating the Tenth Amendment. Historically, the authority for defining and enforcing criminal laws lies with the states. Criminal law enforcement has been a fundamental element of state sovereignty. Drafting state employees for federal enforcement duty is unprecedented.

The commerce clause cannot justify conscripting local CLEOs into federal law enforcement, because CLEOs are not engaged in or connected to interstate commerce. Attempts to argue that regulation will ultimately affect commerce and therefore is justifiable under the commerce clause have been struck down in earlier cases.

Article II of the Constitution provides that the president, not CLEOs, shall faithfully execute the laws. The careful system of checks and balances in the U.S. system of government is disrupted by having local CLEOs enforce federal laws, without any of the safeguards against abuse of power that were built into the Constitution.

For the respondent, United States:

This case is distinguishable from New York v. United States. In that case, Congress commandeered the states’ legislative process by requiring the states to legislate their own solution. In this case, the federal government is asking only for local assistance in implementing a comprehensive federal policy.

Congress may find it necessary and proper to enlist local officials in limited, non-policy-making aspects of the implementation of federal law. Congress has done this in the past, beginning with the First Congress requiring court clerks to help register aliens seeking citizenship.

The act does not pose substantial burdens on the states or the CLEOs, so it does not threaten the separate and independent existence of the states. The act imposes only temporary and minimal duties on local officeholders and grants them discretion in determining how to meet those responsibilities.

Because the regulated activity is legitimately subject to federal regulation under the commerce clause, the only question before the Court is whether the means chosen are reasonably related to the ends. Petitioner has not claimed that the means are an irrational means to the ends.

JUSTICE SCALIA delivered the opinion of the Court.

The question presented in these cases is whether certain interim provisions of the Brady Handgun Violence Prevention Act, commanding state and local law enforcement officers to conduct background checks on prospective handgun purchasers and to perform certain related tasks, violate the Constitution. . . .

. . . [T]he Brady Act purports to direct state law enforcement officers to participate, albeit only temporarily, in the administration of a federally enacted regulatory scheme. . . .

The petitioners here object to being pressed into federal service, and contend that congressional action compelling state officers to execute federal laws is unconstitutional. Because there is no constitutional text speaking to this precise question, the answer to the CLEOs’ challenge must be sought in historical understanding and practice, in the structure of the Constitution, and in the jurisprudence of this Court. . . .

Petitioners contend that compelled enlistment of state executive officers for the administration of federal programs is, until very recent years at least, unprecedented. The Government contends, to the contrary, that “the earliest Congresses enacted statutes that required the participation of state officials in the implementation of federal laws.” . . .

The Government’s contention demands our careful consideration, since early congressional enactments “provid[e] ‘contemporaneous and weighty evidence’ of the Constitution’s meaning.” . . . Conversely if, as petitioners contend, earlier Congresses avoided use of this highly attractive power, we would have reason to believe that the power was thought not to exist. . . .

Not only do the enactments of the early Congresses, as far as we are aware, contain no evidence of an assumption that the Federal Government may command the States’ executive power in the absence of a particularized constitutional authorization, they contain some indication of precisely the opposite assumption. On September 23, 1789—the day before its proposal of the Bill of Rights—the First Congress enacted a law aimed at obtaining state assistance of the most rudimentary and necessary sort for the enforcement of the new Government’s laws: the holding of federal prisoners in state jails at federal expense. Significantly, the law issued not a command to the States’ executive, but a recommendation to their legislatures. Congress “recommended to the legislatures of the several States to pass laws, making it expressly the duty of the keepers of their gaols [jails], to receive and safe keep therein all prisoners committed under the authority of the United States.” . . .

In addition to early legislation, the Government also appeals to other sources we have usually regarded as indicative of the original understanding of the Constitution. It points to portions of The Federalist which . . . [state] that Congress will probably “make use of the State officers and State regulations, for collecting” federal taxes, The Federalist No. 36 (A. Hamilton), and predicted that “the eventual collection [of internal revenue] under the immediate authority of the Union, will generally be made by the officers, and according to the rules, appointed by the several States” (J. Madison). The Government also invokes the Federalist’s more general observations that the Constitution would “enable the [national] government to employ the ordinary magistracy of each [State] in the execution of its laws,” No. 27 (A. Hamilton), and that it was “extremely probable that in other instances, particularly in the organization of the judicial power, the officers of the States will be clothed in the correspondent authority of the Union,” No. 45 (J. Madison). But none of these statements necessarily implies—what is the critical point here—that Congress could impose these responsibilities without the consent of the States. They appear to rest on the natural assumption that the States would consent to allowing their officials to assist the Federal Government, an assumption proved correct by the extensive mutual assistance the States and Federal Government voluntarily provided one another in the early days of the Republic, including voluntary federal implementation of state law. . . .

. . . We turn next to consideration of the structure of the Constitution, to see if we can discern among its “essential postulate[s]” a principle that controls the present cases. . . .

It is incontestable that the Constitution established a system of “dual sovereignty.” Although the States surrendered many of their powers to the new Federal Government, they retained “a residuary and inviolable sovereignty,” The Federalist No. 39 (J. Madison). . . . Residual state sovereignty was also implicit, of course, in the Constitution’s conferral upon Congress of not all governmental powers, but only discrete, enumerated ones, which implication was rendered express by the Tenth Amendment’s assertion that “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

The Framers’ experience under the Articles of Confederation had persuaded them that using the States as the instruments of federal governance was both ineffectual and provocative of federal-state conflict. . . . [T]he Framers rejected the concept of a central government that would act upon and through the States, and instead designed a system in which the state and federal governments would exercise concurrent authority over the people—who were, in Hamilton’s words, “the only proper objects of government,” The Federalist No. 15. . . . The great innovation of this design was that-our citizens would have two political capacities, one state and one federal, each protected from incursion by the other. . . . The Constitution thus contemplates that a State’s government will represent and remain accountable to its own citizens. As Madison expressed it: “[T]he local or municipal authorities form distinct and independent portions of the supremacy, no more subject, within their respective spheres, to the general authority than the general authority is subject to them, within its own sphere.” The Federalist No. 39.

This separation of the two spheres is one of the Constitution’s structural protections of liberty. “Just as the separation and independence of the coordinate branches of the Federal Government serve to prevent the accumulation of excessive power in any one branch, a healthy balance of power between the States and the Federal Government will reduce the risk of tyranny and abuse from either front.” . . . To quote Madison once again:

In the compound republic of America, the power surrendered by the people is first divided between two distinct governments, and then the portion allotted to each subdivided among distinct and separate departments. Hence a double security arises to the rights of the people. The different governments will control each other, at the same time that each will be controlled by itself. The Federalist No. 51

We have thus far discussed the effect that federal control of state officers would have upon the first element of the “double security” alluded to by Madison: the division of power between State and Federal Governments. It would also have an effect upon the second element: the separation and equilibration of powers between the three branches of the Federal Government itself. The Constitution does not leave to speculation who is to administer the laws enacted by Congress; the President, it says, “shall take Care that the Laws be faithfully executed,” personally and through officers whom he appoints. . . . The Brady Act effectively transfers this responsibility to thousands of CLEOs in the 50 States, who are left to implement the program without meaningful Presidential control (if indeed meaningful Presidential control is possible without the power to appoint and remove). The insistence of the Framers upon unity in the Federal Executive—to insure both vigor and accountability—is well known. See The Federalist No. 70 (A. Hamilton). That unity would be shattered, and the power of the President would be subject to reduction, if Congress could act as effectively without the President as with him, by simply requiring state officers to execute its laws.

The dissent of course resorts to the last, best hope of those who defend ultra vires congressional action, the Necessary and Proper Clause. It reasons that the power to regulate the sale of handguns under the Commerce Clause, coupled with the power to “make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers,” conclusively establishes the Brady Act’s constitutional validity, because the Tenth Amendment imposes no limitations on the exercise of delegated powers but merely prohibits the exercise of powers “not delegated to the United States.” What destroys the dissent’s Necessary and Proper Clause argument, however, is not the Tenth Amendment but the Necessary and Proper Clause itself. When a “La[w] . . . for carrying into Execution” the Commerce Clause violates the principle of state sovereignty reflected in the various constitutional provisions we mentioned earlier it is not a “La[w] . . . proper for carrying into Execution the Commerce Clause.” and is thus, in the words of The Federalist, “merely [an] ac[t] of usurpation” which “deserve[s] to be treated as such.” The Federalist No. 33 (A. Hamilton).

Finally, and most conclusively in the present litigation, we turn to the prior jurisprudence of this Court. . . .

. . . In New York [v. United States we held that] “The Federal Government . . . may not compel the States to enact or administer a federal regulatory program.” . . .

The Government contends that New York is distinguishable on the following ground: unlike the “take title” provisions invalidated there, the background check provision of the Brady Act does not require state legislative or executive officials to make policy, but instead issues a final directive to state CLEOs. . . .

The Government’s distinction between “making” law and merely “enforcing” it, between “policymaking” and mere “implementation,” is an interesting one. . . . [But] [e]xecutive action that has utterly no policymaking component is rare, particularly at an executive level as high as a jurisdiction’s chief law enforcement officer. Is it really true that there is no policymaking involved in deciding, for example, what “reasonable efforts” shall be expended to conduct a background check? . . .

The Government also maintains that requiring state officers to perform discrete, ministerial tasks specified by Congress does not violate the principle of New York because it does not diminish the accountability of state or federal officials. This argument fails even on its own terms. By forcing state governments to absorb the financial burden of implementing a federal regulatory program, Members of Congress can take credit for “solving” problems without having to ask their constituents to pay for the solutions with higher federal taxes. And even when the States are not forced to absorb the costs of implementing a federal program, they are still put in the position of taking the blame for its burdensomeness and for its defects. . . .

We held in New York [v. United States] that Congress cannot compel the States to enact or enforce a federal regulatory program. Today we hold that Congress cannot circumvent that prohibition by conscripting the State’s officers directly. The Federal Government may neither issue directives requiring the States to address particular problems, nor command the States’ officers, or those of their political subdivisions, to administer or enforce a federal regulatory program. [S]uch commands are fundamentally incompatible with our constitutional system of dual sovereignty. Accordingly, the judgment of the Court of Appeals for the Ninth Circuit is reversed. Accordingly, the judgment of the Court of Appeals for the Ninth Circuit is reversed.

It is so ordered.

JUSTICE THOMAS, concurring.

In my “revisionist” view, the Federal Government’s authority under the Commerce Clause, which merely allocates to Congress the power “to regulate Commerce . . . among the several states,” does not extend to the regulation of wholly intrastate, point of sale transactions. Absent the underlying authority to regulate the intrastate transfer of firearms, Congress surely lacks the corollary power to impress state law enforcement officers into administering and enforcing such regulations. . . .

Even if we construe Congress’ authority to regulate interstate commerce to encompass those intrastate transactions that “substantially affect” interstate commerce, I question whether Congress can regulate the particular transactions at issue here. The Constitution, in addition to delegating certain enumerated powers to Congress, places whole areas outside the reach of Congress’ regulatory authority. The First Amendment, for example, is fittingly celebrated for preventing Congress from “prohibiting the free exercise” of religion or “abridging the freedom of speech.” The Second Amendment similarly appears to contain an express limitation on the government’s authority. . . . This Court has not had recent occasion to consider the nature of the substantive right safeguarded by the Second Amendment. If, however, the Second Amendment is read to confer a personal right to “keep and bear arms,” a colorable argument exists that the Federal Government’s regulatory scheme, at least as it pertains to the purely intrastate sale or possession of firearms, runs afoul of that Amendment’s protections.

JUSTICE STEVENS, with whom JUSTICE SOUTER, JUSTICE GINSBURG, and JUSTICE BREYER join, dissenting.

When Congress exercises the powers delegated to it by the Constitution, it may impose affirmative obligations on executive and judicial officers of state and local governments as well as ordinary citizens. This conclusion is firmly supported by the text of the Constitution, the early history of the Nation, decisions of this Court, and a correct understanding of the basic structure of the Federal Government.

These cases do not implicate the more difficult questions associated with congressional coercion of state legislatures addressed in New York v. United States (1992). Nor need we consider the wisdom of relying on local officials rather than federal agents to carry out aspects of a federal program, or even the question whether such officials may be required to perform a federal function on a permanent basis. The question is whether Congress, acting on behalf of the people of the entire Nation, may require local law enforcement officers to perform certain duties during the interim needed for the development of a federal gun control program. . . .

The text of the Constitution provides a sufficient basis for a correct disposition of this case.

Article I, §8, grants the Congress the power to regulate commerce among the States. Putting to one side the revisionist views expressed by Justice Thomas in his concurring opinion in United States v. Lopez (1995), there can be no question that that provision adequately supports the regulation of commerce in handguns effected by the Brady Act. Moreover, the additional grant of authority in that section of the Constitution “[t]o make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers” is surely adequate to support the temporary enlistment of local police officers in the process of identifying persons who should not be entrusted with the possession of handguns. In short, the affirmative delegation of power in Article I provides ample authority for the congressional enactment.

Unlike the First Amendment, which prohibits the enactment of a category of laws that would otherwise be authorized by Article I, the Tenth Amendment imposes no restriction on the exercise of delegated powers. . . .

The Amendment confirms the principle that the powers of the Federal Government are limited to those affirmatively granted by the Constitution, but it does not purport to limit the scope or the effectiveness of the exercise of powers that are delegated to Congress. Thus, the Amendment provides no support for a rule that immunizes local officials from obligations that might be imposed on ordinary citizens. . . .

There is not a clause, sentence, or paragraph in the entire text of the Constitution of the United States that supports the proposition that a local police officer can ignore a command contained in a statute enacted by Congress pursuant to an express delegation of power enumerated in Article I. . . .

. . . [T]he Court’s reasoning [also] contradicts New York v. United States.

That decision squarely approved of cooperative federalism programs, designed at the national level but implemented principally by state governments. New York disapproved of a particular method of putting such programs into place, not the existence of federal programs implemented locally. . . .

The provision of the Brady Act that crosses the Court’s newly defined constitutional threshold is more comparable to a statute requiring local police officers to report the identity of missing children to the Crime Control Center of the Department of Justice than to an offensive federal command to a sovereign state. If Congress believes that such a statute will benefit the people of the Nation, and serve the interests of cooperative federalism better than an enlarged federal bureaucracy, we should respect both its policy judgment and its appraisal of its constitutional power.

Accordingly, I respectfully dissent.

JUSTICE SOUTER, dissenting.

In deciding these cases, which I have found closer than I had anticipated, it is The Federalist that finally determines my position. I believe that the most straightforward reading of No. 27 is authority for the Government’s position here, and that this reading is both supported by No. 44 and consistent with Nos. 36 and 45.

Hamilton in No. 27 first notes that because the new Constitution would authorize the National Government to bind individuals directly through national law, it could “employ the ordinary magistracy of each [State] in the execution of its laws.” Were he to stop here, he would not necessarily be speaking of anything beyond the possibility of cooperative arrangements by agreement. But he then addresses the combined effect of the proposed Supremacy Clause, and state officers’ oath requirement, and he states that “the Legislatures, Courts and Magistrates of the respective members will be incorporated into the operations of the national government, as far as its just and constitutional authority extends; and will be rendered auxiliary to the enforcement of its laws.” The natural reading of this language is not merely that the officers of the various branches of state governments may be employed in the performance of national functions; Hamilton says that the state governmental machinery “will be incorporated” into the Nation’s operation, and because the “auxiliary” status of the state officials will occur because they are “bound by the sanctity of an oath,” I take him to mean that their auxiliary functions will be the products of their obligations thus undertaken to support federal law, not of their own, or the States,’ unfettered choices.

Madison in No. 44 supports this reading in his commentary on the oath requirement. He asks why state magistrates should have to swear to support the National Constitution, when national officials will not be required to oblige themselves to support the state counterparts. His answer is that national officials “will have no agency in carrying the State Constitutions into effect. The members and officers of the State Governments, on the contrary, will have an essential agency in giving effect to the Federal Constitution.” . . .

In the light of all these passages, I cannot persuade myself that the statements from No. 27 speak of anything less than the authority of the National Government, when exercising an otherwise legitimate power (the commerce power, say), to require state “auxiliaries” to take appropriate action.

THE ELEVENTH AMENDMENT AND SOVEREIGN IMMUNITY

An important element in our understanding of federalism is the principle of sovereign immunity. The origins of this doctrine can be traced back several centuries into the early development of English common law. Sovereign immunity initially was based on the notion that all law flows from the king and that the courts are the king’s creation. Therefore, the king can do no wrong under the law (rex non potest peccare) and consequently he cannot be held accountable in the courts he created. As the law developed, sovereign immunity came to mean that a government cannot be sued in its own courts unless it gives consent. When the colonists settled in America, sovereign immunity was a generally accepted legal doctrine. Even before the formation of the federal government, state governments claimed sovereign immunity protection from lawsuits in their own courts; and when the federal government was created it was universally understood that it, too, enjoyed sovereign immunity protection. Importantly, sovereign immunity is not granted by the Constitution, but is considered to emanate from the very essence of statehood.

During the process of ratifying the Constitution, concern was expressed that federal judicial power would extend to suits brought against states by citizens of other states or even by foreign countries. In Federalist No. 81 Alexander Hamilton tried to put such fears to rest: “It is inherent in the nature of sovereignty not to be amenable to the suit of an individual without its consent.” In other words, sovereign immunity would protect a state from suits to which it did not consent.

Quite early on, however, it appeared that the United States would not adhere to this principle. As we noted in Chapter 2, in 1793 the Supreme Court accepted original jurisdiction in Chisholm v. Georgia, a suit brought against the state of Georgia by two citizens of South Carolina trying to collect a debt. This action was based on Article III’s authorization for federal courts to adjudicate controversies “between a State and Citizens of another State.” Congress and the states strongly opposed the Court’s action and reacted quickly by adopting the Eleventh Amendment, which gives states immunity from being sued, without their consent, in federal courts by “Citizens of another State, or by Citizens or Subjects of any Foreign State.”

Soon afterward, however, the Supreme Court gave the Eleventh Amendment a “stingy” reading. In his opinion in Cohens v. Virginia (1821), Chief Justice Marshall stated his belief that the Eleventh Amendment did not preclude citizens from bringing suit in federal court against their own state. That view held sway with the Court until the post–Civil War case of Hans v. Louisiana (1890). The Court, in Hans, was aware of Marshall’s “observation” in Cohens but deemed it dicta, “unnecessary to the decision,” and therefore not binding. It went on to conclude that the Eleventh Amendment does, in fact, prohibit suits brought in federal court by citizens against their own state unless the state grants consent. According to the Court, even though the text of the amendment does not mention suits by a state’s own citizens, it would be “anomalous”—especially given the furor over Chisholm—that a state may be sued in the federal courts by its own citizens in cases arising under the Constitution or federal laws but could not be sued under similar circumstances by the citizens of other states, or of a foreign state.

Although Hans seemed to expand the reach of state sovereign immunity, Congress, with the blessing of the Supreme Court, attempted to contract it. This trend continued into the 1980s. In case after case, the Court allowed Congress to make exceptions to the sovereign immunity established in the Eleventh Amendment. In Fitzpatrick v. Bitzer (1976) the Court held that because the Fourteenth Amendment expressly authorizes Congress to enforce the amendment “by appropriate legislation,” Congress could, when exercising that authority, abrogate the states’ immunity from suit under the Eleventh Amendment. Similarly, in Pennsylvania v. Union Gas Co. (1989) a divided Court ruled that the commerce clause (Article I, Section 8) permitted Congress to make an exception to the Eleventh Amendment’s grant of immunity, holding that the power to regulate commerce “among the several States” would be “incomplete without the authority to render States liable in damages.” These decisions, favoring federal power over state interests, were consistent with the philosophy of cooperative federalism that was accepted by the justices at that time.

But in 1996 the Court overruled Union Gas in Seminole Tribe of Florida v. Florida, a case involving the Indian Gaming Regulatory Act. This act requires that states negotiate in good faith with Native American tribes over gambling activities. If a tribe thinks a state is not doing so, the act permits the tribe to bring suit in a federal court to compel the state to negotiate in good faith. Writing for the Court, Chief Justice Rehnquist stated, “Even when the Constitution vests in Congress complete law-making authority over a particular area, the Eleventh Amendment prevents congressional authorization of suits by private parties against unconsenting States.” In other words, the Court asserted that the specific terms of Article I of the constitutional text do not permit Congress to abrogate the states’ immunity from suits commenced or prosecuted in the federal courts.

In Alden v. Maine the U.S. Supreme Court ruled that state workers such as Julio Martinez, left, Linda Maher, and Joe DeFilipp of Maine could not sue the state for federal labor law violations.

Sun Journal photo by Russ Dillingham

Would the Court push Seminole Tribe even farther, holding that Congress cannot subject nonconsenting states to private suits for damages even in their own courts? This question was at the heart of Alden v. Maine.

The Court’s Alden decision rejected Congress’s attempt to penetrate Maine’s sovereign immunity shield by authorizing aggrieved parties to sue the state in state court. That left the probation workers in an impossible situation. Although federal law provided state government employees certain rights, the Seminole Tribe decision barred them from taking their claims to federal court, and in Alden the justices ruled that sovereign immunity prohibited them from suing the state in state court. This, the dissenters pointed out, created a legal wrong with no legal remedy.

The Court’s ruling in Alden was a strong statement in favor of the protections provided state governments by sovereign immunity. The 5–4 vote in the case, however, indicated that the majority was somewhat fragile. In subsequent decisions the justices usually (but not always) remained reasonably loyal to the position articulated in Alden. In Kimel v. Florida Board of Regents (2000), for example, the Alden majority held that Congress could not make states liable for suits brought in federal court under the federal Age Discrimination in Employment Act. And in Board of Trustees of the University of Alabama v. Garrett (2001) the same five justices ruled that state employees cannot sue their employers in federal court for violations of the Americans with Disabilities Act of 1990.

Something of a break in this trend came from the Court in a 2003 statement on the Eleventh Amendment. In Nevada Department of Human Resources v. Hibbs the justices surprised observers when they held that states are not immune from suits brought in federal court by their employees under the federal Family and Medical Leave Act of 1993, which provides employees with up to twelve workweeks of unpaid leave annually in the event of the onset of a “serious health condition” in the employee’s spouse and for other reasons. One purpose of the act, according to Congress, was “to minimize the potential for employment discrimination on the basis of sex by ensuring generally that leave is available on a gender-neutral basis and to promote the goal of equal employment opportunity for women and men.” Congress believed the act was necessary because “due to the nature of the roles of men and women in our society, the primary responsibility for family caretaking often falls on women, and such responsibility affects the working lives of women more than it affects the working lives of men.”

Chief Justice Rehnquist explained why the Court rejected the state’s claim of immunity from suit in this case but not in Kimel and Garrett. Specifically, he noted that discrimination based on age and disability receives a lower level of scrutiny than do classifications based on gender, and this law—unlike those at issue in Kimel and Garrett—is aimed at minimizing gender discrimination. Rehnquist concluded, “The States’ record of unconstitutional participation in, and fostering of, gender-based discrimination in the administration of leave benefits is weighty enough to justify the enactment of [the law]” under Congress’s Fourteenth Amendment enforcement powers. This was not the case in Garrett and Kimel.

Given the care Rehnquist took to differentiate Hibbs from Kimel and other modern Eleventh Amendment rulings, it seemed likely that Hibbs represented an exception, not the start of a trend. This supposition received support in 2012 when the Court appeared to revert to its earlier positions. In Coleman v. Court of Appeals of Maryland the justices took up the issue of whether Congress properly abrogated a state’s Eleventh Amendment sovereign immunity when it passed a section of the Family and Medical Leave Act of 1993. By a 5–4 vote the justices held that a man who was allegedly fired by the Maryland Court of Appeals after he requested sick leave under the self-care provisions of the act could not sue the state for damages in federal court. The evidence, Justice Kennedy wrote, failed to show a relevant pattern of state constitutional violations sufficient to justify Congress’s authority to subject the state to federal lawsuit.

In the end, the centuries-old sovereign immunity doctrine provides federal and state governments considerable protection from citizen lawsuits. Unless it gives consent, the federal government cannot be sued in either federal or state court. State sovereign immunity, supplemented by the Eleventh Amendment, extends to state governments similar protections against private lawsuits. The sovereign immunity enjoyed by the states applies only to the state government itself and not to political subdivisions such as cities, counties, or school districts. Federal and state governments voluntarily have reduced the practical effects of sovereign immunity by passing legislation granting permission to be sued over a variety of litigation categories. The Federal Tort Claims Act, for example, permits citizens who have been wrongfully injured by persons acting on behalf of the United States government to sue for damages in federal court.

Alden v. Maine

527 U.S. 706 (1999)

http://laws.findlaw.com/us/527/706.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Kennedy, O’Connor, Rehnquist, Scalia, Thomas)

4 (Breyer, Ginsburg, Souter, Stevens)

OPINION OF THE COURT: Kennedy

DISSENTING OPINION: Souter

Facts:

The Eleventh Amendment bars states from being sued in federal court without their express consent. The Supreme Court, despite the ruling in Hans, allowed Congress to make some exceptions to this general rule. Congress took advantage of these decisions, occasionally abrogating the Eleventh Amendment immunity from suit. The Fair Labor Standards Act (FLSA), for example, enables state employees to bring federal suits against their states.

In 1992 sixty-five probation officers took advantage of this provision and sued their employer, the state of Maine, in federal district court for violating overtime pay provisions of the FLSA. While the suit was pending, the Supreme Court reversed course. In Seminole Tribe of Florida it held that Article I does not permit Congress to abrogate the states’ sovereign immunity from suits commenced or prosecuted in the federal courts. This decision, in turn, led the district court to dismiss the probation officers’ suit.

Not willing to give up the battle, the officers took their claim to a Maine state court. Even though the FLSA enables employees to bring suit against their states in state courts, the trial court dismissed the suit on the basis of sovereign immunity, and the Maine Supreme Judicial Court affirmed.

When the officers appealed to the Supreme Court, the justices were confronted with this question: Do the powers delegated to Congress under Article I include the power to subject nonconsenting states to private suits for damages in state courts? Because the text of the Eleventh Amendment, which itself was a response to the Supreme Court’s decision in Chisholm, speaks only of federal judicial power, the majority turned to history and tradition to derive an answer.

Arguments:

For the petitioners, John H. Alden et al.:

The supremacy clause makes clear that a state court cannot refuse to hear this case by relying on the sovereign immunity defense asserted by the state. It makes a federal law as much the law in the states as laws passed by the state legislature, and it charges state courts with a responsibility to enforce that law. This rule applies equally to actions against a state.

There is no federal constitutional principle of state sovereign immunity that overrides a state court’s duty under the supremacy clause to enforce federal law. The Eleventh Amendment, by its text, limits only “the Judicial power of the United States” and does not apply to suits brought in state court.

For the respondent, state of Maine:

A basic right of the states is that they cannot be sued in their own courts without their consent. This right existed when the Constitution was ratified; it was made an explicit part of the Constitution when the Eleventh Amendment was adopted. It is as essential a component of state sovereignty today as it was two hundred years ago.

Although the Eleventh Amendment specifically refers to the judicial power of the United States and so cannot resolve the federalism issues raised in this case, the Supreme Court has never interpreted the Eleventh Amendment by a mechanical, textual interpretation. Instead, the Court has indicated that the Eleventh Amendment memorializes a fundamental principle of federalism: state immunity from suit exists as an attribute of sovereignty independent of the Eleventh Amendment.

The Civil War amendments represent the only exception to this principle.

JUSTICE KENNEDY delivered the opinion of the Court.

In this case we must determine whether Congress has the power, under Article I, to subject nonconsenting States to private suits in their own courts. [T]he fact that the Eleventh Amendment by its terms limits only “[t]he Judicial power of the United States” does not resolve the question. . . .

In determining whether there is “compelling evidence” that this derogation of the States’ sovereignty is “inherent in the constitutional compact,” we [discuss] history, practice, . . . and the structure of the Constitution.

We look first to evidence of the original understanding of the Constitution. Petitioners contend that because the ratification debates and the events surrounding the adoption of the Eleventh Amendment focused on the States’ immunity from suit in federal courts, the historical record gives no instruction as to the founding generation’s intent to preserve the States’ immunity from suit in their own courts.

We believe, however, that the founders’ silence is best explained by the simple fact that no one, not even the Constitution’s most ardent opponents, suggested the document might strip the States of the immunity. In light of the overriding concern regarding the States’ war-time debts, together with the well known creativity, foresight, and vivid imagination of the Constitution’s opponents, the silence is most instructive. It suggests the sovereign’s right to assert immunity from suit in its own courts was a principle so well established that no one conceived it would be altered by the new Constitution. . . .

. . . The . . . furor raised by Chisholm, and the speed and unanimity with which the Amendment was adopted . . . underscore the jealous care with which the founding generation sought to preserve the sovereign immunity of the States. . . .

Our historical analysis is supported by early congressional practice. . . . Although early Congresses enacted various statutes authorizing federal suits in state court, we have discovered no instance in which they purported to authorize suits against nonconsenting States in these fora. . . .

Not only were statutes purporting to authorize private suits against nonconsenting States in state courts not enacted by early Congresses, statutes purporting to authorize such suits in any forum are all but absent from our historical experience. . . .

Our final consideration is whether a congressional power to subject nonconsenting States to private suits in their own courts is consistent with the structure of the Constitution. We look both to the essential principles of federalism and to the special role of the state courts in the constitutional design.

Although the Constitution grants broad powers to Congress, our federalism requires that Congress treat the States in a manner consistent with their status as residuary sovereigns and joint participants in the governance of the Nation. See, e.g., United States v. Lopez [1995]; Printz [v. United States, 1997]; New York [v. United States, 1992]. The founding generation thought it “neither becoming nor convenient that the several States of the Union, invested with that large residuum of sovereignty which had not been delegated to the United States, should be summoned as defendants to answer the complaints of private persons.” The principle of sovereign immunity preserved by constitutional design “thus accords the States the respect owed them as members of the federation.” Petitioners contend that immunity from suit in federal court suffices to preserve the dignity of the States. Private suits against nonconsenting States, however, present “the indignity of subjecting a State to the coercive process of judicial tribunals at the instance of private parties,” regardless of the forum. Not only must a State defend or default but also it must face the prospect of being thrust, by federal fiat and against its will, into the disfavored status of a debtor, subject to the power of private citizens to levy on its treasury or perhaps even government buildings or property which the State administers on the public’s behalf.

In some ways, of course, a congressional power to authorize private suits against nonconsenting States in their own courts would be even more offensive to state sovereignty than a power to authorize the suits in a federal forum. Although the immunity of one sovereign in the courts of another has often depended in part on comity or agreement, the immunity of a sovereign in its own courts has always been understood to be within the sole control of the sovereign itself. A power to press a State’s own courts into federal service to coerce the other branches of the State, furthermore, is the power first to turn the State against itself and ultimately to commandeer the entire political machinery of the State against its will and at the behest of individuals. Such plenary federal control of state governmental processes denigrates the separate sovereignty of the States.

It is unquestioned that the Federal Government retains its own immunity from suit not only in state tribunals but also in its own courts. In light of our constitutional system recognizing the essential sovereignty of the States, we are reluctant to conclude that the States are not entitled to a reciprocal privilege.

Underlying constitutional form are considerations of great substance. Private suits against nonconsenting States—especially suits for money damages—may threaten the financial integrity of the States. It is indisputable that, at the time of the founding, many of the States could have been forced into insolvency but for their immunity from private suits for money damages. Even today, an unlimited congressional power to authorize suits in state court to levy upon the treasuries of the States for compensatory damages, attorney’s fees, and even punitive damages could create staggering burdens, giving Congress a power and a leverage over the States that is not contemplated by our constitutional design. The potential national power would pose a severe and notorious danger to the States and their resources. . . .

Congress cannot abrogate the States’ sovereign immunity in federal court; were the rule to be different here, the National Government would wield greater power in the state courts than in its own judicial instrumentalities. . . .

The constitutional privilege of a State to assert its sovereign immunity in its own courts does not confer upon the State a concomitant right to disregard the Constitution or valid federal law. The States and their officers are bound by obligations imposed by the Constitution and by federal statutes that comport with the constitutional design. We are unwilling to assume the States will refuse to honor the Constitution or obey the binding laws of the United States. The good faith of the States thus provides an important assurance that “[t]his Constitution, and the Laws of the United States which shall be made in Pursuance thereof . . . shall be the supreme Law of the Land.” U.S. Const., Art. VI.

Sovereign immunity, moreover, does not bar all judicial review of state compliance with the Constitution and valid federal law. Rather, certain limits are implicit in the constitutional principle of state sovereign immunity.

The first of these limits is that sovereign immunity bars suits only in the absence of consent. Many States, on their own initiative, have enacted statutes consenting to a wide variety of suits. The rigors of sovereign immunity are thus “mitigated by a sense of justice which has continually expanded by consent the suability of the sovereign.” Nor, subject to constitutional limitations, does the Federal Government lack the authority or means to seek the States’ voluntary consent to private suits.

The States have consented, moreover, to some suits pursuant to the plan of the Convention or to subsequent constitutional amendments. In ratifying the Constitution, the States consented to suits brought by other States or by the Federal Government. A suit which is commenced and prosecuted against a State in the name of the United States by those who are entrusted with the constitutional duty to “take Care that the Laws be faithfully executed,” U.S. Const., Art. II, §3, differs in kind from the suit of an individual: While the Constitution contemplates suits among the members of the federal system as an alternative to extralegal measures, the fear of private suits against nonconsenting States was the central reason given by the founders who chose to preserve the States’ sovereign immunity. Suits brought by the United States itself require the exercise of political responsibility for each suit prosecuted against a State, a control which is absent from a broad delegation to private persons to sue nonconsenting States.

We have held also that in adopting the Fourteenth Amendment, the people required the States to surrender a portion of the sovereignty that had been preserved to them by the original Constitution, so that Congress may authorize private suits against nonconsenting States pursuant to its §5 enforcement power. By imposing explicit limits on the powers of the States and granting Congress the power to enforce them, the Amendment “fundamentally altered the balance of state and federal power struck by the Constitution.” When Congress enacts appropriate legislation to enforce this Amendment, federal interests are paramount, and Congress may assert an authority over the States which would be otherwise unauthorized by the Constitution. Fitzpatrick [v. Bitzer, 1976]. . . .

The second important limit to the principle of sovereign immunity is that it bars suits against States but not lesser entities. The immunity does not extend to suits prosecuted against a municipal corporation or other governmental entity which is not an arm of the State. The principle of sovereign immunity as reflected in our jurisprudence strikes the proper balance between the supremacy of federal law and the separate sovereignty of the States. Established rules provide ample means to correct ongoing violations of law and to vindicate the interests which animate the Supremacy Clause. That we have, during the first 210 years of our constitutional history, found it unnecessary to decide the question presented here suggests a federal power to subject nonconsenting States to private suits in their own courts is unnecessary to uphold the Constitution and valid federal statutes as the supreme law.

The sole remaining question is whether Maine has waived its immunity. The State of Maine “regards the immunity from suit as ‘one of the highest attributes inherent in the nature of sovereignty,’” and adheres to the general rule that “a specific authority conferred by an enactment of the legislature is requisite if the sovereign is to be taken as having shed the protective mantle of immunity.” Petitioners have not attempted to establish a waiver of immunity under this standard. Although petitioners contend the State has discriminated against federal rights by claiming sovereign immunity from this FLSA suit, there is no evidence that the State has manipulated its immunity in a systematic fashion to discriminate against federal causes of action. To the extent Maine has chosen to consent to certain classes of suits while maintaining its immunity from others, it has done no more than exercise a privilege of sovereignty concomitant to its constitutional immunity from suit. The State, we conclude, has not consented to suit. . . .

. . . Although the Constitution begins with the principle that sovereignty rests with the people, it does not follow that the National Government becomes the ultimate, preferred mechanism for expressing the people’s will. The States exist as a refutation of that concept. In choosing to ordain and establish the Constitution, the people insisted upon a federal structure for the very purpose of rejecting the idea that the will of the people in all instances is expressed by the central power, the one most remote from their control. The Framers of the Constitution did not share our dissenting colleagues’ belief that the Congress may circumvent the federal design by regulating the States directly when it pleases to do so, including by a proxy in which individual citizens are authorized to levy upon the state treasuries absent the States’ consent to jurisdiction. . . .

The judgment of the Supreme Judicial Court of Maine is

Affirmed.

JUSTICE SOUTER, with whom JUSTICE STEVENS, JUSTICE GINSBURG, and JUSTICE BREYER join, dissenting.

The National Constitution formally and finally repudiated the received political wisdom that a system of multiple sovereignties constituted the “great solecism of an imperium in imperio.” Once “the atom of sovereignty” had been split, the general scheme of delegated sovereignty as between the two component governments of the federal system was clear, and was succinctly stated by Chief Justice Marshall: “In America, the powers of sovereignty are divided between the government of the Union, and those of the States. They are each sovereign, with respect to the objects committed to it, and neither sovereign with respect to the objects committed to the other.” McCulloch v. Maryland (1819).

Hence the flaw in the Court’s appeal to federalism. The State of Maine is not sovereign with respect to the national objective of the FLSA. It is not the authority that promulgated the FLSA, on which the right of action in this case depends. That authority is the United States acting through the Congress, whose legislative power under Article I of the Constitution to extend FLSA coverage to state employees has already been decided, see Garcia v. San Antonio Metropolitan Transit Authority (1985), and is not contested here. . . .

. . . [T]here is much irony in the Court’s profession that it grounds its opinion on a deeply rooted historical tradition of sovereign immunity, when the Court abandons a principle nearly as inveterate, and much closer to the hearts of the Framers: that where there is a right, there must be a remedy. . . . The generation of the Framers thought the principle so crucial that several States put it into their constitutions. And when Chief Justice Marshall asked about Marbury, “If he has a right, and that right has been violated, do the laws of his country afford him a remedy?” Marbury v. Madison (1803), the question was rhetorical, and the answer clear:

“The very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury. One of the first duties of government is to afford that protection. In Great Britain the king himself is sued in the respectful form of a petition, and he never fails to comply with the judgment of his court.”

Yet today the Court has no qualms about saying frankly that the federal right to damages afforded by Congress under the FLSA cannot create a concomitant private remedy. The right was “made for the benefit of” petitioners; they have been “hindered by another of that benefit”; but despite what has long been understood as the “necessary consequence of law,” they have no action. It will not do for the Court to respond that a remedy was never available where the right in question was against the sovereign. A State is not the sovereign when a federal claim is pressed against it, and even the English sovereign opened itself to recovery and, unlike Maine, provided the remedy to complement the right. To the Americans of the founding generation it would have been clear (as it was to Chief Justice Marshall) that if the King would do right, the democratically chosen Government of the United States could do no less. The Chief Justice’s contemporaries might well have reacted to the Court’s decision today in the words spoken by Edmund Randolph when responding to the objection to jurisdiction in Chisholm: “[The framers] must have viewed human rights in their essence, not in their mere form.”

The Court has swung back and forth with regrettable disruption on the enforceability of the FLSA against the States, but if the present majority had a defensible position one could at least accept its decision with an expectation of stability ahead. As it is, any such expectation would be naive. The resemblance of today’s state sovereign immunity to the Lochner era’s industrial due process is striking. The Court began this century by imputing immutable constitutional status to a conception of economic self-reliance that was never true to industrial life and grew insistently fictional with the years, and the Court has chosen to close the century by conferring like status on a conception of state sovereign immunity that is true neither to history nor to the structure of the Constitution. I expect the Court’s late essay into immunity doctrine will prove the equal of its earlier experiment in laissez-faire, the one being as unrealistic as the other, as indefensible, and probably as fleeting.

NEW JUDICIAL FEDERALISM

Federalism issues are not confined to conflicts over the actions of legislators and executives. Federal–state relations questions frequently arise in the judicial branch as well. Often this is due to legal conflicts that implicate both state and federal laws. For example, if a magazine seller is charged by state authorities of selling obscene materials in violation of state law, the accused may offer a defense that his actions are protected by the federal Constitution’s First Amendment freedom of expression. As a consequence, various stages of the subsequent legal actions may occur in either federal or state court with the judges required to interpret or apply both state and federal laws. This gives rise to the potential for conflict between state and federal courts.

Such conflicts are limited by the principle of comity: the mutual respect that the two court systems owe to each. This principle requires federal judges to follow state interpretations of state law and to respect, but not necessarily defer to, state judges’ interpretations of federal statutes and the Constitution. As Laurence H. Tribe explains, the principles of federalism require that federal courts further “the twin policies of preserving the integrity of state law and respecting the institutional autonomy of state judicial systems.”17

Following that principle, the Court in Murdock v. City of Memphis (1875) said that it would not review state decisions unless the state court’s interpretation implicated issues of federal law. This traditional view is called the “adequate and independent state grounds test”: so long as a state court decision rests on adequate and independent state grounds, the Supreme Court will not resolve either the state or the federal issue in the case. Consequently, state courts are entitled to interpret their own statutes and constitutional provisions, and if their reasoning rests on adequate and independent state grounds, their decisions are not subject to review by federal courts.18

Until the 1970s the adequate and independent doctrine caused little concern among litigants and interest groups seeking expansive interpretations of constitutional rights. As we noted in chapter 1, in the 1950s and 1960s the U.S. Supreme Court, under the leadership of Earl Warren, was among the most liberal in modern American history. In decision after decision, it sought to protect the disadvantaged in society. During the heyday of that Court (1962–1968 terms), when the justices were ruling for disadvantaged societal interests in more than 75 percent of their cases, “the notion of a state court [being] more liberal than the Supreme Court was oxymoronic.”19

This situation changed dramatically when President Richard Nixon had the opportunity to replace some of the most liberal members of the Warren Court. His choice of Warren Burger for chief justice was particularly effective: Earl Warren supported the claims of criminal defendants and other societal “underdogs” in more than three-quarters of the Court’s cases, but his successor supported such claims only about 30 percent of the time.

It is not surprising that commentators perceived that the Burger Court had reduced protection of certain constitutional rights. Warren Court holdovers, particularly Justices Brennan and Marshall, shared this perception. They were disappointed with the Burger Court’s drift toward conservatism. To offset it, they argued that states may permissibly invoke their own constitutional guarantees and laws to extend the protection of liberties and rights beyond the level provided by the federal Constitution as the Burger Court was interpreting it.20 That Brennan and Marshall would offer this argument makes sense, given the existing state of doctrine governing the Court’s responsibility to review state court decisions interpreting state statutory and constitutional provisions—the adequate and independent state grounds test.

In Brennan and Marshall’s thinking, state court judges could use their constitutions and laws to reach liberal decisions—or, at least, decisions more liberal than those of the Burger Court—and, under the adequate and independent standard test, the Supreme Court would refrain from reviewing (overturning) them. By relying more on state courts than federal courts, litigants representing liberal civil liberties interests would also avoid having their cases heard by the lower federal courts, which were increasingly staffed by conservative Nixon appointees.

In order for Brennan and Marshall’s suggestions to take hold, litigants would have to allege a violation of state law and initiate their claims in state court; state judges would need to rely on state law to reach their conclusions. The result would be an enhanced role for state courts in determining the rights of their citizens. This elevation in the importance of state courts was referred to as the “new judicial federalism.”21

Just as Brennan and Marshall’s arguments were beginning to gain some traction in the legal community,22 their conservative colleagues stepped directly into the debate. As you read the excerpts from Michigan v. Long (1983), consider whether the Burger Court’s approach to the adequate and independent grounds test contributed to new judicial federalism, as some scholars argue, or compromised it, as others assert.

Writing for the Court in Long, Justice O’Connor—a former state court judge—offered a new approach for applying the adequate and independent state grounds standard to ambiguous state court decisions. In such cases the Supreme Court would now presume that the state decision rested on federal grounds.23 Should state judges desire to avoid this presumption, O’Connor wrote, they “need only make clear by a plain statement in [their] judgment that the federal cases are being used only for the purpose of guidance, and do not themselves compel the result the court has reached.” For if they indicate “clearly and expressly” that their decisions are “based on bona fide separate, adequate, and independent state grounds,” then the Court will “not undertake to review the decision.”

Naturally, the majority justified this new approach to the adequate and independent state grounds test as a reasonable way to resolve the “vexing issue” of ambiguous state decisions. Even Justice Stevens, in his dissent, did not take issue with the notion that a clear approach to this area of the law was needed. He simply disliked the one O’Connor fashioned, as did many other commentators, who asserted that the majority’s solution was ideologically grounded, designed to provide the conservative justices with a way to oppose the liberal state courts’ new course. The decision in Long shores up this point: by invoking this new approach—the presumption that a state court decision rested on federal grounds—to the independent and adequate state grounds standard, the Court was able to review and overturn a liberal (here, pro-defendant) state court decision.

Although this new test allowed the Supreme Court to uphold Long’s conviction, it also gave a large assist to new judicial federalism. O’Connor’s opinion essentially provided state judges specific instructions on how to avoid Supreme Court review. The Supreme Court would not accept for review a lower court decision that included a clear statement that the ruling was based on state law alone. If federal precedents were cited, the court would have to make clear that such decisions were used for guidance only and were not relied on for the court’s final conclusions.

Under the Court’s new approach, the Long outcome could have been much different. Long claimed that the search of his automobile violated both federal and state constitutions. The state supreme court could have ruled in Long’s favor by finding a violation of state search and seizure provisions alone. Doing so would have removed the need for the state court even to address the federal constitutional claim. An explicit statement to that effect would have satisfied the Supreme Court’s new independent and adequate grounds test and precluded federal court review of the decision.

Are state courts taking advantage of this opportunity? There are certainly examples that they have. Take, for instance, the Massachusetts Supreme Judicial Court’s decision in Goodridge v. Department of Public Health (2003). In that case fourteen individuals filed legal action against the state claiming that the Massachusetts prohibition against same-sex marriage violated their rights. The state trial court ruled against them, but on appeal the state supreme court reversed. The decision was based on the court’s conclusion that the Massachusetts marriage laws deprived the plaintiffs of their rights to due process of law and equal treatment under the law as guaranteed by the Massachusetts state constitution. By relying on the Massachusetts constitution alone, the court removed the possibility of the state appealing the decision to the U.S. Supreme Court where a very different outcome would have been possible. As a result, same-sex marriages became a legal reality in Massachusetts a dozen years before the U.S. Supreme Court reached the same conclusion in Obergefell v. Hodges (2015).

Michigan v. Long

463 U.S. 1032 (1983)

http://laws.findlaw.com/us/463/1032.html

Oral arguments are available at https://www.oyez.org.

Vote: 6 (Blackmun, Burger, O’Connor, Powell, Rehnquist, White)

3 (Brennan, Marshall, Stevens)

OPINION OF THE COURT: O’Connor

CONCURRING OPINION: Blackmun

DISSENTING OPINIONS: Brennan, Stevens

Facts:

Under the adequate and independent state grounds test, the Supreme Court refrains from reviewing state court interpretations of state constitutions and laws unless those decisions involve issues of federal law. This test is not as clear as it might seem because, occasionally, state court opinions rely on both federal and state law. So the question often emerges as to whether these kinds of “ambiguous” decisions do or do not rest on adequate and independent state grounds.

Addressing this question has proved to be a vexing task for the justices, and the results have been inconsistent. Prior to Michigan v. Long, the Court had used several methods of responding to appeals about which there was ambiguity as to whether the state court had decided the case on adequate and independent state grounds. These methods included dismissing the case, vacating the decision and sending it back to the state court for clarification of the grounds on which the decision rested, directing the litigant to obtain such clarification from the state, and making an independent determination whether the state court relied on federal or state laws/constitutions.

In Long the Supreme Court tried to clarify its approach to the adequate and independent state grounds test. The case involved the constitutionality of a police search of David Long’s car, which resulted in the seizure of a substantial amount of marijuana. A lower state court found Long guilty of possessing controlled substances, but the Michigan Supreme Court reversed his conviction. The state high court held that the officers’ search of the car violated both the Fourth Amendment of the U.S. Constitution and Article I, Section 11, of the Michigan Constitution. These two constitutional provisions share nearly identical language in describing search and seizure rights.

That the Michigan Supreme Court used the state constitution to reach a liberal decision—one that favored the criminally accused—was just the kind of action Brennan and Marshall had wanted, but the court’s opinion contained a glitch. Because the Michigan Supreme Court rested its decision on both the federal and state constitutions, the ruling fell into the “ambiguous” zone: Did it rest on sufficiently independent and adequate state grounds so that the U.S. Supreme Court should refuse to examine it? Or was the invocation of the U.S. Constitution grounds enough for Supreme Court review? In what follows, we excerpt those parts of the opinions that deal with these questions.

Arguments:

For the petitioner, state of Michigan:

The Michigan Supreme Court made a reference to Article I, Section 11, of the Michigan Constitution, but the decision was made on the basis of the Fourth Amendment of the U.S. Constitution. The court discussed only federal cases dealing with the Fourth Amendment.

If the Michigan Supreme Court had applied Michigan law, it would allow the search at issue here. Michigan case law on the reasonableness of searches bears a strong relationship to the Fourth Amendment.

For the respondent, David Long:

The Court lacks jurisdiction to hear this case. The decision of the Michigan Supreme Court rests on adequate state law ground. The state courts in Michigan have consistently imposed a higher standard under the state constitutional provisions relating to search and seizure than the U.S. Supreme Court has adopted under the Fourth Amendment.

At minimum the question of whether the state court rested its decision on state or federal law is uncertain enough that the Court should remand the case for clarification.

JUSTICE O’CONNOR delivered the opinion of the Court.

In Terry v. Ohio (1968), we upheld the validity of a protective search for weapons in the absence of probable cause to arrest because it is unreasonable to deny a police officer the right “to neutralize the threat of physical harm,” when he possesses an articulable suspicion that an individual is armed and dangerous. We did not, however, expressly address whether such a protective search for weapons could extend to an area beyond the person in the absence of probable cause to arrest. In the present case, respondent David Long was convicted for possession of marihuana found by police in the passenger compartment and trunk of the automobile that he was driving. The police searched the passenger compartment because they had reason to believe that the vehicle contained weapons potentially dangerous to the officers. We hold that the protective search of the passenger compartment was reasonable under the principles articulated in Terry and other decisions of this Court. We also examine Long’s argument that the decision below rests upon an adequate and independent state ground, and we decide in favor of our jurisdiction. . . .

. . . [W]e must consider Long’s argument that we are without jurisdiction to decide this case because the decision below rests on an adequate and independent state ground. The court below referred twice to the State Constitution in its opinion, but otherwise relied exclusively on federal law. Long argues that the Michigan courts have provided greater protection from searches and seizures under the State Constitution than is afforded under the Fourth Amendment, and the references to the State Constitution therefore establish an adequate and independent ground for the decision below.

It is, of course, “incumbent upon this Court . . . to ascertain for itself . . . whether the asserted non-federal ground independently and adequately supports the judgment.” Although we have announced a number of principles in order to help us determine whether various forms of references to state law constitute adequate and independent state grounds, we openly admit that we have thus far not developed a satisfying and consistent approach for resolving this vexing issue. . . . In some instances, we have taken the strict view that if the ground of decision was at all unclear, we would dismiss the case. In other instances, we have vacated, or continued a case in order to obtain clarification about the nature of a state court decision. In more recent cases, we have ourselves examined state law to determine whether state courts have used federal law to guide their application of state law or to provide the actual basis for the decision that was reached. . . .

This ad hoc method of dealing with cases that involve possible adequate and independent state grounds is antithetical to the doctrinal consistency that is required when sensitive issues of federal-state relations are involved. Moreover, none of the various methods of disposition that we have employed thus far recommends itself as the preferred method that we should apply to the exclusion of others, and we therefore determine that it is appropriate to reexamine our treatment of this jurisdictional issue in order to achieve the consistency that is necessary. . . .

Respect for the independence of state courts, as well as avoidance of rendering advisory opinions, have been the cornerstones of this Court’s refusal to decide cases where there is an adequate and independent state ground. It is precisely because of this respect for state courts, and this desire to avoid advisory opinions, that we do not wish to continue to decide issues of state law that go beyond the opinion that we review, or to require state courts to reconsider cases to clarify the grounds of their decisions. Accordingly, when, as in this case, a state court decision fairly appears to rest primarily on federal law, or to be interwoven with the federal law, and when the adequacy and independence of any possible state law ground is not clear from the face of the opinion, we will accept as the most reasonable explanation that the state court decided the case the way it did because it believed that federal law required it to do so. If a state court chooses merely to rely on federal precedents as it would on the precedents of all other jurisdictions, then it need only make clear by a plain statement in its judgment or opinion that the federal cases are being used only for the purpose of guidance, and do not themselves compel the result that the court has reached. In this way, both justice and judicial administration will be greatly improved. If the state court decision indicates clearly and expressly that it is alternatively based on bona fide separate, adequate, and independent grounds, we, of course, will not undertake to review the decision.

This approach obviates in most instances the need to examine state law in order to decide the nature of the state court decision, and will at the same time avoid the danger of our rendering advisory opinions. It also avoids the unsatisfactory and intrusive practice of requiring state courts to clarify their decisions to the satisfaction of this Court. We believe that such an approach will provide state judges with a clearer opportunity to develop state jurisprudence unimpeded by federal interference, and yet will preserve the integrity of federal law. . . .

Our review of the decision below under this framework leaves us unconvinced that it rests upon an independent state ground. Apart from its two citations to the State Constitution, the court below relied exclusively on its understanding of Terry and other federal cases. Not a single state case was cited to support the state court’s holding that the search of the passenger compartment was unconstitutional. Indeed, the court declared that the search in this case was unconstitutional because “[the] Court of Appeals erroneously applied the principles of Terry v. Ohio . . . to the search of the interior of the vehicle in this case.” The references to the State Constitution in no way indicate that the decision below rested on grounds in any way independent from the state court’s interpretation of federal law. Even if we accept that the Michigan Constitution has been interpreted to provide independent protection for certain rights also secured under the Fourth Amendment, it fairly appears in this case that the Michigan Supreme Court rested its decision primarily on federal law.

Rather than dismissing the case, or requiring that the state court reconsider its decision on our behalf solely because of a mere possibility that an adequate and independent ground supports the judgment, we find that we have jurisdiction in the absence of a plain statement that the decision below rested on an adequate and independent state ground. It appears to us that the state court “felt compelled by what it understood to be federal constitutional considerations to construe . . . its own law in the manner it did.” . . .

The judgment of the Michigan Supreme Court is reversed and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

JUSTICE STEVENS, dissenting.

The jurisprudential questions presented in this case are far more important than the question whether the Michigan police officer’s search of respondent’s car violated the Fourth Amendment. The case raises profoundly significant questions concerning the relationship between two sovereigns—the State of Michigan and the United States of America.

The Supreme Court of the State of Michigan expressly held “that the deputies’ search of the vehicle was proscribed by the Fourth Amendment to the United States Constitution and art 1, §11 of the Michigan Constitution” [emphasis added]. The state law ground is clearly adequate to support the judgment, but the question whether it is independent of the Michigan Supreme Court’s understanding of federal law is more difficult. Four possible ways of resolving that question present themselves: (1) asking the Michigan Supreme Court directly, (2) attempting to infer from all possible sources of state law what the Michigan Supreme Court meant, (3) presuming that adequate state grounds are independent unless it clearly appears otherwise, or (4) presuming that adequate state grounds are not independent unless it clearly appears otherwise. This Court has, on different occasions, employed each of the first three approaches; never until today has it even hinted at the fourth. In order to “achieve the consistency that is necessary,” the Court today undertakes a reexamination of all the possibilities. It rejects the first approach as inefficient and unduly burdensome for state courts, and rejects the second approach as an inappropriate expenditure of our resources. Although I find both of those decisions defensible in themselves, I cannot accept the Court’s decision to choose the fourth approach over the third—to presume that adequate state grounds are intended to be dependent on federal law unless the record plainly shows otherwise. I must therefore dissent.

If we reject the intermediate approaches, we are left with a choice between two presumptions: one in favor of our taking jurisdiction, and one against it. Historically, the latter presumption has always prevailed. . . . The Court today points out that in several cases we have weakened the traditional presumption by using the other two intermediate approaches identified above. Since those two approaches are now to be rejected, however, I would think that stare decisis would call for a return to historical principle. Instead, the Court seems to conclude that because some precedents are to be rejected, we must overrule them all.

Even if I agreed with the Court that we are free to consider as a fresh proposition whether we may take presumptive jurisdiction over the decisions of sovereign States, I could not agree that an expansive attitude makes good sense. It appears to be common ground that any rule we adopt should show “respect for state courts, and [a] desire to avoid advisory opinions.” And I am confident that all Members of this Court agree that there is a vital interest in the sound management of scarce federal judicial resources. All of those policies counsel against the exercise of federal jurisdiction. They are fortified by my belief that a policy of judicial restraint—one that allows other decisional bodies to have the last word in legal interpretation until it is truly necessary for this Court to intervene—enables this Court to make its most effective contribution to our federal system of government. . . .

The Court offers only one reason for asserting authority over cases such as the one presented today: “an important need for uniformity in federal law [that] goes unsatisfied when we fail to review an opinion that rests primarily upon federal grounds and where the independence of an alleged state ground is not apparent from the four corners of the opinion.” Of course, the supposed need to “review an opinion” clashes directly with our oft-repeated reminder that “our power is to correct wrong judgments, not to revise opinions.” The clash is not merely one of form: the “need for uniformity in federal law” is truly an ungovernable engine. That same need is no less present when it is perfectly clear that a state ground is both independent and adequate. In fact, it is equally present if a state prosecutor announces that he believes a certain policy of nonenforcement is commanded by federal law. Yet we have never claimed jurisdiction to correct such errors, no matter how egregious they may be, and no matter how much they may thwart the desires of the state electorate. We do not sit to expound our understanding of the Constitution to interested listeners in the legal community; we sit to resolve disputes. If it is not apparent that our views would affect the outcome of a particular case, we cannot presume to interfere.

Finally, I am thoroughly baffled by the Court’s suggestion that it must stretch its jurisdiction and reverse the judgment of the Michigan Supreme Court in order to show “[respect] for the independence of state courts.” . . .

I respectfully dissent.

NATIONAL PREEMPTION OF STATE LAWS

One of the more important recurring issues of federalism arises when both state and federal governments lay claim to regulation of the same activity. The supremacy clause seems to offer an easy answer to such conflicts: if Congress passes legislation with the intent of occupying a certain issue area and precluding state involvement in that area, then any state legislation that “stands as an obstacle” must fall. The federal statute preempts state involvement, even if Congress and the states exercise concurrent authority over the subject in question. The problem is that federal laws usually do not specify whether Congress intended to preclude state action. When disputes arise over this ambiguity, the judiciary is often called on to determine whether Congress desires to exercise exclusive or concurrent jurisdiction.

For certain subjects, the Supreme Court has found the task easy. There is little question, in the Court’s view, that when Congress acts in the area of foreign affairs, it does so exclusively even if its actions touch on areas over which states have some authority. The Court made this point quite clear in State of Missouri v. Holland. In this case, the federal government entered into a treaty with Great Britain, but a direct conflict between state and federal laws arose when Congress passed legislation to implement the provisions of that treaty.

Justice Holmes’s opinion was narrowly drawn; he focused on the matter at hand. Even so, his message was clear: when Congress acts in the area of foreign affairs, it does so exclusively even if its actions touch on areas over which states have some authority. Eight decades later the Rehnquist Court reiterated this basic message in a case dealing with trade with Burma. Unlike Missouri v. Holland, however, this case involves state and federal policies that shared the same basic objective: to apply economic sanctions on a nation that repressed the democratic rights of its people.

Crosby is an interesting case for several reasons, among them Scalia’s concurring opinion. Scalia demonstrates his interest in reaching decisions based on the clear language in laws without delving into the intent of their framers or legislative history.

Furthermore, as in Holland the justices held that states were preempted from taking action in the areas of foreign affairs. And, if this holding needed any additional reinforcement, the Court provided it in American Insurance Association v. Garamendi (2003). This case considered a California law that required any insurer doing business in the state to disclose information about all policies sold in Europe between 1920 and 1945 by the company itself or anyone “related” to it. The aim of the law was to ensure that Holocaust victims or their heirs could take direct action on their own behalf to receive payment on their insurance policies. The American Insurance Association, joined by the United States as an amicus curiae, challenged the law on the ground that it interfered with the federal government’s conduct of foreign relations and thus is preempted.

Writing for the majority, Justice David Souter agreed with this argument. He noted that the federal government’s position “expressed unmistakably in the executive agreements signed by the President with Germany and Austria, has been to encourage European insurers to work . . . to develop acceptable claim procedures” rather than to encourage lawsuits. “California,” Souter noted, “has taken a different tack of providing regulatory sanctions to compel disclosure and payment, supplemented by a new cause of action for Holocaust survivors if the other sanctions should fail.” He continued,

The situation created by the California legislation calls to mind the impact of the Massachusetts Burma law on the effective exercise of the President’s power, as recounted in the statutory preemption case, Crosby v. National Foreign Trade Council (2000). [The California law’s] economic compulsion to make public disclosure employs “a different, state system of economic pressure,” and in doing so undercuts the President’s diplomatic discretion and the choice he has made exercising it. . . . The law thus “compromise[s] the very capacity of the President to speak for the Nation with one voice in dealing with other governments” to resolve claims against European companies arising out of World War II.

In Holland, Crosby, and Garamendi, the Court delivered a clear message to the states. State laws that impinge on the federal government’s foreign policy powers are not likely to receive a favorable treatment by the Court. Most preemption disputes, however, involve domestic matters. In recent decades the Court’s docket almost every year has included at least one preemption dispute. Table 6-5 provides examples of some of the more important domestic preemption cases the Court has decided.

Arizona v. United States (2012) is one of the more controversial of the Court’s recent preemption decisions. The case focused on the nation’s immigration laws, a policy area with both foreign and domestic components. States in the nation’s southwestern region have experienced large numbers of immigrants from Latin American nations, with a significant portion entering the United States unlawfully. Most observers agree that federal policies designed to deal with the influx of unauthorized aliens have been largely ineffective, but political deadlocks have doomed reform attempts. Residents of the states along the border with Mexico have sharply criticized federal inaction and long complained that they have been forced to bear the brunt of the social and economic costs associated with the problem.

In 2010 the state of Arizona passed legislation granting state law enforcement officials new authority to enforce federal laws against those unlawfully residing within its borders. The federal government immediately reacted by filing a lawsuit claiming that the Arizona statute unconstitutionally encroached on federal authority. This constitutional dispute had enormous political, economic, and humanitarian implications.

In reading Justice Kennedy’s majority opinion in this case, pay special attention to his discussion of federalism and his review of standards used by the Court to settle preemption disputes.

On January 25, 2012, Arizona governor Janice Brewer and President Barack Obama have a heated immigration policy exchange on the tarmac of the Phoenix-Mesa Gateway Airport. Two years earlier, Arizona passed the Support Our Law Enforcement and Neighborhoods Act “to discourage and deter unlawful entry” into the United States. In 2012 the Supreme Court struck down major portions of the law on the ground that federal statutes preempted them.

AP Photo/Haraz N. Ghanbari, File

Having discussed in this chapter the general dimensions of federalism and the doctrinal cycles that have characterized the Supreme Court’s interpretation of it, we will turn our attention in the next two chapters to the authority of government to regulate commerce and to tax and spend. It is in these two policy realms that some of the most significant and controversial disputes over the division of federal and state powers have occurred.

State of Missouri v. Holland

252 U.S. 416 (1920)

http://laws.findlaw.com/us/252/416.html

Vote: 7 (Brandeis, Clark, Day, Holmes, McKenna, McReynolds, White)

2 (Pitney, Van Devanter)

OPINION OF THE COURT: Holmes

Facts:

In 1913 Congress enacted legislation to protect certain species of migratory birds in danger of extinction, but the act was struck down as an unconstitutional use of the power to regulate interstate commerce. Three years later, the United States and Great Britain entered into a treaty that addressed a similar concern. The treaty noted that many species of migratory birds “traversed certain parts of the United States and of Canada, that they were of great value as a source of food and in destroying insects injurious to vegetation, but were in danger of extermination through lack of adequate protection.” Britain and the United States agreed that their “law-making bodies” should take steps to prevent the extinction of these birds. To give effect to this agreement, Congress in 1918 enacted another law, the Migratory Bird Treaty Act, which prohibited anyone from “killing, capturing, or selling” any species of birds cited in the treaty.

Missouri challenged the act, bringing suit against a U.S. game warden, Ray P. Holland, to prevent him from enforcing it. The state argued that the law infringed on states’ rights regardless of whether it was based in congressional commerce power or in treaty-making authority.

Arguments:

For the appellant, the state of Missouri:

Under the ancient law, feudal law, and the common law in England, the absolute control of wild game was a part of sovereignty. When the American colonies became “free and independent states,” the power to control the taking of wild game passed to the states.

The 1918 act is the same as the 1913 law that the lower courts struck down. Congress was merely using its treaty power as a vehicle to interfere with rights reserved to the states under the Tenth Amendment.

If Congress can use treaties to take over powers reserved to the state, the president and Senate could control the laws of a state relating to health and internal trade; prescribe law regarding elections; force the introduction and sale of alcohol and drugs, however injurious to the health and well-being of a state; cede to a foreign power a state; and destroy the securities of liberty and property as effectually as the most tyrannical government ever formed.

For the appellee, Ray P. Holland, U.S. game warden:

Aside from the treaty, a migratory bird law falls under the government’s power to regulate commerce between the states.

The Constitution expressly gives Congress the power to enact laws as may be necessary to give effect to treaties.

The power of Congress to legislate to make treaties effective is not limited to the subjects over which it has power in purely domestic affairs. The situations are different. In the domestic sphere, Americans are citizens with dual sovereignties, each supreme within its own sphere. But in foreign relations, Americans are part of one government, which is invested with the powers that belong to independent nations.

MR. JUSTICE HOLMES delivered the opinion of the Court.

[T]he question raised is the general one whether the treaty and statute are void as an interference with the rights reserved to the states.

To answer this question it is not enough to refer to the 10th Amendment, reserving the powers not delegated to the United States, because by article 2, §2, the power to make treaties is delegated expressly, and by article 6, treaties made under the authority of the United States, along with the Constitution and laws of the United States, made in pursuance thereof, are declared the supreme law of the land. If the treaty is valid, there can be no dispute about the validity of the statute under article 1, §8, as a necessary and proper means to execute the powers of the government. The language of the Constitution as to the supremacy of treaties being general, the question before us is narrowed to an inquiry into the ground upon which the present supposed exception is placed.

It is said that a treaty cannot be valid if it infringes the Constitution; that there are limits, therefore, to the treaty-making power; and that one such limit is that what an act of Congress could not do unaided, in derogation of the powers reserved to the states, a treaty cannot do. An earlier act of Congress that attempted by itself, and not in pursuance of a treaty, to regulate the killing of migratory birds within the states, had been held bad in the district court. United States v. Shauver; United States v. McCullagh. Those decisions were supported by arguments that migratory birds were owned by the states in their sovereign capacity, for the benefit of their people, and that . . . this control was one that Congress had no power to displace. The same argument is supposed to apply now with equal force.

Whether the two cases cited were decided rightly or not, they cannot be accepted as a test of the treaty power. Acts of Congress are the supreme law of the land only when made in pursuance of the Constitution, while treaties are declared to be so when made under the authority of the United States. It is open to question whether the authority of the United States means more than the formal acts prescribed to make the convention. We do not mean to imply that there are no qualifications to the treaty-making power; but they must be ascertained in a different way. It is obvious that there may be matters of the sharpest exigency for the national well-being that an act of Congress could not deal with, but that a treaty followed by such an act could, and it is not lightly to be assumed that, in matters requiring national action, “a power which must belong to and somewhere reside in every civilized government” is not to be found. Andrews v. Andrews (1903). What was said in that case with regard to the powers of the states applies with equal force to the powers of the nation in cases where the states individually are incompetent to act. We are not yet discussing the particular case before us, but only are considering the validity of the test proposed. With regard to that, we may add that when we are dealing with words that also are a constituent act, like the Constitution of the United States, we must realize that they have called into life a being the development of which could not have been foreseen completely by the most gifted of its begetters. It was enough for them to realize or to hope that they had created an organism; it has taken a century and has cost their successors much sweat and blood to prove that they created a nation. The case before us must be considered in the light of our whole experience, and not merely in that of what was said a hundred years ago. The treaty in question does not contravene any prohibitory words to be found in the Constitution. The only question is whether it is forbidden by some invisible radiation from the general terms of the 10th Amendment. We must consider what this country has become in deciding what that amendment has reserved.

The state, as we have intimated, founds its claim of exclusive authority upon an assertion of title to migratory birds,—an assertion that is embodied in statute. No doubt it is true that, as between a state and its inhabitants, the state may regulate the killing and sale of such birds, but it does not follow that its authority is exclusive of paramount powers. To put the claim of the state upon title is to lean upon a slender reed. Wild birds are not in the possession of anyone; and possession is the beginning of ownership. The whole foundation of the state’s rights is the presence within their jurisdiction of birds that yesterday had not arrived, tomorrow may be in another state, and in a week a thousand miles away. If we are to be accurate, we cannot put the case of the state upon higher ground than that the treaty deals with creatures that for the moment are within the state borders, that it must be carried out by officers of the United States within the same territory, and that, but for the treaty, the state would be free to regulate this subject itself.

As most of the laws of the United States are carried out within the states, and as many of them deal with matters which, in the silence of such laws, the state might regulate, such general grounds are not enough to support Missouri’s claim. Valid treaties, of course, “are as binding within the territorial limits of the states as they are effective throughout the dominion of the United States.” No doubt the great body of private relations usually falls within the control of the state, but a treaty may override its power. . . .

Here a national interest of very nearly the first magnitude is involved. It can be protected only by national action in concert with that of another power. The subject-matter is only transitorily within the state, and has no permanent habitat therein. But for the treaty and the statute, there soon might be no birds for any powers to deal with. We see nothing in the Constitution that compels the government to sit by while a food supply is cut off and the protectors of our forests and of our crops are destroyed. It is not sufficient to rely upon the states. The reliance is vain, and were it otherwise, the question is whether the United States is forbidden to act. We are of opinion that the treaty and statute must be upheld.

Decree affirmed.

Crosby v. National Foreign Trade Council

530 U.S. 363 (2000)

http://laws.findlaw.com/us/530/363.html

Oral arguments are available at https://www.oyez.org.

Vote: 9 (Breyer, Ginsburg, Kennedy, O’Connor, Rehnquist, Scalia, Souter, Stevens, Thomas)

0

OPINION OF THE COURT: Souter

OPINION CONCURRING IN JUDGMENT: Scalia

Facts:

In June 1996 Massachusetts passed a law barring state entities from buying goods or services from companies doing business with Burma.24 The law defines “doing business with Burma” to cover any person (including a business)

Having a principal place of business in Burma;

Providing financial services to the government of Burma;

Promoting the importation or sale from Burma of gems, timber, oil, gas, or other related products, commerce in which is largely controlled by the government of Burma; or

Providing any goods or services to the government of Burma.

In September, three months after the Massachusetts law was enacted, Congress passed a statute imposing a set of mandatory and conditional sanctions on Burma. The federal act has five basic parts, three of which are substantive and two procedural. First, it imposes three sanctions directly on Burma. It bans all aid to the Burmese government except for humanitarian assistance, counternarcotics efforts, and promotion of human rights and democracy. These restrictions are to remain in effect “until such time as the President determines and certifies to Congress that Burma has made measurable and substantial progress in improving human rights practices and implementing democratic government.” Second, the federal act authorizes the president to impose further sanctions subject to certain conditions. He may prohibit “United States persons” from “new investment” in Burma, and shall do so if he determines and certifies to Congress that the Burmese government has physically harmed, rearrested, or exiled Daw Aung San Suu Kyi (the Burmese opposition leader who was awarded the Nobel Peace Prize in 1991) or has committed “large-scale repression of or violence against the Democratic opposition.” Third, the statute directs the president to work to develop “a comprehensive, multilateral strategy to bring democracy to and improve human rights practices and the quality of life in Burma.”

In the procedural provisions of the federal statute, the fourth section requires the president to report periodically to certain congressional committee chairs on the progress toward democratization and better living conditions in Burma as well as on the development of the required strategy. The fifth part of the federal act authorizes the president “to waive, temporarily or permanently, any sanction [under the federal act] . . . if he determines and certifies to Congress that the application of such sanction would be contrary to the national security interests of the United States.”

Three Burmese monks stand in front of the U.S. Supreme Court on March 22, 2000, to demonstrate their support for Massachusetts’s “selective purchasing” law. The law, which condemns Burma’s human rights record and all but prohibits state government purchases from companies operating there, was overturned by the Court in 2000.

Tim Sloan/AFP/Getty Images

On May 20, 1997, President Clinton issued Executive Order 13047, in which he certified that the government of Burma had “committed large-scale repression of the democratic opposition in Burma” and found that the Burmese government’s actions and policies constituted “an unusual and extraordinary threat to the national security and foreign policy of the United States,” a threat characterized as a national emergency. The president then prohibited new investment in Burma “by United States persons,” any approval or facilitation by a United States person of such new investment by foreign persons, and any transaction meant to evade or avoid the ban. Subsequently, Congress imposed mandatory and conditional sanctions on Burma.

Because several members of the National Foreign Trade Council, a nonprofit corporation representing companies engaged in foreign commerce, were affected by the state act, the council brought a federal suit against Massachusetts. The district court held that the state law “unconstitutionally impinged on the federal government’s exclusive authority to regulate foreign affairs,” and the First Circuit Court of Appeals affirmed. When the Supreme Court heard this case on appeal, the United States government participated as amicus curiae urging the justices to strike down the Massachusetts law.

Arguments:

For the petitioner, Stephen Crosby, Massachusetts secretary of administration and finance:

For more than two hundred years, Massachusetts and other states have used boycotts to support the “natural, essential, and unalienable rights” of people around the world. The Massachusetts law is similar to the many divestment and selective purchasing laws enacted by state and local governments in the 1980s concerning South Africa.

Nothing in the U.S. Constitution denies states the right to apply a moral standard to their spending decisions or requires states to trade with dictators.

The federal law does not preempt; rather, it implicitly permits state selective purchasing laws regarding Burma. The Court should presume that the state law is valid given the historical importance of the ability of states to make their own spending decisions. Simply because a federal law in the foreign affairs realm is at issue does not change the presumption.

For the respondent, National Foreign Trade Council:

For more than two hundred years, the federal government has employed sanctions against merchants as part of its foreign policy strategy. These sanctions express disapproval of other nations and their policies and use economic leverage as a means of bringing about change in their conduct.

The framers wanted to ensure that the Constitution reserves such foreign policy decisions exclusively to the federal government, and this Court has agreed. To allow the state action here would be to undermine national foreign policy and put Americans at risk.

The law violates the commerce clause by discriminating against companies engaged in commerce with Burma. There is no question that the state law conflicts with the federal law imposing sanctions on Burma. The state disrupts the careful balance created by federal policy.

JUSTICE SOUTER delivered the opinion of the Court.

The issue is whether the Burma law of the Commonwealth of Massachusetts, restricting the authority of its agencies to purchase goods or services from companies doing business with Burma, is invalid under the Supremacy Clause of the National Constitution owing to its threat of frustrating federal statutory objectives. We hold that it is. . . .

A fundamental principle of the Constitution is that Congress has the power to preempt state law. Art. VI, cl. 2. Even without an express provision for preemption, we have found that state law must yield to a congressional Act in at least two circumstances. When Congress intends federal law to “occupy the field,” state law in that area is preempted. And even if Congress has not occupied the field, state law is naturally preempted to the extent of any conflict with a federal statute. We will find preemption where it is impossible for a private party to comply with both state and federal law and where “under the circumstances of [a] particular case, [the challenged state law] stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” What is a sufficient obstacle is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects:

“For when the question is whether a Federal act overrides a state law, the entire scheme of the statute must of course be considered and that which needs must be implied is of no less force than that which is expressed. If the purpose of the act cannot otherwise be accomplished—if its operation within its chosen field else must be frustrated and its provisions be refused their natural effect—the state law must yield to the regulation of Congress within the sphere of its delegated power.” [Savage v. Jones, 1912]

Applying this standard, we see the state Burma law as an obstacle to the accomplishment of Congress’s full objectives under the federal Act. We find that the state law undermines the intended purpose and “natural effect” of at least three provisions of the federal Act, that is, its delegation of effective discretion to the President to control economic sanctions against Burma, its limitation of sanctions solely to United States persons and new investment, and its directive to the President to proceed diplomatically in developing a comprehensive, multilateral strategy towards Burma.

First, Congress clearly intended the federal act to provide the President with flexible and effective authority over economic sanctions against Burma. Although Congress immediately put in place a set of initial sanctions, it authorized the President to terminate any and all of those measures upon determining and certifying that there had been progress in human rights and democracy in Burma. It invested the President with the further power to ban new investment by United States persons, dependent only on specific Presidential findings of repression in Burma. And, most significantly, Congress empowered the President “to waive, temporarily or permanently, any sanction [under the federal act] . . . if he determines and certifies to Congress that the application of such sanction would be contrary to the national security interests of the United States.”

This express investiture of the President with statutory authority to act for the United States in imposing sanctions with respect to the government of Burma, augmented by the flexibility* to respond to change by suspending sanctions in the interest of national security, recalls Justice Jackson’s observation in Youngstown Sheet & Tube Co. v. Sawyer (1952): “When the President acts pursuant to an express or implied authorization of Congress, his authority is at its maximum, for it includes all that he possesses in his own right plus all that Congress can delegate.” Within the sphere defined by Congress, then, the statute has placed the President in a position with as much discretion to exercise economic leverage against Burma, with an eye toward national security, as our law will admit. And it is just this plenitude of Executive authority that we think controls the issue of preemption here. The President has been given this authority not merely to make a political statement but to achieve a political result, and the fullness of his authority shows the importance in the congressional mind of reaching that result. It is simply implausible that Congress would have gone to such lengths to empower the President if it had been willing to compromise his effectiveness by deference to every provision of state statute or local ordinance that might, if enforced, blunt the consequences of discretionary Presidential action.

And that is just what the Massachusetts Burma law would do in imposing a different, state system of economic pressure against the Burmese political regime. . . . [T]he state statute penalizes some private action that the federal Act (as administered by the President) may allow, and pulls levers of influence that the federal Act does not reach. But the point here is that the state sanctions are immediate. This unyielding application undermines the President’s intended statutory authority by making it impossible for him to restrain fully the coercive power of the national economy when he may choose to take the discretionary action open to him, whether he believes that the national interest requires sanctions to be lifted, or believes that the promise of lifting sanctions would move the Burmese regime in the democratic direction. Quite simply, if the Massachusetts law is enforceable the President has less to offer and less economic and diplomatic leverage as a consequence. In Dames & Moore v. Regan (1981), we used the metaphor of the bargaining chip to describe the President’s control of funds valuable to a hostile country; here, the state Act reduces the value of the chips created by the federal statute. It thus “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”

Congress manifestly intended to limit economic pressure against the Burmese Government to a specific range. The federal Act confines its reach to United States persons, imposes limited immediate sanctions, places only a conditional ban on a carefully defined area of “new investment,” and pointedly exempts contracts to sell or purchase goods, services, or technology. These detailed provisions show that Congress’s calibrated Burma policy is a deliberate effort “to steer a middle path.”

The State has set a different course, and its statute conflicts with federal law at a number of points by penalizing individuals and conduct that Congress has explicitly exempted or excluded from sanctions. While the state Act differs from the federal in relying entirely on indirect economic leverage through third parties with Burmese connections, it otherwise stands in clear contrast to the congressional scheme in the scope of subject matter addressed. It restricts all contracts between the State and companies doing business in Burma. . . . It is specific in targeting contracts to provide financial services, and general goods and services, to the Government of Burma, and thus prohibits contracts between the State and United States persons for goods, services, or technology, even though those transactions are explicitly exempted from the ambit of new investment prohibition when the President exercises his discretionary authority to impose sanctions under the federal Act. . . .

. . . [T]he state Act is at odds with the President’s intended authority to speak for the United States among the world’s nations in developing a “comprehensive, multilateral strategy to bring democracy to and improve human rights practices and the quality of life in Burma.” Congress called for Presidential cooperation with . . . other countries in developing such a strategy, directed the President to encourage a dialogue between the government of Burma and the democratic opposition, and required him to report to the Congress on the progress of his diplomatic efforts. As with Congress’s explicit delegation to the President of power over economic sanctions, Congress’s express command to the President to take the initiative for the United States among the international community invested him with the maximum authority of the National Government, cf. Youngstown Sheet & Tube Co. in harmony with the President’s own constitutional powers, U.S. Const., Art. II, §2, cl. 2 (“[The President] shall have Power, by and with the Advice and Consent of the Senate, to make Treaties” and “shall appoint Ambassadors, other public Ministers and Consuls”); §3 (“[The President] shall receive Ambassadors and other public Ministers”). This clear mandate and invocation of exclusively national power belies any suggestion that Congress intended the President’s effective voice to be obscured by state or local action.

Again, the state Act undermines the President’s capacity, in this instance for effective diplomacy. It is not merely that the differences between the state and federal Acts in scope and type of sanctions threaten to complicate discussions; they compromise the very capacity of the President to speak for the Nation with one voice in dealing with other governments. We need not get into any general consideration of limits of state action affecting foreign affairs to realize that the President’s maximum power to persuade rests on his capacity to bargain for the benefits of access to the entire national economy without exception for enclaves fenced off willy-nilly by inconsistent political tactics. When such exceptions do qualify his capacity to present a coherent position on behalf of the national economy, he is weakened, of course, not only in dealing with the Burmese regime, but in working together with other nations in hopes of reaching common policy and “comprehensive” strategy. . . .

[The state] contends that the failure of Congress to preempt the state Act demonstrates implicit permission. The State points out that Congress has repeatedly declined to enact express preemption provisions aimed at state and local sanctions, and it calls our attention to the large number of such measures passed against South Africa in the 1980s, which various authorities cited have thought were not preempted. The State stresses that Congress was aware of the state Act in 1996, but did not preempt it explicitly when it adopted its own Burma statute. The State would have us conclude that Congress’s continuing failure to enact express preemption implies approval, particularly in light of occasional instances of express preemption of state sanctions in the past.

The argument is unconvincing on more than one level. A failure to provide for preemption expressly may reflect nothing more than the settled character of implied preemption doctrine that courts will dependably apply, and in any event, the existence of conflict cognizable under the Supremacy Clause does not depend on express congressional recognition that federal and state law may conflict. The State’s inference of congressional intent is unwarranted here, therefore, simply because the silence of Congress is ambiguous. Since we never ruled on whether state and local sanctions against South Africa in the 1980s were preempted or otherwise invalid, arguable parallels between the two sets of federal and state Acts do not tell us much about the validity of the latter.

Because the state Act’s provisions conflict with Congress’s specific delegation to the President of flexible discretion, with limitation of sanctions to a limited scope of actions and actors, and with direction to develop a comprehensive, multilateral strategy under the federal Act, it is preempted, and its application is unconstitutional, under the Supremacy Clause.

The judgment of the Court of Appeals for the First Circuit is affirmed.

It is so ordered.

JUSTICE SCALIA, with whom JUSTICE THOMAS joins, concurring in the judgment.

It is perfectly obvious on the face of this statute that Congress, with the concurrence of the President, intended to “provid[e] the President with flexibility in implementing its Burma sanctions policy.” I therefore see no point in devoting a footnote [footnote 9] to the interesting (albeit unsurprising) proposition that “[s]tatements by the sponsors of the federal Act” show that they shared this intent and that a statement in a letter from a State Department officer shows that flexibility had “the explicit support of the Executive.” . . .

Of course even if . . . the Court’s invocations of legislative history were not utterly irrelevant, I would still object to them, since neither the statements of individual Members of Congress (ordinarily addressed to a virtually empty floor), nor Executive statements and letters addressed to congressional committees, nor the nonenactment of other proposed legislation, is a reliable indication of what a majority of both Houses of Congress intended when they voted for the statute before us. The only reliable indication of that intent—the only thing we know for sure can be attributed to all of them—is the words of the bill that they voted to make law. In a way, using unreliable legislative history to confirm what the statute plainly says anyway (or what the record plainly shows) is less objectionable since, after all, it has absolutely no effect upon the outcome. But in a way, this utter lack of necessity makes it even worse. . . .

. . . [I]t tells future litigants that, even when a statute is clear on its face, and its effects clear upon the record, statements from the legislative history may help (and presumably harm) the case. If so, they must be researched and discussed by counsel—which makes appellate litigation considerably more time consuming, and hence considerably more expensive, than it need be. This to my mind outweighs the arguable good that may come of such persistent irrelevancy, at least when it is indulged in the margins: that it may encourage readers to ignore our footnotes.

For this reason, I join only the judgment of the Court.

Arizona v. United States

567 U.S. _____ (2012)

http://laws.findlaw.com/us/000/11–182.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Breyer, Ginsburg, Kennedy, Roberts, Sotomayor)

3 (Alito, Scalia, Thomas)

OPINION OF THE COURT: Kennedy

OPINIONS CONCURRING IN PART AND DISSENTING IN PART: Alito, Scalia, Thomas

NOT PARTICIPATING: Kagan

FACTS:

Faced with large numbers of unauthorized aliens within its borders and frustrated by the federal government’s inability to resolve the nation’s immigration issues, the Arizona legislature in 2010 passed S.B. 1070, the Support Our Law Enforcement and Neighborhoods Act. The stated purpose of the legislation was to “discourage and deter the unlawful entry and presence of aliens and economic activity by persons unlawfully present in the United States.” The law established a state policy of “attrition through enforcement.”

The law had four provisions of constitutional concern. First, Section 3 made failure to carry federally required alien registration documents a state crime. Second, Section 5(C) made it a state crime for unauthorized aliens to apply for work or to work as employees or independent contractors in Arizona. Third, Section 6 authorized police to make a warrantless arrest of any person if the officer had probable cause to believe that the person had committed a deportable offense. And fourth, Section 2(B) required state law enforcement officers to check the immigration status of any lawfully stopped person whom the officer reasonably suspected of being an unauthorized immigrant.

Before S.B. 1070 could take effect, the federal government filed suit against the state of Arizona and Governor Janice Brewer, claiming that federal immigration law preempted S.B. 1070 and that the law was therefore unconstitutional on its face. The federal district court ruled in favor of the United States and issued a preliminary injunction against enforcement of the law. The court of appeals affirmed, and the Supreme Court granted review.

ARGUMENTS:

For the petitioners, the state of Arizona and Arizona Governor Janice Brewer:

S.B. 1070 does not impose its own substantive immigration standards; it simply uses state resources to enforce existing federal rules.

Under our system of cooperative federalism, the laws of the United States can be enforced by either federal or state officers unless Congress specifically states otherwise. Congress has not done so.

Congress has established policies for cooperative actions between the federal government and the states on immigration matters. This indicates that Congress has not implied that federal law preempts the immigration field.

For the respondent, United States:

Under the Constitution, the national government has plenary authority to admit aliens to this country, to prescribe the terms under which they may remain, and, if necessary, to remove them. Because those decisions involve other countries’ citizens, they necessarily implicate “important and delicate” considerations of foreign policy.

Congress has set forth a single federal framework governing aliens’ obligations. The state cannot, in the name of enforcing a federal obligation, claim the right to punish aliens who the executive branch has decided not to prosecute based on important considerations consistent with the Immigration and Naturalization Act.

In enforcing immigration laws, the federal government welcomes the cooperation and assistance of state and local officers. Sections of S.B. 1070, however, make cooperation impossible by authorizing local officers to take actions that might not be consistent with the federal government’s priorities.

Justice Kennedy delivered the opinion of the Court.

The Government of the United States has broad, undoubted power over the subject of immigration and the status of aliens. This authority rests, in part, on the National Government’s constitutional power to “establish an uniform Rule of Naturalization,” and its inherent power as sovereign to control and conduct relations with foreign nations.

The federal power to determine immigration policy is well settled. Immigration policy can affect trade, investment, tourism, and diplomatic relations for the entire Nation, as well as the perceptions and expectations of aliens in this country who seek the full protection of its laws. Perceived mistreatment of aliens in the United States may lead to harmful reciprocal treatment of American citizens abroad.

It is fundamental that foreign countries concerned about the status, safety, and security of their nationals in the United States must be able to confer and communicate on this subject with one national sovereign, not the 50 separate States. This Court has reaffirmed that “[o]ne of the most important and delicate of all international relationships . . . has to do with the protection of the just rights of a country’s own nationals when those nationals are in another country.” Hines v. Davidowitz (1941).

Federal governance of immigration and alien status is extensive and complex. Congress has specified categories of aliens who may not be admitted to the United States. Unlawful entry and unlawful reentry into the country are federal offenses. Once here, aliens are required to register with the Federal Government and to carry proof of status on their person. Failure to do so is a federal misdemeanor. Federal law also authorizes States to deny noncitizens a range of public benefits, and it imposes sanctions on employers who hire unauthorized workers. . . .

Discretion in the enforcement of immigration law embraces immediate human concerns. Unauthorized workers trying to support their families, for example, likely pose less danger than alien smugglers or aliens who commit a serious crime. The equities of an individual case may turn on many factors, including whether the alien has children born in the United States, long ties to the community, or a record of distinguished military service. Some discretionary decisions involve policy choices that bear on this Nation’s international relations. . . . The dynamic nature of relations with other countries requires the Executive Branch to ensure that enforcement policies are consistent with this Nation’s foreign policy with respect to these and other realities. . . .

The pervasiveness of federal regulation does not diminish the importance of immigration policy to the States. Arizona bears many of the consequences of unlawful immigration. Hundreds of thousands of deportable aliens are apprehended in Arizona each year. Unauthorized aliens who remain in the State comprise, by one estimate, almost six percent of the population. And in the State’s most populous county, these aliens are reported to be responsible for a disproportionate share of serious crime. . . .

These concerns are the background for the formal legal analysis that follows. The issue is whether, under preemption principles, federal law permits Arizona to implement the state-law provisions in dispute.

Federalism, central to the constitutional design, adopts the principle that both the National and State Governments have elements of sovereignty the other is bound to respect. From the existence of two sovereigns follows the possibility that laws can be in conflict or at cross-purposes. The Supremacy Clause provides a clear rule that federal law “shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” Under this principle, Congress has the power to preempt state law. See Crosby v. National Foreign Trade Council (2000); Gibbons v. Ogden (1824). There is no doubt that Congress may withdraw specified powers from the States by enacting a statute containing an express preemption provision.

State law must also give way to federal law in at least two other circumstances. First, the States are precluded from regulating conduct in a field that Congress, acting within its proper authority, has determined must be regulated by its exclusive governance. The intent to displace state law altogether can be inferred from a framework of regulation “so pervasive . . . that Congress left no room for the States to supplement it” or where there is a “federal interest . . . so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.” Rice v. Santa Fe Elevator Corp. (1947).

Second, state laws are preempted when they conflict with federal law. This includes cases where “compliance with both federal and state regulations is a physical impossibility,” and those instances where the challenged state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” Hines. In preemption analysis, courts should assume that “the historic police powers of the States” are not superseded “unless that was the clear and manifest purpose of Congress.” Rice; see Wyeth v. Levine (2009).

The four challenged provisions of the state law each must be examined under these preemption principles.

Section 3

Section 3 of S. B. 1070 creates a new state misdemeanor. It forbids the “willful failure to complete or carry an alien registration document . . . in violation of 8 United States Code section 1304(e) or 1306(a).” In effect, §3 adds a state-law penalty for conduct proscribed by federal law. The United States contends that this state enforcement mechanism intrudes on the field of alien registration, a field in which Congress has left no room for States to regulate.

The Court discussed federal alien-registration requirements in Hines v. Davidowitz. In 1940, as international conflict spread, Congress added to federal immigration law a “complete system for alien registration.” The new federal law struck a careful balance. It punished an alien’s willful failure to register but did not require aliens to carry identification cards. There were also limits on the sharing of registration records and fingerprints. The Court found that Congress intended the federal plan for registration to be a “single integrated and all-embracing system.” Because this “complete scheme . . . for the registration of aliens” touched on foreign relations, it did not allow the States to “curtail or complement” federal law or to “enforce additional or auxiliary regulations.” As a consequence, the Court ruled that Pennsylvania could not enforce its own alien-registration program.

The present regime of federal regulation is not identical to the statutory framework considered in Hines, but it remains comprehensive. . . .

The framework enacted by Congress leads to the conclusion here, as it did in Hines, that the Federal Government has occupied the field of alien registration. The federal statutory directives provide a full set of standards governing alien registration, including the punishment for noncompliance. It was designed as a “harmonious whole.” Where Congress occupies an entire field, as it has in the field of alien registration, even complementary state regulation is impermissible. Field preemption reflects a congressional decision to foreclose any state regulation in the area, even if it is parallel to federal standards. See Silkwood v. Kerr-McGee Corp. (1984).

Federal law makes a single sovereign responsible for maintaining a comprehensive and unified system to keep track of aliens within the Nation’s borders. If §3 of the Arizona statute were valid, every State could give itself independent authority to prosecute federal registration violations, “diminish[ing] the [Federal Government]’s control over enforcement” and “detract[ing] from the ‘integrated scheme of regulation’ created by Congress.” Wisconsin Dept. of Industry v. Gould Inc. (1986). Even if a State may make violation of federal law a crime in some instances, it cannot do so in a field (like the field of alien registration) that has been occupied by federal law. . . .

These specific conflicts between state and federal law simply underscore the reason for field preemption. As it did in Hines, the Court now concludes that, with respect to the subject of alien registration, Congress intended to preclude States from “complement[ing] the federal law, or enforc[ing] additional or auxiliary regulations.” Section 3 is preempted by federal law.

Section 5(C)

Unlike §3, which replicates federal statutory requirements, §5(C) enacts a state criminal prohibition where no federal counterpart exists. The provision makes it a state misdemeanor for “an unauthorized alien to knowingly apply for work, solicit work in a public place or perform work as an employee or independent contractor” in Arizona. Violations can be punished by a $2,500 fine and incarceration for up to six months. The United States contends that the provision upsets the balance struck by the Immigration Reform and Control Act of 1986 (IRCA) and must be preempted as an obstacle to the federal plan of regulation and control. . . .

. . . Congress enacted IRCA as a comprehensive framework for “combating the employment of illegal aliens.” Hoffman Plastic Compounds, Inc. v. NLRB (2002). The law makes it illegal for employers to knowingly hire, recruit, refer, or continue to employ unauthorized workers. It also requires every employer to verify the employment authorization status of prospective employees. These requirements are enforced through criminal penalties and an escalating series of civil penalties tied to the number of times an employer has violated the provisions.

This comprehensive framework does not impose federal criminal sanctions on the employee side (i.e., penalties on aliens who seek or engage in unauthorized work). . . .

The legislative background of IRCA underscores the fact that Congress made a deliberate choice not to impose criminal penalties on aliens who seek, or engage in, unauthorized employment. . . . IRCA’s framework reflects a considered judgment that making criminals out of aliens engaged in unauthorized work—aliens who already face the possibility of employer exploitation because of their removable status—would be inconsistent with federal policy and objectives. . . .

The ordinary principles of preemption include the well-settled proposition that a state law is preempted where it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines. Under §5(C) of S. B. 1070, Arizona law would interfere with the careful balance struck by Congress with respect to unauthorized employment of aliens. Although §5(C) attempts to achieve one of the same goals as federal law—the deterrence of unlawful employment—it involves a conflict in the method of enforcement. The Court has recognized that a “[c]onflict in technique can be fully as disruptive to the system Congress enacted as conflict in overt policy.” Motor Coach Employees v. Lockridge (1971). The correct instruction to draw from the text, structure, and history of IRCA is that Congress decided it would be inappropriate to impose criminal penalties on aliens who seek or engage in unauthorized employment. It follows that a state law to the contrary is an obstacle to the regulatory system Congress chose. Section 5(C) is preempted by federal law.

Section 6

Section 6 of S. B. 1070 provides that a state officer, “without a warrant, may arrest a person if the officer has probable cause to believe . . . [the person] has committed any public offense that makes [him] removable from the United States.” The United States argues that arrests authorized by this statute would be an obstacle to the removal system Congress created.

As a general rule, it is not a crime for a removable alien to remain present in the United States. See INS v. Lopez-Mendoza (1984). If the police stop someone based on nothing more than possible removability, the usual predicate for an arrest is absent. When an alien is suspected of being removable, a federal official issues an administrative document called a Notice to Appear. The form does not authorize an arrest. Instead, it gives the alien information about the proceedings, including the time and date of the removal hearing. If an alien fails to appear, an in absentia order may direct removal.

The federal statutory structure instructs when it is appropriate to arrest an alien during the removal process. For example, the Attorney General can exercise discretion to issue a warrant for an alien’s arrest and detention “pending a decision on whether the alien is to be removed from the United States.” And if an alien is ordered removed after a hearing, the Attorney General will issue a warrant. . . . [W]arrants are executed by federal officers who have received training in the enforcement of immigration law. . . .

Section 6 attempts to provide state officers even greater authority to arrest aliens on the basis of possible removability than Congress has given to trained federal immigration officers. Under state law, officers who believe an alien is removable by reason of some “public offense” would have the power to conduct an arrest on that basis regardless of whether a federal warrant has issued or the alien is likely to escape. This state authority could be exercised without any input from the Federal Government about whether an arrest is warranted in a particular case. This would allow the State to achieve its own immigration policy. The result could be unnecessary harassment of some aliens (for instance, a veteran, college student, or someone assisting with a criminal investigation) whom federal officials determine should not be removed.

This is not the system Congress created. . . .

By authorizing state officers to decide whether an alien should be detained for being removable, §6 violates the principle that the removal process is entrusted to the discretion of the Federal Government. A decision on removability requires a determination whether it is appropriate to allow a foreign national to continue living in the United States. Decisions of this nature touch on foreign relations and must be made with one voice. . . .

Congress has put in place a system in which state officers may not make warrantless arrests of aliens based on possible removability except in specific, limited circumstances. By nonetheless authorizing state and local officers to engage in these enforcement activities as a general matter, §6 creates an obstacle to the full purposes and objectives of Congress. Section 6 is preempted by federal law.

Section 2(B)

Section 2(B) of S. B. 1070 requires state officers to make a “reasonable attempt . . . to determine the immigration status” of any person they stop, detain, or arrest on some other legitimate basis if “reasonable suspicion exists that the person is an alien and is unlawfully present in the United States.” The law also provides that “[a]ny person who is arrested shall have the person’s immigration status determined before the person is released.” . . .

Three limits are built into the state provision. First, a detainee is presumed not to be an alien unlawfully present in the United States if he or she provides a valid Arizona driver’s license or similar identification. Second, officers “may not consider race, color or national origin . . . except to the extent permitted by the United States [and] Arizona Constitution[s].” Third, the provisions must be “implemented in a manner consistent with federal law regulating immigration, protecting the civil rights of all persons and respecting the privileges and immunities of United States citizens.”

The United States and its amici contend that, even with these limits, the State’s verification requirements pose an obstacle to the framework Congress put in place. The first concern is the mandatory nature of the status checks. The second is the possibility of prolonged detention while the checks are being performed. . . .

The nature and timing of this case counsel caution in evaluating the validity of §2(B). The Federal Government has brought suit against a sovereign State to challenge the provision even before the law has gone into effect. There is a basic uncertainty about what the law means and how it will be enforced. At this stage, without the benefit of a definitive interpretation from the state courts, it would be inappropriate to assume §2(B) will be construed in a way that creates a conflict with federal law. As a result, the United States cannot prevail in its current challenge. This opinion does not foreclose other preemption and constitutional challenges to the law as interpreted and applied after it goes into effect. . . .

The National Government has significant power to regulate immigration. With power comes responsibility, and the sound exercise of national power over immigration depends on the Nation’s meeting its responsibility to base its laws on a political will informed by searching, thoughtful, rational civic discourse. Arizona may have understandable frustrations with the problems caused by illegal immigration while that process continues, but the State may not pursue policies that undermine federal law.

The United States has established that §§3, 5(C), and 6 of S. B. 1070 are preempted. It was improper, however, to enjoin §2(B) before the state courts had an opportunity to construe it and without some showing that enforcement of the provision in fact conflicts with federal immigration law and its objectives.

The judgment of the Court of Appeals for the Ninth Circuit is affirmed in part and reversed in part. The case is remanded for further proceedings consistent with this opinion.

It is so ordered.

JUSTICE SCALIA, concurring in part and dissenting in part.

The United States is an indivisible “Union of sovereign States.” Today’s opinion, approving virtually all of the Ninth Circuit’s injunction against enforcement of the four challenged provisions of Arizona’s law, deprives States of what most would consider the defining characteristic of sovereignty: the power to exclude from the sovereign’s territory people who have no right to be there. Neither the Constitution itself nor even any law passed by Congress supports this result. . . .

As is often the case, discussion of the dry legalities that are the proper object of our attention suppresses the very human realities that gave rise to the suit. Arizona bears the brunt of the country’s illegal immigration problem. Its citizens feel themselves under siege by large numbers of illegal immigrants who invade their property, strain their social services, and even place their lives in jeopardy. Federal officials have been unable to remedy the problem, and indeed have recently shown that they are unwilling to do so. Thousands of Arizona’s estimated 400,000 illegal immigrants—including not just children but men and women under 30—are now assured immunity from enforcement, and will be able to compete openly with Arizona citizens for employment.

Arizona has moved to protect its sovereignty—not in contradiction of federal law, but in complete compliance with it. The laws under challenge here do not extend or revise federal immigration restrictions, but merely enforce those restrictions more effectively. If securing its territory in this fashion is not within the power of Arizona, we should cease referring to it as a sovereign State. I dissent.

JUSTICE THOMAS, concurring in part and dissenting in part.

I agree with Justice Scalia that federal immigration law does not pre-empt any of the challenged provisions of S. B. 1070. I reach that conclusion, however, for the simple reason that there is no conflict between the “ordinary meanin[g]” of the relevant federal laws and that of the four provisions of Arizona law at issue here. . . .

Despite the lack of any conflict between the ordinary meaning of the Arizona law and that of the federal laws at issue here, the Court holds that various provisions of the Arizona law are pre-empted because they “stan[d] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” I have explained [concurring opinion in Wyeth v. Levine (2009) and dissenting opinion in Haywood v. Drown (2009)] that the “purposes and objectives” theory of implied pre-emption is inconsistent with the Constitution because it invites courts to engage in freewheeling speculation about congressional purpose that roams well beyond statutory text. Under the Supremacy Clause, pre-emptive effect is to be given to congressionally enacted laws, not to judicially divined legislative purposes. Thus, even assuming the existence of some tension between Arizona’s law and the supposed “purposes and objectives” of Congress, I would not hold that any of the provisions of the Arizona law at issue here are pre-empted on that basis.

JUSTICE ALITO, concurring in part and dissenting in part.

I agree with the Court that §2(B) is not pre-empted. That provision does not authorize or require Arizona law enforcement officers to do anything they are not already allowed to do under existing federal law. The United States’ argument that §2(B) is pre-empted, not by any federal statute or regulation, but simply by the Executive’s current enforcement policy is an astounding assertion of federal executive power that the Court rightly rejects.

I also agree with the Court that §3 is pre-empted by virtue of our decision in Hines v. Davidowitz (1941). Our conclusion in that case that Congress had enacted an “all-embracing system” of alien registration and that States cannot “enforce additional or auxiliary regulations” forecloses Arizona’s attempt here to impose additional, state-law penalties for violations of the federal registration scheme.

While I agree with the Court on §2(B) and §3, I part ways on §5(C) and §6. The Court’s holding on §5(C) is inconsistent with De Canas v. Bica (1976), which held that employment regulation, even of aliens unlawfully present in the country, is an area of traditional state concern. Because state police powers are implicated here, our precedents require us to presume that federal law does not displace state law unless Congress’ intent to do so is clear and manifest. I do not believe Congress has spoken with the requisite clarity to justify invalidation of §5(C). Nor do I believe that §6 is invalid. Like §2(B), §6 adds virtually nothing to the authority that Arizona law enforcement officers already exercise. And whatever little authority they have gained is consistent with federal law.

ANNOTATED READINGS

General books on federalism, including the founding period and McCulloch v. Maryland, are Robert Allen, The Ordeal of the Constitution: The Antifederalists and the Ratification Struggle of 1787–1788 (Norman: University of Oklahoma Press, 1966); Raoul Berger, Federalism: The Founders’ Design (Norman: University of Oklahoma Press, 1987); Erwin Chemerinsky, Enhancing Government: Federalism for the 21st Century (Palo Alto, CA: Stanford University Press, 2008); Richard E. Ellis, Aggressive Nationalism: McCulloch v. Maryland and the Foundation of Federal Authority in the Young Republic (New York: Oxford University Press, 2007); Malcolm M. Feeley and Edward Rubin, Federalism: Political Identity and Tragic Compromise (Ann Arbor: University of Michigan Press, 2008); Gerald Gunther, ed., John Marshall’s Defense of McCulloch v. Maryland (Stanford, CA: Stanford University Press, 1969); Alison L. LaCroix, The Ideological Origins of American Federalism (Cambridge, MA: Harvard University Press, 2011); Laura Langer, Judicial Review in State Supreme Courts: A Comparative Study (Albany, NY: State University Press of America, 2002); Alpheus Mason, The States Rights Debate: Anti-Federalism and the Constitution (Englewood Cliffs, NJ: Prentice Hall, 1964); Robert F. Nagel, The Implosion of American Federalism (New York: Oxford University Press, 2001); John D. Nugent, Safeguarding Federalism: How States Protect Their Interests in National Policy Making (Norman: University of Oklahoma Press, 2009); John R. Schmidhauser, The Supreme Court as Final Arbiter in Federal-State Relations, 1789–1957 (Chapel Hill: University of North Carolina Press, 1958); and Eric N. Waltenburg and Bill Swinford, Litigating Federalism: The States before the U.S. Supreme Court (Westport, CT: Greenwood Press, 1999).

On the Tenth and Eleventh Amendments, new judicial federalism (and the role of state supreme courts), and preemption, see William W. Buzbee, ed., Preemption Choice: The Theory, Law, and Reality of Federalism’s Core Question (Cambridge: Cambridge University Press, 2009); Mark R. Killenbeck, ed., The Tenth Amendment and State Sovereignty (Lanham, MD: Rowman & Littlefield, 2002); and John V. Orth, The Judicial Power of the United States: The Eleventh Amendment in American History (New York: Oxford University Press, 1987).

1. J. W. Peltason, Corwin and Peltason’s Understanding the Constitution, 14th ed. (Fort Worth, TX: Harcourt Brace, 1997), 17. See also J. W. Peltason and Sue Davis, Corwin and Peltason’s Understanding the Constitution, 15th ed. (Fort Worth, TX: Harcourt Brace, 2000), chap. 1.

2. Dissent in New State Ice Co. v. Liebmann, 285 U.S. 262 at 311 (1932).

3. Martin v. Hunter’s Lessee, 14 U.S. (1 Wheat) 304 at 324–325 (1816).

4. Reprinted in Urofsky, Documents of American Constitutional and Legal History,, 159.

5. For more on the Tenth Amendment as an enclave, see Martin H. Redish, The Constitution as Political Structure (New York: Oxford University Press, 1995). Redish rejects this interpretation of the amendment.

1. See Redish, The Constitution as Political Structure. The idea here is that even if Congress possessed the power, it would be unable to exercise it if it impinged on the “enclave.”

2. The first part of the opinion deals with the question of whether Congress had the power to create the bank. See the excerpt in chapter 3. The second part deals with the constitutionality of the Maryland tax. Marshall clearly delineates this division.

3. Also recall from the excerpt in chapter 3 that Marshall declared, “Should Congress, in the execution of its powers, adopt measures which are prohibited by the Constitution, or should Congress, under the pretext of executing its powers, pass laws for the accomplishment of objects not intrusted to the Government, it would become the painful duty of this tribunal, should a case requiring such a decision come before it, to say that such an act was not the law of the land.”

4. For records of these essays, see Gerald Gunther, ed., John Marshall’s Defense of McCulloch v. Maryland (Stanford, CA: Stanford University Press, 1969).

5. R. Kent Newmyer, The Supreme Court under Marshall and Taney (New York: Crowell, 1968), 94.

6. Sources for the facts of this case are National Cyclopaedia of American Biography, vol. 2 (New York: James T. White, 1892), 306–307; Dictionary of American Biography, vol. 8 (New York: Charles Scribner’s Sons, 1935), 488–489; American National Biography, vol. 19 (New York: Oxford University Press, 1999), 487–489. Original documents relating to the case are available at “The Revised Dred Scott Case Collection,” Washington University http://digital.wustl.edu/dredscott/.

7. The name Sanford was misspelled Sandford in the official records.

8. Just prior to the Court’s decision in Scott v. Sandford, an embarrassed Calvin Chaffee discovered his wife’s previous ownership of the slave. When the justices ruled against Scott, Chaffee and Sanford transferred title to Scott to Taylor Blow, another son of his original owner. They did so to facilitate Scott’s emancipation. Under state law, a Missouri slave could be freed only if the owner was a Missouri citizen. Blow emancipated Dred Scott and his family on May 26, 1857, just two and a half months after the Supreme Court’s ruling. By this time, Scott had become a local celebrity in St. Louis. He spent the rest of his life as a porter at the Barum Hotel. He lived just over a year as a free man, dying of tuberculosis on September 17, 1858. Henry Blow paid for his funeral and burial in St. Louis.

9. U.S. Reports contains the following statement about arguments in this case: “The reporter regrets that want of room will not allow him to give the arguments of counsel; but he regrets it the less, because the subject is thoroughly examined in the opinion of the court, the opinions of the concurring judges, and the opinions of the judges who dissented from the judgment of the court.” Not only are the arguments not recorded in U.S. Reports (as they often were for nineteenth-century cases), but we also cannot locate briefs. Accordingly, we follow the reporter’s advice and develop arguments from the Court’s opinion.

10. Quoted by Charles Warren in The Supreme Court in United States History, vol. 2 (Boston: Little, Brown, 1926), 304.

11. Quoted by Bernard Schwartz in A History of the Supreme Court (New York: Oxford University Press, 1993), 154.

12. Congressional Globe (23 February 1865) 38th Cong., 2d sess., 1012. It was not until 1874 that busts of Samuel Chase and Roger Taney were approved “without debate.” See Warren, The Supreme Court in United States History, 393–394.

13. Farber and Sherry, A History of the American Constitution, 343.

14. Pritchett, Constitutional Law of the Federal System, 60–61.

15. Joseph F. Kobylka, “The Court, Justice Blackmun, and Federalism,” Creighton Law Review 19 (1985–1986): 21.

16. New York also argued that the act was inconsistent with the guarantee clause, which directs the United States to “guarantee to every State in this Union a Republican Form of Government.” Recall from Chapter 2 that, beginning in Luther v. Borden (1849), the Court seemed to suggest that claims under the guarantee clause present nonjusticiable political questions. New York’s attorneys marshaled scholarly arguments suggesting that under some circumstances the Court should address questions following from the guarantee clause. See, for example, Deborah Jones Merritt, “The Guarantee Clause and State Autonomy: Federalism for a Third Century,” Columbia Law Review 88 (1988): 1–78. Justice O’Connor declined to enter this debate.

17. Laurence H. Tribe, American Constitutional Law, 2nd ed. (New York: Foundation Press, 1988), 196–197.

18. As Abrahamson and Gutman explain, the Court had two justifications for promulgating this doctrine: a respect for the independence of state judiciaries and a desire to avoid “issuing . . . opinions that discuss and answer legal questions unnecessary to the resolution of the case,” otherwise known as advisory opinions. Shirley S. Abrahamson and Diane S. Gutman, “The New Judicial Federalism: State Constitutions and State Courts,” Judicature 71 (1987), 88–99. See Herb v. Pitcairn (1945), in which the Court discusses its rationale for the “adequate and independent state grounds test.”

19. Harold J. Spaeth, “Burger Court Review of State Court Civil Liberties Decisions,” Judicature 68 (1985): 285.

20. See, for example, Brennan’s dissent (joined by Marshall) in Michigan v. Mosley (1975).

21. Abrahamson and Gutman, “The New Judicial Federalism.”

22. In an influential Harvard Law Review article, Brennan presented an extended version of his Mosley dissent directly to the legal community. See William J. Brennan Jr., “State Constitutions and the Protection of Individual Rights,” Harvard Law Review 90 (1977): 489–504.

23. Abrahamson and Gutman, “The New Judicial Federalism,” 97.

24. The state law refers to Burma or Myanmar. The military regime that runs the Union of Burma changed the name of the country to Myanmar, but the democratically elected opposition continues to call the country Burma. According to the U.S. State Department, “Out of support for the democratically elected leaders, the U.S. Government likewise uses Burma.”

* Statements by the sponsors of the federal Act underscore the statute’s clarity in providing the President with flexibility in implementing its Burma sanctions policy. See statement of principal sponsor Sen. Cohen, emphasizing importance of providing “the administration flexibility in reacting to changes, both positive and negative, with respect to the behavior of the [Burmese regime]”; statement of cosponsor Sen. McCain, describing the federal act as “giv[ing] the President, who, whether Democrat or Republican, is charged with conducting our Nation’s foreign policy, some flexibility.” . . . These sponsors chose a pliant policy with the explicit support of the Executive. See, letter from Barbara Larkin, Assistant Secretary, Legislative Affairs, U.S. Department of State to Sen. Cohen: “We believe the current and conditional sanctions which your language proposes are consistent with Administration policy. As we have stated on several occasions in the past, we need to maintain our flexibility to respond to events in Burma and to consult with Congress on appropriate responses to ongoing and future development there.”

7 The Commerce Power

CONSIDER the following laws:

The Sherman Anti-Trust Act, designed to outlaw monopolies that attempt to dominate particular industries and eliminate all competition

The Fair Labor Standards Act, aimed at ensuring that employers pay their employees fair wages and that employers do not force employees to work unreasonable numbers of hours

The Civil Rights Act of 1964, which prohibits certain forms of discrimination on the basis of race, color, religion, or national origin

These three laws may cover different subjects, but they are alike in one important regard: Congress enacted them under its power “to regulate Commerce . . . among the several States.”

Given the importance of these and the many other laws Congress has passed under its commerce power, it is no wonder that these few words have resulted in many controversies and substantial litigation. Concern over the exercise of the power to regulate commerce was present at the Constitution’s birth and continues today. At each stage of the nation’s development from a former colony isolated from the world’s commercial centers to a country wielding vast economic power, legal disputes of great significance tested the powers of government to regulate the economy. During certain periods, such as John Marshall’s chief justiceship, the decisions of the Supreme Court enhanced the role of the federal government in promoting economic development. At other times, however, such as the period immediately following the Great Depression, the Court’s interpretations thwarted the government’s attempts to overcome economic collapse. From the earliest days of the nation, battles over the commerce power have raised basic questions: What is regulation? What is commerce? What is commerce among the states (now called interstate commerce)? What powers of commercial regulation does the Constitution grant to the federal government, and what powers remain with the states?

Rather than address these questions individually, in this chapter we explore the development of the commerce power chronologically. We take this approach because, as we have just suggested, the Court has answered such questions in various ways in different eras, sometimes enhancing the federal government’s power and sometimes curtailing it. These phases tend to correspond to the cyclical debate between dual and cooperative federalism that we considered in chapter 6. Keep in mind, however, that at times justices who adopt the tools of the dual federalism approach—especially the Tenth Amendment and narrower approaches to defining interstate commerce—are more committed to an antiregulation regime than they are to states’ rights.

FOUNDATIONS OF THE COMMERCE POWER

A primary reason the Constitutional Convention was called was the inability of the government under the Articles of Confederation to control the country’s commercial activity effectively. Economic conditions were dismal following the Revolutionary War. The national and state governments were deeply in debt. The tax base of the newly independent nation was minimal, and commerce was undeveloped, leaving property taxes and customs duties as the primary sources of government funds.

The states were almost exclusively in charge of economic regulation. To raise enough revenue to pay their debts, the states imposed substantial taxes on land, placing farmers in an economically precarious condition. The states also erected trade barriers and imposed duties on the importation of foreign goods. Although these policies were enacted in part to promote the states’ domestic businesses, the result was a general strangulation of commercial activity. Several states printed their own money and passed statutes canceling debts. With each of the states working independently, the national economy continued to slide into stagnation, and, for all practical purposes, the central government was powerless to respond effectively.

When agrarian interests reached their economic breaking point—culminating in the 1787 march on the federal arsenal at Springfield, Massachusetts, by a makeshift army of farmers led by Revolutionary War veteran Daniel Shays and others—it was clear that something had to be done. Congress called for a convention to reconsider the status of the Articles of Confederation, a convention that ultimately resulted in the drafting of the United States Constitution.

Commerce and the Constitutional Convention

The delegates to the Constitutional Convention recognized the necessity of giving the power to regulate the economy to the central government. The nation could no longer tolerate the individual states’ pursuit of independent policies, each having a different impact on the country’s economic health. To that end, Article I of the Constitution removed certain powers from the states and gave the federal government powers it did not have under the Articles of Confederation. States could not print money, impair the obligation of contracts, or tax imports or exports. The federal government obtained the authority necessary to impose uniform regulations for the national economy. Among the powers granted to the central government were the authority to tax and impose customs duties, to spend and borrow, to develop and protect a single monetary system, and to regulate bankruptcies. Most important was the authority to regulate interstate and foreign commerce. Article I, Section 8, states: “The Congress shall have the Power . . . to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

The need for Congress to speak for the nation with a single voice on these matters was clear to the framers. Even Alexander Hamilton and James Madison, who disagreed on many questions of federalism, were in accord on the necessity of the central government to control interstate and foreign commerce. Hamilton wrote in The Federalist Papers No. 22:

In addition to the defects already enumerated in the existing federal system, there are others of not less importance which concur in rendering it altogether unfit for the administration of the affairs of the Union.

The want of a power to regulate commerce is by all parties allowed to be of the number.

In Federalist No. 42 Madison took a similar position, arguing that the experience of the United States under the articles, as well as that of European countries, demonstrated that a central government without broad powers over the nation’s commerce was destined to fail.

Congress quickly seized on the authority to regulate commerce with other nations. Almost immediately, it imposed import duties as a means of raising revenue. The constitutional grant in this area was clear: the power to regulate foreign commerce, as well as other matters of foreign policy, was given unambiguously to the national government, and the role of the states was eliminated. Since ratification, the states have challenged congressional supremacy over foreign commerce only on rare occasions.

The power to regulate interstate commerce, however, was a different story. Congress was slow in responding to this grant of authority, and federal officials continued to view business as an activity occurring within the borders of the individual states. In fact, Congress did not pass comprehensive legislation governing commerce among the states until the Interstate Commerce Act of 1887.

Marshall Defines the Commerce Power

The commerce clause gives Congress the power to “regulate Commerce . . . among the Several states.” But what do these terms—“regulate,” “commerce,” and “among”—mean? The history of the commerce clause is replete with disputes over definitions. Is “commerce” limited to buying and selling goods, or is its meaning broad enough to include other activities, such as manufacturing and production? What about “among”? How should we distinguish interstate commerce, which, according to the Constitution, the federal government regulates, from intrastate commerce, over which the states may retain regulatory power? Problems associated with such distinctions were difficult enough in the early years, but they became even more complex as the economy grew and the country changed from agrarian to industrialized. As many constitutional law cases illustrate, disputes over commercial regulatory authority often involve power struggles between the national government and the states.

Aaron Ogden

The Granger Collection

Disputes over the meaning of the commerce clause came to the Supreme Court even during the early years of nationhood. The justices probed the constitutional definition of “commerce” and the proper division of federal and state power to regulate it. Of the commerce cases decided by the Supreme Court in those early decades, none was more important than Gibbons v. Ogden (1824). This dispute involved some of the nation’s most prominent and powerful businessmen and attorneys. A great deal was at stake, both economically and politically. In his opinion for the Court, Chief Justice Marshall responded to the fundamental problems of defining the power to regulate commerce among the states. His answers to the questions presented in this case are still very much a part of our constitutional fabric.

Like his opinions in Marbury and McCulloch, Marshall’s opinion in Gibbons laid a constitutional foundation that remains in place today. The decision made several important points. First, commerce involves more than buying and selling: it also includes the commercial intercourse between nations and states, and therefore transportation and navigation clearly fall within the definition of commerce. Second, commerce among the states begins in one state and ends in another; it does not stop when the act of crossing a state border is completed. Consequently, commerce that occurs within a state may be part of a larger interstate process. Third, once an act is considered part of interstate commerce, Congress, according to the Constitution, may regulate it. The power to regulate interstate commerce is complete and has no limitation other than what may be found in other constitutional provisions. But note that Marshall rejects Ogden’s argument that the Tenth Amendment serves as such a limit. In line with his opinion in McCulloch, Marshall does not find that the amendment creates an “enclave” of state power. Instead, he emphasizes that Congress is limited to its delegated powers (see chapter 6)—in this case, the power to regulate interstate commerce, however broadly defined. This brings us to the fourth point: because the text of the commerce clause limits congressional power to regulate commerce among the states, the power to regulate commerce that occurs completely within the boundaries of a single state and does not extend to or affect other states belongs to the states.

Gibbons v. Ogden was a substantial victory for national power. It broadly construed the terms regulate, “Commerce,” and “Commerce . . . among the several States” (or interstate commerce). But Marshall did not go as far as Daniel Webster had urged. The opinion asserts only that Congress has complete power to regulate interstate commerce and that federal regulations are superior to any state laws. The decision does not answer the question of the legitimacy of states regulating interstate commerce in the absence of federal action. That controversy was left for future justices to decide.

Gibbons v. Ogden

22 U.S. (9 Wheat.) 1 (1824)

http://laws.findlaw.com/us/22/1.html

Vote: 6 (Duvall, Johnson, Marshall, Story, Todd, Washington)

0

OPINION OF THE COURT: Marshall

CONCURRING OPINION: Johnson

NOT PARTICIPATING: Thompson

Thomas Gibbons

Gibbons Family Papers, Special Collections and Archives, Drew University Library

Facts:

This complicated litigation can be traced back to 1798, when the New York legislature granted the wealthy and prominent Robert R. Livingston a monopoly to operate steamboats on all waters within the state, including the two most important commercial waterways, New York Harbor and the Hudson River. New York officials did not see the monopoly grant as particularly important because no one had yet developed a steamship that could operate reliably and profitably. Livingston, however, joined forces with Robert Fulton, and together they produced a commercially viable steamship. This mode of transportation became extremely popular and very profitable for the partners. When they obtained a similar monopoly over the port of New Orleans in 1811, they had significant control over the nation’s two most important harbors.

The rapid westward expansion taking place at that time fueled the need for modern transportation systems. The Livingston-Fulton monopoly, however, put a damper on the use of steam engines in the evolution of such a system. The New York monopoly was so strong and so vigorously enforced that retaliatory laws were enacted by other states, which refused to let steam-powered vessels from New York use their waters. Especially hostile relations developed between New York and New Jersey, and violence between the crews of rival companies became common. Livingston died in 1813, followed two years later by Fulton, but their monopoly lived on.

Aaron Ogden, a former governor of New Jersey, and Thomas Gibbons, a successful Georgia lawyer, entered into a partnership to carry passengers between New York City and Elizabethtown, New Jersey. Ogden had purchased the right to operate in New York waters from the Livingston-Fulton monopoly, and Gibbons had a federal permit issued under the 1793 Coastal Licensing Act to operate steamships along the coast. With these grants of authority the two partners could carry passengers between New York and New Jersey. The leaders of the New York monopoly, however, pressured Ogden to terminate his relationship with Gibbons and to join them. As a result, the Ogden-Gibbons partnership dissolved.

Gibbons then joined forces with Cornelius Vanderbilt, and they began a fierce competition with Ogden and the New York monopoly interests. Gibbons and Vanderbilt entered New York waters in violation of the monopoly whenever they could, picking up as much New York business as possible. In response, Ogden successfully convinced the New York courts to enjoin Gibbons from entering New York waters. Gibbons appealed this ruling to the U.S. Supreme Court.

To press their case, Gibbons and Vanderbilt acquired the services of two of the best lawyers of the day, William Wirt and Daniel Webster. Wirt, the attorney general of the United States, argued that the federal permit issued to Gibbons took precedence over any state-issued monopoly, and therefore Gibbons had the right to enter New York waters. Webster took a more radical position, explicitly stating that the commerce clause of the Constitution gave Congress near exclusive power over commerce and that the state-granted monopoly was a violation of that clause. Ogden’s lawyer responded that navigation was not commerce under the meaning of the Constitution but instead was an intrastate enterprise left to the states to regulate. The oral arguments in the case lasted four and a half days.

Arguments:

For the appellant, Thomas Gibbons:

Although not all regulations that might affect commerce are exclusively in the power of Congress, the power exercised by the state in this case is a federal power that did not remain with the states in the Constitution.

The power to regulate commerce is crucial to the nation’s well-being. In establishing the Constitution, the people understood this and transferred the commerce power from the states to the federal government so that a uniform and general system could be maintained. What is regulated here is not the commerce of the several states, respectively, but the commerce of the United States.

The inevitable consequence of this analysis is that Congress may establish ferries and turnpikes and may regulate in other ways that touch the interior of states.

For the respondent, Aaron Ogden:

The Constitution provides for limited and expressly delegated powers, which can be exercised only as granted, or in the cases enumerated. This principle, which distinguishes the national from the state governments, follows from the fact that the Constitution itself is a delegation of power, not a restriction of power previously possessed and from the express stipulation in the Tenth Amendment. The Constitution must be construed strictly with regard to the powers expressly granted. Every portion of power not granted must remain with the states.

The practice of the states shows that the commerce power has always been considered concurrent. New York has passed numerous laws that are regulations of commerce with foreign nations, with other states, and with the Indian tribes. The state may exercise its power, so long as its laws do not interfere with any right exercised under the Constitution or laws of the United States.

The commerce power is not only concurrent, but is limited in Congress. It does not extend to the regulation of the internal commerce of any state because terms used in the grant of power are “among the several States.” Internal commerce is that which is carried on within the limits of a state.

The state law does not even regulate commerce; it regulates internal trade and the right of navigation within a state. This belongs exclusively to the states, even though it incidentally may affect the right of intercourse between the states.

MR. CHIEF JUSTICE MARSHALL DELIVERED THE OPINION OF THE COURT.

The appellant contends that this decree is erroneous, because the laws which purport to give the exclusive privilege it sustains, are repugnant to the constitution and laws of the United States.

They are said to be repugnant—

To that clause in the constitution which authorizes Congress to regulate commerce. . . .

The words are, “Congress shall have power to regulate commerce with foreign nations, and among the several States, and with the Indian tribes.”

The subject to be regulated is commerce; and our constitution being . . . one of enumeration, and not of definition, to ascertain the extent of the power, it becomes necessary to settle the meaning of the word. The counsel for the appellee would limit it to traffic, to buying and selling, or the interchange of commodities, and do not admit that it comprehends navigation. This would restrict a general term, applicable to many objects, to one of its significations. Commerce, undoubtedly, is traffic, but it is something more: it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse. The mind can scarcely conceive a system for regulating commerce between nations, which shall exclude all laws concerning navigation, which shall be silent on the admission of the vessels of the one nation into the ports of the other, and be confined to prescribing rules for the conduct of individuals, in the actual employment of buying and selling, or of barter.

If commerce does not include navigation, the government of the Union has no direct power over that subject, and can make no law prescribing what shall constitute American vessels, or requiring that they shall be navigated by American seamen. Yet this power has been exercised from the commencement of the government, has been exercised with the consent of all, and has been understood by all to be a commercial regulation. All America understands, and has uniformly understood, the word “commerce,” to comprehend navigation. It was so understood, and must have been so understood, when the constitution was framed. The power over commerce, including navigation, was one of the primary objects for which the people of America adopted their government, and must have been contemplated in forming it. The convention must have used the word in that sense, because all have understood it in that sense; and the attempt to restrict it comes too late. . . .

Daniel Webster’s 1821 handwritten note to Cornelius Vanderbilt acknowledging receipt of a $500 retainer to represent Thomas Gibbons in the case of Gibbons v. Ogden.

Gibbons Family Papers, Special Collections and Archives, Drew University Library

The word used in the constitution, then, comprehends, and has been always understood to comprehend, navigation within its meaning; and a power to regulate navigation, is as expressly granted, as if that term had been added to the word “commerce.”

To what commerce does this power extend? The constitution informs us, to commerce “with foreign nations, and among the several States, and with the Indian tribes.”

It has, we believe, been universally admitted, that these words comprehend every species of commercial intercourse between the United States and foreign nations. No sort of trade can be carried on between this country and any other, to which this power does not extend. It has been truly said, that commerce, as the word is used in the constitution, is a unit, every part of which is indicated by the term.

If this be the admitted meaning of the word, in its application to foreign nations, it must carry the same meaning throughout the sentence, and remain a unit, unless there be some plain intelligible cause which alters it.

The subject to which the power is next applied, is to commerce “among the several States.” The word “among” means intermingled with. A thing which is among others, is intermingled with them. Commerce among the States, cannot stop at the external boundary line of each State, but may be introduced into the interior.

It is not intended to say that these words comprehend that commerce, which is completely internal, which is carried on between man and man in a State, or between different parts of the same State, and which does not extend to or affect other States. Such a power would be inconvenient, and is certainly unnecessary.

Comprehensive as the word “among” is, it may very properly be restricted to that commerce which concerns more States than one. The phrase is not one which would probably have been selected to indicate the completely interior traffic of a State, because it is not an apt phrase for that purpose; and the enumeration of the particular classes of commerce, to which the power was to be extended, would not have been made, had the intention been to extend the power to every description. The enumeration presupposes something not enumerated; and that something, if we regard the language or the subject of the sentence, must be the exclusively internal commerce of a State. The genius and character of the whole government seem to be, that its action is to be applied to all the external concerns of the nation, and to those internal concerns which affect the States generally; but not to those which are completely within a particular State, which do not affect other States, and with which it is not necessary to interfere, for the purpose of executing some of the general powers of the government. The completely internal commerce of a State, then, may be considered as reserved for the State itself.

But, in regulating commerce with foreign nations, the power of Congress does not stop at the jurisdictional lines of the several States. It would be a very useless power, if it could not pass those lines. The commerce of the United States with foreign nations, is that of the whole United States. Every district has a right to participate in it. The deep streams which penetrate our country in every direction, pass through the interior of almost every State in the Union, and furnish the means of exercising this right. If Congress has the power to regulate it, that power must be exercised whenever the subject exists. If it exists within the States, if a foreign voyage may commence or terminate at a port within a State, then the power of Congress may be exercised within a State.

This principle is, if possible, still more clear, when applied to commerce “among the several States.” They either join each other, in which case they are separated by a mathematical line, or they are remote from each other, in which case other States lie between them. What is commerce “among” them; and how is it to be conducted? Can a trading expedition between two adjoining States, commence and terminate outside of each? And if the trading intercourse be between two States remote from each other, must it not commence in one, terminate in the other, and probably pass through a third? Commerce among the States must, of necessity, be commerce with the States. . . .

We are now arrived at the inquiry—What is this power?

It is the power to regulate; that is, to prescribe the rule by which commerce is to be governed. This power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the constitution. . . . If, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations, and among the several States, is vested in Congress as absolutely as it would be in a single government, having in its constitution the same restrictions on the exercise of the power as are found in the constitution of the United States. The wisdom and the discretion of Congress, their identity with the people, and the influence which their constituents possess at elections, are, in this, as in many other instances, as that, for example, of declaring war, the sole restraints on which they have relied, to secure them from its abuse. They are the restraints on which the people must often rely solely, in all representative governments.

The power of Congress, then, comprehends navigation, within the limits of every State in the Union; so far as that navigation may be, in any manner, connected with “commerce with foreign nations, or among the several States, or with the Indian tribes.” It may, of consequence, pass the jurisdictional line of New York, and act upon the very waters to which the prohibition now under consideration applies.

But it has been urged with great earnestness, that, although the power of Congress to regulate commerce with foreign nations, and among the several States, be co-extensive with the subject itself, and have no other limits than are prescribed in the constitution, yet the States may severally exercise the same power, within their respective jurisdictions. In support of this argument, it is said, that they possessed it as an inseparable attribute of sovereignty, before the formation of the constitution, and still retain it, except so far as they have surrendered it by that instrument; that this principle results from the nature of the government, and is secured by the tenth amendment; that an affirmative grant of power is not exclusive, unless in its own nature it be such that the continued exercise of it by the former possessor is inconsistent with the grant, and that this is not of that description.

The appellant, conceding these postulates, except the last, contends, that full power to regulate a particular subject, implies the whole power, and leaves no residuum; that a grant of the whole is incompatible with the existence of a right in another to any part of it. . . .

In discussing the question, whether this power is still in the States, in the case under consideration, we may dismiss from it the inquiry, whether it is surrendered by the mere grant to Congress, or is retained until Congress shall exercise the power. We may dismiss that inquiry, because it has been exercised, and the regulations which Congress deemed it proper to make, are now in full operation. The sole question is, can a State regulate commerce with foreign nations and among the States, while Congress is regulating it?

The counsel for the respondent answer this question in the affirmative, and rely very much on the restrictions in the 10th section, as supporting their opinion. . . .

It has been contended by the general counsel for the appellant, that, as the word “to regulate” implies in its nature, full power over the thing to be regulated, it excludes, necessarily, the action of all others that would perform the same operation on the same thing. That regulation is designed for the entire result, applying to those parts which remain as they were, as well as to those which are altered. It produces a uniform whole, which is as much disturbed and deranged by changing what the regulating power designs to leave untouched, as that on which it has operated.

There is great force in this argument, and the Court is not satisfied that it has been refuted.

Since, however, in exercising the power of regulating their own purely internal affairs, whether of trading or police, the States may sometimes enact laws, the validity of which depends on their interfering with, and being contrary to, an act of Congress passed in pursuance of theconstitution, the Court will enter upon the inquiry, whether the laws of New York, as expounded by the highest tribunal of that State, have, in their application to this case, come into collision with an act of Congress, and deprived a citizen of a right to which that act entitles him. Should this collision exist, it will be immaterial whether those laws were passed in virtue of a concurrent power “to regulate commerce with foreign nations and among the several States,” or, in virtue of a power to regulate their domestic trade and police. In one case and the other, the acts of New York must yield to the law of Congress; and the decision sustaining the privilege they confer, against a right given by a law of the Union, must be erroneous. . . .

But the framers of our constitution foresaw this state of things, and provided for it, by declaring the supremacy not only of itself, but of the laws made in pursuance of it. The nullity of any act, inconsistent with the constitution, is produced by the declaration, that the constitution is the supreme law. The appropriate application of that part of the clause which confers the same supremacy on laws and treaties, is to such acts of the State Legislatures as do not transcend their powers, but, though enacted in the execution of acknowledged State powers, interfere with, or are contrary to the laws of Congress, made in pursuance of the constitution, or some treaty made under the authority of the United States. In every such case, the act of Congress, or the treaty, is supreme; and the law of the State, though enacted in the exercise of powers not controverted, must yield to it. . . .

But all inquiry into this subject seems to the Court to be put completely at rest, by the act already mentioned, entitled, “An act for the enrolling and licensing of steam boats.”

This act authorizes a steam boat employed, or intended to be employed, only in a river or bay of the United States, owned wholly or in part by an alien, resident within the United States, to be enrolled and licensed as if the same belonged to a citizen of the United States.

This act demonstrates the opinion of Congress, that steam boats may be enrolled and licensed, in common with vessels using sails. They are, of course, entitled to the same privileges, and can no more be restrained from navigating waters, and entering ports which are free to such vessels, than if they were wafted on their voyage by the winds, instead of being propelled by the agency of fire. The one element may be as legitimately used as the other, for every commercial purpose authorized by the laws of the Union; and the act of a State inhibiting the use of either to any vessel having a license under the act of Congress, comes, we think, in direct collision with that act.

ATTEMPTS TO DEFINE THE COMMERCE POWER IN THE WAKE OF THE INDUSTRIAL REVOLUTION

Marshall provided a clear, if expansive, framework for the exercise of congressional commerce power, but the national legislature did not take immediate advantage of this broad interpretation of its authority. As a result, commerce clause cases did not become major items on the Supreme Court’s agenda until the second half of the nineteenth century. By that time, small intrastate businesses were giving way to large interstate corporations. Industrial expansion blossomed, and the interstate railroad and pipeline systems were well under way. The infamous captains of industry were creating large monopolistic trusts that dominated huge segments of the national economy, squeezing out small businesses and discouraging new entrepreneurs. The industrial combines that controlled the railroads also, in effect, ruled agriculture and other interests that relied on the rails to transport goods to market. This commercial growth brought great prosperity to some, but it also caused horrendous social problems. Children worked in sweatshops, and unsafe working conditions and low wages plagued employees of all ages, eventually leading to the formation of labor unions.

In light of these developments, Congress sought to exert some control over both the economic and the social concerns following from the rise of big business. To deal with the former, it passed several laws—aimed at regulating business practices—based in its commerce power. In the case of social problems, it began to make use of the commerce clause as a federal police power—that is, the government’s authority to regulate for the health, safety, morals, and general welfare of its citizens.

Critics immediately attacked Congress for exceeding its constitutional authority. Their primary argument was that the laws regulated intrastate activity, not “Commerce . . . among the several States,” and so Congress had overstepped its power; the regulation of intrastate activity was reserved to the states under the Tenth Amendment. In the social realm, they also questioned whether laws motivated by morality considerations were an appropriate exercise of the commerce power and whether laws that prohibited particular kinds of activities—for example, shipping lottery tickets across state lines—fell within Congress’s power “to regulate” commerce.

In what follows, we consider the Court’s response to these arguments, beginning with the debate over intra- versus interstate commerce, and moving next to the use of commerce as a federal police power. As you read the cases, consider whether the developing doctrine was compatible with Marshall’s foundational decision in Gibbons.

Defining Interstate Commerce

As we just noted, in the wake of the rise of big business, Congress passed several laws based on its commerce power. Two are particularly notable: the Interstate Commerce Act of 1887, which established a mechanism for regulating the nation’s interstate railroads, and the Sherman Anti-Trust Act of 1890 (hereafter Sherman Act), which was designed to break up monopolies that restrained trade. Business interests challenged both, primarily on the ground that they were regulations not of interstate commerce, but rather of intrastate activity, which was the purview of the states, not Congress.

Even with Marshall’s decision in Gibbons, discriminating between inter- and intrastate commerce was not easy. The Supreme Court faced a significant number of appeals that asked the justices to clarify whether the national legislature had overstepped its bounds and regulated commerce that was purely intrastate. To say that the Court had difficulty developing a coherent doctrine is an understatement.

Manufacturing and Its Relationship to Interstate Commerce.

The Court’s endorsement of the federal power to regulate transportation, navigation, and instruments of commerce did not extend initially to the attempts by Congress to impose effective antitrust legislation. The targets of the antitrust statutes were the monopolies that controlled basic industries and choked out all competition. During the late 1800s these trusts grew to capture and exercise dominance over many industries, including oil, meatpacking, sugar, and steel. The Sherman Act was Congress’s first attempt to break up these anticompetitive combines. It outlawed all contracts and combinations of companies that had the effect of restraining trade and commerce or eliminating competition.

For the antitrust law to be fully effective, however, its provisions had to cover the manufacturing and processing stages of commercial activity, which raised a serious constitutional problem. In earlier cases the Court had ruled that manufacturing was essentially a local activity and not part of interstate commerce. In Veazie v. Moor (1853) the Court had labeled it a far-reaching “pretension” to suggest that the federal power over interstate commerce extended to manufacturing. Later, in Kidd v. Pearson (1888), the Court took an even stronger stand. At issue was an Iowa statute that outlawed the production of alcoholic beverages. The law was challenged on the ground that the liquor being manufactured was intended for interstate shipment and sale, and consequently, the state was unconstitutionally regulating interstate commerce.

Speaking for the Court, Justice Lucius Q. C. Lamar rejected the attack, arguing,

No distinction is more popular to the common mind, or more clearly expressed in economic and political literature, than that between manufactures and commerce. Manufacture is transformation—the fashioning of raw materials into a change of form for use. The functions of commerce are different. The buying and selling and the transportation incident thereto constitute commerce.

Could the new antitrust law be applied to manufacturing? Or had Congress exceeded its constitutional authority in regulating production? These questions were answered in United States v. E. C. Knight Co. (1895), a battle over the federal government’s attempts to break up the sugar trust.

Chief Justice Melville W. Fuller’s opinion shows the initial development of the Court’s focus on the extent to which the various stages of business affect interstate commerce. Proponents of federal regulation often argued that if an intrastate economic activity—whether manufacturing and production or shipment and distribution—had any effect on interstate commerce, Congress could regulate it. The Supreme Court rejected this position in E. C. Knight. To the Court, commerce is different from manufacturing and production because “commerce succeeds to manufacture, and is not a part of it.” As a result, manufacturing affects interstate commerce only indirectly and Congress may not regulate it; rather, it is a local matter that is up to the states to regulate. Federal authority becomes activated only when the intrastate activity has a direct effect on interstate commerce. In the sugar trust case, Fuller concluded that the challenged monopoly of refining facilities had only an indirect effect on interstate commerce and therefore was not subject to federal regulation. While the distinction between direct and indirect effects could be interpreted various ways, conservative Courts continued to use it to strike down other federal regulatory attempts. Indeed, the distinction took center stage in the Court’s opinion in Schechter Poultry Corp. v. United States, in which, as we shall see, the justices struck down a major piece of Roosevelt’s New Deal legislation.

Although E. C. Knight removed manufacturing from the authority of the Sherman Act, it did not doom federal antitrust efforts. In fact, when the monopolistic activity was not manufacturing, the Court was quite willing to apply the law. For example, the Court held that companies engaged in production and interstate sale of pipe came under the sections of the Sherman Act.2 In 1904 the Court went even farther, ruling in Northern Securities Company v. United States that stock transactions creating a holding company (the result of an effective merger between the Northern Pacific and Great Northern Railroad companies) were subject to Sherman Act scrutiny. In spite of these applications of the antitrust law, E. C. Knight set an important precedent, declaring manufacturing to be outside the definition of interstate commerce. This ruling later would be extended, with serious repercussions, to bar many of the New Deal programs passed to combat the Great Depression. It was only at such a time of economic collapse that the wisdom expressed in Justice John Marshall Harlan’s dissent in E. C. Knight became apparent: the federal government must be empowered to regulate economic evils that are injurious to the nation’s commerce and that a single state is incapable of eradicating.

United States v. E. C. Knight Co.

156 U.S. 1 (1895)

http://laws.findlaw.com/us/156/1.html

Vote: 8 (Brewer, Brown, Field, Fuller, Gray, Jackson, Shiras, White)

1 (Harlan)

OPINION OF THE COURT: Fuller

DISSENTING OPINION: Harlan

Facts:

At the end of the nineteenth century, six companies dominated the American sugar refining industry. The largest was American Sugar Refining Company, which had control of about 65 percent of the nation’s refining capacity. Four Pennsylvania refiners shared 33 percent of the market, and a Boston company had a scant 2 percent. In March 1892 American Sugar entered into agreements that allowed it to acquire the four Pennsylvania refineries, including E. C. Knight Company, giving it absolute control over 98 percent of the sugar refining business in the United States.

The federal government sued to have the acquisition agreements canceled. According to Justice Department attorneys, the sugar trust operated as a monopoly in restraint of trade in violation of the Sherman Act. Attorneys for American Sugar and the acquired companies held that the law did not apply to sugar refining because that activity is manufacturing subject to state, not federal, control.

E. C. Knight was the Court’s first antitrust case. The outcome was crucial to the government’s attempts to break up powerful monopolies. Some observers have charged that Attorney General Richard Olney failed to provide the best prosecution of the case. Olney was not a dedicated trustbuster; he had opposed the passage of the antitrust act and later worked for its repeal.1

Arguments:

For the appellant, United States:

The power to control the manufacturing of sugar is a monopoly over an important good, which cannot be enjoyed by most Americans unless it is shipped in interstate commerce. As a result, the federal government, in the exercise of its power to regulate commerce, may prohibit monopolies directly and set aside the instruments that have created them.

The products of these refineries were sold and distributed among the states; therefore, all the companies were engaged in trade or commerce with several states and other nations.

For the appellee, E. C. Knight Co.:

Congress’s commerce clause power does not extend to articles that are manufactured simply because they are manufactured with an intent to sell later to citizens of the same state or another. No article is part of trade or commerce, which can be regulated by Congress, until it is put in the way of transit. Congress can only regulate trade and commerce between the states (contracts to buy, sell, exchange goods to be transported, the actual transportation, and the instrumentalities of transportation). There is, in short, a distinction between manufacturing and commerce.

If businesses agree that they will not transport goods from one state to another, they make a contract in restraint of trade between the states. If, however, they simply agree that they will not manufacture goods within a certain state, even if this results in no trade with other states in the goods, Congress cannot interfere because the agreement pertains to manufacturing, not commerce.

MR. CHIEF JUSTICE FULLER DELIVERED THE OPINION OF THE COURT.

The fundamental question is, whether conceding that the existence of a monopoly in manufacture is established by the evidence, that monopoly can be directly suppressed under the act of Congress in the mode attempted by this bill.

It cannot be denied that the power of a State to protect the lives, health, and property of its citizens, and to preserve good order and the public morals, “the power to govern men and things within the limits of its dominion,” is a power originally and always belonging to the States, not surrendered by them to the general government, not directly restrained by the Constitution of the United States, and essentially exclusive. The relief of the citizens of each State from the burden of monopoly and the evils resulting from the restraint of trade among such citizens was left with the States to deal with, and this court has recognized their possession of that power even to the extent of holding that an employment or business carried on by private individuals, when it becomes a matter of such public interest and importance as to create a common charge or burden upon the citizen; in other words, when it becomes a practical monopoly, to which the citizen is compelled to resort and by means of which a tribute can be exacted from the community, is subject to regulation by state legislative power. On the other hand, the power of Congress to regulate commerce among the several States is also exclusive. The Constitution does not provide that interstate commerce shall be free, but, by the grant of this exclusive power to regulate it, it was left free except as Congress might impose restraints. Therefore it has been determined that the failure of Congress to exercise this exclusive power in any case is an expression of its will that the subject shall be free from restrictions or impositions upon it by the several States, and if a law passed by a State in the exercise of its acknowledged powers comes into conflict with that will, the Congress and the State cannot occupy the position of equal opposing sovereignties, because the Constitution declares its supremacy and that of the laws passed in pursuance thereof; and that which is not supreme must yield to that which is supreme. “Commerce, undoubtedly, is traffic,” said Chief Justice Marshall, “but it is something more; it is intercourse. It describes the commercial intercourse between nations and parts of nations in all its branches, and is regulated by prescribing rules for carrying on that intercourse.” That which belongs to commerce is within the jurisdiction of the United States, but that which does not belong to commerce is within the jurisdiction of the police power of the State.

The argument is that the power to control the manufacture of refined sugar is a monopoly over a necessary of life, to the enjoyment of which by a large part of the population of the United States interstate commerce is indispensable, and that, therefore, the general government in the exercise of the power to regulate commerce may repress such monopoly directly and set aside the instruments which have created it. But this argument cannot be confined to necessaries of life merely, and must include all articles of general consumption. Doubtless the power to control the manufacture of a given thing involves in a certain sense the control of its disposition, but this is a secondary and not the primary sense; and although the exercise of that power may result in bringing the operation of commerce into play, it does not control it, and affects it only incidentally and indirectly. Commerce succeeds to manufacture, and is not a part of it. The power to regulate commerce is the power to prescribe the rule by which commerce shall be governed, and is a power independent of the power to suppress monopoly. But it may operate in repression of monopoly whenever that comes within the rules by which commerce is governed or whenever the transaction is itself a monopoly of commerce.

It is vital that the independence of the commercial power and of the police power, and the delimitation between them, however sometimes perplexing, should always be recognized and observed, for while the one furnishes the strongest bond of union, the other is essential to the preservation of the autonomy of the States as required by our dual form of government; and acknowledged evils, however grave and urgent they may appear to be, had better be borne, than the risk be run, in the effort to suppress them, of more serious consequences by resort to expedients of even doubtful constitutionality.

It will be perceived how far-reaching the proposition is that the power of dealing with a monopoly directly may be exercised by the general government whenever interstate or international commerce may be ultimately affected. The regulation of commerce applies to the subjects of commerce and not to matters of internal police. Contracts to buy, sell, or exchange goods to be transported among the several States, the transportation and its instrumentalities, and articles bought, sold, or exchanged for the purposes of such transit among the States, or put in the way of transit, may be regulated, but this is because they form part of interstate trade or commerce. The fact that an article is manufactured for export to another State does not of itself make it an article of interstate commerce, and the intent of the manufacturer does not determine the time when the article or product passes from the control of the States and belongs to commerce. This was so ruled in Coe v. Errol [1886], in which the question before the court was whether certain logs cut at a place in New Hampshire and hauled to a river town for the purpose of transportation to the State of Maine were liable to be taxed like other property in the State of New Hampshire. Mr. Justice Bradley, delivering the opinion of the court, said: “Does the owner’s state of mind in relation to the goods, that is, his intent to export them, and his partial preparation to do so, exempt them from taxation? This is the precise question for solution. . . . There must be a point of time when they cease to be governed exclusively by the domestic law and begin to be governed and protected by the national law of commercial regulation, and that moment seems to us to be a legitimate one for this purpose, in which they commence their final movement from the State of their origin to that of their destination.”

And again, in Kidd v. Pearson, where the question was discussed whether the right of a State to enact a statute prohibiting within its limits the manufacture of intoxicating liquors, except for certain purposes, could be overthrown by the fact that the manufacturer intended to export the liquors when made, it was held that the intent of the manufacturer did not determine the time when the article or product passed from the control of the State and belonged to commerce, and that, therefore, the statute, in omitting to except from its operation the manufacture of intoxicating liquors within the limits of the State for export, did not constitute an unauthorized interference with the right of Congress to regulate commerce. . . .

Contracts, combinations, or conspiracies to control domestic enterprise in manufacture, agriculture, mining, production in all its forms, or to raise or lower prices or wages, might unquestionably tend to restrain external as well as domestic trade, but the restraint would be an indirect result, however inevitable and whatever its extent, and such result would not necessarily determine the object of the contract, combination, or conspiracy.

Again, all the authorities agree that in order to vitiate a contract or combination it is not essential that its result should be a complete monopoly; it is sufficient if it really tends to that end and to deprive the public of the advantages which flow from free competition. Slight reflection will show that if the national power extends to all contracts and combinations in manufacture, agriculture, mining, and other productive industries, whose ultimate result may affect external commerce, comparatively little of business operations and affairs would be left for state control.

It was in the light of well-settled principles that the act of July 2, 1890, was framed. Congress did not attempt thereby to assert the power to deal with monopoly directly as such; or to limit and restrict the rights of corporations created by the States or the citizens of the States in the acquisition, control, or disposition of property; or to regulate or prescribe the price or prices at which such property or the products thereof should be sold; or to make criminal the acts of persons in the acquisition and control of property which the States of their residence or creation sanctioned or permitted. Aside from the provisions applicable where Congress might exercise municipal power, what the law struck at was combinations, contracts, and conspiracies to monopolize trade and commerce among the several States or with foreign nations; but the contracts and acts of the defendants related exclusively to the acquisition of the Philadelphia refineries and the business of sugar refining in Pennsylvania, and bore no direct relation to commerce between the States or with foreign nations. The object was manifestly private gain in the manufacture of the commodity, but not through the control of interstate or foreign commerce. It is true that the bill alleged that the products of these refineries were sold and distributed among the several States, and that all the companies were engaged in trade or commerce with the several States and with foreign nations; but this was no more than to say that trade and commerce served manufacture to fulfill its function. Sugar was refined for sale, and sales were probably made at Philadelphia for consumption, and undoubtedly for resale by the first purchasers throughout Pennsylvania and other States, and refined sugar was also forwarded by the companies to other States for sale. Nevertheless it does not follow that an attempt to monopolize, or the actual monopoly of, the manufacture was an attempt, whether executory or consummated, to monopolize commerce, even though, in order to dispose of the product, the instrumentality of commerce was necessarily invoked. There was nothing in the proofs to indicate any intention to put a restraint upon trade or commerce, and the fact, as we have seen, that trade or commerce might be indirectly affected was not enough to entitle complainants to a decree. . . .

Decree affirmed.

MR. JUSTICE HARLAN, dissenting.

In my judgment, the citizens of the several States composing the Union are entitled, of right, to buy goods in the State where they are manufactured, or in any other State, without being confronted by an illegal combination whose business extends throughout the whole country, which by the law everywhere is an enemy to the public interests, and which prevents such buying, except at prices arbitrarily fixed by it. I insist that the free course of trade among the States cannot coexist with such combinations. When I speak of trade I mean the buying and selling of articles of every kind that are recognized articles of interstate commerce. Whatever improperly obstructs the free course of interstate intercourse and trade, as involved in the buying and selling of articles to be carried from one State to another, may be reached by Congress, under its authority to regulate commerce among the States. The exercise of that authority so as to make trade among the States, in all recognized articles of commerce, absolutely free from unreasonable or illegal restrictions imposed by combinations, is justified by an express grant of power to Congress and would redound to the welfare of the whole country. I am unable to perceive that any such result would imperil the autonomy of the States, especially as that result cannot be attained through the action of any one State.

Undue restrictions or burdens upon the purchasing of goods, in the market for sale, to be transported to other States, cannot be imposed even by a State without violating the freedom of commercial intercourse guaranteed by the Constitution. But if a State within whose limits the business of refining sugar is exclusively carried on may not constitutionally impose burdens upon purchases of sugar to be transported to other States, how comes it that combinations of corporations or individuals, within the same State, may not be prevented by the national government from putting unlawful restraints upon the purchasing of that article to be carried from the State in which such purchases are made? If the national power is competent to repress State action in restraint of interstate trade as it may be involved in purchases of refined sugar to be transported from one State to another State, surely it ought to be deemed sufficient to prevent unlawful restraints attempted to be imposed by combinations of corporations or individuals upon those identical purchases; otherwise, illegal combinations of corporations or individuals may—so far as national power and inter-state commerce are concerned—do, with impunity, what no State can do. . . .

To the general government has been committed the control of commercial intercourse among the States, to the end that it may be free at all times from any restraints except such as Congress may impose or permit for the benefit of the whole country. The common government of all the people is the only one that can adequately deal with a matter which directly and injuriously affects the entire commerce of the country, which concerns equally all the people of the Union, and which, it must be confessed, cannot be adequately controlled by any one State. Its authority should not be so weakened by construction that it cannot reach and eradicate evils that, beyond all question, tend to defeat an object which that government is entitled, by the Constitution, to accomplish.

The Shreveport Doctrine.

The regulation of the railroads provided the Court an early opportunity to refine the definition of interstate commerce. The first railroads were small local operations regulated by the states, but as interstate rail systems developed, the justices held that their regulation was rightfully a federal responsibility.3 Congress responded by passing the Interstate Commerce Act of 1887, which created the Interstate Commerce Commission (ICC) to regulate railroads and set rates. The Court approved the constitutionality of the commission but later stripped it of its ability to set rates.4 In 1906 Congress revised the authority and procedures of the commission and reestablished its rate-setting power.

The Court’s decision in Houston, E. & W. Texas Railway Co. v. United States (1914), better known as the Shreveport Rate Case, firmly established congressional power over the nation’s rails. This dispute arose from competition among three railroad companies to serve various cities in Texas. Two were based in Texas, one in Houston and the other in Dallas, and the third competitor operated out of Shreveport, Louisiana. The Texas Railroad Commission regulated the Texas companies because their operations were exclusively intrastate, but the Shreveport company came under the jurisdiction of the ICC. Difficulties arose when the Texas regulators set rates substantially lower than did the ICC. The motive behind these lower rates was clear: the Texas commission wanted to encourage intrastate trade and to discourage Texas companies from taking their business to Shreveport. The rates placed the Shreveport railroad at a distinct disadvantage in competing for the Texas market. In response, the ICC ordered the intrastate Texas rates to be raised to the interstate levels. When the commission’s authority to set intrastate rail rates was challenged, the Supreme Court ruled in favor of the ICC, articulating what became known as the Shreveport doctrine. The Court held that the federal government had the power to regulate intrastate commerce when a failure to regulate would cripple, retard, or destroy interstate commerce. According to Justice Charles Evans Hughes’s opinion for the Court,

The fact that [these] carriers are instruments of intrastate commerce, as well as of interstate commerce, does not derogate from the complete and paramount authority of Congress over the latter, or preclude the Federal power from being exerted to prevent the intrastate operations of such carriers from being made a means of injury to that which has been confided to Federal care. Wherever the interstate and intrastate transactions of carriers are so related that the government of the one involves the control of the other, it is Congress, and not the state, that is entitled to prescribe the final and dominant rule, for otherwise Congress would be denied the exercise of its constitutional authority, and the state, and not the nation, would be supreme within the national field.

It was clear to Hughes that the regulatory power of the federal government extends to those aspects of intrastate commerce that have such a close and substantial relation to interstate traffic that control is essential to protect the security and efficiency of interstate commerce.

The Stream of Commerce Doctrine.

Government efforts to break up the meatpacking trust presented a different constitutional challenge. The corporations that dominated the meat industry, such as Armour, Cudahy, and Swift, ruled the nation’s stockyards, which stood at the throat of the meat-distribution process. Western ranchers sent their livestock to the stockyards to be sold, butchered, and packed for shipment to consumers in the East. Livestock brokers, known as commission men, received the animals at the stockyards and sold them to the meatpacking companies for the ranchers. Consequently, when the meatpacking trust acquired control of the stockyards and the commission men who worked there, it was in a position to direct where the ranchers sent their stock, fix meat prices, demand unreasonably low rates for transporting stock, and decide when to withhold meat from the market. The government believed these actions constituted a restraint of trade in violation of the Sherman Act. The meatpackers argued that their control over the stockyards was an intrastate matter to be regulated by the states.

The Court settled the dispute in Swift & Company v. United States (1905), in which Justice Oliver Wendell Holmes held for a unanimous Court that the Sherman Act applied to the stockyards. The commercial sale of beef, the justice reasoned, began when the cattle left the range and did not terminate until final sale. The fact that the cattle stopped at the stockyards, midpoint in this commercial enterprise, did not mean that they were removed from interstate commerce. Holmes’s opinion develops what has become known as the “stream of commerce doctrine,” which allows federal regulation of interstate commerce from the point of its origin to the point of its termination. Interruptions in the course of that interstate commerce do not suspend the right of Congress to regulate. Stafford v. Wallace, an appeal based on another federal assault on the meatpacking combines, develops the doctrine more fully.

The stream of commerce precedents set in the Swift and Stafford stockyards cases were applied later to other regulatory schemes. Most notable was Chicago Board of Trade v. Olsen (1923), which brought the grain exchanges under the rubric of interstate commerce. Such decisions broadened the power of the federal government to control the economy.

But, we hasten to note, the Court continued to find that certain commercial activities exerted too little direct impact on interstate commerce to justify congressional control. The most prominent among these were manufacturing and processing. The 1895 sugar trust case of E. C. Knight established this principle and was reinforced in 1918 by Hammer v. Dagenhart, the child labor case. Hammer, excerpted later in this chapter, provides an example of the Court’s use during this period of the Tenth Amendment to limit federal regulatory power; it also, as we shall see, illustrates the Court’s use of the production/distribution distinction of E. C. Knight to narrow Congress’s ability to use the commerce clause as a federal police power.

Stafford v. Wallace

258 U.S. 495 (1922)

http://laws.findlaw.com/us/258/495.html

Vote: 7 (Brandeis, Clarke, Holmes, McKenna, Pitney, Taft, Van Devanter)

1 (McReynolds)

OPINION OF THE COURT: Taft

NOT PARTICIPATING: Day

Facts:

Armed with the Swift & Company precedent, Congress in 1921 passed the Packers and Stockyard Act. This legislation attempted to go beyond antitrust considerations in regulating the meatpacking industry. In addition to making it unlawful for the packers to fix prices or engage in monopolistic practices, the law forbade meatpackers in interstate commerce to engage in any unfair, discriminatory, or deceptive practices. It required all stockyard dealers and commission men to register with the secretary of agriculture. The transactions at the stockyards had to conform to a schedule of charges open for public inspection. Fees and charges could be changed only after ten days’ notice to the secretary. Congress delegated to the Agriculture Department the authority to make rules and regulations to carry out the act, set stockyard rates, and prescribe record-keeping procedures for stockyard officials.

Stafford and Company, a corporation engaged in commercial transactions of cattle, sued Secretary of Agriculture Henry Wallace, asking the courts to enjoin his enforcement of the act. The lower court refused to issue the requested injunction, and the company appealed.

Arguments:

For the appellants, T. F. Stafford et al.:

The lower court’s decision rests on the following syllogism: “the stockyards themselves are instrumentalities of interstate commerce,” and the dealers in livestock at the yards are “engaged in or participating in that commerce within the stockyards”; accordingly, the dealers are engaged in interstate commerce, which Congress can regulate. Both the premise and conclusion are wrong. The dealers are not engaged in “commerce within the stockyards.” They buy and sell livestock for others, which is something separate and distinct from interstate commerce. It is not affected by whether the shipment originates within the state or out of state. The transportation ceases when the livestock reaches the stockyards, and it does not begin again, if ever, until after the services of appellants have been fully performed.

If the appellants are engaged in interstate commerce solely because they perform a service concerning livestock that may be shipped in interstate commerce, so too are the men who feed the cattle, and so on. If Congress can regulate these activities—that is, all the incidents connected with that commerce—the entire sphere of mercantile activity would exclude state control over contracts and commerce that are purely domestic in their nature.

For the appellees, Henry Wallace, secretary of agriculture, et al.:

Various Court decisions have established the power of Congress to regulate all instrumentalities by which interstate commerce is carried on or conducted. The appellant’s business, which offers terminal facilities at one of the world’s largest livestock markets, is embraced within those instrumentalities of interstate commerce just as if it were an integral part of a great railroad system.

The question here is not whether the appellants should be covered by the Packers and Stockyard Act by judicial interpretation but whether Congress had the power to designate them and their transactions as part of the “current of commerce” and therefore covered by the act. The answer is yes because they form as much a part of the “current of commerce” as the railroads or the stockyards company. See Swift.

MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

The object to be secured by the act is the free and unburdened flow of live stock from the ranges and farms of the West and the Southwest through the great stockyards and slaughtering centers on the borders of that region, and thence in the form of meat products to the consuming cities of the country in the Middle West and East, or, still as live stock, to the feeding places and fattening farms in the Middle West or East for further preparation for the market.

The chief evil feared is the monopoly of the packers, enabling them unduly and arbitrarily to lower prices to the shipper who sells, and unduly and arbitrarily to increase the price to the consumer who buys. Congress thought that the power to maintain this monopoly was aided by control of the stockyards. Another evil which it sought to provide against by the act, was exorbitant charges, duplication of commissions, deceptive practices in respect of prices, in the passage of the live stock through the stockyards, all made possible by collusion between the stockyards management and the commission men, on the one hand, and the packers and dealers on the other. Expenses incurred in the passage through the stockyards necessarily reduce the price received by the shipper, and increase the price to be paid by the consumer. If they be exorbitant or unreasonable, they are an undue burden on the commerce which the stockyards are intended to facilitate. Any unjust or deceptive practice or combination that unduly and directly enhances them is an unjust obstruction to that commerce. . . .

The stockyards are not a place of rest or final destination. Thousands of head of live stock arrive daily by carload and trainload lots, and must be promptly sold and disposed of and moved out to give place to the constantly flowing traffic that presses behind. The stockyards are but a throat through which the current flows, and the transactions which occur therein are only incident to this current from the West to the East, and from one State to another. Such transactions cannot be separated from the movement to which they contribute and necessarily take on its character. The commission men are essential in making the sales without which the flow of the current would be obstructed, and this, whether they are made to packers or dealers. The dealers are essential to the sales to the stock farmers and feeders. The sales are not in this aspect merely local transactions. They create a local change of title, it is true, but they do not stop the flow; they merely change the private interests in the subject of the current, not interfering with, but, on the contrary, being indispensable to its continuity. The origin of the live stock is in the West, its ultimate destination known to, and intended by, all engaged in the business is in the Middle West and East either as meat products or stock for feeding and fattening. This is the definite and well-understood course of business. The stockyards and the sales are necessary factors in the middle of this current of commerce.

The act, therefore, treats the various stockyards of the country as great national public utilities to promote the flow of commerce from the ranges and farms of the West to the consumers in the East. It assumes that they conduct a business affected by a public use of a national character and subject to national regulation. That it is a business within the power of regulation by legislative action needs no discussion. . . . Nor is there any doubt that in the receipt of live stock by rail and in their delivery by rail the stockyards are an interstate commerce agency. The only question here is whether the business done in the stockyards between the receipt of the live stock in the yards and the shipment of them therefrom is a part of interstate commerce, or is so associated with it as to bring it within the power of national regulation. A similar question has been before this court and had great consideration in Swift & Co. v. United States. The judgment in that case gives a clear and comprehensive exposition which leaves to us in this case little but the obvious application of the principles there declared. . . .

The application of the commerce clause of the Constitution in the Swift Case was the result of the natural development of interstate commerce under modern conditions. It was the inevitable recognition of the great central fact that such streams of commerce from one part of the country to another which are ever flowing are in their very essence the commerce among the States and with foreign nations which historically it was one of the chief purposes of the Constitution to bring under national protection and control. This court declined to defeat this purpose in respect of such a stream and take it out of complete national regulation by a nice and technical inquiry into the noninterstate character of some of its necessary incidents and facilities when considered alone and without reference to their association with the movement of which they were an essential but subordinate part.

The principles of the Swift Case have become a fixed rule of this court in the construction and application of the commerce clause. . . .

Of course, what we are considering here is not a bill in equity or an indictment charging conspiracy to obstruct interstate commerce, but a law. The language of the law shows that what Congress had in mind primarily was to prevent such conspiracies by supervision of the agencies which would be likely to be employed in it. If Congress could provide for punishment or restraint of such conspiracies after their formation through the Anti-Trust Law as in the Swift Case, certainly it may provide regulation to prevent their formation. . . .

As already noted, the word “commerce” when used in the act is defined to be interstate and foreign commerce. Its provisions are carefully drawn to apply only to those practices and obstructions which in the judgment of Congress are likely to affect interstate commerce prejudicially. Thus construed and applied, we think the act clearly within congressional power and valid.

Other objections are made to the act and its provisions as violative of other limitations of the Constitution, but the only one seriously pressed was that based on the Commerce Clause and we do not deem it necessary to discuss the others.

The orders of the District Court refusing the interlocutory injunctions are

Affirmed.

Regulating Commerce as a Federal Police Power

Challenging laws as regulating intrastate, not interstate, commerce was only one approach taken to resist federal regulatory efforts during this period. Business interests also attacked certain kinds of laws as beyond congressional commerce power on the ground that they regulated morality and not commerce. They claimed that Congress was inappropriately using the commerce clause as a federal police power. As we noted earlier, the term police power refers to the general authority of a government to regulate for the health, safety, morals, and general welfare of its citizens. The states possessed general police powers prior to the adoption of the federal Constitution and retained them when the national government was created. Consequently, states may pass laws for the general welfare without any specific grant of power to do so. As long as the legislation does not run afoul of specific constitutional limitations (such as the Bill of Rights), the states are free to act.

The federal government, on the other hand, is a government of delegated powers. It does not possess any general police power. For an act of Congress to be valid, it must rest on a specific grant of authority—an enumerated, implied, or inherent power. Madison described the situation aptly in Federalist No. 45: the “powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.”

Consider prostitution, which was at issue in Hoke v. United States (1913). Based on its police powers, a state could pass legislation outlawing prostitution without any justification necessary. The federal government, however, could pass such a law only if Congress could justify it as an exercise of a delegated power. Consequently, we have the dispute in Hoke over whether a law making it a criminal violation to take “any woman or girl” across state lines “for the purpose of prostitution or debauchery, or for any other immoral purpose” was a valid exercise of the power to regulate interstate commerce.

So, while most of the battles over the meaning of interstate commerce have been largely economic—Gibbons and E. C. Knight provide examples—Hoke illustrates that the regulation of commerce can be structured in a way that affects matters of health, safety, and morals. But are regulations of this sort constitutional? Congress framed the law at issue in Hoke, known as the Mann Act, as an exercise of its commerce power. But the legislators may have been motivated by moral, rather than commercial, considerations. Is this an appropriate exercise of the commerce power? May Congress legitimately use the commerce clause as a means of exercising an authority at the national level similar to the states’ police powers? A related consideration is that many of these laws, including the Mann Act, prohibit particular activities. Are “prohibitions” regulations within the meaning of the commerce clause?

Marshall’s opinion in Gibbons is suggestive. Recall his words: “Th[e] [commerce] power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the constitution.” In other words, if an activity falls under the definition of commerce among the states, then Congress has the right to regulate it as long as the regulation does not violate a constitutional limitation (such as the First Amendment). The commerce clause itself imposes no limitations on the motivations for such legislation.

Would subsequent Courts agree? Champion v. Ames provides an initial response. The case demonstrates, first, that the power to “regulate” commerce includes the power to prohibit certain activities. It also shows how Congress can use the commerce power to depress certain activities it deems unacceptable. This goal is much different from those that are present when Congress regulates commerce for economic reasons.

As you read Justice John Marshall Harlan’s opinion for the Court, notice the expansive terms he uses to describe the commerce power. Does he convince you that Congress can use the commerce clause to include the power to prohibit what Congress thought was an immoral trade? The four dissenters did not think so. They argued that Congress was not regulating commerce at all; instead, it was trying to prohibit lotteries, a matter for the police powers of the state to address.

Champion set the precedent that Congress may indeed use the commerce clause in much the same manner as states use their police powers. In the years following Champion, the legislature passed a number of laws designed to accomplish social, not economic, goals through the exercise of the commerce power. In 1906 Congress passed the Meat Inspection Act and the Pure Food and Drug Act, which prohibited contaminated foods from interstate commerce. Five years later the Supreme Court upheld the Food and Drug Act as a proper exercise of the commerce power.5 In 1910, as a method of curtailing interstate prostitution rings, Congress passed the Mann Act, as we mentioned above. In Hoke the Court unanimously ruled that the federal government has the authority under the commerce clause to prohibit taking women across state lines for purposes of prostitution or other immoral activities. In addition, Congress passed various laws that federalized criminal activity that extends beyond the boundaries of a single state. Kidnapping that crosses state lines, interstate transportation of stolen property, and even interstate flight to avoid prosecution are all federal crimes because of Congress’s power to regulate commerce among the states.

And yet, just when it seemed that the Court would continue to allow Congress to develop federal police powers via the commerce clause, it dealt Congress a significant blow in the case of Hammer v. Dagenhart (1918).

Young girls working in a clothing factory. Congressional attempts to curb child labor by taxing the items produced were repeatedly rebuffed by the Supreme Court.

Library of Congress

If William Day’s opinion was a total victory for the Executive Committee, it meant little to the Dagenharts (see box 7-1). More important is what it meant for congressional power under the commerce clause. First, it perpetuated that distinction drawn in E. C. Knight between the manufacturing and the production of goods, which the Court regarded as intrastate commerce and therefore to be regulated only by the states, and their shipment in interstate commerce, which Congress could regulate. In Hammer the Court saw the law as a regulation of the manufacturing stage rather than a regulation of interstate commerce. Seen in this way, some say the decision was not so much a rejection of the power of Congress to regulate social matters as it was a reminder that the justices would treat these types of laws in the way as they did the Anti-Trust Law at issue in E. C. Knight: Congress must show that it is not regulating manufacturing or production. On the other hand, Day seemed to reprimand Congress for using the commerce power to invade state police power. As he wrote, “The grant of power to Congress over the subject of interstate commerce was to enable it to regulate such commerce, and not to give it authority to control the states in their exercise of the police power over local trade and manufacture.” This is related to another striking aspect of Hammer: the Court’s use of the Tenth Amendment as, seemingly, an independent brake on the commerce power.

Champion v. Ames

188 U.S. 321 (1903)

http://laws.findlaw.com/us/188/321.html

Vote: 5 (Brown, Harlan, Holmes, McKenna, White)

4 (Brewer, Fuller, Peckham, Shiras)

OPINION OF THE COURT: Harlan

DISSENTING OPINION: Fuller

Facts:

In 1895 Congress passed a statute prohibiting lottery tickets from being imported from abroad, transported across state lines or sent through the mail. United States Marshal John Ames arrested Charles Champion in Chicago on charges that he had arranged for a shipment of lottery tickets, supposedly printed in Paraguay, to be transported from Texas to California by Wells Fargo. When federal authorities attempted to transport Champion to Texas to stand trial on the charges, he filed for a writ of habeas corpus challenging his arrest. He alleged that Congress acted unconstitutionally when it passed the lottery ticket law.

Arguments:

For the appellant, Charles Champion:

The power to regulate lotteries, and to permit or prohibit the sale of lottery tickets, is exclusively a police power reserved to the states. The suppression of lotteries is not an exercise of any power the Constitution commits to Congress and so violates the Tenth Amendment.

The law can be sustained only as an exercise of the commerce power. But it is not a regulation of commerce; it is a suppression of an alleged evil. Sending lottery tickets is not a transaction within the scope of the commerce power. And it cannot be doubted that the intention and purpose of Congress was to suppress lotteries.

Although the law may be necessary to suppress lotteries, it has no relation to interstate commerce and, therefore, is not “necessary and proper for carrying into execution” the power to regulate commerce among the states.

For the appellee, John C. Ames, U.S. marshal:

Lottery tickets are articles of commerce in the sense that they are things that are the subjects of barter and sale.

Whether an article is or is not an article of commerce is dependent not on its noxiousness or usefulness, nor on whether the states have prohibited it within their borders in the exercise of their police power, but on whether such articles have been, in the ordinary and usual channels of trade, the subjects of purchase and sale. Any article that people buy or sell is an article of commerce and comes under the power of Congress when its exchange is interstate.

The power to prohibit is absolute, and the legislature is the final judge of the wisdom of its exercise.

MR. JUSTICE HARLAN DELIVERED THE OPINION OF THE COURT.

What is the import of the word “commerce” as used in the Constitution? It is not defined by that instrument. Undoubtedly, the carrying from one State to another by independent carriers of things or commodities that are ordinary subjects of traffic, and which have in themselves a recognized value in money, constitutes interstate commerce. But does not commerce among the several States include something more? Does not the carrying from one State to another, by independent carriers, of lottery tickets that entitle the holder to the payment of a certain amount of money therein specified also constitute commerce among the States? . . .

The leading case under the commerce clause of the Constitution is Gibbons v. Ogden. Referring to that clause, Chief Justice Marshall said: “ . . . This power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the Constitution. These are expressed in plain terms, and do not affect the questions which arise in this case or which have been discussed at the bar. If, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations, and among the several States, is vested in Congress as absolutely as it would be in a single government, having in its constitution the same restrictions on the exercise of the power as are found in the Constitution of the United States.” . . .

. . . [P]rior adjudications . . . sufficiently indicate the grounds upon which this court has proceeded when determining the meaning and scope of the commerce clause. They show that commerce among the States embraces navigation, intercourse, communication, traffic, the transit of persons, and the transmission of messages by telegraph. They also show that the power to regulate commerce among the several States is vested in Congress as absolutely as it would be in a single government, having in its constitution the same restrictions on the exercise of the power as are found in the Constitution of the United States; that such power is plenary, complete in itself, and may be exerted by Congress to its utmost extent, subject only to such limitations as the Constitution imposes upon the exercise of the powers granted by it; and that in determining the character of the regulations to be adopted Congress has a large discretion which is not to be controlled by the courts, simply because, in their opinion, such regulations may not be the best or most effective that could be employed.

We come then to inquire whether there is any solid foundation upon which to rest the contention that Congress may not regulate the carrying of lottery tickets from one State to another, at least by corporations or companies whose business it is, for hire, to carry tangible property from one State to another. . . .

We are of opinion that lottery tickets are subjects of traffic and therefore are subjects of commerce, and the regulation of the carriage of such tickets from State to State, at least by independent carriers, is a regulation of commerce among the several States. . . .

It is to be remarked that the Constitution does not define what is to be deemed a legitimate regulation of interstate commerce. In Gibbons v. Ogden it was said that the power to regulate such commerce is the power to prescribe the rule by which it is to be governed. But this general observation leaves it to be determined, when the question comes before the court, whether Congress in prescribing a particular rule has exceeded its power under the Constitution. While our Government must be acknowledged by all to be one of enumerated powers, the Constitution does not attempt to set forth all the means by which such powers may be carried into execution. It leaves to Congress a large discretion as to the means that may be employed in executing a given power. . . .

If a State, when considering legislation for the suppression of lotteries within its own limits, may properly take into view the evils that inhere in the raising of money, in that mode, why may not Congress, invested with the power to regulate commerce among the several States, provide that such commerce shall not be polluted by the carrying of lottery tickets from one State to another? In this connection it must not be forgotten that the power of Congress to regulate commerce among the States is plenary, is complete in itself, and is subject to no limitations except such as may be found in the Constitution. What provision in that instrument can be regarded as limiting the exercise of the power granted? What clause can be cited which, in any degree, countenances the suggestion that one may, of right, carry or cause to be carried from one State to another that which will harm the public morals? We cannot think of any clause of that instrument that could possibly be invoked by those who assert their right to send lottery tickets from State to State except the one providing that no person shall be deprived of his liberty without the due process of law. We have said that the liberty protected by the Constitution embraces the right to be free in the enjoyment of one’s faculties; “to be free to use them in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; to pursue any livelihood or avocation, and for that purpose to enter into all contracts that may be proper.” But surely it will not be said to be a part of any one’s liberty, as recognized by the supreme law of the land, that he shall be allowed to introduce into commerce among the States an element that will be confessedly injurious to the public morals. . . .

Besides, Congress, by that act, does not assume to interfere with traffic or commerce in lottery tickets carried on exclusively within the limits of any State, but has in view only commerce of that kind among the several States. It has not assumed to interfere with the completely internal affairs of any State, and has only legislated in respect of a matter which concerns the people of the United States. As a State may, for the purpose of guarding the morals of its own people, forbid all sales of lottery tickets within its limits, so Congress, for the purpose of guarding the people of the United States against the “widespread pestilence of lotteries” and to protect the commerce which concerns all the States, may prohibit the carrying of lottery tickets from one State to another. . . .

The whole subject is too important, and the questions suggested by its consideration are too difficult of solution to justify any attempt to lay down a rule for determining in advance the validity of every statute that may be enacted under the commerce clause. We decide nothing more in the present case than that lottery tickets are subjects of traffic among those who choose to sell or buy them; that the carriage of such tickets by independent carriers from one State to another is therefore interstate commerce; that under its power to regulate commerce among the several States Congress—subject to the limitations imposed by the Constitution upon the exercise of the powers granted—has plenary authority over such commerce, and may prohibit the carriage of such tickets from State to State; and that legislation to that end, and of that character, is not inconsistent with any limitation or restriction imposed upon the exercise of the powers granted to Congress.

The judgment is

Affirmed.

MR. CHIEF JUSTICE FULLER, with whom concur MR. JUSTICE BREWER, MR. JUSTICE SHIRAS, and MR. JUSTICE PECKHAM, dissenting.

The naked question is whether the prohibition by Congress of the carriage of lottery tickets from one State to another by means other than the mails is within the powers vested in that body by the Constitution of the United States. That the purpose of Congress in this enactment was the suppression of lotteries cannot reasonably be denied. That purpose is avowed in the title of the act, and is its natural and reasonable effect, and by that its validity must be tested.

The power of the State to impose restraints and burdens on persons and property in conservation and promotion of the public health, good order and prosperity is a power originally and always belonging to the States, not surrendered by them to the General Government nor directly restrained by the Constitution of the United States, and essentially exclusive, and the suppression of lotteries as a harmful business falls within this power, commonly called of police.

It is urged, however, that because Congress is empowered to regulate commerce between the several States, it, therefore, may suppress lotteries by prohibiting the carriage of lottery matter. Congress may indeed make all laws necessary and proper for carrying the powers granted to it into execution, and doubtless an act prohibiting the carriage of lottery matter would be necessary and proper to the execution of a power to suppress lotteries; but that power belongs to the States and not to Congress. To hold that Congress has general police power would be to hold that it may accomplish objects not entrusted to the General Government, and to defeat the operation of the Tenth Amendment, declaring that: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

Hammer v. Dagenhart

247 U.S. 251 (1918)

http://laws.findlaw.com/us/247/251.html

Vote: 5 (Day, McReynolds, Pitney, Van Devanter, White)

4 (Brandeis, Clarke, Holmes, McKenna)

OPINION OF THE COURT: Day

DISSENTING OPINION: Holmes

Facts:

In the 1880s America entered the industrial age, which was characterized by the unfettered growth of the private sector economy. The Industrial Revolution changed the United States for the better in countless ways, but it also had a downside. Lacking any significant government controls, many businesses had less-than-benevolent relations with their workers. Some forced employees to work more than fourteen hours a day at absurdly low wages and under dreadful conditions. They also had no qualms about employing children under the age of sixteen.

Americans were divided over these practices. On one side were the entrepreneurs, stockholders, and others who gained from worker exploitation. By employing children, paying low wages, and providing no benefits, they minimized expenses and maximized profits. On the other side were the progressives, reformist groups, and individuals who sought to persuade the states and the federal government to enact laws to protect workers. These two camps repeatedly clashed in their struggle to attain diametrically opposed policy ends.6

One of the first battles came in 1915, when Congress began consideration of a bill to prohibit the shipment in interstate commerce of factory products made by children under the age of fourteen or by children ages fourteen to sixteen who worked more than eight hours a day. Numerous progressive groups supported the legislation, but it faced substantial opposition from employer associations such as the Executive Committee of Southern Cotton Manufacturers. This group was made up of militant mill owners who organized in 1915 solely to defeat federal child labor legislation. After months of legislative battles, Congress finally passed the legislation, known as the Keating-Owen Child Labor Act of 1916. The committee’s leader, David Clark, vowed that his group would challenge the constitutionality of the act in court. He retained the services of a corporate law firm that held a laissez-faire philosophy to argue the committee’s case. He then sought the right test case to challenge the law. Eventually, he decided on a suit against the Fidelity Manufacturing Company.

The case he brought was perfect for the committee’s needs. Roland Dagenhart and his two minor sons were employed at Fidelity, a cotton mill in North Carolina. Under state law, each of Dagenhart’s sons was permitted to work up to eleven hours a day. Under the new federal act, however, the older boy could work only eight hours, and the younger one could not work at all. Not only were the facts relating to the Dagenharts advantageous, but Clark also secured the cooperation of the company, which had equal disdain for the law, in planning the litigation. One month before the effective date of the law, the company posted the new federal regulations on its door and “explained” to affected employees that they would be unable to continue to work. A week later, having already secured the consent of the Dagenharts and the factory, the committee’s attorneys filed an injunction against the company and William C. Hammer, a federal prosecutor, to prevent enforcement of the law.

Within a month, the district court heard arguments and ruled the act unconstitutional. The judge did not write an opinion, but when he handed down his decision he fully agreed with the committee’s arguments, suggesting that the federal government had usurped state power.

Once the district court stayed enforcement of the act, both the committee and the U.S. Justice Department began to plan the strategies they would use before the U.S. Supreme Court. The committee argued that Congress had no authority to impose its policies on the states. The government’s defense was led by Solicitor General John W. Davis. One of the great attorneys of the day, he made a strong case for the law, although he probably personally opposed it. Not only did he argue that the regulation of child labor fell squarely within Congress’s purview, but he also supplied the Court with data indicating that the states themselves had sought to eliminate the exploitation of young children by employers. His brief pointed out that only three states placed no age limit on factory employees, and only ten allowed those between the ages of fourteen and sixteen to work. We detail additional arguments below.

Arguments:

For the appellant, William C. Hammer, U.S. attorney:

The commerce clause authorizes Congress to “regulate commerce among the several states.” Here, the statute is clearly a regulation, and it applies only to the actual transportation of products out of state, not to the intrastate activity of manufacturing. Supreme Court precedent has clarified that transportation of goods is clearly within the meaning of “commerce.” Therefore, the statute is wholly within the bounds of congressional commerce power.

Unfair competition concerns also justify the act. States cannot limit child labor without raising the costs of manufacturing within their borders, which puts them at an economic disadvantage. The federal government is the only body that is able to enact a uniform law to prevent business practices that lead to unfair competition.

The question of states’ rights is irrelevant if the statute is found to be valid exercise of congressional power under the commerce clause.

For the appellee, Roland Dagenhart:

In their writings, the framers made clear that the purpose of the commerce clause was not to grant a positive power to the federal government. Rather, it was viewed as a provision designed to prevent injustices committed in commerce by the states.

Legislative history shows that the purpose of the act is to prevent child labor, not to protect or promote commerce. Congress is attempting to regulate the pretransportation conditions of labor, not the actual transportation of the goods. That is beyond the scope of the commerce clause, and Congress may not do indirectly what it is prohibited to do directly.

Any consequences of child labor are local, so they may be regulated only by the state. The Tenth Amendment reserves the right to exercise police power over intrastate matters to the states.

MR. JUSTICE DAY DELIVERED THE OPINION OF THE COURT.

It is . . . contended that the authority of Congress may be exerted to control interstate commerce in the shipment of child-made goods because of the effect of the circulation of such goods in other states where the evil of this class of labor has been recognized by local legislation, and the right to thus employ child labor has been more rigorously restrained than in the state of production. In other words, that the unfair competition thus engendered may be controlled by closing the channels of interstate commerce to manufacturers in those states where the local laws do not meet what Congress deems to be the more just standard of other states.

There is no power vested in Congress to require the states to exercise their police power so as to prevent possible unfair competition. Many causes may co-operate to give one state, by reason of local laws or conditions, an economic advantage over others. The commerce clause was not intended to give to Congress a general authority to equalize such conditions. In some of the states laws have been passed fixing minimum wages for women; in others the local law regulates the hours of labor of women in various employments. Business done in such states may be at an economic disadvantage when compared with states which have no such regulations; surely, this fact does not give Congress the power to deny transportation in interstate commerce to those who carry on business where the hours of labor and the rate of compensation for women have not been fixed by a standard in the use in other states and approved by Congress.

The grant of power to Congress over the subject of interstate commerce was to enable it to regulate such commerce, and not to give it authority to control the states in their exercise of the police power over local trade and manufacture.

The grant of authority over a purely Federal matter was not intended to destroy the local power always existing and carefully reserved to the states in the 10th Amendment to the Constitution. . . .

That there should be limitations upon the right to employ children in mines and factories in the interest of their own and the public welfare, all will admit. That such employment is generally deemed to require regulation is shown by the fact that the brief of counsel states that every state in the Union has a law upon the subject, limiting the right to thus employ children. In North Carolina, the state wherein is located the factory in which the employment was had in the present case, no child under twelve years of age is permitted to work.

. . . The maintenance of the authority of the states over matters purely local is as essential to the preservation of our institutions as is the conservation of the supremacy of the Federal power in all matters intrusted to the nation by the Federal Constitution.

In interpreting the Constitution it must never be forgotten that the nation is made up of states, to which are intrusted the powers of local government. And to them and to the people the powers not expressly delegated to the national government are reserved. The power of the states to regulate their purely internal affairs by such laws as seem wise to the local authority is inherent, and has never been surrendered to the general government. To sustain this statute would not be, in our judgment, a recognition of the lawful exertion of congressional authority over interstate commerce, but would sanction an invasion by the Federal power of the control of a matter purely local in its character, and over which no authority has been delegated to Congress in conferring the power to regulate commerce among the states.

We have neither authority nor disposition to question the motives of Congress in enacting this legislation. The purposes intended must be attained consistently with constitutional limitations, and not by an invasion of the powers of the states. This court has no more important function than that which devolves upon it the obligation to preserve inviolate the constitutional limitations upon the exercise of authority, Federal and state, to the end that each may continue to discharge, harmoniously with the other, the duties intrusted to it by the Constitution.

In our view the necessary effect of this act is, by means of a prohibition against the movement in interstate commerce of ordinary commercial commodities, to regulate the hours of labor of children in factories and mines within the states,—a purely state authority. Thus the act in a twofold sense is repugnant to the Constitution. It not only transcends the authority delegated to Congress over commerce, but also exerts a power as to a purely local matter to which the Federal authority does not extend. The far-reaching result of upholding the act cannot be more plainly indicated than by pointing out that if Congress can thus regulate matters intrusted to local authority by prohibition of the movement of commodities in interstate commerce, all freedom of commerce will be at an end, and the power of the states over local matters may be eliminated, and thus our system of government be practically destroyed.

For these reasons we hold that this law exceeds the constitutional authority of Congress. It follows that the decree of the District Court must be affirmed.

MR. JUSTICE HOLMES, dissenting.

The act does not meddle with anything belonging to the states. They may regulate their internal affairs and their domestic commerce as they like. But when they seek to send their products across the state line they are no longer within their rights. If there were no Constitution and no Congress their power to cross the line would depend upon their neighbors. Under the Constitution such commerce belongs not to the states, but to Congress to regulate. It may carry out its views of public policy whatever indirect effect they may have upon the activities of the states. Instead of being encountered by a prohibitive tariff at her boundaries, the state encounters the public policy of the United States which it is for Congress to express. The public policy of the United States is shaped with a view to the benefit of the nation as a whole. . . . The national welfare as understood by Congress may require a different attitude within its sphere from that of some self-seeking state. It seems to me entirely constitutional for Congress to enforce its understanding by all the means at its command.

box 7-1 AFTERMATH . . . REUBEN DAGENHART

FIVE YEARS after the Supreme Court’s decision in Hammer v. Dagenhart striking down the child labor law, a journalist interviewed Reuben Dagenhart, whose father had sued to prevent Congress from interfering with his sons’ jobs in a North Carolina cotton mill. Reuben was twenty when he was interviewed. Excerpts follow:

“What benefit . . . did you get out of the suit which you won in the United States Supreme Court?”

“I don’t see that I got any benefit. I guess I’d be a lot better off if they hadn’t won it.

“Look at me! A hundred and five pounds, a grown man, and no education. I may be mistaken, but I think the years I’ve put in the cotton mills have stunted my growth. They kept me from getting any schooling. I had to stop school after the third grade and now I need the education I didn’t get.”

“Just what did you and John get out of that suit then?” he was asked.

“Why, we got some automobile rides when them big lawyers from the North was down here. Oh yes, and they bought both of us a Coca-Cola! That’s all we got out of it.”

“What did you tell the judge when you were in court?”

“Oh, John and me was never in court. Just Paw was there. John and me was just little kids in short pants. I guess we wouldn’t have looked like much in court. . . . We were working in the mill while the case was going on.”

Reuben hasn’t been to school in years, but his mind has not been idle.

“It would have been a good thing for all the kids in this state if that law they passed had been kept. Of course, they do better now than they used to. You don’t see so many babies working in the factories, but you see a lot of them that ought to be going to school.”

SOURCE: Labor, November 17, 1923, 3, quoted in Leonard F. James, ed., The Supreme Court in American Life, 2nd ed. (Glenview, IL: Scott, Foresman, 1971), 74.

THE SUPREME COURT AND THE NEW DEAL

The Supreme Court’s related moves of narrowing the definition of commerce and invoking the Tenth Amendment in E. C. Knight and Hammer probably reflected less a commitment to states’ rights than a willingness on the part of the Court to embrace a free enterprise philosophy. If so, this matched the general mood of the public, as at least some Americans were benefiting so much from the economic boom of the 1920s that they opposed regulation. Calvin Coolidge famously put it this way: “After all, the chief business of the American people is business.”

This changed almost overnight when the New York Stock Exchange crashed on October 29, 1929. The crash set in motion a series of events that shook the American economy and drove the nation into a deep depression. For the next two years, the stock market continued to tumble, with the Standard & Poor’s Industrial Average falling 75 percent. The gross national product declined 27 percent over three years, and the unemployment rate rose from a healthy 3.2 percent in 1929 to a catastrophic 24.9 percent in 1933.

The Republican Party, which had been victorious in the November 1928 elections, controlled the White House and both houses of Congress. The party attempted to cope with the Great Depression by following the laissez-faire philosophy of government that it had followed prior to the stock market crash, but that approach was no longer working; the economic forces against which the Republicans were fighting were enormous. A different political approach was necessary to battle the collapse, and the American people were demanding such a change. They got it, as we detail below, with the election of a Democratic president and Congress in the 1932 elections.

While some of the Court’s decisions, such as Swift and Stafford, seemed to give the government more power to regulate the economy, others, such as E. C. Knight and Hammer, were obstacles, limiting Congress’s ability to cope effectively with a full-scale economic collapse. And at least initially the justices of the Supreme Court were unwilling to remove them. This situation touched off one of history’s most dramatic confrontations between the Court and the president, and it permanently altered the allocation of government powers.

The Depression and Political Change

In the 1932 presidential election, voters rejected incumbent Herbert Hoover and swept Democratic candidate Franklin D. Roosevelt into office by a huge margin. With new Democratic majorities in the House and Senate, the president began combating the Depression with policies he called the New Deal. The overwhelming Democratic margins in Congress gave Roosevelt all the political clout he needed to gain approval of his radical new approach to boosting the economy. His programs were so popular with the American people that in 1936 they reelected Roosevelt by an even greater margin and provided him with even larger Democratic majorities in Congress, reducing the Republicans almost to minor party status. Clearly, the severe economic events following the 1929 crash triggered substantial political change, with the legislative and executive branches experiencing wholesale partisan shifts (see table 7-1).

The U.S. Supreme Court, however, did not change. In 1929, just before the stock market crash, the Court membership was six Republicans and three Democrats. The economic conservatives (Butler, McReynolds, Sanford, Sutherland, Taft, and Van Devanter) were in control, outnumbering the justices more sympathetic to political and economic change (Brandeis, Holmes, and Stone). By 1932 the Court had three new justices. Former justice Charles Hughes, who had resigned his seat in 1916 to seek the presidency, succeeded William Howard Taft as chief justice; Benjamin Cardozo took Holmes’s seat; and Owen Roberts replaced Edward Sanford. Although these changes reduced the Republican majority to five, it created no appreciable change in the ideological balance of the Court. Hoover filled all three of these vacancies, which occurred before Roosevelt took office. Inaugurated in March 1933, Roosevelt had no opportunity to name a Supreme Court justice until Willis Van Devanter retired in June 1937. Roosevelt’s first appointment, Hugo Black, assumed his seat in August of that year. Not until 1940 did the Court have a majority appointed from the period after Roosevelt’s first election.

In the executive branch, however, Roosevelt was able to assemble a cadre of young, creative people to devise novel ways of approaching the ailing economy, and these New Deal Democrats quickly set out to develop, enact, and implement their programs. Congress passed the first legislation, the Emergency Banking Act of 1933, just five days after Roosevelt’s inauguration, and a string of statutes designed to control all major sectors of the nation’s economy followed (see box 7-2). In adopting these programs, Congress relied on a number of constitutional powers, including the powers to tax, spend, and regulate interstate and foreign commerce.

NOTE: These data depict the change in political representation in the three branches of the federal government following the 1929 stock market crash and the deepening depression that continued over the next several years. Members of the House and one-third of the senators were elected the previous November. The data on presidential election margins are based on previous November’s elections. Supreme Court information is as of January of the designated years.

The new political majority that dominated the legislative and executive branches called for the government to take an active role in economic regulation. The Supreme Court remained firmly in the control of representatives of the old order, with views on the relationship of government and the economy at odds with those of the political branches. A clash between the president and the Court was inevitable.

The Court Attacks the New Deal

As soon as the New Deal programs came into being, conservative business interests began to challenge their constitutional validity. In just two years the appeals started to reach the Court’s doorstep. Beginning in 1935 and lasting for two long, tense years, the Court and the New Deal Democrats fought over the constitutionality of an expanded federal role in managing the economy.

During this period, the justices struck down a number of important New Deal statutes. Of ten major programs, the Supreme Court approved only two—the Tennessee Valley Authority and the emergency monetary laws. Four hard-line conservative justices—Pierce Butler, James McReynolds, George Sutherland, and Willis Van Devanter—formed the heart of the Court’s opposition. Many thought their obstruction of New Deal initiatives would bring about the nation’s ruin. As a consequence, they became known as the Four Horsemen of the Apocalypse, a biblical reference to the end of the world in the Book of Revelation. Two of the four, Butler and McReynolds, were Democrats (see box 7-3).

Naturally, these four justices by themselves could not declare void any act of Congress. They needed the vote of at least one other justice. As box 7-4 indicates, they had little trouble attracting others to their cause. Of the eight major 1935–1936 decisions in which they struck down congressional policies, three were by 5–4 votes in which Justice Roberts joined the four conservatives. In one additional case, both Roberts and Chief Justice Hughes voted with them. But in three of these significant decisions, the Court was unanimous, with even the liberals, Brandeis, Cardozo, and Stone, voting to strike down the challenged legislation.

The first salvo in the war between the two branches occurred on January 7, 1935, when the Court announced its decision in Panama Refining Company v. Ryan. By an 8–1 vote the justices struck down a section of the National Industrial Recovery Act of 1933 (NIRA) as an improper delegation of congressional power to the executive branch. The section in question was a major New Deal weapon for regulating the oil industry. It gave the president the power to prohibit interstate shipment of oil and petroleum products that were produced or stored in a manner illegal under state law. The justices found fault with the act because it did not provide sufficiently clear standards to guide the executive branch; rather, it gave the president almost unlimited discretion in applying the prohibitions. Panama Refining was the first case in which the Court struck down legislation because it was an improper delegation of power. (See Chapter 5 for more on the delegation of powers.)

Although the decision in Panama Refining was restricted to the delegation question and did not focus on Congress’s interstate commerce authority, it promised bad days ahead for the administration. Not only was the decision a disappointment for the president, but also the vote was lopsided. Justice Cardozo alone voted to approve the law.

The Court dropped its biggest bomb on the New Deal four months later. The justices voted 5–4 on May 6 to declare the Railroad Retirement Act of 1934 an unconstitutional violation of the commerce clause and the due process clause of the Fifth Amendment.7 Then, on May 27—a date that became known as Black Monday—the justices announced three significant blows to the administration’s efforts to fight the Depression, all by unanimous votes. First, in Humphrey’s Executor v. United States, the Court declared that the president did not have the power to remove a member of the Federal Trade Commission (FTC). Second, the justices invalidated the 1934 Frazier-Lemke Act, which had provided mortgage relief, especially to farmers.8 Finally, in A. L. A. Schechter Poultry Corp. v. United States the Court handed the president his most stinging defeat by declaring major portions of the NIRA unconstitutional as an improper delegation of legislative power and a violation of the commerce clause.

The decision in Schechter closely paralleled the E. C. Knight ruling and rejected the application of the stream of commerce doctrine. In E. C. Knight the Court held that sugar refining was a manufacturing stage not part of interstate commerce and, therefore, the federal government could not regulate it. Similarly, in Schechter the Court classified the slaughtering and local sale of chickens as intrastate commerce. The stream of commerce evident in the stockyards decisions did not apply. In Schechter the interstate movement of the poultry had ceased. Once the distributor had sold to local processors like the Schechters’ company, the chickens had reached their state of final destination and became a part of intrastate commerce. Also consistent with E. C. Knight, the justices concluded that the poultry slaughter business had only an indirect effect on interstate commerce.

Through the remaining months of 1935 and into 1936, the Court continued to strike down federal legislation designed to cope with the Depression. In some cases the Court found the statutes defective for violating the federal taxing and spending power or for depriving individuals of their right to property without due process of law, topics we cover in later chapters. No matter what the reason for the decision, the Court throughout this period was concerned with congressional actions that went beyond constitutional authority to regulate interstate commerce. Congress could not constitutionally legislate local business activity, such as manufacturing, processing, or refining, unless it had a direct effect on interstate commerce. The Court supported congressional regulation when the commerce was in movement from one state to another, but, as demonstrated in Schechter, the justices were unwilling to allow Congress to act on commerce after it had completed its interstate journey. Schechter examined when interstate commerce ends; in May 1936 the Court taught the administration a lesson in when interstate commerce begins, with its decision in Carter v. Carter Coal Company.

Congress passed the Bituminous Coal Conservation Act in August 1935, following the Schechter decision. This law replaced the NIRA coal codes, which had been reasonably effective in bringing some stability to the depressed coal industry. The new act called for the establishment of a commission empowered to develop regulations regarding fair competition, production, wages, hours, and labor relations. The commission included representatives from coal producers, coal miners, and the public. To fund the program, Congress imposed a tax at the mines of 15 percent of the value of the coal produced. As was not the case with the NIRA codes, compliance with the new code regulations was voluntary. There was, however, an incentive for joining the program. Companies who participated were given a rebate of 90 percent of the taxes levied by the act.

James W. Carter and other shareholders urged their company, Carter Coal, not to participate in the program. The board of directors did not want to join, but it believed that the company could not afford to pay the 15 percent tax and forgo the participation rebate. Carter and the stockholders sued to prevent the company from joining the program on the ground that the Coal Act was unconstitutional. Of Carter’s several attacks on the law, the most deadly was the charge that coal mining was not interstate commerce.

By a 5–4 vote the justices struck down the law. The majority held that coal mining was not interstate commerce because the activity occurred within a single state. The stream of commerce doctrine was inapplicable because the movement of the coal to other states had not yet begun. Furthermore, the justices concluded that the production of coal did not have a direct effect on interstate commerce. For these reasons, the Court invalidated federal regulation of coal mining. But Carter v. Carter Coal was to be Roosevelt’s last major defeat at the hands of the Four Horsemen and their allies.

BOX 7-2 NEW DEAL LEGISLATION

THE Roosevelt Democrats moved on the nation’s economic problems with great speed after the president took the oath of office on March 4, 1933. Listed below are the major economic actions passed during his first term. Note how many were enacted within the first one hundred days of the new administration.

BOX 7-3 THE FOUR HORSEMEN

Willis Van Devanter (1910–1937)

Republican from Wyoming. Born 1859. University of Cincinnati Law School. Wyoming state legislator and state supreme court judge. Federal appeals court judge. Appointed by William Howard Taft.

Library of Congress

James Clark McReynolds (1914–1941)

Democrat from Tennessee. Born 1862. University of Virginia Law School. United States attorney general. Appointed by Woodrow Wilson.

Library of Congress

George Sutherland (1922–1938)

Republican from Utah. Born 1862. University of Michigan Law School. State legislator, U.S. representative, U.S. senator. Appointed by Warren G. Harding.

Library of Congress

Pierce Butler (1922–1939)

Democrat from Minnesota. Born 1866. No law school, studied privately. Corporate attorney. Appointed by Warren G. Harding.

Library of Congress

BOX 7-4 THE SUPREME COURT AND THE NEW DEAL

Listed below are eight major decisions handed down by the Supreme Court in 1935 and 1936 declaring parts of the New Deal legislative program unconstitutional.

A. L. A. Schechter Poultry Corp. v. United States

295 U.S. 495 (1935)

http://laws.findlaw.com/us/295/495.html

Vote: 9 (Brandeis, Butler, Cardozo, Hughes, McReynolds, Roberts, Stone, Sutherland, Van Devanter)

0

OPINION OF THE COURT: Hughes

CONCURRING OPINION: Cardozo

Facts:

Congress passed the National Industrial Recovery Act (NIRA), the most far-reaching and comprehensive of all the New Deal legislation, on June 16, 1933. Applying to every sector of American industry, the NIRA called for the creation of codes of fair competition for business. The codes would regulate trade practices, wages, hours, and other business activities within various industries. Trade associations and other industry groups had the responsibility for drafting the codes, which were submitted to the president for approval. In the absence of the private sector’s recommendations, the president was authorized to draft codes himself. Once approved by the president, the codes had the force of law, and violators faced fines and even jail.

The NIRA was vulnerable to constitutional challenge on two grounds. First, it set almost no standards for the president to use in approving or drafting the codes. Congress had handed Roosevelt a blank check to bring all of American industry into line with his views of what was best for economic recovery. Second, the law regulated what at that time was considered intrastate commerce.

The Schechter case involved a challenge to the NIRA poultry codes, focusing on the industry in New York, the nation’s largest chicken market.9 This market clearly was operating in interstate commerce, as 96 percent of the poultry sold in New York came from out-of-state suppliers. The industry was riddled with graft and plagued by deplorable health and sanitation conditions. The Live Poultry Code approved by President Roosevelt set a maximum workweek of forty hours and a minimum hourly wage of fifty cents. In addition, the code established a health inspection system, regulations to govern slaughtering procedures, and compulsory record keeping.

A. L. A. Schechter Poultry Corporation, owned by Joseph, Martin, Aaron, and Alex Schechter, was a poultry slaughtering business in Brooklyn. Slaughterhouse operators such as the Schechters purchased large numbers of live chickens from local poultry dealers who imported the fowl from out of state to be killed and dressed for sale.

Government officials found the Schechters in violation of the Poultry Code on numerous counts: They ignored the code’s wage and hour provisions, failed to comply with government record-keeping requirements, and did not conform to the slaughter regulations. Their worst offense, however, was selling unsanitary poultry that the government found unfit for human consumption. For this reason, Schechter Poultry became known as the “sick chicken case.”

The government obtained indictments against the Schechter Poultry Corporation and the four brothers on sixty counts of violating the code, and the jury found them guilty of nineteen. Each of the brothers was sentenced to a short jail term. They appealed unsuccessfully to the court of appeals and then pressed their case to the U.S. Supreme Court, asserting that the NIRA was unconstitutional on improper delegation and commerce clause grounds.

Arguments:

For the petitioners, A. L. A. Schechter Poultry Corp. et al.:

The act attempts to override and ignore not only the limitations of the commerce clause but also the prohibition against illegal delegation of legislative power. It is a bold and unparalleled law that is drastic in character.

The act is an illegal delegation of power because Congress has set up no intelligible policies to govern the president and no standards to guide and restrict his action.

The act exceeds the commerce power because, according to existing precedent, production—whether by way of manufacture, mining, farming, or any other activity—is not commerce and is not subject to regulation under the commerce clause. To hold otherwise, as decisions of the Court make clear, would destroy our dual system of government and allow the federal government to nationalize industry.

For the respondent, United States:

Under the Court’s decisions, the act’s provisions are within the commerce power of the Congress. Petitioners’ slaughtering business is so closely related to interstate movement that it makes no difference what parts of their business are “in” interstate commerce and what parts are less “in” but still necessary to its functioning.

The effect of petitioners’ practices on the national price and on the interstate movement of poultry is the same as the effect of the local activities at issue in Stafford v. Wallace. The New York market dominates the live poultry industry and determines the prices in other markets, as well as the prices received by shippers and farmers.

Petitioners’ practices also affect the quality and volume of poultry shipped in interstate commerce, another reason for federal regulation. Because consumers are unable to distinguish good poultry from unfit poultry, they distrust the market and buy less poultry. It is estimated that if unfit poultry were excluded from the market by effectively prohibiting its sale in New York, the consumption and shipment of poultry would increase by about 20 percent.

Even if the practices here in normal economic times would have only an indirect effect upon interstate commerce, economic conditions are such that they now substantially burden interstate commerce because we are in a period of overproduction, cutthroat competition, unemployment, and reduced buying power. Only Congress can deal with the causes contributing to these problems. It would be impossible for the states to take quick and uniform action.

A. L. A. Schechter (center) of Schechter Poultry Corporation with his attorneys Joseph Heller (left) and Frederick Wood, May 2, 1935.

© Bettman/Corbis

MR. CHIEF JUSTICE HUGHES DELIVERED THE OPINION OF THE COURT.

The question of the delegation of legislative power. We recently had occasion to review the pertinent decisions and the general principles which govern the determination of this question. The Constitution provides that “All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” Art. I, §1. And the Congress is authorized “To make all laws which shall be necessary and proper for carrying into execution” its general powers. Art. I, §8, par. 18. The Congress is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested. . . .

Section 3 of the Recovery Act is without precedent. It supplies no standards for any trade, industry or activity. It does not undertake to prescribe rules of conduct to be applied to particular states of fact determined by appropriate administrative procedure. Instead of prescribing rules of conduct, it authorizes the making of codes to prescribe them. For that legislative undertaking, §3 sets up no standards, aside from the statement of the general aims of rehabilitation, correction and expansion described in section one. In view of the scope of that broad declaration, and of the nature of the few restrictions that are imposed, the discretion of the President in approving or prescribing codes, and thus enacting laws for the government of trade and industry throughout the country, is virtually unfettered. We think that the code-making authority thus conferred is an unconstitutional delegation of legislative power.

. . . The question of the application of the provisions of the Live Poultry Code to intrastate transactions. . . . This aspect of the case presents the question whether the particular provisions of the Live Poultry Code, which the defendants were convicted for violating and for having conspired to violate, were within the regulating power of Congress.

These provisions relate to the hours and wages of those employed by defendants in their slaughterhouses in Brooklyn and to the sales there made to retail dealers and butchers.

(1) Were these transactions “in” interstate commerce? Much is made of the fact that almost all the poultry coming to New York is sent there from other States. But the code provisions, as here applied, do not concern the transportation of the poultry from other States to New York, or the transactions of the commission men or others to whom it is consigned, or the sales made by such consignees to defendants. When defendants had made their purchases, whether at the West Washington Market in New York City or at the railroad terminals serving the City, or elsewhere, the poultry was trucked to their slaughterhouses in Brooklyn for local disposition. The interstate transactions in relation to that poultry then ended. Defendants held the poultry at their slaughterhouse markets for slaughter and local sale to retail dealers and butchers who in turn sold directly to consumers. Neither the slaughtering nor the sales by defendants were transactions in interstate commerce.

The undisputed facts thus afford no warrant for the argument that the poultry handled by defendants at their slaughterhouse markets was in a “current” or “flow” of interstate commerce and was thus subject to congressional regulation. The mere fact that there may be a constant flow of commodities into a State does not mean that the flow continues after the property has arrived and has become commingled with the mass of property within the State and is there held solely for local disposition and use. So far as the poultry here in question is concerned; the flow in interstate commerce had ceased. The poultry had come to a permanent rest within the State. It was not held, used, or sold by defendants in relation to any further transactions in interstate commerce and was not destined for transportation to other States. Hence, decisions which deal with a stream of interstate commerce—where goods come to rest within a State temporarily and are later to go forward in interstate commerce—and with the regulations of transactions involved in that practical continuity of movement, are not applicable here.

(2) Did the defendants’ transactions directly “affect” interstate commerce so as to be subject to federal regulation? The power of Congress extends not only to the regulation of transactions which are part of interstate commerce, but to the protection of that commerce from injury. It matters not that the injury may be due to the conduct of those engaged in intrastate operations. Thus, Congress may protect the safety of those employed in interstate transportation “no matter what may be the source of the dangers which threaten it.” We said in Second Employers’ Liability Cases, that it is the “effect upon interstate commerce,” not “the source of the injury,” which is “the criterion of congressional power.” We have held that, in dealing with common carriers engaged in both interstate and intrastate commerce, the dominant authority of Congress necessarily embraces the right to control their intrastate operations in all matters having such a close and substantial relation to interstate traffic that the control is essential or appropriate to secure the freedom of that traffic from interference or unjust discrimination and to promote the efficiency of the interstate service. And combinations and conspiracies to restrain interstate commerce, or to monopolize any part of it, are none the less within the reach of the Anti-Trust Act because the conspirators seek to attain their end by means of intrastate activities. . . .

In determining how far the federal government may go in controlling intrastate transactions upon the ground that they “affect” interstate commerce, there is a necessary and well-established distinction between direct and indirect effects. The precise line can be drawn only as individual cases arise, but the distinction is clear in principle. Direct effects are illustrated by the railroad cases we have cited, as, e.g., the effect of failure to use prescribed safety appliances on railroads which are the highways of both interstate and intrastate commerce, injury to an employee engaged in interstate transportation by the negligence of an employee engaged in an intrastate movement, the fixing of rates for intrastate transportation which unjustly discriminate against interstate commerce. But where the effect of intrastate transactions upon interstate commerce is merely indirect, such transactions remain within the domain of state power. If the commerce clause were construed to reach all enterprises and transactions which could be said to have an indirect effect upon interstate commerce, the federal authority would embrace practically all the activities of the people and the authority of the State over its domestic concerns would exist only by sufferance of the federal government. Indeed, on such a theory, even the development of the State’s commercial facilities would be subject to federal control. As we said in the Minnesota Rate Cases: “In the intimacy of commercial relations, much that is done in the superintendence of local matters may have an indirect bearing upon interstate commerce. The development of local resources and the extension of local facilities may have a very important effect upon communities less favored and to an appreciable degree alter the course of trade. The freedom of local trade may stimulate interstate commerce, while restrictive measures within the police power of the State enacted exclusively with respect to internal business, as distinguished from interstate traffic, may in their reflex or indirect influence diminish the latter and reduce the volume of articles transported into or out of the State.”

The distinction between direct and indirect effects has been clearly recognized in the application of the Anti-Trust Act. Where a combination or conspiracy is formed, with the intent to restrain interstate commerce or to monopolize any part of it, the violation of the statute is clear. But where that intent is absent, and the objectives are limited to intrastate activities, the fact that there may be an indirect effect upon interstate commerce does not subject the parties to the federal statute, notwithstanding its broad provisions. . . .

. . . [T]he distinction between direct and indirect effects of intrastate transactions upon interstate commerce must be recognized as a fundamental one, essential to the maintenance of our constitutional system. Otherwise, as we have said, there would be virtually no limit to the federal power and for all practical purposes we should have a completely centralized government. We must consider the provisions here in question in the light of this distinction.

The question of chief importance relates to the provisions of the Code as to the hours and wages of those employed in defendants’ slaughterhouse markets. It is plain that these requirements are imposed in order to govern the details of defendants’ management of their local business. The persons employed in slaughtering and selling in local trade are not employed in interstate commerce. Their hours and wages have no direct relation to interstate commerce. The question of how many hours these employees should work and what they should be paid differs in no essential respect from similar questions in other local businesses which handle commodities brought into a State and there dealt in as a part of its internal commerce. This appears from an examination of the considerations urged by the Government with respect to conditions in the poultry trade. Thus, the Government argues that hours and wages affect prices; that slaughterhouse men sell at a small margin above operating costs; that a slaughterhouse operator paying lower wages or reducing his cost by exacting long hours of work, translates his saving into lower prices; that this results in demands for a cheaper grade of goods; and that the cutting of prices brings about a demoralization of the price structure. Similar conditions may be adduced in relation to other businesses. The argument of the Government proves too much. If the federal government may determine the wages and hours of employees in the internal commerce of a State, because of their relation to cost and prices and their indirect effect upon interstate commerce, it would seem that a similar control might be exerted over other elements of cost, also affecting prices, such as the number of employees, rents, advertising, methods of doing business, etc. All the processes of production and distribution that enter into cost could likewise be controlled. If the cost of doing an intrastate business is in itself the permitted object of federal control, the extent of the regulation of cost would be a question of discretion and not of power.

The Government also makes the point that efforts to enact state legislation establishing high labor standards have been impeded by the belief that unless similar action is taken generally, commerce will be diverted from the States adopting such standards, and that this fear of diversion has led to demands for federal legislation on the subject of wages and hours. The apparent implication is that the federal authority under the commerce clause should be deemed to extend to the establishment of rules to govern wages and hours in intrastate trade and industry generally throughout the country, thus overriding the authority of the States to deal with domestic problems arising from labor conditions in their internal commerce.

It is not the province of the Court to consider the economic advantages or disadvantages of such a centralized system. It is sufficient to say that the Federal Constitution does not provide for it. Our growth and development have called for wide use of the commerce power of the federal government in its control over the expanded activities of interstate commerce, and in protecting that commerce from burdens, interferences, and conspiracies to restrain and monopolize it. But the authority of the federal government may not be pushed to such an extreme as to destroy the distinction, which the commerce clause itself establishes, between commerce “among the several States” and the internal concerns of a State. The same answer must be made to the contention that is based upon the serious economic situation which led to the passage of the Recovery Act—the fall in prices, the decline in wages and employment, and the curtailment of the market for commodities. Stress is laid upon the great importance of maintaining wage distributions which would provide the necessary stimulus in starting “the cumulative forces making for expanding commercial activity.” Without in any way disparaging this motive, it is enough to say that the recuperative efforts of the federal government must be made in a manner consistent with the authority granted by the Constitution.

We are of the opinion that the attempt through the provisions of the Code to fix the hours and wages of employees of defendants in their intrastate business was not a valid exercise of federal power.

The other violations for which defendants were convicted related to the making of local sales. Ten counts, for violation of the provision as to “straight killing,” were for permitting customers to make “selections of individual chickens taken from particular coops and half coops.” Whether or not this practice is good or bad for the local trade, its effect, if any, upon interstate commerce was only indirect. The same may be said of violations of the Code by intrastate transactions consisting of the sale “of an unfit chicken” and of sales which were not in accord with the ordinances of the City of New York. The requirement of reports as to prices and volumes of defendants’ sales was incident to the effort to control their intrastate business. . . .

On both the grounds we have discussed, the attempted delegation of legislative power, and the attempted regulation of intrastate transactions which affect interstate commerce only indirectly, we hold the code provisions here in question to be invalid and that the judgment of conviction must be reversed.

MR. JUSTICE CARDOZO, concurring.

The delegated power of legislation which has found expression in this code is not canalized within banks that keep it from overflowing. It is unconfined and vagrant. . . .

This is delegation running riot. . . .

The code does not confine itself to the suppression of methods of competition that would be classified as unfair according to accepted business standards or accepted norms of ethics. It sets up a comprehensive body of rules to promote the welfare of the industry, if not the welfare of the nation, without reference to standards, ethical or commercial, that could be known or predicted in advance of its adoption. . . . Even if the statute itself had fixed the meaning of fair competition by way of contrast with practices that are oppressive or unfair, the code outruns the bounds of the authority conferred. What is excessive is not sporadic or superficial. It is deep-seated and pervasive. The licit and illicit sections are so combined and welded as to be incapable of severance without destructive mutilation.

But there is another objection, far-reaching and incurable, aside from any defect of unlawful delegation.

If this code had been adopted by Congress itself, and not by the President on the advice of an industrial association, it would even then be void, unless authority to adopt it is included in the grant of power “to regulate commerce with foreign nations, and among the several States.” United States Constitution, art. 1, 8, cl. 3.

I find no authority in that grant for the regulation of wages and hours of labor in the intrastate transactions that make up the defendants’ business. As to this feature of the case, little can be added to the opinion of the court. There is a view of causation that would obliterate the distinction between what is national and what is local in the activities of commerce. . . .

I am authorized to state that MR. JUSTICE STONE joins in this opinion.

The Court-Packing Plan

The Court entered its summer recess in 1936 having completed a year and a half of dealing with Roosevelt’s legislative program and striking down several of the New Deal’s most important programs. The Four Horsemen constituted a solid bloc, and in major cases these justices could count on the support of at least one other—usually Owen Roberts. Roosevelt was understandably frustrated with what he viewed as the Court’s obstructionism; he was also impatient that no vacancies had occurred that he might fill with appointees sympathetic to the New Deal.

In the national elections of 1936, few doubted that Roosevelt would be reelected and that the Democrats would continue to control Congress.10 The only question was how big the margin was going to be. Roosevelt won by a landslide, capturing 98 percent of the electoral votes. His Republican opponent, Alf Landon of Kansas, carried only Maine and Vermont. The congressional elections were also a triumph for the Democrats. When the legislature reconvened in early 1937, they controlled approximately 80 percent of the seats in both houses. With such an impressive mandate from the people and such strong party support in Congress, Roosevelt was willing to proceed with his planned attack on the Court. If no vacancies on the Supreme Court occurred naturally, Roosevelt would try to create some.

On February 5, 1937, the president announced his plan to reorganize the federal court system. His proposed legislation was predicated, at least formally, on the argument that the judiciary was too overworked and understaffed to carry out its duties effectively. His idea was to expand the number of lower court judgeships; streamline federal jurisdiction, especially with respect to cases having constitutional significance; and adopt a flexible method of temporarily moving lower court judges from their normal duties to districts with case backlogs (see box 7-5).

To many observers these administrative reforms were little more than a smoke screen for Roosevelt’s proposals concerning the Supreme Court. The president asked Congress to authorize the creation of one new seat on the Court for every justice who had attained the age of seventy but remained in active service. Up to six new justices could be appointed in this way, bringing the potential size of the Court to a maximum of fifteen. At the time of his proposal, six sitting justices were older than seventy. If Roosevelt could appoint six New Deal advocates to the Court, they probably could attract the votes of at least two others and form a majority that would give constitutional approval to the president’s programs. Although Roosevelt attempted to justify his idea on the ground that the advanced age of several sitting justices called for the addition of younger, more-vigorous colleagues, everyone saw the plan for what it was—an attempt to pack the Court.

Reaction was not favorable.11 Public opinion polls taken during the course of the debate over the plan reveal that at no time did a majority of Americans support Roosevelt’s proposal (see figure 7-1). Members of the organized bar were overwhelmingly opposed. Even with large Democratic majorities in both houses of Congress, Roosevelt had difficulty selling his proposal to the legislature. Chief Justice Hughes wrote a public letter criticizing the proposal to Senator Burton Wheeler of Montana, a leader of Democrats opposing the president.12 The press expressed sharp disapproval. In spite of the general support the people gave Roosevelt and the New Deal, they did not appreciate his tampering with the structure of government to get his way. Roosevelt’s response to this unexpected criticism was to go directly to the people to press his case, and in doing so he became a little more open about his objectives. In his radio broadcast the president explained his proposal and urged the American public to support it.

The Switch in Time That Saved Nine

The battle in Congress over the president’s plan was closely fought.13 A continuation of the confrontation, however, was averted in large measure by the actions of the justices themselves. On March 29, 1937, just twenty days after the president’s broadcast, the Court signaled that changes were in the making. The first indication was the 5–4 decision in West Coast Hotel v. Parrish (1937), which upheld the validity of a Washington State law regulating wages and working conditions for women and children.

Figure 7-1 Public Support for Roosevelt’s 1937 Court-Packing Plan

source: Lee Epstein, Jeffrey A. Segal, Harold Spaeth, and Thomas G. Walker, The Supreme Court Compendium: Data, Decisions, and Developments, 6th ed. (Thousand Oaks, CA: Sage/CQ Press, 2015), table 8–30.

source: Lee Epstein, Jeffrey A. Segal, Harold Spaeth, and Thomas G. Walker, The Supreme Court Compendium: Data, Decisions, and Developments, 6th ed. (Thousand Oaks, CA: Sage/CQ Press, 2015), table 8–30.

Although this case involved a state law rather than a federal statute and concerned issues of substantive due process rather than the commerce clause, it had great significance. Aside from the doctrinal importance of the case, discussed in chapter 10, it signaled a change in the Court’s voting coalitions. Justice Roberts, so long an ally of the Four Horsemen, deserted the conservatives and voted with the liberal bloc to approve the legislation. Just months earlier Roberts had voted with the conservatives in a 5–4 decision striking down a New York law that was nearly identical to the one he now approved.14

“Historical Figures”—a 1937 Herblock cartoon, copyright by The Herb Block Foundation.

A 1937 Herblock Cartoon, © The Herb Block Foundation

Two weeks later Roberts proved that his West Coast Hotel vote was not an aberration. On April 12 the Court issued its ruling in National Labor Relations Board (NLRB) v. Jones & Laughlin Steel Corporation. Once again Roberts joined Hughes, Brandeis, Cardozo, and Stone to form a majority, this time upholding a major piece of New Deal legislation. The decision may be the most important economic ruling of the twentieth century. In it the Court announced a break from the past and ushered in a new era in the constitutional relationship between the government and the economy.

Justice Owen Roberts. He cast critical votes in 1937 Supreme Court cases that expanded the authority of the federal government to regulate the economy.

Collection of the Supreme Court of the United States

The decisions in West Coast Hotel v. Parrish and NLRB v. Jones & Laughlin Steel took the energy out of Roosevelt’s drive to pack the Court. It no longer appeared necessary, as the Court now was looking with greater approval at state and federal legislation to correct the failing economy. In addition, on May 18, 1937, Justice Van Devanter, a consistent foe of Roosevelt’s New Deal programs, announced that he would retire from the Court at the end of the term. At long last the president would have an opportunity to put a justice of his own choosing on the Court.

On June 7 the Senate Judiciary Committee recommended that the Court-packing bill not be passed. To the president’s great displeasure, seven of the ten senators signing the report were Democrats. Majority Leader Joseph Robinson (D-Ark.), mounted a last-ditch effort on behalf of the president, advocating a compromise plan that would have raised the threshold age for replacing the justices from seventy to seventy-five years. Robinson made considerable progress in forging a coalition to pass this modified plan, but the effort stalled when he died from a heart attack on July 14.15

Much has been said and written about Justice Roberts’s change in position. At the time, it was described as “the switch in time that saved nine,” because his move from the conservative to the liberal wing of the Court was largely responsible for killing the Court-packing plan and preserving the Court as a nine-justice institution. Such a characterization is not flattering for a judge, who is not supposed to make decisions on the basis of external political pressures. Nevertheless, it would certainly be understandable for a justice to rethink his views if the future of the Court as an institution were at stake.

More-contemporary analyses of Roberts’s switch point out that the notion that he caved in to the pressures of the president’s plan is overly simplistic. Although the decision in West Coast Hotel was announced after Roosevelt sent his proposal to Congress, it was argued and initially voted on weeks before the president made his plans public. Roosevelt had kept the Court-packing proposal carefully under wraps before he announced it, and the likelihood that the justices had advance knowledge of it is slight. Furthermore, Roberts was not a doctrinaire conservative. Although he joined the Court’s right wing in several important decisions, he did not have the laissez-faire zeal of the Four Horsemen. In fact, Roberts had voted on a number of occasions in support of state efforts to combat economic problems.16 Some observers now conclude that Roberts’s change of position was primarily a matter of his growing disenchantment with the hard-line conservative view and that he followed “his sound judicial intuition to a well-reasoned position in keeping with the public interest.”17 As for Roberts’s own explanation, he maintained traditional judicial silence. When asked in a 1946 interview why he had altered his position, he deflected the question by responding, “Who knows what causes a judge to decide as he does? Maybe the breakfast he had has something to do with it.”18 Whatever the reasons for his switch, it broke the conservatives’ domination of the Court.

BOX 7-5 EXCERPTS FROM THE WHITE HOUSE BROADCAST, MARCH 9, 1937

TONIGHT, sitting at my desk in the White House, I make my first radio report to the people in my second term of office. . . .

Last Thursday I described the American form of Government as a three horse team provided by the Constitution to the American people so that their field might be plowed. The three horses are, of course, the three branches of government—the Congress, the Executive and the Courts. Two of the horses are pulling in unison today; the third is not. Those who have intimated that the President of the United States is trying to drive that team overlook the simple fact that the President, as Chief Executive, is himself one of the three horses.

It is the American people themselves who are in the driver’s seat.

It is the American people themselves who want the furrow plowed.

It is the American people themselves who expect the third horse to pull in unison with the other two. . . .

When the Congress has sought to stabilize national agriculture, to improve the conditions of labor, to safeguard business against unfair competition, to protect our national resources, and in many other ways, to serve our clearly national needs, the majority of the Court has been assuming the power to pass on the wisdom of these Acts of the Congress—and to approve or disapprove the public policy written into these laws. . . .

The Court . . . has improperly set itself up as a third House of the Congress—a super-legislature, as one of the Justices has called it—reading into the Constitution words and implications which are not there, and which were never intended to be there.

We have, therefore, reached the point as a Nation where we must take action to save the Constitution from the Court and the Court from itself. We must find a way to take an appeal from the Supreme Court to the Constitution itself. We want a Supreme Court which will do justice under the Constitution—not over it. In our Courts we want a government of laws and not of men.

I want—as all Americans want—an independent judiciary as proposed by the framers of the Constitution. That means a Supreme Court that will enforce the Constitution as written—that will refuse to amend the Constitution by the arbitrary exercise of judicial power—amendment by judicial say-so. It does not mean a judiciary so independent that it can deny the existence of facts universally recognized. . . .

What is my proposal? It is simply this: whenever a Judge or Justice of any Federal Court has reached the age of seventy and does not avail himself of the opportunity to retire on a pension, a new member shall be appointed by the President then in office, with the approval, as required by the Constitution, of the Senate of the United States.

That plan has two chief purposes. By bringing into the Judicial system a steady and continuing stream of new and younger blood, I hope, first, to make the administration of all Federal justice speedier and, therefore, less costly; secondly, to bring to the decision of social and economic problems younger men who have had personal experience and contact with modern facts and circumstances under which average men have to live and work. This plan will save our national Constitution from hardening of the judicial arteries.

The number of Judges to be appointed would depend wholly on the decision of present Judges now over seventy, or those who would subsequently reach the age of seventy.

If, for instance, any one of the six Justices of the Supreme Court now over the age of seventy should retire as provided under the plan, no additional place would be created. Consequently, although there never can be more than fifteen, there may be only fourteen, or thirteen, or twelve. And there may be only nine.

There is nothing novel or radical about this idea. It seeks to maintain the Federal bench in full vigor. It has been discussed and approved by many persons of high authority ever since a similar proposal passed the House of Representatives in 1869. . . .

The statute would apply to all the Courts in the Federal system. There is general approval so far as the lower Federal courts are concerned. The plan has met opposition only so far as the Supreme Court of the United States itself is concerned. If such a plan is good for the lower courts it certainly ought to be equally good for the highest Court from which there is no appeal.

Those opposing this plan have sought to arouse prejudice and fear by crying that I am seeking to “pack” the Supreme Court and that a baneful precedent will be established.

What do they mean by the words “packing the Court”?

Let me answer this question with a bluntness that will end all honest misunderstanding of my purposes.

If by that phrase “packing the Court” it is charged that I wish to place on the bench spineless puppets who would disregard the law and would decide specific cases as I wished them to be decided, I make this answer—that no President fit for his office would appoint, and no Senate of honorable men fit for their office would confirm, that kind of appointees to the Supreme Court.

But if by that phrase the charge is made that I would appoint and the Senate would confirm Justices worthy to sit beside present members of the Court who understand those modern conditions—that I will appoint Justices who will not undertake to override the judgment of the Congress on legislative policy—that I will appoint Justices who will act as Justices and not as legislators—if the appointment of such Justices can be called “packing the Courts,” then I say that I and with me the vast majority of the American people favor doing just that thing—now.

Is it a dangerous precedent for the Congress to change the number of the Justices? The Congress has always had, and will have, that power. The number of Justices has been changed several times before—in the Administrations of John Adams and Thomas Jefferson—both signers of the Declaration of Independence—Andrew Jackson, Abraham Lincoln and Ulysses S. Grant. . . .

We think it so much in the public interest to maintain a vigorous judiciary that we encourage the retirement of elderly Judges by offering them a life pension at full salary. Why then should we leave the fulfillment of this public policy to chance or make it dependent upon the desire or prejudice of any individual Justice?

It is the clear intention of our public policy to provide for a constant flow of new and younger blood into the Judiciary. Normally every President appoints a large number of District and Circuit Judges and a few members of the Supreme Court. Until my first term practically every President of the United States had appointed at least one member of the Supreme Court. President Taft appointed five members and named a Chief Justice—President Wilson three—President Harding four including a Chief Justice—President Coolidge one—President Hoover three including a Chief Justice.

Such a succession of appointments should have provided a Court well-balanced as to age. But chance and the disinclination of individuals to leave the Supreme bench have now given us a Court in which five Justices will be over seventy-five years of age before next June and one over seventy. Thus a sound public policy has been defeated.

I now propose that we establish by law an assurance against any such ill-balanced Court in the future. I propose that hereafter, when a Judge reaches the age of seventy, a new and younger Judge shall be added to the Court automatically. In this way I propose to enforce a sound public policy by law instead of leaving the composition of our Federal Courts, including the highest, to be determined by chance or the personal decision of individuals.

If such a law as I propose is regarded as establishing a new precedent—is it not a most desirable precedent?

Like all lawyers, like all Americans, I regret the necessity of this controversy. But the welfare of the United States, and indeed of the Constitution itself, is what we all must think about first. Our difficulty with the Court today rises not from the Court as an institution but from human beings within it. But we cannot yield our constitutional destiny to the personal judgment of a few men who, being fearful of the future, would deny us the necessary means of dealing with the present.

This plan of mine is no attack on the Court; it seeks to restore the Court to its rightful and historic place in our system of Constitutional Government and to have it resume its high task of building anew on the Constitution “a system of living law.” . . .

During the past half century the balance of power between the three great branches of the Federal Government has been tipped out of balance by the Courts in direct contradiction of the high purposes of the framers of the Constitution. It is my purpose to restore that balance. You who know me will accept my solemn assurance that in a world in which democracy is under attack, I seek to make American democracy succeed.

SOURCE: Fireside Chat, March 9, 1937.

National Labor Relations Board v. Jones & Laughlin Steel Corporation

301 U.S. 1 (1937)

http://laws.findlaw.com/us/301/1.html

Vote: 5 (Brandeis, Cardozo, Hughes, Roberts, Stone)

4 (Butler, McReynolds, Sutherland, Van Devanter)

OPINION FOR THE COURT: Hughes

DISSENTING OPINION: McReynolds

Facts:

In 1935 Congress passed the National Labor Relations Act, more commonly known as the Wagner Act. The purpose of the legislation was to help workers achieve gains in wages and working conditions through the collective bargaining process. The act’s primary aim was to protect the rights of employees to organize and join labor unions and to provide a means for the enforcement of those rights. The law authorized the creation of the National Labor Relations Board (NLRB), which was empowered to hear complaints of unfair labor practices and impose certain corrective measures. The act was based on the power of Congress to regulate interstate commerce and on the assertion that labor unrest and strikes (“industrial strife”) caused interruptions in such commerce that Congress had the right to prevent.

Jones & Laughlin was one of the nation’s largest steel producers. Its operations were fully integrated, extending into many states and involving every aspect of steel production, from mining through production and distribution. Complaints were filed against the company for engaging in unfair labor practices at its plant in Aliquippa, Pennsylvania. The charges included discriminating against workers who wanted to join a labor union. The NLRB ruled against the company and ordered it to reinstate ten workers who had been dismissed because of their union activities. The company refused, claiming that the Wagner Act was unconstitutional. Steel production facilities, according to the company, were engaged in a manufacturing activity that had been declared by the Supreme Court to be intrastate commerce and thus outside Congress’s regulatory authority. The lower courts, applying existing Supreme Court precedent, ruled in favor of the company, and the NLRB appealed.

Arguments:

For the petitioner, National Labor Relations Board:

The act is a legitimate exercise of preventive power: it deals with the causes of the burden (here, industrial strife) on interstate commerce in anticipation of their probable effect, in much the same way as did the act at issue in Stafford v. Wallace. The law attempts to eliminate only those practices “affecting commerce.” This phrase “affecting commerce” is defined in the law as “in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce.” These words are patterned on language from the Court’s commerce clause decisions.

Schechter Poultry and Carter Coal do not apply here. In Schechter the Court rejected arguments that wages and hours in local industry affected interstate commerce through an intricate chain of economic causes and effects; any effect was indirect. In Carter Coal the Court held that the effect of wage cutting on interstate commerce was also indirect. The law at issue in Carter Coal also had collective bargaining provisions, which were included mostly to provide a means for regulating wages. The National Labor Relations Act, in contrast, is designed solely to eliminate the burden on interstate commerce caused by industrial strife, which affects commerce directly, without an intervening condition.

For the respondent, Jones & Laughlin Steel Corporation:

The act, although disguised as a regulation of interstate commerce, is a regulation of labor. Under Schechter Poultry, the commerce clause cannot be used to legislate labor relations, which do not constitute a part of interstate commerce.

Congress has tried to evade this distinction by limiting the act to transactions “affecting commerce,” although the provisions are broad enough to cover almost every employment relation. To reach the conclusion that firing a few production employees has a consequential effect on interstate commerce, the government must pile assumption on assumption. This statute is a labor law, not a regulation of commerce, and it does not help to sustain the pretext that an indirect connection exists between the two.

Decisions such as Stafford v. Wallace are not applicable here. Stockyards are instrumentalities of interstate commerce in much the same way as are the actual carriers of interstate commerce. The regulated activities in this and other cases were in the stream of commerce and exerted a direct effect on its flow. This doctrine does not apply to production activities that may indirectly affect the stream of commerce, as Carter Coal makes clear.

MR. CHIEF JUSTICE HUGHES DELIVERED THE OPINION OF THE COURT.

First. The Scope of the Act.—The Act is challenged in its entirety as an attempt to regulate all industry, thus invading the reserved powers of the States over their local concerns. It is asserted that the references in the Act to interstate and foreign commerce are colorable at best; that the Act is not a true regulation of such commerce or of matters which directly affect it but on the contrary has the fundamental object of placing under the compulsory supervision of the federal government all industrial labor relations within the nation. . . .

If this conception of terms, intent and consequent inseparability were sound, the Act would necessarily fall by reason of the limitation upon the federal power which inheres in the constitutional grant, as well as because of the explicit reservation of the Tenth Amendment. The authority of the federal government may not be pushed to such an extreme as to destroy the distinction, which the commerce clause itself establishes, between commerce “among the several States” and the internal concerns of a State. That distinction between what is national and what is local in the activities of commerce is vital to the maintenance of our federal system. . . .

We think it clear that the National Labor Relations Act may be construed so as to operate within the sphere of constitutional authority. The jurisdiction conferred upon the Board, and invoked in this instance, is found in §10 (a), which provides:

“Sec. 10 (a). The Board is empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice (listed in section 8 . . . ) affecting commerce. The critical words of this provision, prescribing the limits of the Board’s authority in dealing with the labor practices, are ‘affecting commerce.’ The Act specifically defines the ‘commerce’ to which it refers (§2 (6) . . . ):

“The term ‘commerce’ means trade, traffic, commerce, transportation, or communication among the several States, or between the District of Columbia or any Territory of the United States and any State or other Territory, or between any foreign country and any State, Territory, or the District of Columbia, or within the District of Columbia or any Territory, or between points in the same State but through any other State or any Territory or the District of Columbia or any foreign country.”

There can be no question that the commerce thus contemplated by the Act (aside from that within a Territory or the District of Columbia) is interstate and foreign commerce in the constitutional sense. The Act also defines the term “affecting commerce” (§2 (7) . . . ):

“The term ‘affecting commerce’ means in commerce, or burdening or obstructing commerce or the free flow of commerce or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce.”

This definition is one of exclusion as well as inclusion. The grant of authority to the Board does not purport to extend to the relationship between all industrial employees and employers. Its terms do not impose collective bargaining upon all industry regardless of effects upon interstate and foreign commerce. It purports to reach only what may be deemed to burden or obstruct that commerce and, thus qualified, it must be construed as contemplating the exercise of control within constitutional bounds. It is a familiar principle that acts which directly burden or obstruct interstate or foreign commerce, or its free flow, are within the reach of the congressional power. Acts having that effect are not rendered immune because they grow out of labor disputes. It is the effect upon commerce, not the source of the injury, which is the criterion. Whether or not particular action does affect commerce in such a close and intimate fashion as to be subject to federal control, and hence to lie within the authority conferred upon the Board, is left by the statute to be determined as individual cases arise. We are thus to inquire whether in the instant case the constitutional boundary has been passed.

Second. The Unfair Labor Practices in Question.—. . . [T]he statute goes no further than to safeguard the right of employees to self-organization and to select representatives of their own choosing for collective bargaining or other mutual protection without restraint or coercion by their employer.

That is a fundamental right. Employees have as clear a right to organize and select their representatives for lawful purposes as the respondent has to organize its business and select its own officers and agents. Discrimination and coercion to prevent the free exercise of the right of employees to self-organization and representation is a proper subject for condemnation by competent legislative authority. Long ago we stated the reason for labor organizations. We said that they were organized out of the necessities of the situation; that a single employee was helpless in dealing with an employer; that he was dependent ordinarily on his daily wage for the maintenance of himself and family; that if the employer refused to pay him the wages that he thought fair, he was nevertheless unable to leave the employ and resist arbitrary and unfair treatment; that union was essential to give laborers opportunity to deal on an equality with their employer. We reiterated these views when we had under consideration the Railway Labor Act of 1926. Fully recognizing the legality of collective action on the part of employees in order to safeguard their proper interests, we said that Congress was not required to ignore this right but could safeguard it. Congress could seek to make appropriate collective action of employees an instrument of peace rather than of strife. We said that such collective action would be a mockery if representation were made futile by interference with freedom of choice. Hence the prohibition by Congress of interference with the selection of representatives for the purpose of negotiation and conference between employers and employees, “instead of being an invasion of the constitutional right of either, was based on the recognition of the rights of both.” We have reasserted the same principle in sustaining the application of the Railway Labor Act as amended in 1934.

Third. The Application of the Act to Employees Engaged in Production.—The Principle Involved.—Respondent says that whatever may be said of employees engaged in interstate commerce, the industrial relations and activities in the manufacturing department of respondent’s enterprise are not subject to federal regulation. The argument rests upon the proposition that manufacturing in itself is not commerce.

The Government distinguishes these cases. The various parts of respondent’s enterprise are described as interdependent and as thus involving “a great movement of iron ore, coal and limestone along well-defined paths to the steel mills, thence through them, and thence in the form of steel products into the consuming centers of the country—a definite and well-understood course of business.” It is urged that these activities constitute a “stream” or “flow” of commerce, of which the Aliquippa manufacturing plant is the focal point, and that industrial strife at that point would cripple the entire government. Reference is made to our decision sustaining the Packers and Stockyards Act. . . .

We do not find it necessary to determine whether these features of defendant’s business dispose of the asserted analogy to the “stream of commerce” cases. The instances in which that metaphor has been used are but particular, and not exclusive, illustrations of the protective power which the Government invokes in support of the present Act. The congressional authority to protect interstate commerce from burdens and obstructions is not limited to transactions which can be deemed to be an essential part of a “flow” of interstate or foreign commerce. Burdens and obstructions may be due to injurious action springing from other sources. The fundamental principle is that the power to regulate commerce is the power to enact “all appropriate legislation” for “its protection and advancement”; to adopt measures “to promote its growth and insure its safety”; “to foster, protect, control and restrain.” That power is plenary and may be exerted to protect interstate commerce “no matter what the source of the dangers which threaten it.” Although activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control. . . .

It is thus apparent that the fact that the employees here concerned were engaged in production is not determinative. The question remains as to the effect upon interstate commerce of the labor practice involved. . . .

Fourth. Effects of the Unfair Labor Practice in Respondent’s Enterprise.—Giving full weight to respondent’s contention with respect to a break in the complete continuity of the “stream of commerce” by reason of respondent’s manufacturing operations, the fact remains that the stoppage of those operations by industrial strife would have a most serious effect upon interstate commerce. In view of respondent’s far-flung activities, it is idle to say that the effect would be indirect or remote. It is obvious that it would be immediate and might be catastrophic. We are asked to shut our eyes to the plainest facts of our national life and to deal with the question of direct and indirect effects in an intellectual vacuum. Because there may be but indirect and remote effects upon interstate commerce in connection with a host of local enterprises throughout the country, it does not follow that other industrial activities do not have such a close and intimate relation to interstate commerce as to make the presence of industrial strife a matter of the most urgent national concern. When industries organize themselves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce from the paralyzing consequences of industrial war? We have often said that interstate commerce itself is a practical conception. It is equally true that interferences with that commerce must be appraised by a judgment that does not ignore actual experience.

Experience has abundantly demonstrated that the recognition of the right of employees to self-organization and to have representatives of their own choosing for the purpose of collective bargaining is often an essential condition of industrial peace. Refusal to confer and negotiate has been one of the most prolific causes of strife. This is such an outstanding fact in the history of labor disturbances that it is a proper subject of judicial notice and requires no citation of instances. . . . These questions have frequently engaged the attention of Congress and have been the subject of many inquiries. The steel industry is one of the great basic industries of the United States, with ramifying activities affecting interstate commerce at every point. The Government aptly refers to the steel strike of 1919–1920 with its far-reaching consequences. The fact that there appears to have been no major disturbance in that industry in the more recent period did not dispose of the possibilities of future and like dangers to interstate commerce which Congress was entitled to foresee and to exercise its protective power to forestall. It is not necessary again to detail the facts as to respondent’s enterprise. Instead of being beyond the pale, we think that it presents in a most striking way the close and intimate relation which a manufacturing industry may have to interstate commerce and we have no doubt that Congress had constitutional authority to safeguard the right of respondent’s employees to self-organization and freedom in the choice of representatives for collective bargaining. . . .

Reversed.

MR. JUSTICE McREYNOLDS delivered the following dissenting opinion in the cases preceding:

MR. JUSTICE VAN DEVANTER, MR. JUSTICE SUTHERLAND, MR. JUSTICE BUTLER and I are unable to agree with the decisions just announced. . . .

Considering the far-reaching import of these decisions, the departure from what we understand has been consistently ruled here, and the extraordinary power confirmed to a Board of three [the NLRB], the obligation to present our views becomes plain. . . .

The precise question for us to determine is whether in the circumstances disclosed Congress has power to authorize what the Labor Board commanded the respondents to do. Stated otherwise, in the circumstances here existing could Congress by statute direct what the Board has ordered? . . .

The argument in support of the Board affirms: “Thus the validity of any specific application of the preventive measures of this Act depends upon whether industrial strife resulting from the practices in the particular enterprise under consideration would be of the character which Federal power could control if it occurred. If strife in that enterprise could be controlled, certainly it could be prevented.”

Manifestly that view of Congressional power would extend it into almost every field of human industry. With striking lucidity, fifty years ago, Kidd v. Pearson declared: “If it be held that the term [commerce with foreign Nations, and among the several States] includes the regulation of all such manufactures as are intended to be the subject of commercial transactions in the future, it is impossible to deny that it would also include all productive industries that contemplate the same thing. The result would be that Congress would be invested, to the exclusion of the States, with the power to regulate, not only manufactures, but also agriculture, horticulture, stock raising, domestic fisheries, mining—in short, every branch of human activity.” This doctrine found full approval in United States v. E. C. Knight Co., Schechter Poultry Corp. v. United States, and Carter v. Carter Coal Co., where the authorities are collected and principles applicable here are discussed. . . .

The Constitution still recognizes the existence of states with indestructible powers; the Tenth Amendment was supposed to put them beyond controversy.

We are told that Congress may protect the “stream of commerce” and that one who buys raw material without the state, manufactures it therein, and ships the output to another state is in that stream. Therefore it is said he may be prevented from doing anything which may interfere with its flow.

This, too, goes beyond the constitutional limitations heretofore enforced. If a man raises cattle and regularly delivers them to a carrier for interstate shipment, may Congress prescribe the conditions under which he may employ or discharge helpers on the ranch? The products of a mine pass daily into interstate commerce; many things are brought to it from other states. Are the owners and miners within the power of Congress in respect of the miners’ tenure and discharge? May a mill owner be prohibited from closing his factory or discontinuing his business because so to do would stop the flow of products to and from his plant in interstate commerce? May employees in a factory be restrained from quitting work in a body because this will close the factory and thereby stop the flow of commerce? May arson of a factory be made a Federal offense whenever this would interfere with such flow? If the business cannot continue with the existing wage scale, may Congress command a reduction? If the ruling of the Court just announced is adhered to these questions suggest some of the problems certain to arise. . . .

There is no ground on which reasonably to hold that refusal by a manufacturer, whose raw materials come from states other than that of his factory and whose products are regularly carried to other states, to bargain collectively with employees in his manufacturing plant, directly affects interstate commerce. In such business, there is not one but two distinct movements or streams in interstate transportation. The first brings in raw material and there ends. Then follows manufacture, a separate and local activity. Upon completion of this, and not before, the second distinct movement or stream in interstate commerce begins and the products go to other states. Such is the common course for small as well as large industries. It is unreasonable and unprecedented to say the commerce clause confers upon Congress power to govern the relations between employers and employees in these local activities. In Schechter’s case we condemned as unauthorized by the commerce clause assertion of federal power in respect of commodities which had come to rest after interstate transportation. And, in Carter’s case, we held Congress lacked the power to regulate labor relations in respect of commodities before interstate commerce has begun.

It is gravely stated that experience teaches that if an employer discourages membership in “any organization of any kind” “in which employees participate, and which exists for the purpose in whole or in part of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment or conditions of work,” discontent may follow and this in turn may lead to a strike, and as the outcome of the strike there may be a block in the stream of interstate commerce. Therefore Congress may inhibit the discharge! Whatever effect any cause of discontent may ultimately have upon commerce is far too indirect to justify Congressional regulation. Almost anything—marriage, birth, death—may in some fashion affect commerce.

That Congress has power by appropriate means, not prohibited by the Constitution, to prevent direct and material interference with the conduct of interstate commerce is settled doctrine. But the interference struck at must be direct and material, not some mere possibility contingent on wholly uncertain events; and there must be no impairment of rights guaranteed. . . .

The things inhibited by the Labor Act relate to the management of a manufacturing plant—something distinct from commerce and subject to the authority of the state. And this may not be abridged because of some vague possibility of distant interference with commerce. . . .

The right to contract is fundamental and includes the privilege of selecting those with whom one is willing to assume contractual relations. This right is unduly abridged by the Act now upheld. A private owner is deprived of power to manage his own property by freely selecting those to whom his manufacturing operations are to be entrusted. We think this cannot lawfully be done in circumstances like those here disclosed.

It seems clear to us that Congress has transcended the powers granted.

Consolidating the New Interpretation of the Commerce Power

Justice Van Devanter’s retirement was followed over the next four years by the retirements of Justices Sutherland and Brandeis and the deaths of Justices Cardozo and Butler. By 1940 Franklin Roosevelt had appointed a majority of the sitting justices. And in 1941 Justice McReynolds, the last of the Four Horsemen, also retired.

With NLRB v. Jones & Laughlin Steel showing the way, the increasingly liberal Court upheld a number of New Deal programs. It also continued to expand the concept of interstate commerce. Gone were the old notions that production, manufacturing, mining, and processing were exclusively intrastate affairs with insufficient direct effects on interstate commerce to activate federal commerce powers. Precedents such as E. C. Knight, Hammer, Panama Refining, Schechter Poultry, and Carter Coal were substantially overruled or discredited, or severely limited (see box 7-6).

Of all the cases during this period, two are considered among the Court’s most important statements on congressional commerce power: United States v. Darby (1941) and Wickard v. Filburn (1942). Not only do they provide insight into modern-era commerce clause doctrine, but they also serve to illustrate how far the Court had moved from its pre-1937 idea of interstate commerce. As you read Darby, keep in mind decisions such as Hammer v. Dagenhart, in which the Court struck down an act prohibiting the shipment in interstate commerce of products made by children. Regulating child labor, the Court reasoned, was not “expressly” delegated to the federal government and so, by virtue of the Tenth Amendment, belonged to the states. As you compare Wickard to earlier rulings, recall that in E. C. Knight a sugar trust that controlled 98 percent of the nation’s sugar refining was considered to be operating in intrastate commerce. And in Carter v. Carter Coal, the entire coal mining industry was said to be outside the power of Congress to regulate interstate commerce. How do these industries compare with Roscoe Filburn’s farm (p. 463)?

BOX 7-6 SUPREME COURT EXPANSION OF THE COMMERCE POWERS, 1937–1942

United States v. Darby

312 U.S. 100 (1941)

http://laws.findlaw.com/us/312/100.html

Vote: 8 (Black, Douglas, Frankfurter, Hughes, Murphy, Reed, Roberts, Stone)

0

OPINION OF THE COURT: Stone

Facts:

In 1938 Congress, under its power to regulate interstate commerce, enacted a major piece of New Deal legislation, the Fair Labor Standards Act (FLSA). It provided that all employers “engaged in interstate commerce, or in the production of goods for that commerce” must pay all their employees a minimum wage of twenty-five cents per hour and not permit employees to work longer than forty-four hours per week without paying them one and one-half times their regular pay for their overtime hours. In November 1939 the federal government sought and obtained an indictment against Fred W. Darby for violating the FLSA. The indictment alleged that Darby, the owner of a lumber company, was engaged in the production and manufacturing of goods shipped out of state, but that he had not abided by either of the FLSA’s principal pay requirements.

Darby did not dispute the charges but invoked the logic of Hammer v. Dagenhart and other pre-1937 cases. The government responded with legal and pragmatic arguments.

Arguments:

For the appellant, United States:

The meaning of the phrase interstate commerce at the time the commerce clause was drafted included manufacturing and the entire economy. Therefore, Congress is empowered by the Constitution to regulate all of these areas.

Due to interstate commercial competition, no one state can require higher labor standards in the absence of a uniform federal law. Employers with lower labor standards would have an unfair advantage in interstate competition, and only the national government can pragmatically act on the problem. The lumber industry well illustrates the problem of the inability of the states to ensure adequate labor conditions: more than 57 percent of the lumber produced enters into interstate commerce from forty-five of the states.

The commerce clause power should be assessed by what it regulates, not by what it affects. Intrastate acts lie within the power of Congress when it is necessary to effectively control interstate transactions, and Congress need not wait until transportation begins to protect the flow of commerce.

Since McCulloch the Court has recognized that the Tenth Amendment is not a limit on the powers of the federal government. That doctrine has not been overruled, and it cannot be overruled by implication by the recent cases suggesting otherwise.

For the appellee, Fred W. Darby:

The act is an unconstitutional attempt to regulate the conditions surrounding the production of goods and commodities; it is not a regulation of interstate commerce within the delegated power to Congress under the commerce clause.

The government’s argument is an indirect attack upon the dual system of government established by the framers. Allowing the federal government to control anything related to economic issues is directly contrary to the doctrine that the federal government is a government of limited and enumerated powers. The Tenth Amendment guarantees that certain powers are reserved to the states and the people.

The mere fact that individual states cannot adequately protect the markets outside their borders for the sale of their products does not give the national government unqualified power to regulate competition in those interstate markets.

MR. JUSTICE STONE DELIVERED THE OPINION OF THE COURT.

The two principal questions raised by the record in this case are, first, whether Congress has constitutional power to prohibit the shipment in interstate commerce of lumber manufactured by employees whose wages are less than a prescribed minimum or whose weekly hours of labor at that wage are greater than a prescribed maximum [Section 15(1)], and, second, whether it has power to prohibit the employment of workmen in the production of goods “for interstate commerce” at other than prescribed wages and hours [Section 15(a)(2)]. . . .

The prohibition of shipment of the proscribed goods in interstate commerce. Section 15(a)(1) prohibits, and the indictment charges, the shipment in interstate commerce, of goods produced for interstate commerce by employees whose wages and hours of employment do not conform to the requirements of the Act. [T]he only question arising under the commerce clause with respect to such shipments is whether Congress has the constitutional power to prohibit them.

While manufacture is not, of itself, interstate commerce, the shipment of manufactured goods interstate is such commerce, and the prohibition of such shipment by Congress is indubitably a regulation of the commerce. The power to regulate commerce is the power “to prescribe the rule by which commerce is governed.” Gibbons v. Ogden. It extends not only to those regulations which aid, foster and protect the commerce, but embraces those which prohibit it. It is conceded that the power of Congress to prohibit transportation in interstate commerce includes noxious articles, Lottery Case, Hoke v. United States . . . , kidnapped persons and articles, such as intoxicating liquor or convict made goods, traffic in which is forbidden or restricted by the laws of the state of destination.

But it is said that the present prohibition falls within the scope of none of these categories; that, while the prohibition is nominally a regulation of the commerce, its motive or purpose is regulation of wages and hours of persons engaged in manufacture, the control of which has been reserved to the states. . . . [It is said that] under the guise of a regulation of interstate commerce, [Congress] undertakes to regulate wages and hours within the state contrary to the policy of the state which has elected to leave them unregulated.

The power of Congress over interstate commerce “is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution.” Gibbons v. Ogden. That power can neither be enlarged nor diminished by the exercise or nonexercise of state power. Congress, following its own conception of public policy concerning the restrictions which may appropriately be imposed on interstate commerce, is free to exclude from the commerce articles whose use in the states for which they are destined it may conceive to be injurious to the public health, morals or welfare, even though the state has not sought to regulate their use.

Such regulation is not a forbidden invasion of state power merely because either its motive or its consequence is to restrict the use of articles of commerce within the states of destination, and is not prohibited unless by other Constitutional provisions. It is no objection to the assertion of the power to regulate interstate commerce that its exercise is attended by the same incidents which attend the exercise of the police power of the states.

The motive and purpose of the present regulation are plainly to make effective the Congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions, which competition is injurious to the commerce and to the states from and to which the commerce flows. The motive and purpose of a regulation of interstate commerce are matters for the legislative judgment upon the exercise of which the Constitution places no restriction, and over which the courts are given no control. . . .

In the more than a century which has elapsed since the decision of Gibbons v. Ogden, these principles of constitutional interpretation have been so long and repeatedly recognized by this Court as applicable to the Commerce Clause that there would be little occasion for repeating them now were it not for the decision of this Court twenty-two years ago in Hammer v. Dagenhart. In that case, it was held by a bare majority of the Court, over the powerful and now classic dissent of Mr. Justice Holmes setting forth the fundamental issues involved, that Congress was without power to exclude the products of child labor from interstate commerce. The reasoning and conclusion of the Court’s opinion there cannot be reconciled with the conclusion which we have reached, that the power of Congress under the Commerce Clause is plenary to exclude any article from interstate commerce subject only to the specific prohibitions of the Constitution.

Hammer v. Dagenhart has not been followed. The distinction on which the decision was rested, that Congressional power to prohibit interstate commerce is limited to articles which in themselves have some harmful or deleterious property—a distinction which was novel when made and unsupported by any provision of the Constitution—has long since been abandoned. . . .

The conclusion is inescapable that Hammer v. Dagenhart was a departure from the principles which have prevailed in the interpretation of the Commerce Clause both before and since the decision, and that such vitality, as a precedent, as it then had, has long since been exhausted. It should be, and now is, overruled.

Validity of the wage and hour requirements. Section 15(a)(2) [requires] employers to conform to the wage and hour provisions with respect to all employees engaged in the production of goods for interstate commerce. As appellee’s employees are not alleged to be “engaged in interstate commerce,” the validity of the prohibition turns on the question whether the employment, under other than the prescribed labor standards, of employees engaged in the production of goods for interstate commerce is so related to the commerce, and so affects it, as to be within the reach of the power of Congress to regulate it. . . .

The obvious purpose of the Act was not only to prevent the interstate transportation of the proscribed product, but to stop the initial step toward transportation, production with the purpose of so transporting it. Congress was not unaware that most manufacturing businesses shipping their product in interstate commerce make it in their shops without reference to its ultimate destination, and then, after manufacture, select some of it for shipment interstate and some intrastate, according to the daily demands of their business, and that it would be practically impossible, without disrupting manufacturing businesses, to restrict the prohibited kind of production to the particular pieces of lumber, cloth, furniture or the like which later move in interstate, rather than intrastate, commerce.

There remains the question whether such restriction on the production of goods for commerce is a permissible exercise of the commerce power. The power of Congress over interstate commerce is not confined to the regulation of commerce among the states. It extends to those activities intrastate which so affect interstate commerce or the exercise of the power of Congress over it as to make regulation of them appropriate means to the attainment of a legitimate end, the exercise of the granted power of Congress to regulate interstate commerce. See McCulloch v. Maryland.

While this Court has many times found state regulation of interstate commerce, when uniformity of its regulation is of national concern, to be incompatible with the Commerce Clause even though Congress has not legislated on the subject, the Court has never implied such restraint on state control over matters intrastate not deemed to be regulations of interstate commerce or its instrumentalities even though they affect the commerce. In the absence of Congressional legislation on the subject, state laws which are not regulations of the commerce itself or its instrumentalities are not forbidden, even though they affect interstate commerce.

But it does not follow that Congress may not, by appropriate legislation, regulate intrastate activities where they have a substantial effect on interstate commerce. A recent example is the National Labor Relations Act for the regulation of employer and employee relations in industries in which strikes, induced by unfair labor practices named in the Act, tend to disturb or obstruct interstate commerce. See National Labor Relations Board v. Jones & Laughlin Steel Corp. But, long before the adoption of the National Labor Relations Act, this Court had many times held that the power of Congress to regulate interstate commerce extends to the regulation through legislative action of activities intrastate which have a substantial effect on the commerce or the exercise of the Congressional power over it. In such legislation, Congress has sometimes left it to the courts to determine whether the intrastate activities have the prohibited effect on the commerce, as in the Sherman Act. . . . In passing on the validity of legislation of the class last mentioned, the only function of courts is to determine whether the particular activity regulated or prohibited is within the reach of the federal power.

Congress having by the present Act adopted the policy of excluding from interstate commerce all goods produced for the commerce which do not conform to the specified labor standards, it may choose the means reasonably adapted to the attainment of the permitted end even though they involve control of intrastate activities. Such legislation has often been sustained with respect to powers other than the commerce power granted to the national government when the means chosen, although not themselves within the granted power, were nevertheless deemed appropriate aids to the accomplishment of some purpose within an admitted power of the national government. A familiar like exercise of power is the regulation of intrastate transactions which are so commingled with or related to interstate commerce that all must be regulated if the interstate commerce is to be effectively controlled. Shreveport Case.

We think also that §15(a)(2), now under consideration, is sustainable independently of §15(a)(1), which prohibits shipment or transportation of the proscribed goods. As we have said, the evils aimed at by the Act are the spread of substandard labor conditions through the use of the facilities of interstate commerce for competition by the goods so produced with those produced under the prescribed or better labor conditions, and the consequent dislocation of the commerce itself caused by the impairment or destruction of local businesses by competition made effective through interstate commerce. The Act is thus directed at the suppression of a method or kind of competition in interstate commerce which it has, in effect, condemned as “unfair,” . . . made effective through interstate commerce.

The Sherman Act and the National Labor Relations Act are familiar examples of the exertion of the commerce power to prohibit or control activities wholly intrastate because of their effect on interstate commerce. . . .

The means adopted by §15(a)(2) for the protection of interstate commerce by the suppression of the production of the condemned goods for interstate commerce is so related to the commerce, and so affects it, as to be within the reach of the commerce power. Congress, to attain its objective in the suppression of nationwide competition in interstate commerce by goods produced under substandard labor conditions, has made no distinction as to the volume or amount of shipments in the commerce or of production for commerce by any particular shipper or producer. It recognized that, in present day industry, competition by a small part may affect the whole, and that the total effect of the competition of many small producers may be great. The legislation, aimed at a whole, embraces all its parts.

So far as Carter v. Carter Coal Co. is inconsistent with this conclusion, its doctrine is limited in principle by the decisions under the Sherman Act and the National Labor Relations Act, which we have cited and which we follow.

Our conclusion is unaffected by the Tenth Amendment, which provides:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

The amendment states but a truism that all is retained which has not been surrendered. There is nothing in the history of its adoption to suggest that it was more than declaratory of the relationship between the national and state governments as it had been established by the Constitution before the amendment, or that its purpose was other than to allay fears that the new national government might seek to exercise powers not granted, and that the states might not be able to exercise fully their reserved powers.

From the beginning and for many years, the amendment has been construed as not depriving the national government of authority to resort to all means for the exercise of a granted power which are appropriate and plainly adapted to the permitted end. McCulloch v. Maryland. . . .

Reversed.

Wickard v. Filburn

317 U.S. 111 (1942)

http://laws.findlaw.com/us/317/111.html

Vote: 9 (Black, Byrnes, Douglas, Frankfurter, Jackson, Murphy, Reed, Roberts, Stone)

0

OPINION OF THE COURT: Jackson

Facts:

The 1938 Agricultural Adjustment Act, as amended, allowed the secretary of agriculture to establish production limits for various grains. Under these limits, acreage allotments were assigned to the individual farmer. The purpose of the law was to stop wild swings in grain prices by eliminating surpluses and shortfalls.

Roscoe Filburn owned a small farm in Montgomery County, Ohio. For many years he raised dairy cattle and chickens, selling the milk, poultry, and eggs the farm produced. He also raised winter wheat on a small portion of his farm. He sold some wheat and used the rest to feed his cattle and chickens, make flour for home consumption, and produce seeds for the next planting.

In July 1940 Secretary of Agriculture Claude R. Wickard set the wheat production limits for the 1941 crop. Filburn was allotted 11.1 acres to be planted in wheat with a yield of 20.1 bushels per acre. He planted not only his allotted acres but also some other land to produce the wheat for home consumption. In total Filburn planted 23 acres in wheat, from which he harvested 239 bushels more than the government allowed him. For this excess planting Filburn was fined $117.11. He refused to pay the fine, claiming that Congress had exceeded its powers under the commerce clause by regulating the planting by an individual of wheat on his own property for on-farm consumption. The lower court ruled in Filburn’s favor, and Secretary Wickard appealed.

Arguments:

For the appellant, Claude R. Wickard, secretary of agriculture, et al.:

The quota on wheat is a valid exercise of the commerce power. That the law penalizes excess wheat, which is available for marketing but is consumed as feed, seed, or household food, does not make it invalid. Because excessive wheat affects national price and supply, Congress reasonably concluded that orderly interstate marketing and reasonable interstate prices could best be achieved if the quota system applied to all wheat available for marketing and not just to that actually sold.

The quota system was also adopted because of the practical difficulties in devising an enforcement system limited to wheat sold. It would be impossible for the government to check on all sales by the more than 1 million wheat producers. Under the current system enforcement is feasible because all the government needs to know is the amount of acreage planted by the farmer and the average yield per acre.

Under the Constitution, Congress can choose whatever means it deems appropriate and necessary to carry out its policy of keeping excess wheat off the interstate market under its commerce clause power.

Roscoe Filburn, the Ohio farmer who unsuccessfully argued that Congress lacked the constitutional power to regulate the production of wheat intended for on-farm consumption.

Courtesy of Mary Lou Spurgeon

For the appellee, Roscoe Filburn:

Neither interstate nor intrastate commerce, nor an intermingling between the two, is at issue here. It involves wheat that a farmer may consume on his own farm for food, seed, or feed. It at no time moves into commerce between the states, nor even in a state. It is under the control of the farmer and has not moved into any channel of trade; it is private property.

The government insists that wheat used on a farm for the farmer’s own purposes is in competition with commercial feed and seeds. This is too absurd to take seriously. This is akin to saying that because person A manufactures a radio, A cannot use the radio in his own home but must instead buy a radio from person B so that B can continue his business and B must buy a radio from A to keep A in business. Neither party can have the benefit of his own product.

MR. JUSTICE JACKSON DELIVERED THE OPINION OF THE COURT.

It is urged that under the Commerce Clause of the Constitution, Article I, §8, clause 3, Congress does not possess the power it has in this instance sought to exercise. The question would merit little consideration since our decision in United States v. Darby sustaining the federal power to regulate production of goods for commerce, except for the fact that this Act extends federal regulation to production not intended in any part for commerce but wholly for consumption on the farm. The Act includes a definition of “market” and its derivatives, so that as related to wheat, in addition to its conventional meaning, it also means to dispose of “by feeding (in any form) to poultry or livestock which, or the products of which, are sold, bartered, or exchanged, or to be so disposed of.” Hence, marketing quotas not only embrace all that may be sold without penalty but also what may be consumed on the premises. Wheat produced on excess acreage is designated as “available for marketing” as so defined, and the penalty is imposed thereon. Penalties do not depend upon whether any part of the wheat, either within or without the quota, is sold or intended to be sold. The sum of this is that the Federal Government fixes a quota including all that the farmer may harvest for sale or for his own farm needs, and declares that wheat produced on excess acreage may neither be disposed of nor used except upon payment of the penalty, or except it is stored as required by the Act or delivered to the Secretary of Agriculture.

Appellee says that this is a regulation of production and consumption of wheat. Such activities are, he urges, beyond the reach of Congressional power under the Commerce Clause, since they are local in character, and their effects upon interstate commerce are at most “indirect.” In answer the Government argues that the statute regulates neither production nor consumption, but only marketing; and, in the alternative, that if the Act does go beyond the regulation of marketing it is sustainable as a “necessary and proper” implementation of the power of Congress over interstate commerce.

The Government’s concern lest the Act be held to be a regulation of production or consumption, rather than of marketing, is attributable to a few dicta and decisions of this Court which might be understood to lay it down that activities such as “production,” “manufacturing,” and “mining” are strictly “local” and, except in special circumstances which are not present here, cannot be regulated under the commerce power because their effects upon interstate commerce are, as matter of law, only “indirect.” Even today, when this power has been held to have great latitude, there is no decision of this Court that such activities may be regulated where no part of the product is intended for interstate commerce or intermingled with the subjects thereof. We believe that a review of the course of decision under the Commerce Clause will make plain, however, that questions of the power of Congress are not to be decided by reference to any formula which would give controlling force to nomenclature such as “production” and “indirect” and foreclose consideration of the actual effects of the activity in question upon interstate commerce.

At the beginning Chief Justice Marshall described the federal commerce power with a breadth never yet exceeded. Gibbons v. Ogden. He made emphatic the embracing and penetrating nature of this power by warning that effective restraints on its exercise must proceed from political rather than from judicial processes.

For nearly a century, however, decisions of this Court under the Commerce Clause dealt rarely with questions of what Congress might do in the exercise of its granted power under the Clause, and almost entirely with the permissibility of state activity which it was claimed discriminated against or burdened interstate commerce. During this period there was perhaps little occasion for the affirmative exercise of the commerce power, and the influence of the Clause on American life and law was a negative one, resulting almost wholly from its operation as a restraint upon the powers of the states. In discussion and decision the point of reference, instead of being what was “necessary and proper” to the exercise by Congress of its granted power, was often some concept of sovereignty thought to be implicit in the status of statehood. Certain activities such as “production,” “manufacturing,” and “mining” were occasionally said to be within the province of state governments and beyond the power of Congress under the Commerce Clause.

It was not until 1887, with the enactment of the Interstate Commerce Act, that the interstate commerce power began to exert positive influence in American law and life. This first important federal resort to the commerce power was followed in 1890 by the Sherman Anti-Trust Act and, thereafter, mainly after 1903, by many others. These statutes ushered in new phases of adjudication, which required the Court to approach the interpretation of the Commerce Clause in the light of an actual exercise by Congress of its power thereunder.

When it first dealt with this new legislation, the Court adhered to its earlier pronouncements, and allowed but little scope to the power of Congress. United States v. Knight Co. These earlier pronouncements also played an important part in several of the five cases in which this Court later held that Acts of Congress under the Commerce Clause were in excess of its power.

Even while important opinions in this line of restrictive authority were being written, however, other cases called forth broader interpretations of the Commerce Clause destined to supersede the earlier ones, and to bring about a return to the principles first enunciated by Chief Justice Marshall in Gibbons v. Ogden. . . .

Whether the subject of the regulation in question was “production,” “consumption,” or “marketing” is . . . not material for purposes of deciding the question of federal power before us. That an activity is of local character may help in a doubtful case to determine whether Congress intended to reach it. The same consideration might help in determining whether in the absence of Congressional action it would be permissible for the state to exert its power on the subject matter, even though in so doing it to some degree affected interstate commerce. But even if appellee’s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as “direct” or “indirect.” . . .

The effect of consumption of home-grown wheat on interstate commerce is due to the fact that it constitutes the most variable factor in the disappearance of the wheat crop. Consumption on the farm where grown appears to vary in an amount greater than 20 per cent of average production. The total amount of wheat consumed as food varies but relatively little, and use as seed is relatively constant.

The maintenance by government regulation of a price for wheat undoubtedly can be accomplished as effectively by sustaining or increasing the demand as by limiting the supply. The effect of the statute before us is to restrict the amount which may be produced for market and the extent as well to which one may forestall resort to the market by producing to meet his own needs. That appellee’s own contribution to the demand for wheat may be trivial by itself is not enough to remove him from the scope of federal regulation where, as here, his contribution, taken together with that of many other similarly situated, is far from trivial.

It is well established by decisions of this Court that the power to regulate commerce includes the power to regulate the prices at which commodities in that commerce are dealt in and practices affecting such prices. One of the primary purposes of the Act in question was to increase the market price of wheat, and to that end to limit the volume thereof that could affect the market. It can hardly be denied that a factor of such volume and variability as home-consumed wheat would have a substantial influence on price and market conditions. This may arise because being in marketable condition such wheat overhangs the market and, if induced by rising prices, tends to flow into the market and check price increases. But if we assume that it is never marketed, it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market. Homegrown wheat in this sense competes with wheat in commerce. The stimulation of commerce is a use of the regulatory function quite as definitely as prohibitions or restrictions thereon. This record leaves us in no doubt that Congress may properly have considered that wheat consumed on the farm where grown, if wholly outside the scheme of regulation, would have a substantial effect in defeating and obstructing its purpose to stimulate trade therein at increased prices. . . .

Reversed.

THE ERA OF EXPANSIVE COMMERCE CLAUSE JURISPRUDENCE

With the Darby and Wickard decisions, the Court entered a new era of commerce clause interpretation. The justices no longer considered relevant issues such as direct versus indirect effects, manufacturing/production versus distribution, or stream of commerce concerns. They made clear, as Stone wrote in Darby, that “[t]he power of Congress over interstate commerce is not confined to the regulation of commerce among the states. It extends to those activities intrastate which so affect interstate commerce or the exercise of the power of Congress over it as to make regulation of them appropriate means to the attainment of a legitimate end, the exercise of the granted power of Congress to regulate interstate commerce.”

Why would the Court allow Congress to regulate activities that were purely local in nature when the commerce clause speaks only of activities “among the several States”? Stone’s invocation of the language of McCulloch provides the answer. For Congress to regulate the interstate activities, it may be “necessary and proper” for it to regulate the local activities. This, according to Stone, was the case in Darby, and according to Jackson it held in Wickard, too. If every farmer acted as Filburn did, it would affect demand for wheat, which, in turn, would have a substantial effect in “defeating and obstructing” the congressional regulatory scheme of stabilizing prices. As Jackson put it, that Filburn’s “own contribution to the demand for wheat may be trivial by itself is not enough to remove him from the scope of federal regulation where, as here, his contribution, taken together with that of many other similarly situated, is far from trivial.” Under this approach very little commercial activity could be defined as purely intrastate. For, as Darby, Wickard, and the commerce clause cases to come in the 1960s and 1970s suggest, as long as the local activities are part of a class of activities that Congress decides in the aggregate have a substantial effect on interstate commerce, Congress may regulate. Finally, as our emphasis on “Congress decides” suggests, no longer would the Court decide whether the local activities, taken in the aggregate, substantially affect interstate commerce in fact, but only whether Congress reasonably thinks it does (or whether it has a “rational basis” for so concluding, as more-modern Courts have termed it). This approach sat comfortably with the Court’s new approach to economic legislation, whether passed by Congress or by the states (see chapter 10).

Note too Darby’s return to the Court’s approach in Gibbons, that the power of Congress over interstate commerce “is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the constitution.” To the Darby Court, Congress was free to use its commerce power as a federal police power, excluding from “commerce articles whose use in the states for which they are destined it may conceive to be injurious to the public health, morals or welfare.” A law falling into this category, as Stone wrote, is “not a forbidden invasion of state power merely because either its motive or its consequence is to restrict the use of articles of commerce within the states of destination, and is not prohibited unless by other Constitutional provisions.” But, to Stone, other “constitutional provisions” do not include the Tenth Amendment. In contrast to the Court’s approach in Hammer, the Tenth Amendment is not an enclave to which the litigants can turn when Congress is making constitutional use of its commerce power; it is but a “truism.”

Taken together, these cases gave Congress substantial authority to regulate under the commerce clause without fear of the Court invalidating its legislation. Congress took great advantage of this new deference by enacting a vast number of laws that earlier Courts might have considered outside the definition of interstate commerce and thus federal purview.

Many of these were in the economic realm, but with the expansive definition of interstate commerce that occurred after 1937 came a commensurate expansion of the federal police powers. These changes gave Congress sufficient power to combat social problems that it otherwise would have been unable to fight effectively.

Modern civil rights laws provide a good example. The constitutional protections against discrimination are found primarily in the equal protection clause of the Fourteenth Amendment and the due process clause of the Fifth, which have erected powerful barriers against invidious discrimination. But their exclusive target is discrimination perpetuated by the government. The words of the Fourteenth Amendment are clear: “Nor shall any state . . . deny to any person within its jurisdiction the equal protection of the laws.” Nothing in the Fifth or Fourteenth Amendments prohibits discrimination by private parties. These amendments were not intended to prohibit a private citizen from being discriminatory, but only to bar discriminatory government action. Although the Fourteenth Amendment includes a clause giving Congress the authority to enforce the provision with appropriate legislation, the Supreme Court has ruled that such enforcement legislation may not extend beyond the scope of the amendment itself. Consequently, the amendment does not empower Congress to regulate private discriminatory behavior.

When the civil rights activists of the 1950s and 1960s campaigned for the elimination of discriminatory conditions, high on their list was the eradication of discrimination by private parties who operated public accommodations. The movement targeted the owners of hotels, restaurants, movie theaters, recreation areas, and transportation systems. With the decision in Brown v. Board of Education (1954), governments could no longer maintain laws mandating segregation of such facilities, but private operators could still impose discrimination on their own. In the South, where segregation was the way of life, no one expected the states to pass civil rights statutes prohibiting private parties from discriminating. Therefore, civil rights advocates pressured Congress to act.

Congress responded by enacting the Civil Rights Act of 1964, the most comprehensive legislation of its type ever passed. The act, as amended, is still the nation’s strongest statute aimed at eliminating discrimination. The primary authority for passing this groundbreaking legislation, however, was not a clause in the Bill of Rights or one of the Civil War amendments, but the commerce clause. Because the Court had treated commerce clause legislation favorably since 1937, members of Congress had confidence that the Civil Rights Act would withstand a legal challenge. Opponents of the legislation argued that Congress had misused its power to regulate commerce by invoking it to justify a civil rights law. Obviously, they said, the framers, many of whom owned slaves, did not intend the power to regulate commerce among the states to be used to enact civil rights legislation.

Was Congress on solid ground in doing so? The primary test of the law’s constitutionality was Heart of Atlanta Motel, Inc. v. United States (1964). As you read this case, note Justice Tom C. Clark’s description of how racial discrimination has a negative impact on interstate commerce. Also note the Court’s expansive view of interstate commerce and its conclusion that the commerce clause can be used to combat moral wrongs.

Employing the same sweeping language as the Court used in Wickard and especially Darby, Justice Clark’s opinion gave Congress broad powers to use the commerce clause as authority to regulate moral wrongs that occur in interstate commerce. The Heart of Atlanta Motel complied with the Court’s decision (see box 7-7), and a new era of civil rights in public accommodations began. The Court’s interpretation of the commerce clause turned that provision into one of the most powerful weapons in the federal government’s regulatory arsenal.

Although this broad interpretation of Congress’s regulatory powers under the commerce clause had become generally accepted, it is important to note that even in the 1960s and 1970s, individual justices occasionally expressed doubts about the expansiveness of the modern definitions of interstate commerce. An example is Hugo Black’s reaction to the Court’s decision in Daniel v. Paul (1969). At issue was the application of federal regulations to the Lake Nixon Club, a small recreational facility located in a rural area of Arkansas on county roads far from any interstate highway. To avoid having to comply with desegregation laws, owner Euell Paul operated it as a private club, charging a nominal membership fee of twenty-five cents for participation in activities such as swimming, dancing, picnicking, and boating. The club served a local clientele: there was no evidence that any interstate traveler had ever used it. The Court ruled that the club operated in interstate commerce for the following reasons: (1) it advertised for business in publications known to be read by some interstate travelers; (2) it leased fifteen paddleboats from an Oklahoma company; (3) it owned a jukebox and records that, while purchased from an Arkansas company, had been manufactured out of state; and (4) three out of the four items sold at the snack bar (e.g., bread and soft drinks) contained ingredients from out of state.

This reasoning was too much for Justice Black. Although he opposed the racial policies of the club, Black refused to accept the conclusion that this “sleepy hollow” was engaged in interstate commerce. The Court’s decision, he argued, was “stretching the Commerce Clause so as to give the Federal Government complete control over every little remote country place of recreation in every nook and cranny of every precinct and county in every one of the 50 states. This goes too far for me.” His dissent was ironic given that Black was the first of the ardent New Deal justices.

Justice Potter Stewart had a similar reaction in Perez v. United States (1971). This case involved the Consumer Credit Protection Act, which Congress passed under its commerce clause power to criminalize extortionate means to collect payments on loans. Congress based its use of the commerce clause on its conclusion that “loan sharks”—lenders who use threats of violence to ensure the repayment of loans—are in a class largely controlled by organized crime, which exerts an adverse effect on interstate commerce. Alcides Perez was convicted under the act for attempting to extort money from the owner of a butcher shop. Perez challenged the law, claiming that Congress may not use its commerce power to regulate purely local loan-sharking.

The Supreme Court disagreed. Writing for a majority of eight, Justice William O. Douglas began by setting out his understanding of what the Court had said about the reach of the commerce clause:

The Commerce Clause reaches, in the main, three categories of problems. First, the use of channels of interstate or foreign commerce which Congress deems are being misused. Second, protection of the instrumentalities of interstate commerce. Third, those activities affecting commerce. It is with this last category that we are here concerned.

By “channels . . . being misused,” Douglas meant, for example, using airline routes to ship stolen goods or interstate highways to transport people who have been kidnapped. (Champion v. Ames provides another example.) The “instrumentalities” of interstate commerce follow from, among other cases, the Shreveport Rate Case and include things (or even persons) that move in the channels of interstate commerce. Neither of these ideas is especially controversial.19 Even in E. C. Knight the Court held that “transportation and its instrumentalities” are appropriate subjects of the commerce power.

The chief concerns in Perez, as in so many cases, are raised by Douglas’s last category. How do we know whether an activity that seems local, such as the activity at issue here, affects commerce? For Douglas, the answer lay in the Court’s post–New Deal decisions in NLRB, Wickard, and Darby: Congress had concluded that loan-sharking, although a purely local activity, had, by virtue of being part of a “class of activities,” a substantial effect on interstate commerce, and that was enough to sustain the law.

Justice Stewart cast the lone dissent in the case. He agreed that Congress can use its commerce clause power to protect the instrumentalities and channels of commerce and to regulate intrastate activities that have a substantial effect on interstate commerce. But, echoing Black in Daniel v. Paul, he was concerned that under this law “a man can be convicted without any proof of interstate movement, of the use of the facilities of interstate commerce, or of facts showing that his conduct affected interstate commerce.” He continued, “The Framers of the Constitution never intended that the National Government might define as a crime and prosecute such wholly local activity through the enactment of federal criminal laws.” This power, in Stewart’s view, belonged to the states unless Congress could “rationally have concluded that loan-sharking is an activity with interstate attributes that distinguish it in some substantial respect from other local crime.” In short, it was not enough for Stewart to say simply that loan-sharking has some interstate characteristics because “all crime is a national problem” and Congress cannot regulate “all crime.”

Still, in spite of these occasional complaints that the Court had erased the distinction between inter- and intrastate commerce, the justices remained wedded to a broad interpretation of the congressional commerce power. The post–New Deal approach reflects Justice Cardozo’s dissent in Carter v. Carter Coal Company, in which he said the commerce power is “as broad as the need that evokes it.”

Heart of Atlanta Motel, Inc. v. United States

379 U.S. 241 (1964)

http://laws.findlaw.com/us/379/241.html

Oral arguments are available at https://www.oyez.org.

Vote: 9 (Black, Brennan, Clark, Douglas, Goldberg, Harlan, Stewart, Warren, White)

0

OPINION OF THE COURT: Clark

CONCURRING OPINIONS: Black, Douglas, Goldberg

Facts:

Title II of the 1964 Civil Rights Act in its original form prohibited discrimination on the basis of race, color, religion, or national origin by certain public accommodations that operated in or affected interstate commerce. The accommodations specifically included were as follows:

Inns, hotels, motels, or other lodging facilities of five rooms or more. Because they served the traveling public, these facilities were considered part of interstate commerce by definition.

Restaurants and cafeterias, if they served interstate travelers or if a substantial portion of their food or other products had moved in interstate commerce.

Motion picture houses, if they presented films that had moved in interstate commerce.

Any facility physically located within any of the other covered accommodations, which included operations such as hotel shops and theater snack bars.

The Heart of Atlanta Motel was a 216-room facility in Atlanta, Georgia, owned by a group of investors led by Moreton Rolleston Jr. Located near the commercial center of the city, it had easy access to two interstate highways and two major state roads. The motel advertised for business in national publications and maintained more than fifty billboards and highway signs around the state. Both the government and the motel agreed that the facility met the act’s definition of a public accommodation in interstate commerce.

The motel admitted that prior to the enactment of the civil rights law it practiced a policy of racial discrimination. Furthermore, it acknowledged that it intended to continue its policy of not serving African Americans. To secure its right to do so, the motel filed suit to have the 1964 Civil Rights Act declared unconstitutional.

Arguments:

For the appellant, Heart of Atlanta Motel, Inc.:

The Court should not construe the Constitution in the way it thinks the framers of the Constitution, if living, would today. The Court should construe the Constitution in accord with the intentions of the framers at the time it was drawn and with the intentions of those who adopted it at the time.

The framers’ intentions were clear: to limit the powers of the federal government to those delegated in the Constitution with all others reserved to the states. If the Court allows this broad use of commerce power, there is no limit on Congress. It can regulate every person and every business as it sees fit.

Congress has not even established any standards to determine if a motel is in or materially affects interstate commerce. It might just as well have confiscated all motels and nationalized them on the ground that they are in interstate commerce.

For the appellees, United States et al.:

Based on the Court’s decision in NLRB, Congress has the power to regulate local activities that might have a substantial and harmful effect on interstate commerce. Based on Wickard, the effect on commerce need not be determined solely by the effect on the parties to the litigation. Congress (and the Court) may consider whether the party’s contribution, aggregated with others similarly situated, will have an adverse effect on commerce.

As Champion makes clear, Congress, in exercising its power to foster interstate commerce, may touch on subjects of social or moral wrong, in addition to their adverse economic effects.

Congress’s fact-finding shows that, under these precedents, Title II is a valid exercise of Congress’s power to regulate interstate commerce. Discrimination in public accommodations imposes a burden on movement in interstate commerce, and discrimination in hotels and motels serving transient guests imposes burdens on interstate travel.

Race discrimination is not only a social and moral issue but also a national and economic issue. Testimony shows that because African Americans may be forced to find lodging in places far removed from their route of travel due to discrimination by hotels, the number of persons engaging in interstate travel is diminished.

MR. JUSTICE CLARK DELIVERED THE OPINION OF THE COURT.

The Basis of Congressional Action.

While the Act as adopted carried no congressional findings the record of its passage through each house is replete with evidence of the burdens that discrimination by race or color places upon interstate commerce. This testimony included the fact that our people have become increasingly mobile with millions of people of all races traveling from State to State; that Negroes in particular have been the subject of discrimination in transient accommodations, having to travel great distances to secure the same; that often they have been unable to obtain accommodations and have had to call upon friends to put them up overnight; and that these conditions had become so acute as to require the listing of available lodging for Negroes in a special guidebook which was itself “dramatic testimony to the difficulties” Negroes encounter in travel. These exclusionary practices were found to be nationwide, the Under Secretary of Commerce testifying that there is “no question that this discrimination in the North still exists to a large degree” and in the West and Midwest as well. This testimony indicated a qualitative as well as a quantitative effect on interstate travel by Negroes. The former was the obvious impairment of the Negro traveler’s pleasure and convenience that resulted when he continually was uncertain of finding lodging. As for the latter, there was evidence that this uncertainty stemming from racial discrimination had the effect of discouraging travel on the part of a substantial portion of the Negro community. This was the conclusion not only of the Under Secretary of Commerce but also of the Administrator of the Federal Aviation Agency who wrote the Chairman of the Senate Commerce Committee that it was his “belief that air commerce is adversely affected by the denial to a substantial segment of the traveling public of adequate and desegregated public accommodations.” We shall not burden this opinion with further details since the voluminous testimony presents overwhelming evidence that discrimination by hotels and motels impedes interstate travel.

The Power of Congress over Interstate Travel.

The power of Congress to deal with these obstructions depends on the meaning of the Commerce Clause. Its meaning was first enunciated 140 years ago by the great Chief Justice John Marshall in Gibbons v. Ogden (1824), in these words:

“The subject to be regulated is commerce; and . . . to ascertain the extent of the power, it becomes necessary to settle the meaning of the word. The counsel for the appellee would limit it to traffic, to buying and selling, or the interchange of commodities . . . but it is something more: it is intercourse . . . between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.

“To what commerce does this power extend? The constitution informs us, to commerce ‘with foreign nations and among the several States, and with the Indian tribes.’

“It has, we believe, been universally admitted, that these words comprehend every species of commercial intercourse. . . . No sort of trade can be carried on . . . to which this power does not extend.

“The subject to which the power is next applied, is to commerce ‘among the several States.’ The word ‘among’ means intermingled.” . . .

In short, the determinative test of the exercise of power by the Congress under the Commerce Clause is simply whether the activity sought to be regulated is “commerce which concerns more States than one” and has a real and substantial relation to the national interest. Let us now turn to this facet of the problem.

That the “intercourse” of which the Chief Justice spoke included the movement of persons through more States than one was settled as early as 1849, in the Passenger Cases, where Mr. Justice McLean stated: “That the transportation of passengers is a part of commerce is not now an open question.” Again in 1913 Mr. Justice McKenna, speaking for the Court, said: “Commerce among the States, we have said, consists of intercourse and traffic between their citizens, and includes the transportation of persons and property. . . . Nor does it make any difference whether the transportation is commercial in character.” . . .

The same interest in protecting interstate commerce which led Congress to deal with segregation in interstate carriers and the white-slave traffic has prompted it to extend the exercise of its power to gambling; to criminal enterprises; to deceptive practices in the sale of products; to fraudulent security transactions; to misbranding of drugs; to wages and hours; to members of labor unions; to crop control; to discrimination against shippers; to the protection of small business from injurious price cutting; to resale price maintenance; to professional football; and to racial discrimination by owners and managers of terminal restaurants.

That Congress was legislating against moral wrongs in many of these areas rendered its enactments no less valid. In framing Title II of this Act Congress was also dealing with what it considered a moral problem. But that fact does not detract from the overwhelming evidence of the disruptive effect that racial discrimination has had on commercial intercourse. It was this burden which empowered Congress to enact appropriate legislation, and, given this basis for the exercise of its power, Congress was not restricted by the fact that the particular obstruction to interstate commerce with which it was dealing was also deemed a moral and social wrong.

It is said that the operation of the motel here is of a purely local character. But . . . the power of Congress to promote interstate commerce also includes the power to regulate the local incidents thereof, including local activities in both the States of origin and destination, which might have a substantial and harmful effect upon that commerce. One need only examine the evidence which we have discussed above to see that Congress may—as it has—prohibit racial discrimination by motels serving travelers, however “local” their operations may appear. . . .

We, therefore, conclude that the action of the Congress in the adoption of the Act as applied here to a motel which concededly serves interstate travelers is within the power granted it by the Commerce Clause of the Constitution, as interpreted by this Court for 140 years. It may be argued that Congress could have pursued other methods to eliminate the obstructions it found in interstate commerce caused by racial discrimination. But this is a matter of policy that rests entirely with the Congress not with the courts. How obstructions in commerce may be removed—what means are to be employed—is within the sound and exclusive discretion of the Congress. It is subject only to one caveat—that the means chosen by it must be reasonably adapted to the end permitted by the Constitution. We cannot say that its choice here was not so adapted. The Constitution requires no more.

Affirmed.

box 7-7 AFTERMATH . . . HEART OF ATLANTA MOTEL

THE HEART OF ATLANTA MOTEL, built in 1956, was owned by a group of Atlanta investors. One of the co-owners was Moreton Rolleston Jr., a former lieutenant commander in the U.S. Navy and a longtime Atlanta lawyer. Rolleston was a strong supporter of racial segregation. It was no coincidence, therefore, that the Heart of Atlanta Motel refused to serve black customers and that the motel did not cooperate with a consortium of fourteen downtown hotels whose owners agreed in 1963 to accommodate conventions that included blacks.

Moreton Rolleston Jr.

Leviton-Atlanta: Jay

When it appeared certain that Congress would pass the 1964 Civil Rights Act, Rolleston, who also served as the motel’s attorney, prepared a lawsuit to challenge its constitutionality. He filed the suit just two hours after President Lyndon Johnson signed the bill into law.

In August 1964, after losing in the district court, the owners complied with the court’s ruling and began operating the motel on an integrated basis. At the same time, they pressed an appeal to the U.S. Supreme Court. Rolleston, arguing before the justices, claimed that the Civil Rights Act was an unconstitutional intrusion by the federal government into an area reserved to the states and a violation of the rights of business owners. When the Supreme Court unanimously upheld the law on December 14, 1964, Rolleston lamented, “The decision opens the frightful door to unlimited power of a centralized government in Washington, in which the individual citizen and his personal liberty are of no importance.”

Several years later Rolleston bought out his fellow investors and became the motel’s sole owner. In 1973 the motel was sold and razed. A large, modern hotel now occupies the land where the Heart of Atlanta Motel once stood.

Rolleston continued to practice law in Atlanta well into his eighties. In 2000 he was briefly a Republican candidate for the U.S. Senate. Seven years later, the Georgia Supreme Court disbarred the eighty-nine-year-old Rolleston for abusing the legal process by excessive litigation in a property dispute that was ongoing for more than two decades. The legal battle included Rolleston’s attempts to stop film producer and actor Tyler Perry from building a 30,000-square-foot mansion on a seventeen-acre riverfront parcel of land that Rolleston claimed to own, a claim that the courts repeatedly rejected. In addition, Rolleston lost a $5.4 million malpractice ruling in 1995, and he suffered a $4.1 million judgment in 1998. In defiance of the disbarment action, Rolleston pledged to continue practicing law.

Rolleston died on August 19, 2013, at the age of ninety-five.

SOURCES: Richard C. Cortner, Civil Rights and Public Accommodations: The Heart of Atlanta Motel and McClung Cases (Lawrence: University Press of Kansas, 2001); Atlanta Journal-Constitution, May 14, 1991; May 16, 1991; December 25, 1991; March 23, 1995; February 8, 1996; March 5, 1998; August 8, 2000; October 10, 2007; October 24, 2007; burial records, Arlington Memorial Park, Sandy Springs, Georgia.

LIMITS ON THE COMMERCE POWER: THE REPUBLICAN COURT ERA

As the nation entered the 1990s, commerce clause jurisprudence seemed to be a settled matter. Since the 1937 decision in NLRB v. Jones & Laughlin Steel Corporation, the Court had persevered in its commitment to cooperative federalism and loyalty to an expansive view of the federal government’s commerce powers. As late as 1985, the Court in San Antonio Metropolitan Transit Authority (SAMTA) v. Garcia had made a major statement supportive of continuing in this vein.

NOTE: Justices whose names appear in bold generally support a more expansive view of the commerce power than do those whose names are in plain font. Justices whose names are underlined were in the majority. Votes in Sebelius are classified on the basis of the Commerce Clause portion of the decision. R = Republican appointee; D = Democratic appointee.

Under the surface, however, the prospects for change were mounting. The Court’s vote in Garcia was 5–4 and, therefore, vulnerable to the impact of personnel changes. The four justices who dissented in Garcia were all Republican appointees, and the nation had turned decidedly in the direction of the Republicans by electing presidents of that party in three successive elections (1980, 1984, and 1988). Republican President Ronald Reagan had the opportunity to appoint four new justices to the Court and George H. W. Bush added two more. The most consequential of those appointments was Bush’s 1991 selection of conservative justice Clarence Thomas to replace the retiring Thurgood Marshall, a member of the Garcia majority. This appointment tipped the scales in favor of justices who were sympathetic to the interests of the states and less supportive of expansive federal regulation. Table 7-2 illustrates the effect of those personnel changes, beginning with the decision in Garcia and continuing over six subsequent major federalism/commerce decisions through 2012.

The first indication that the balance of power had shifted occurred in New York v. United States (1992), just one year after the appointment of Justice Thomas. You may recall from our reading of that case in chapter 6 that the majority struck down a federal law that mandated that states adopt a particular radioactive waste policy. The justices held that the Constitution does not allow the federal government to command the states to pass legislation to implement federally preferred policies. The Court’s decision in New York signaled that those sympathetic to preserving the traditional role of the states now formed a majority.

Even so, the Court’s decision in United States v. Lopez (1995) came as somewhat of a surprise. For the first time since the battles over the New Deal, the justices invalidated a federal statute as falling outside the authority granted to Congress by the commerce clause.20 In addition to explaining the rationale for this outcome, Chief Justice Rehnquist’s majority opinion nicely reviews the evolution of the Court’s commerce clause doctrine.

Just how far-reaching was United States v. Lopez? How did it fit into the Court’s evolving commerce clause jurisprudence? Some interpreted it quite narrowly, simply as a warning to Congress that it must justify its legislation by showing the relationship between the activities regulated and interstate commerce. Had Congress explicitly demonstrated that it was responding to the negative impact school violence has on the economy, they asserted, it is likely that the Court would have found no fault with the law. These commentators saw the decision as little more than a detour and not a full-scale retreat from the body of commerce clause jurisprudence that flows almost seamlessly from NLRB v. Jones & Laughlin Steel Corporation onward (the Tenth Amendment cases of National League of Cities and New York v. United States being the chief exceptions).

Others viewed the decision as more sweeping, and as a signal that the Court would no longer allow Congress to regulate whatever it wished on the ground that all activities somehow affect interstate commerce. These critics concluded that Lopez was not an isolated ruling; rather, it should be considered in conjunction with New York v. United States (1992) and Printz v. United States (1997) (both excerpted in chapter 6)—other decisions in which a majority of the Court ruled against federal action that was seen as encroaching on the states.

The justices themselves seemed divided on what the case represented. In their concurring opinions, Justice Anthony Kennedy called Lopez a “limited holding,” but Justice Clarence Thomas declared that it was time “to modify our Commerce Clause jurisprudence.” The Court’s 5–4 vote contributed additional uncertainty. Whether Lopez was an aberration or a signal that the Court was following Thomas’s advice became clearer five years later, when the Court issued its decision in United States v. Morrison.

The importance of United States v. Morrison extended far beyond the main participants in the dispute (see box 7-8). By the same 5–4 vote as occurred in Lopez and using the same reasoning, the Supreme Court struck down the Violence Against Women Act. Four months later the justices in Jones v. United States (2000) held that a federal criminal statute against arson, passed pursuant to the interstate commerce power, could not be applied to a man who tossed a Molotov cocktail into his cousin’s house. Because the target of the arson was a private residence not used in any commercial activity, the Court concluded that Congress under the commerce clause had no authority to regulate.21

The opinions in Lopez, Morrison, and Jones, taken together with other Rehnquist Court federalism and taxation decisions, provide some indication of the Court’s modified commerce clause jurisprudence (see box 7-9). Following the New Deal revolution, the federal government was given wide latitude to regulate in the name of interstate commerce, but now the Court seemed to be cautioning that the commerce clause does not give Congress a blank check to regulate all activity in the name of commerce. In contrast to the New Deal case of Darby, the Court asserted that the Tenth Amendment could stand as a barrier to laws passed under the commerce clause if they commandeered the states, as in Printz. And in contrast to a case like Garcia, the Court in Lopez and Morrison now suggested that a federal law may be constitutionally suspect if it does not regulate an economic activity that, in the aggregate, substantially affects interstate commerce.

The importance of this evolution in doctrine remains to be seen. Although the Court has enunciated a revised interpretation of the commerce power, its application of that standard in no way resembles the breadth of the Court’s attack on federal authority in the period prior to 1937. In fact, some of its decisions have been quite consistent with its earlier post–New Deal jurisprudence. One example is Gonzales v. Raich (2005), a controversial ruling on the validity of state laws that allow the medical use of marijuana. Under vigorous attack from the dissenters, the majority applied the precedent of Wickard v. Filburn and other post–New Deal doctrine.

Angel Raich, shown here at a 2004 press conference, sued to block the U.S. attorney general from enforcing the federal Controlled Substances Act against her. Raich, suffering from a brain tumor and other serious medical conditions, used marijuana under California’s Compassionate Use Act to combat her pain and discomfort.

AP Photo/Noah Berger

Diane Monson joined Angel Raich in asking the Supreme Court to uphold California’s medicinal marijuana law. Monson, under a physician’s direction, regularly used marijuana to alleviate chronic and severe back pain.

AP Photo/Rich Pedrocelli

Although the decision in Raich still allows federal agents to prosecute medical marijuana cases, in October 2009 the Obama administration announced that it would no longer prosecute such cases if the individuals involved are in compliance with state law. The decision of some states, beginning with Colorado and Washington, to remove bans on recreational use of marijuana certainly widens the policy gap between the legalizing states and the federal government. Clearly, under Gonzales v. Raich the federal government can enforce federal laws prohibiting the distribution and possession of marijuana no matter what state law provides. For the present, federal authorities have chosen not to prosecute such violations. Whether that nonenforcement policy will continue for the long term remains to be seen.

Raich demonstrates that Lopez, Morrison, and Jones should not be seen as a wholesale repudiation of commerce clause jurisprudence as it has developed since 1937. Rather, the six-justice majority in Raich, which included conservatives Scalia and Kennedy, held fast to the precedent set in Wickard v. Filburn: the production of commercially viable items, when considered in the aggregate, has a sufficiently substantial relationship with interstate commerce to trigger the use of congressional regulatory authority. But when Congress under the commerce clause attempts to regulate noneconomic activity (such as gun possession, rape, or arson) without showing that the regulation is a necessary part of a broader regulation of interstate commerce, it may impermissibly infringe on powers reserved for the states.

The justices were faced with a legal dispute in 2012 that required them to go well beyond the distinction between economic and noneconomic activity. In National Federation of Independent Business v. Sebelius, the Court considered whether Congress has the power to regulate economic inactivity. At issue was the constitutionality of the Patient Protection and Affordable Care Act of 2010. The attacked legislation imposed comprehensive reforms on the nation’s medical care and health insurance sectors. The law was exceptionally controversial and became a political issue that affected the 2010 and 2012 congressional and presidential elections. A core question in the case was whether Congress constitutionally can require unwilling individuals to purchase health insurance.

On February 25, 2010, key figures in the debate over proposed health-care reforms met at Blair House in Washington but were unsuccessful at finding common ground. One month later President Obama signed into law the Patient Protection and Affordable Care Act after it had passed on a nearly straight party-line vote, with congressional Democrats supporting the law and Republicans opposed. From left, President Barack Obama and Secretary of Health and Human Services Kathleen Sebelius (both Democrats), Senate Minority Leader Mitch McConnell (R-Ky.), and House Minority Leader John Boehner (R-Ohio).

© Pablo Martinez Monsivais/AP/Corbis

In deciding the case the justices examined congressional powers under the commerce clause, the necessary and proper clause, and the taxing and spending clauses. In the following excerpt, we provide the Court’s analysis of congressional authority to enact the health-care law under the commerce clause and the necessary and proper clause. As you will see, the majority concludes that these constitutional provisions do not empower Congress to regulate commercial inactivity. But the commerce clause ruling did not settle the case. As we will see in chapter 8, the health insurance purchase requirement, while not constitutional under the commerce power, was found to be a valid regulation under Congress’s authority to tax and spend.

What should we make of the health-care decision? It is important to realize that while Roberts held that the mandate could not be sustained as an exercise of congressional commerce power, he did uphold it as a tax, as we will see in chapter 8. Moreover, even the holding on the commerce power may not be so far-reaching, because Congress has rarely forced people into commerce.22 Finally, even if Congress does pass another law of this kind, it is not altogether clear that the Court would stand by the distinction drawn by Justice Roberts: it could adopt Ginsburg’s dissenting position. For, as we have seen, commerce clause doctrine has not moved in a straight line; rather, it has varied greatly depending on the philosophies of the sitting justices.

United States v. Lopez

514 U.S. 549 (1995)

http://laws.findlaw.com/us/514/549.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Kennedy, O’Connor, Rehnquist, Scalia, Thomas)

4 (Breyer, Ginsburg, Souter, Stevens)

OPINION OF THE COURT: Rehnquist

CONCURRING OPINIONS: Kennedy, Thomas

DISSENTING OPINIONS: Breyer, Souter, Stevens

Facts:

On March 10, 1992, Alfonso Lopez Jr. came to Edison High School carrying a concealed.38 caliber handgun and five rounds of ammunition. Acting on an anonymous tip, officials at the San Antonio school confronted the twelfth-grade student, and he admitted having the weapon. Lopez claimed that he had been given the gun by an individual who instructed him to deliver it to a third person. The gun was to be used in gang-related activities. Lopez was arrested for violating the federal Gun-Free School Zones Act of 1990.

Lopez, who had no record of previous criminal activity, was convicted in federal district court and sentenced to six months in prison, two years of supervised release, and a $50 fine. His attorneys appealed to the Fifth Circuit Court of Appeals, claiming that Congress had no constitutional authority to pass the Gun-Free School Zones Act. Attorneys for the United States countered by arguing that the law was an appropriate exercise of congressional power to regulate interstate commerce. The appeals court held in favor of Lopez, and the government asked the Supreme Court to review that ruling.

Congress passed the Gun-Free School Zones Act—section 922(q) of chapter 18 of the United States Code—in 1990. In passing the act, Congress did not issue any findings showing a relationship between gun possession on school property and commerce. The federal government argued that such findings should not be required, that it would be sufficient if Congress could reasonably conclude that gun-related violence in schools affects interstate commerce directly or indirectly. Lopez argued that the simple possession of a weapon on school grounds is not a commercial activity that reasonably falls under commerce clause jurisdiction. Furthermore, the regulation of crime and education are traditional areas of state, not federal, jurisdiction.

Arguments:

For the petitioner, United States:

Under the commerce clause and based on past decisions, Congress is empowered to regulate even intrastate, noneconomic activity that, in the aggregate, exerts a substantial impact on interstate commerce.

All Congress must show is that it could rationally have concluded that gun possession on or near school premises affects interstate commerce.

There is an abundant basis from which Congress could reasonably determine that the conduct regulated in the law affects interstate commerce. For example, the need for insurance spreads the economic consequences of violent crime throughout the nation. In addition, violent crime affects interstate commerce by reducing the willingness of people to travel to areas they think are unsafe.

Congress also had grounds for concluding that the presence of guns in schools poses an unacceptable threat to the proper functioning of primary and secondary education. For the last decade or so, the importance of education to national productivity and economic competitiveness was the subject of extensive national concern and debate.

For the respondent, Alfonso Lopez Jr.:

Under the Supreme Court’s decision in Perez v. United States (1971), congressional jurisdiction under the commerce clause reaches, in the main, three categories: (1) the use of channels of interstate or foreign commerce: (2) protection of the instrumentalities of interstate commerce: and (3) those activities affecting interstate commerce. This case involves only the third Perez category.

Congress must demonstrate a substantial link between the object of its regulation and interstate commerce. Here, Congress failed to provide any link between interstate commerce and possession of a firearm.

Even if the Court finds that Congress need not have made formal or informal findings or even have concrete evidence of an effect on commerce when passing the Gun-Free School Zones Act, the act is still unconstitutional. In Gibbons, Chief Justice Marshall recognized that Congress’s power under the commerce clause does not extend to “exclusively internal commerce of a State.” The power to regulate commerce, however broad, is not unlimited. Because it regulates internal, noneconomic activity without a substantial connection to interstate commerce, the Gun-Free School Zones Act exceeds those limits.

CHIEF JUSTICE REHNQUIST DELIVERED THE OPINION OF THE COURT.

In the Gun-Free School Zones Act of 1990, Congress made it a federal offense “for any individual knowingly to possess a firearm at a place that the individual knows, or has reasonable cause to believe, is a school zone.” The Act neither regulates a commercial activity nor contains a requirement that the possession be connected in any way to interstate commerce. We hold that the Act exceeds the authority of Congress “[t]o regulate Commerce . . . among the several States.” . . .

We start with first principles. The Constitution creates a Federal Government of enumerated powers. As James Madison wrote, “[t]he powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.” This constitutionally mandated division of authority “was adopted by the Framers to ensure protection of our fundamental liberties.” Gregory v. Ashcroft (1991). . . .

. . . The Court, through Chief Justice Marshall, first defined the nature of Congress’ commerce power in Gibbons v. Ogden (1824):

“Commerce, undoubtedly, is traffic, but it is something more: it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.”

The commerce power “is the power to regulate; that is, to prescribe the rule by which commerce is to be governed. This power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the constitution.” Id. . . .

For nearly a century thereafter, the Court’s Commerce Clause decisions dealt but rarely with the extent of Congress’ power, and almost entirely with the Commerce Clause as a limit on state legislation that discriminated against interstate commerce. . . . Under this line of precedent, the Court held that certain categories of activity such as “production,” “manufacturing,” and “mining” were within the province of state governments, and thus were beyond the power of Congress under the Commerce Clause. See Wickard v. Filburn (1942) (describing development of Commerce Clause jurisprudence).

In 1887, Congress enacted the Interstate Commerce Act, and in 1890, Congress enacted the Sherman Antitrust Act. These laws ushered in a new era of federal regulation under the commerce power. When cases involving these laws first reached this Court, we imported from our negative Commerce Clause cases the approach that Congress could not regulate activities such as “production,” “manufacturing,” and “mining.” See, e.g., United States v. E. C. Knight Co. (1895); Carter v. Carter Coal Co. (1936). Simultaneously, however, the Court held that, where the interstate and intrastate aspects of commerce were so mingled together that full regulation of interstate commerce required incidental regulation of intrastate commerce, the Commerce Clause authorized such regulation. See, e.g., Houston, E. & W. T. R. Co. v. United States (1914) (Shreveport Rate Cases).

In A. L. A. Schechter Poultry Corp. v. United States (1935), the Court struck down regulations that fixed the hours and wages of individuals employed by an intrastate business because the activity being regulated related to interstate commerce only indirectly. In doing so, the Court characterized the distinction between direct and indirect effects of intrastate transactions upon interstate commerce as “a fundamental one, essential to the maintenance of our constitutional system.” Activities that affected interstate commerce directly were within Congress’ power; activities that affected interstate commerce indirectly were beyond Congress’ reach. The justification for this formal distinction was rooted in the fear that otherwise “there would be virtually no limit to the federal power and for all practical purposes we should have a completely centralized government.”

Two years later, in the watershed case of NLRB v. Jones & Laughlin Steel Corp. (1937), the Court upheld the National Labor Relations Act against a Commerce Clause challenge, and in the process, departed from the distinction between “direct” and “indirect” effects on interstate commerce. The Court held that intrastate activities that “have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions” are within Congress’ power to regulate.

In United States v. Darby (1941), the Court upheld the Fair Labor Standards Act, stating:

“The power of Congress over interstate commerce is not confined to the regulation of commerce among the states. It extends to those activities intrastate which so affect interstate commerce or the exercise of the power of Congress over it as to make regulation of them appropriate means to the attainment of a legitimate end, the exercise of the granted power of Congress to regulate interstate commerce.”

In Wickard v. Filburn, the Court upheld the application of amendments to the Agricultural Adjustment Act of 1938 to the production and consumption of homegrown wheat. The Wickard Court explicitly rejected earlier distinctions between direct and indirect effects on interstate commerce, stating:

“[E]ven if appellee’s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as ‘direct’ or ‘indirect.’”

The Wickard Court emphasized that although Filburn’s own contribution to the demand for wheat may have been trivial by itself, that was not “enough to remove him from the scope of federal regulation where, as here, his contribution, taken together with that of many others similarly situated, is far from trivial.”

Jones & Laughlin Steel, Darby, and Wickard ushered in an era of Commerce Clause jurisprudence that greatly expanded the previously defined authority of Congress under that Clause. In part, this was a recognition of the great changes that had occurred in the way business was carried on in this country. Enterprises that had once been local or at most regional in nature had become national in scope. But the doctrinal change also reflected a view that earlier Commerce Clause cases artificially had constrained the authority of Congress to regulate interstate commerce.

But even these modern-era precedents which have expanded congressional power under the Commerce Clause confirm that this power is subject to outer limits. In Jones & Laughlin Steel, the Court warned that the scope of the interstate commerce power “must be considered in the light of our dual system of government and may not be extended so as to embrace effects upon interstate commerce so indirect and remote that to embrace them, in view of our complex society, would effectually obliterate the distinction between what is national and what is local and create a completely centralized government.” See also Darby (Congress may regulate intrastate activity that has a “substantial effect” on interstate commerce); Wickard (Congress may regulate activity that “exerts a substantial economic effect on interstate commerce”). Since that time, the Court has heeded that warning and undertaken to decide whether a rational basis existed for concluding that a regulated activity sufficiently affected interstate commerce. . . .

Consistent with this structure, we have identified three broad categories of activity that Congress may regulate under its commerce power. First, Congress may regulate the use of the channels of interstate commerce. Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities. Finally, Congress’ commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce.

Within this final category, admittedly, our case law has not been clear whether an activity must “affect” or “substantially affect” interstate commerce in order to be within Congress’ power to regulate it under the Commerce Clause. We conclude, consistent with the great weight of our case law, that the proper test requires an analysis of whether the regulated activity “substantially affects” interstate commerce.

We now turn to consider the power of Congress, in the light of this framework, to enact 922(q). The first two categories of authority may be quickly disposed of: 922(q) is not a regulation of the use of the channels of interstate commerce, nor is it an attempt to prohibit the interstate transportation of a commodity through the channels of commerce; nor can 922(q) be justified as a regulation by which Congress has sought to protect an instrumentality of interstate commerce or a thing in interstate commerce. Thus, if 922(q) is to be sustained, it must be under the third category as a regulation of an activity that substantially affects interstate commerce.

First, we have upheld a wide variety of congressional Acts regulating intrastate economic activity where we have concluded that the activity substantially affected interstate commerce. Examples include the regulation of intrastate coal mining, intrastate extortionate credit transactions, restaurants utilizing substantial interstate supplies, inns and hotels catering to interstate guests, and production and consumption of home-grown wheat. These examples are by no means exhaustive, but the pattern is clear. Where economic activity substantially affects interstate commerce, legislation regulating that activity will be sustained. . . .

Section 922(q) is a criminal statute that by its terms has nothing to do with “commerce” or any sort of economic enterprise, however broadly one might define those terms. Section 922(q) is not an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated. It cannot, therefore, be sustained under our cases upholding regulations of activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce.

Second, 922(q) contains no jurisdictional element which would ensure, through case-by-case inquiry, that the firearm possession in question affects interstate commerce. For example, in United States v. Bass (1971), the Court interpreted former 18 U.S.C. 1202(a), which made it a crime for a felon to “receiv[e], posses[s], or transpor[t] in commerce or affecting commerce . . . any firearm.” The Court interpreted the possession component of 1202(a) to require an additional nexus to interstate commerce both because the statute was ambiguous and because “unless Congress conveys its purpose clearly, it will not be deemed to have significantly changed the federal-state balance.” . . . Unlike the statute in Bass, 922(q) has no express jurisdictional element which might limit its reach to a discrete set of firearm possessions that additionally have an explicit connection with or effect on interstate commerce.

Although as part of our independent evaluation of constitutionality under the Commerce Clause we of course consider legislative findings, and indeed even congressional committee findings, regarding effect on interstate commerce, the Government concedes that “[n]either the statute nor its legislative history contain[s] express congressional findings regarding the effects upon interstate commerce of gun possession in a school zone.” We agree with the Government that Congress normally is not required to make formal findings as to the substantial burdens that an activity has on interstate commerce. But to the extent that congressional findings would enable us to evaluate the legislative judgment that the activity in question substantially affected interstate commerce, even though no such substantial effect was visible to the naked eye, they are lacking here. . . .

The Government’s essential contention, in fine, is that we may determine here that 922(q) is valid because possession of a firearm in a local school zone does indeed substantially affect interstate commerce. The Government argues that possession of a firearm in a school zone may result in violent crime and that violent crime can be expected to affect the functioning of the national economy in two ways. First, the costs of violent crime are substantial, and, through the mechanism of insurance, those costs are spread throughout the population. Second, violent crime reduces the willingness of individuals to travel to areas within the country that are perceived to be unsafe. The Government also argues that the presence of guns in schools poses a substantial threat to the educational process by threatening the learning environment. A handicapped educational process, in turn, will result in a less productive citizenry. That, in turn, would have an adverse effect on the Nation’s economic well-being. As a result, the Government argues that Congress could rationally have concluded that 922(q) substantially affects interstate commerce.

We pause to consider the implications of the Government’s arguments. The Government admits, under its “costs of crime” reasoning, that Congress could regulate not only all violent crime, but all activities that might lead to violent crime, regardless of how tenuously they relate to interstate commerce. Similarly, under the Government’s “national productivity” reasoning, Congress could regulate any activity that it found was related to the economic productivity of individual citizens: family law (including marriage, divorce, and child custody), for example. Under the theories that the Government presents in support of 922(q), it is difficult to perceive any limitation on federal power, even in areas such as criminal law enforcement or education where States historically have been sovereign. Thus, if we were to accept the Government’s arguments, we are hard-pressed to posit any activity by an individual that Congress is without power to regulate. . . .

Admittedly, a determination whether an intrastate activity is commercial or noncommercial may in some cases result in legal uncertainty. But, so long as Congress’ authority is limited to those powers enumerated in the Constitution, and so long as those enumerated powers are interpreted as having judicially enforceable outer limits, congressional legislation under the Commerce Clause always will engender “legal uncertainty.” . . .

These are not precise formulations, and in the nature of things they cannot be. But we think they point the way to a correct decision of this case. The possession of a gun in a local school zone is in no sense an economic activity that might, through repetition elsewhere, substantially affect any sort of interstate commerce. Respondent was a local student at a local school; there is no indication that he had recently moved in interstate commerce, and there is no requirement that his possession of the firearm have any concrete tie to interstate commerce.

To uphold the Government’s contentions here, we would have to pile inference upon inference in a manner that would bid fair to convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States. Admittedly, some of our prior cases have taken long steps down that road, giving great deference to congressional action. The broad language in these opinions has suggested the possibility of additional expansion, but we decline here to proceed any further. To do so would require us to conclude that the Constitution’s enumeration of powers does not presuppose something not enumerated, and that there never will be a distinction between what is truly national and what is truly local. This we are unwilling to do. For the foregoing reasons the judgment of the Court of Appeals is

Affirmed.

JUSTICE BREYER, with whom JUSTICE STEVENS, JUSTICE SOUTER, and JUSTICE GINSBURG join, dissenting.

The issue in this case is whether the Commerce Clause authorizes Congress to enact a statute that makes it a crime to possess a gun in, or near, a school. In my view, the statute falls well within the scope of the commerce power as this Court has understood that power over the last half-century.

In reaching this conclusion, I apply three basic principles of Commerce Clause interpretation. First, the power to “regulate Commerce . . . among the several States” encompasses the power to regulate local activities insofar as they significantly affect interstate commerce. . . . I use the word “significant” because the word “substantial” implies a somewhat narrower power than recent precedent suggests. But, to speak of “substantial effect” rather than “significant effect” would make no difference in this case.

Second, in determining whether a local activity will likely have a significant effect upon interstate commerce, a court must consider, not the effect of an individual act (a single instance of gun possession), but rather the cumulative effect of all similar instances (i.e., the effect of all guns possessed in or near schools).

Third, the Constitution requires us to judge the connection between a regulated activity and interstate commerce, not directly, but at one remove. Courts must give Congress a degree of leeway in determining the existence of a significant factual connection between the regulated activity and interstate commerce—both because the Constitution delegates the commerce power directly to Congress and because the determination requires an empirical judgment of a kind that a legislature is more likely than a court to make with accuracy. The traditional words “rational basis” capture this leeway. Thus, the specific question before us, as the Court recognizes, is not whether the “regulated activity sufficiently affected interstate commerce,” but, rather, whether Congress could have had “a rational basis” for so concluding.

I recognize that we must judge this matter independently. “[S]imply because Congress may conclude that a particular activity substantially affects interstate commerce does not necessarily make it so.” And, I also recognize that Congress did not write specific “interstate commerce” findings into the law under which Lopez was convicted. Nonetheless, as I have already noted, the matter that we review independently (i.e., whether there is a “rational basis”) already has considerable leeway built into it. And, the absence of findings, at most, deprives a statute of the benefit of some extra leeway. This extra deference, in principle, might change the result in a close case, though, in practice, it has not made a critical legal difference. . . .

Applying these principles to the case at hand, we must ask whether Congress could have had a rational basis for finding a significant (or substantial) connection between gun-related school violence and interstate commerce. . . . As long as one views the commerce connection, not as a “technical legal conception,” but as “a practical one,” Swift & Co. v. United States (1905), the answer to this question must be yes. . . .

For one thing, reports, hearings, and other readily available literature make clear that the problem of guns in and around schools is widespread and extremely serious. . . . Congress obviously could have thought that guns and learning are mutually exclusive. And, Congress could therefore have found a substantial educational problem—teachers unable to teach, students unable to learn—and concluded that guns near schools contribute substantially to the size and scope of that problem.

Having found that guns in schools significantly undermine the quality of education in our Nation’s classrooms, Congress could also have found, given the effect of education upon interstate and foreign commerce, that gun-related violence in and around schools is a commercial, as well as a human, problem. Education, although far more than a matter of economics, has long been inextricably intertwined with the Nation’s economy. . . .

In recent years the link between secondary education and business has strengthened, becoming both more direct and more important. Scholars on the subject report that technological changes and innovations in management techniques have altered the nature of the workplace so that more jobs now demand greater educational skills. . . .

Increasing global competition also has made primary and secondary education economically more important. . . . Indeed, Congress has said, when writing other statutes, that “functionally or technologically illiterate” Americans in the work force “erod[e]” our economic “standing in the international marketplace,” and that “our Nation is . . . paying the price of scientific and technological illiteracy, with our productivity declining, our industrial base ailing, and our global competitiveness dwindling.”

Finally, there is evidence that, today more than ever, many firms base their location decisions upon the presence, or absence, of a work force with a basic education. . . .

The economic links I have just sketched seem fairly obvious. Why then is it not equally obvious, in light of those links, that a widespread, serious, and substantial physical threat to teaching and learning also substantially threatens the commerce to which that teaching and learning is inextricably tied? That is to say, guns in the hands of six percent of inner-city high school students and gun-related violence throughout a city’s schools must threaten the trade and commerce that those schools support. The only question, then, is whether the latter threat is (to use the majority’s terminology) “substantial.” And, the evidence of (1) the extent of the gun-related violence problem, (2) the extent of the resulting negative effect on classroom learning, and (3) the extent of the consequent negative commercial effects, when taken together, indicate a threat to trade and commerce that is “substantial.” At the very least, Congress could rationally have concluded that the links are “substantial.”

Specifically, Congress could have found that gun-related violence near the classroom poses a serious economic threat (1) to consequently inadequately educated workers who must endure low paying jobs, and (2) to communities and businesses that might (in today’s “information society”) otherwise gain, from a well-educated work force, an important commercial advantage, of a kind that location near a railhead or harbor provided in the past. . . . The violence related facts, the educational facts, and the economic facts, taken together, make this conclusion rational. And, because under our case law, the sufficiency of the constitutionally necessary Commerce Clause link between a crime of violence and interstate commerce turns simply upon size or degree, those same facts make the statute constitutional.

The majority’s holding—that 922 falls outside the scope of the Commerce Clause—creates three serious legal problems. First, the majority’s holding runs contrary to modern Supreme Court cases that have upheld congressional actions despite connections to interstate or foreign commerce that are less significant than the effect of school violence. . . .

The second legal problem the Court creates comes from its apparent belief that it can reconcile its holding with earlier cases by making a critical distinction between “commercial” and noncommercial “transaction[s].” That is to say, the Court believes the Constitution would distinguish between two local activities, each of which has an identical effect upon interstate commerce, if one, but not the other, is “commercial” in nature. . . .

The third legal problem created by the Court’s holding is that it threatens legal uncertainty in an area of law that, until this case, seemed reasonably well settled. . . .

In sum, to find this legislation within the scope of the Commerce Clause would permit “Congress . . . to act in terms of economic . . . realities.” . . . Upholding this legislation would do no more than simply recognize that Congress had a “rational basis” for finding a significant connection between guns in or near schools and (through their effect on education) the interstate and foreign commerce they threaten. For these reasons, I would reverse the judgment of the Court of Appeals. Respectfully, I dissent.

United States v. Morrison

529 U.S. 598 (2000)

http://laws.findlaw.com/us/529/598.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Kennedy, O’Connor, Rehnquist, Scalia, Thomas)

4 (Breyer, Ginsburg, Souter, Stevens)

OPINION OF THE COURT: Rehnquist

CONCURRING OPINION: Thomas

DISSENTING OPINIONS: Breyer, Souter

Facts:

Not long after Christy Brzonkala enrolled at Virginia Polytechnic Institute (Virginia Tech) in the fall of 1994, she met Antonio Morrison and James Crawford, members of the university’s varsity football team. Brzonkala alleged that within thirty minutes of meeting Morrison and Crawford, she was assaulted and repeatedly raped by the two young men. She claimed that the attack caused her to become severely emotionally disturbed and depressed. In early 1995 she filed a complaint under Virginia Tech’s sexual assault policy. At the subsequent hearing Morrison admitted having sexual contact with Brzonkala and claimed that even though she had twice told him no, the sexual activity was ultimately consensual.

The Judicial Committee found insufficient evidence against Crawford, but it found Morrison guilty of sexual assault and sentenced him to an immediate suspension from the university for two semesters. Morrison appealed this decision, and, because of procedural technicalities, the university retried Morrison under its abusive conduct policy. This time Morrison was found guilty of “using abusive language” and sentenced once more to a two-semester suspension. Morrison again appealed. The university provost set aside Morrison’s punishment. She concluded that it was “excessive” when compared with other convictions under the abusive conduct policy. Morrison’s final punishment was probation and minimal counseling.

Brzonkala then filed suit in federal district court against Morrison, Crawford, and Virginia Tech under 42 U.S.C. 13981, the Violence Against Women Act of 1994, which provided a federal civil remedy for the victims of gender-motivated violence. The district court held that Congress lacked the authority to pass this particular provision under either the commerce clause or the Fourteenth Amendment. A divided court of appeals affirmed that conclusion. The United States intervened in the suit to defend the validity of the statute. Because the court of appeals had invalidated a federal statute on constitutional grounds, the Supreme Court granted certiorari.

The justices concluded that Congress did not have the power to enact the challenged statute under the Fourteenth Amendment. In the portion of the decision excerpted here, the Court addresses Congress’s authority to enact this legislation under the commerce clause.

Arguments:

For the petitioner, United States:

The law is an appropriate exercise of Congress’s power under the commerce clause. After four years of investigation, Congress found that gender-motivated violence burdens the national economy and interstate commerce by making women fear for their safety in the workplace and by imposing increased medical and other costs on victims, their employers and insurers, and state and local governments. All of those burdens were documented in the extensive legislative record.

Congress’s commerce power is not confined to the regulation of those intrastate activities that are “commercial” or “economic” in nature. It is not the character of the activity but the substantiality of its impact on interstate commerce that determines whether the activity may be regulated under the commerce clause, as was suggested in Lopez. Even so, the act is connected to economic activity because the gender-motivated violence remedied occurs at, or en route to, workplaces, retail establishments, and interstate transportation terminals as well as in other settings.

For the respondent, Antonio J. Morrison:

Congress cannot regulate felonious conduct under its commerce power because the activity being regulated is wholly noneconomic in nature. In Lopez the Court emphasized the noneconomic nature of the activity being regulated.

Petitioner’s arguments would give Congress the power to pass virtually any legislation at all because all human activity has economic consequences of one kind or another. That was the federalism concern at the core of Lopez. Ultimately, the government’s argument amounts to the proposition that Congress should be able to regulate any problem it deems sufficiently important. Morrison has a right to be free from an overreaching Congress, just as he has the right to be free from a Congress that would pass a law abridging freedom of speech.

CHIEF JUSTICE REHNQUIST DELIVERED THE OPINION OF THE COURT.

Due respect for the decisions of a coordinate branch of Government demands that we invalidate a congressional enactment only upon a plain showing that Congress has exceeded its constitutional bounds. With this presumption of constitutionality in mind, we turn to the question whether §13981 falls within Congress’ power under Article I, §8, of the Constitution. Brzonkala and the United States rely upon the third clause of the Article, which gives Congress power “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

As we discussed at length in [United States v.] Lopez [1995], our interpretation of the Commerce Clause has changed as our Nation has developed. We need not repeat that detailed review of the Commerce Clause’s history here; it suffices to say that, in the years since NLRB v. Jones & Laughlin Steel Corp. (1937), Congress has had considerably greater latitude in regulating conduct and transactions under the Commerce Clause than our previous case law permitted.

Lopez emphasized, however, that even under our modern, expansive interpretation of the Commerce Clause, Congress’ regulatory authority is not without effective bounds.

“[E]ven [our] modern-era precedents which have expanded congressional power under the Commerce Clause confirm that this power is subject to outer limits. In Jones & Laughlin Steel, the Court warned that the scope of the interstate commerce power ‘must be considered in the light of our dual system of government and may not be extended so as to embrace effects upon interstate commerce so indirect and remote that to embrace them, in view of our complex society, would effectually obliterate the distinction between what is national and what is local and create a completely centralized government.’”

As we observed in Lopez, modern Commerce Clause jurisprudence has “identified three broad categories of activity that Congress may regulate under its commerce power.” “First, Congress may regulate the use of the channels of interstate commerce.” “Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities.” “Finally, Congress’ commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, . . . i.e., those activities that substantially affect interstate commerce.”

Petitioners do not contend that these cases fall within either of the first two of these categories of Commerce Clause regulation. They seek to sustain §13981 as a regulation of activity that substantially affects interstate commerce. . . .

Since Lopez most recently canvassed and clarified our case law governing this third category of Commerce Clause regulation, it provides the proper framework for conducting the required analysis of §13981. In Lopez, we held that the Gun-Free School Zones Act of 1990, which made it a federal crime to knowingly possess a firearm in a school zone, exceeded Congress’ authority under the Commerce Clause. Several significant considerations contributed to our decision.

First, we observed that [the Gun-Free School Zones Act] was “a criminal statute that by its terms has nothing to do with ‘commerce’ or any sort of economic enterprise, however broadly one might define those terms.” . . .

. . . Lopez’s review of Commerce Clause case law demonstrates that in those cases where we have sustained federal regulation of intrastate activity based upon the activity’s substantial effects on interstate commerce, the activity in question has been some sort of economic endeavor.

The second consideration that we found important . . . was that the statute contained “no express jurisdictional element which might limit its reach to a discrete set of firearm possessions that additionally have an explicit connection with or effect on interstate commerce.” . . .

Third, we noted that neither [the Gun-Free School Zones Act] “nor its legislative history contain[s] express congressional findings regarding the effects upon interstate commerce of gun possession in a school zone.” While “Congress normally is not required to make formal findings as to the substantial burdens that an activity has on interstate commerce,” the existence of such findings may “enable us to evaluate the legislative judgment that the activity in question substantially affect[s] interstate commerce, even though no such substantial effect [is] visible to the naked eye.”

Finally, our decision in Lopez rested in part on the fact that the link between gun possession and a substantial effect on interstate commerce was attenuated. The United States argued that the possession of guns may lead to violent crime, and that violent crime “can be expected to affect the functioning of the national economy in two ways. First, the costs of violent crime are substantial, and, through the mechanism of insurance, those costs are spread throughout the population. Second, violent crime reduces the willingness of individuals to travel to areas within the country that are perceived to be unsafe.” The Government also argued that the presence of guns at schools poses a threat to the educational process, which in turn threatens to produce a less efficient and productive workforce, which will negatively affect national productivity and thus interstate commerce.

We rejected these “costs of crime” and “national productivity” arguments because they would permit Congress to “regulate not only all violent crime, but all activities that might lead to violent crime, regardless of how tenuously they relate to interstate commerce.” . . .

“ . . . Thus, if we were to accept the Government’s arguments, we are hard pressed to posit any activity by an individual that Congress is without power to regulate.” [Lopez.]

With these principles underlying our Commerce Clause jurisprudence as reference points, the proper resolution of the present cases is clear. Gender-motivated crimes of violence are not, in any sense of the phrase, economic activity. While we need not adopt a categorical rule against aggregating the effects of any noneconomic activity in order to decide these cases, thus far in our Nation’s history our cases have upheld Commerce Clause regulation of intrastate activity only where that activity is economic in nature.

Like the Gun-Free School Zones Act at issue in Lopez, §13981 contains no jurisdictional element establishing that the federal cause of action is in pursuance of Congress’ power to regulate interstate commerce. . . .

In contrast with the lack of congressional findings that we faced in Lopez, §13981 is supported by numerous findings regarding the serious impact that gender-motivated violence has on victims and their families. But the existence of congressional findings is not sufficient, by itself, to sustain the constitutionality of Commerce Clause legislation. As we stated in Lopez, “‘[S]imply because Congress may conclude that a particular activity substantially affects interstate commerce does not necessarily make it so.’” Rather, “‘[w]hether particular operations affect interstate commerce sufficiently to come under the constitutional power of Congress to regulate them is ultimately a judicial rather than a legislative question, and can be settled finally only by this Court.’”

. . . Congress’ findings are substantially weakened by the fact that they rely so heavily on a method of reasoning that we have already rejected as unworkable if we are to maintain the Constitution’s enumeration of powers. Congress found that gender-motivated violence affects interstate commerce

“by deterring potential victims from traveling interstate, from engaging in employment in interstate business, and from transacting with business, and in places involved in interstate commerce; . . . by diminishing national productivity, increasing medical and other costs, and decreasing the supply of and the demand for interstate products.”

Given these findings and petitioners’ arguments, the concern that we expressed in Lopez that Congress might use the Commerce Clause to completely obliterate the Constitution’s distinction between national and local authority seems well founded. . . . If accepted, petitioners’ reasoning would allow Congress to regulate any crime as long as the nationwide, aggregated impact of that crime has substantial effects on employment, production, transit, or consumption. Indeed, if Congress may regulate gender-motivated violence, it would be able to regulate murder or any other type of violence since gender-motivated violence, as a subset of all violent crime, is certain to have lesser economic impacts than the larger class of which it is a part.

Petitioners’ reasoning, moreover, will not limit Congress to regulating violence but may, as we suggested in Lopez, be applied equally as well to family law and other areas of traditional state regulation since the aggregate effect of marriage, divorce, and childrearing on the national economy is undoubtedly significant. Congress may have recognized this specter when it expressly precluded §13981 from being used in the family law context. Under our written Constitution, however, the limitation of congressional authority is not solely a matter of legislative grace.

We accordingly reject the argument that Congress may regulate noneconomic, violent criminal conduct based solely on that conduct’s aggregate effect on interstate commerce. The Constitution requires a distinction between what is truly national and what is truly local. In recognizing this fact we preserve one of the few principles that has been consistent since the Clause was adopted. The regulation and punishment of intrastate violence that is not directed at the instrumentalities, channels, or goods involved in interstate commerce has always been the province of the States. Indeed, we can think of no better example of the police power, which the Founders denied the National Government and reposed in the States, than the suppression of violent crime and vindication of its victims. . . .

Petitioner Brzonkala’s complaint alleges that she was the victim of a brutal assault. . . . If the allegations here are true, no civilized system of justice could fail to provide her a remedy for the conduct of respondent Morrison. But under our federal system that remedy must be provided by the Commonwealth of Virginia, and not by the United States. The judgment of the Court of Appeals is

Affirmed.

JUSTICE SOUTER, with whom JUSTICE STEVENS, JUSTICE GINSBURG, and JUSTICE BREYER join, dissenting.

The Court says both that it leaves Commerce Clause precedent undisturbed and that the Civil Rights Remedy of the Violence Against Women Act of 1994 exceeds Congress’s power under that Clause. I find the claims irreconcilable and respectfully dissent.

Our cases, which remain at least nominally undisturbed, stand for the following propositions. Congress has the power to legislate with regard to activity that, in the aggregate, has a substantial effect on interstate commerce. The fact of such a substantial effect is not an issue for the courts in the first instance, but for the Congress, whose institutional capacity for gathering evidence and taking testimony far exceeds ours. By passing legislation, Congress indicates its conclusion, whether explicitly or not, that facts support its exercise of the commerce power. The business of the courts is to review the congressional assessment, not for soundness but simply for the rationality of concluding that a jurisdictional basis exists in fact. Any explicit findings that Congress chooses to make, though not dispositive of the question of rationality, may advance judicial review by identifying factual authority on which Congress relied. Applying those propositions in these cases can lead to only one conclusion.

One obvious difference from United States v. Lopez (1995) is the mountain of data assembled by Congress, here showing the effects of violence against women on interstate commerce. Passage of the Act in 1994 was preceded by four years of hearings, which included testimony from physicians and law professors; from survivors of rape and domestic violence; and from representatives of state law enforcement and private business. The record includes reports on gender bias from task forces in 21 States, and we have the benefit of specific factual findings in the eight separate Reports issued by Congress and its committees over the long course leading to enactment. . . .

Congress thereby explicitly stated the predicate for the exercise of its Commerce Clause power. Is its conclusion irrational in view of the data amassed? True, the methodology of particular studies may be challenged, and some of the figures arrived at may be disputed. But the sufficiency of the evidence before Congress to provide a rational basis for the finding cannot seriously be questioned. . . .

The Act would have passed muster at any time between Wickard [v. Filburn] in 1942 and Lopez in 1995, a period in which the law enjoyed a stable understanding that congressional power under the Commerce Clause, complemented by the authority of the Necessary and Proper Clause, extended to all activity that, when aggregated, has a substantial effect on interstate commerce. . . .

The fact that the Act does not pass muster before the Court today is therefore proof, to a degree that Lopez was not, that the Court’s nominal adherence to the substantial effects test is merely that. Although a new jurisprudence has not emerged with any distinctness, it is clear that some congressional conclusions about obviously substantial, cumulative effects on commerce are being assigned lesser values than the once-stable doctrine would assign them. These devaluations are accomplished not by any express repudiation of the substantial effects test or its application through the aggregation of individual conduct, but by supplanting rational basis scrutiny with a new criterion of review. . . .

All of this convinces me that today’s ebb of the commerce power rests on error, and at the same time leads me to doubt that the majority’s view will prove to be enduring law. There is yet one more reason for doubt. Although we sense the presence of [Carter v.] Carter Coal [1936], Schechter [Poultry v. United States, 1935], and [National League of Cities v.] Usery [1976] once again, the majority embraces them only at arm’s-length. Where such decisions once stood for rules, today’s opinion points to considerations by which substantial effects are discounted. Cases standing for the sufficiency of substantial effects are not overruled; cases overruled since 1937 are not quite revived. The Court’s thinking betokens less clearly a return to the conceptual straitjackets of Schechter and Carter Coal and Usery than to something like the unsteady state of obscenity law between Redrup v. New York (1967) and Miller v. California (1973), a period in which the failure to provide a workable definition left this Court to review each case ad hoc. As our predecessors learned then, the practice of such ad hoc review cannot preserve the distinction between the judicial and the legislative, and this Court, in any event, lacks the institutional capacity to maintain such a regime for very long. This one will end when the majority realizes that the conception of the commerce power for which it entertains hopes would inevitably fail the test expressed in Justice Holmes’s statement that “[t]he first call of a theory of law is that it should fit the facts.” The facts that cannot be ignored today are the facts of integrated national commerce and a political relationship between States and Nation much affected by their respective treasuries and constitutional modifications adopted by the people. The federalism of some earlier time is no more adequate to account for those facts today than the theory of laissez-faire was able to govern the national economy 70 years ago.

box 7-8 AFTERMATH . . . UNITED STATES v. MORRISON

CHRISTY BRZONKALA, a former high school basketball player, arrived at Virginia Tech in 1994 with the goal of becoming a sports nutritionist. Antonio Morrison and James Crawford were members of the highly ranked Virginia Tech football team. They had dreams of careers in athletics, perhaps even in professional football. The ambitions of all three were shattered as the result of an incident in a dorm room on a September evening just one month after the school year began, when, as Brzonkala claimed, Morrison and Crawford gang-raped her. What followed was a tangled legal battle ending in the Supreme Court’s decision in United States v. Morrison (2000). By the time the Supreme Court issued its opinion, the case had evolved into a federalism controversy over the extent to which Congress can regulate under its interstate commerce powers. Left behind were the lives of the three principals in the case.

Christy Brzonkala, with one of her attorneys, Kathryn Rodgers of the NOW Legal Defense Fund.

AP Photo

Brzonkala initially failed to tell anyone about the alleged assault. After several months of rarely leaving her room, performing poorly in her courses, and abusing thyroid medication, she came forward with her story. The university refused to expel Morrison and Crawford, and Brzonkala dropped out of college and moved back to her family’s home in Fairfax County, Virginia. She resumed her academic career at George Mason University, but remained there only briefly. She then moved to Washington, D.C., and found work as a waitress. Brzonkala’s suit against the university for sex discrimination was settled out of court. Virginia Tech agreed to pay her $75,000 but admitted no wrongdoing. In 2000 the National Organization for Women, which had supported Brzonkala’s legal efforts, bestowed on her its Women of Courage Award.

The football players argued that they were unfairly charged. Morrison claimed that his sexual encounter with Brzonkala was consensual, and Crawford said that he left the room before any sexual activity occurred. Although police investigated the incident, neither Morrison nor Crawford was charged with any criminal offense.

The university placed Morrison on probation, but he was allowed to remain in school. Not long thereafter he was suspended from the football team following his arrest during a bar brawl. He transferred to Hampton University but returned to Virginia Tech a semester later. He did not play football again. He ultimately received a degree in human nutrition, foods, and exercise. After graduating, Morrison pursued a career as an athletic trainer but found it difficult to find employment. He claimed that racial factors were partially responsible for the unfair treatment he received and the damage his reputation suffered.

Crawford was later convicted of an unrelated sexual assault and disorderly conduct after an altercation in a parking lot. He was stripped of his football scholarship and left the university. He returned to his home state of Florida and began working in retail.

Although the Supreme Court held that the federal government had acted unconstitutionally in passing the Violence Against Women Act, Brzonkala was free to take her suit against Morrison and Crawford to state court. Brzonkala and her attorneys, however, said there was little chance that they would do so. Such a suit would be for monetary damages, and even if it were successful, Morrison and Crawford had little means of satisfying any judgment against them.

SOURCES: Baltimore Sun, January 8, 2000; Washington Post, May 20, 2000.

BOX 7-9 EVOLUTION OF INTERSTATE COMMERCE DOCTRINE

Gonzales v. Raich

545 U.S. 1 (2005)

http://laws.findlaw.com/us/545/1.html

Oral arguments are available at https://www.oyez.org.

Vote: 6 (Breyer, Ginsburg, Kennedy, Scalia, Souter, Stevens)

3 (O’Connor, Rehnquist, Thomas)

OPINION OF THE COURT: Stevens

OPINION CONCURRING IN JUDGMENT: Scalia

DISSENTING OPINIONS: O’Connor, Thomas

Facts:

In 1996 California voters passed Proposition 215, commonly known as the Compassionate Use Act. The law allowed seriously ill state residents to use marijuana for medical purposes. The act also created an exemption from criminal prosecution for patients, physicians, and caregivers who cultivate and possess marijuana for medical reasons.

Californian Angel Raich suffered from more than ten serious and possibly life-threatening medical conditions, including an inoperable brain tumor. On the advice of her doctor she used marijuana to help ease her suffering. Too ill to produce her own supply, Raich depended on two caregivers to grow and provide marijuana without charge.

Diane Monson, another California resident following her physician’s advice, had been using marijuana in compliance with the Compassionate Use Act for about five years to combat chronic back pain caused by a degenerative disease of the spine. She grew about six cannabis plants to maintain a supply of the drug.

In 2002 county deputy sheriffs and federal drug agents came to Monson’s home. After an investigation, the local officials found no evidence of illegal activity under California law. The federal agents, however, concluded that Monson’s possession of marijuana violated the federal Controlled Substances Act. They seized and destroyed her marijuana plants.

Raich and Monson brought a lawsuit against Attorney General Alberto Gonzales and the head of the U.S. Drug Enforcement Administration to bar enforcement of the Controlled Substances Act to the extent that it prevented them from obtaining and possessing marijuana for medical purposes. The federal government claimed that its constitutional power to regulate commerce was sufficiently broad to regulate the use of the substance. Raich and Monson argued that the federal commerce power does not extend to the medical use of marijuana, a purely local and noncommercial activity regulated by state law. They further claimed that their marijuana plants were grown and processed only with water, nutrients, supplies, and equipment originating in California. The court of appeals ruled in favor of Raich and Monson, and the federal government asked the Supreme Court to reverse.

Arguments:

For the petitioners, Alberto R. Gonzales, attorney general, et al.:

Congress has the power under the commerce clause, coupled with the necessary and proper clause, to regulate local activity that substantially affects interstate commerce (see Wickard and Darby). Congress’s determination that local activity with respect to a product substantially affects interstate commerce or could interfere with Congress’s objective in regulating the interstate market of that product is entitled to substantial deference.

Because marijuana trafficking is a commercial activity that occurs in interstate and foreign commerce and affects interstate commerce, Congress has the power under the commerce clause to regulate all commercial marijuana activity, including commercial possession, manufacture, and distribution that occurs wholly intrastate (see Lopez).

The act also constitutionally regulates intrastate manufacture and possession of marijuana for personal use and the distribution of those substances without charge. Congress has concluded that regulation of all intrastate drug activity “is essential to the effective control” of interstate drug trafficking and that regulation of intrastate drug activity was a reasonably necessary means to accomplish its comprehensive regulation of the interstate market in controlled substances.

For the respondents, Angel McClary Raich et al.:

This case is and always has been about state sovereignty and federalism. The issue is whether the federal government may criminalize wholly intrastate, noncommercial conduct that is expressly authorized by the state in an exercise of its broad powers to define criminal law, regulate medical practice, and protect the lives of its citizens. In Lopez and Morrison the Court invalidated federal statutes that were consistent with achievement of goals shared by all the states.

The government’s argument goes beyond the outer limits of Wickard, which involved regulation of commercial farming activity. The respondents’ activity is not commercial, and the link between it and interstate commerce is, at best, attenuated. In addition, prohibiting respondents’ activity is not essential to a larger regulation of interstate economic activity.

JUSTICE STEVENS DELIVERED THE OPINION OF THE COURT.

California is one of at least nine States that authorize the use of marijuana for medicinal purposes. The question presented in this case is whether the power vested in Congress by Article I, §8, of the Constitution “[t]o make all Laws which shall be necessary and proper for carrying into Execution” its authority to “regulate Commerce with foreign Nations, and among the several States” includes the power to prohibit the local cultivation and use of marijuana in compliance with California law. . . .

Respondents in this case do not dispute that passage of the CSA [Controlled Substances Act], as part of the Comprehensive Drug Abuse Prevention and Control Act, was well within Congress’ commerce power. Nor do they contend that any provision or section of the CSA amounts to an unconstitutional exercise of congressional authority. Rather, respondents’ challenge is actually quite limited; they argue that the CSA’s categorical prohibition of the manufacture and possession of marijuana as applied to the intrastate manufacture and possession of marijuana for medical purposes pursuant to California law exceeds Congress’ authority under the Commerce Clause.

In assessing the validity of congressional regulation, none of our Commerce Clause cases can be viewed in isolation. As charted in considerable detail in United States v. Lopez [1995], our understanding of the reach of the Commerce Clause, as well as Congress’ assertion of authority thereunder, has evolved over time. . . .

. . . [We have now] identified three general categories of regulation in which Congress is authorized to engage under its commerce power. First, Congress can regulate the channels of interstate commerce. Perez v. United States (1971). Second, Congress has authority to regulate and protect the instrumentalities of interstate commerce, and persons or things in interstate commerce. Ibid. Third, Congress has the power to regulate activities that substantially affect interstate commerce. Ibid.; NLRB v. Jones & Laughlin Steel Corp. (1937). Only the third category is implicated in the case at hand.

Our case law firmly establishes Congress’ power to regulate purely local activities that are part of an economic “class of activities” that have a substantial effect on interstate commerce. See, e.g., Perez; Wickard v. Filburn (1942). As we stated in Wickard, “even if appellee’s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce.” We have never required Congress to legislate with scientific exactitude. When Congress decides that the “‘total incidence’” of a practice poses a threat to a national market, it may regulate the entire class. In this vein, we have reiterated that when “‘a general regulatory statute bears a substantial relation to commerce, the de minimis character of individual instances arising under that statute is of no consequence.’”

Our decision in Wickard is of particular relevance. . . .

Wickard . . . establishes that Congress can regulate purely intrastate activity that is not itself “commercial,” in that it is not produced for sale, if it concludes that failure to regulate that class of activity would undercut the regulation of the interstate market in that commodity.

The similarities between this case and Wickard are striking. Like the farmer in Wickard, respondents are cultivating, for home consumption, a fungible commodity for which there is an established, albeit illegal, interstate market. Just as the Agricultural Adjustment Act was designed “to control the volume [of wheat] moving in interstate and foreign commerce in order to avoid surpluses . . .” and consequently control the market price, a primary purpose of the CSA is to control the supply and demand of controlled substances in both lawful and unlawful drug markets. In Wickard, we had no difficulty concluding that Congress had a rational basis for believing that, when viewed in the aggregate, leaving home-consumed wheat outside the regulatory scheme would have a substantial influence on price and market conditions. Here too, Congress had a rational basis for concluding that leaving home-consumed marijuana outside federal control would similarly affect price and market conditions.

More concretely, one concern prompting inclusion of wheat grown for home consumption in the 1938 Act was that rising market prices could draw such wheat into the interstate market, resulting in lower market prices. The parallel concern making it appropriate to include marijuana grown for home consumption in the CSA is the likelihood that the high demand in the interstate market will draw such marijuana into that market. While the diversion of homegrown wheat tended to frustrate the federal interest in stabilizing prices by regulating the volume of commercial transactions in the interstate market, the diversion of homegrown marijuana tends to frustrate the federal interest in eliminating commercial transactions in the interstate market in their entirety. In both cases, the regulation is squarely within Congress’ commerce power because production of the commodity meant for home consumption, be it wheat or marijuana, has a substantial effect on supply and demand in the national market for that commodity. . . .

In assessing the scope of Congress’ authority under the Commerce Clause, we stress that the task before us is a modest one. We need not determine whether respondents’ activities, taken in the aggregate, substantially affect interstate commerce in fact, but only whether a “rational basis” exists for so concluding. Given the enforcement difficulties that attend distinguishing between marijuana cultivated locally and marijuana grown elsewhere and concerns about diversion into illicit channels, we have no difficulty concluding that Congress had a rational basis for believing that failure to regulate the intrastate manufacture and possession of marijuana would leave a gaping hole in the CSA. Thus, as in Wickard, when it enacted comprehensive legislation to regulate the interstate market in a fungible commodity, Congress was acting well within its authority to “make all Laws which shall be necessary and proper” to “regulate Commerce . . . among the several States.” That the regulation ensnares some purely intrastate activity is of no moment. As we have done many times before, we refuse to excise individual components of that larger scheme.

To support their contrary submission, respondents rely heavily on two of our more recent Commerce Clause cases. In their myopic focus, they overlook the larger context of modern-era Commerce Clause jurisprudence preserved by those cases. Moreover, even in the narrow prism of respondents’ creation, they read those cases far too broadly. Those two cases, of course, are Lopez and [United States v.] Morrison [2000]. . . .

Unlike those at issue in Lopez and Morrison, the activities regulated by the CSA are quintessentially economic. “Economics” refers to “the production, distribution, and consumption of commodities.” Webster’s Third New International Dictionary 720 (1966). The CSA is a statute that regulates the production, distribution, and consumption of commodities for which there is an established, and lucrative, interstate market. Prohibiting the intrastate possession or manufacture of an article of commerce is a rational (and commonly utilized) means of regulating commerce in that product. . . . Because the CSA is a statute that directly regulates economic, commercial activity, our opinion in Morrison casts no doubt on its constitutionality. . . .

The exemption for cultivation by patients and care-givers can only increase the supply of marijuana in the California market. The likelihood that all such production will promptly terminate when patients recover or will precisely match the patients’ medical needs during their convalescence seems remote; whereas the danger that excesses will satisfy some of the admittedly enormous demand for recreational use seems obvious. Moreover, that the national and international narcotics trade has thrived in the face of vigorous criminal enforcement efforts suggests that no small number of unscrupulous people will make use of the California exemptions to serve their commercial ends whenever it is feasible to do so. Taking into account the fact that California is only one of at least nine States to have authorized the medical use of marijuana, . . . Congress could have rationally concluded that the aggregate impact on the national market of all the transactions exempted from federal supervision is unquestionably substantial.

. . . Thus the case for the exemption comes down to the claim that a locally cultivated product that is used domestically rather than sold on the open market is not subject to federal regulation. Given the findings in the CSA and the undisputed magnitude of the commercial market for marijuana, our decisions in Wickard v. Filburn and the later cases endorsing its reasoning foreclose that claim. . . .

. . . [T]he judgment of the Court of Appeals must be vacated. The case is remanded for further proceedings consistent with this opinion.

It is so ordered.

JUSTICE SCALIA, concurring in the judgment.

I agree with the Court’s holding that the Controlled Substances Act (CSA) may validly be applied to respondents’ cultivation, distribution, and possession of marijuana for personal, medicinal use. I write separately because my understanding of the doctrinal foundation on which that holding rests is, if not inconsistent with that of the Court, at least more nuanced.

Since Perez v. United States (1971), our cases have mechanically recited that the Commerce Clause permits congressional regulation of three categories: (1) the channels of interstate commerce; (2) the instrumentalities of interstate commerce, and persons or things in interstate commerce; and (3) activities that “substantially affect” interstate commerce. The first two categories are self-evident, since they are the ingredients of interstate commerce itself. See Gibbons v. Ogden (1824). The third category, however, is different in kind, and its recitation without explanation is misleading and incomplete.

It is misleading because, unlike the channels, instrumentalities, and agents of interstate commerce, activities that substantially affect interstate commerce are not themselves part of interstate commerce, and thus the power to regulate them cannot come from the Commerce Clause alone. Rather, as this Court has acknowledged since at least United States v. Coombs (1838), Congress’s regulatory authority over intrastate activities that are not themselves part of interstate commerce (including activities that have a substantial effect on interstate commerce) derives from the Necessary and Proper Clause. And the category of “activities that substantially affect interstate commerce,” Lopez, is incomplete because the authority to enact laws necessary and proper for the regulation of interstate commerce is not limited to laws governing intrastate activities that substantially affect interstate commerce. Where necessary to make a regulation of interstate commerce effective, Congress may regulate even those intrastate activities that do not themselves substantially affect interstate commerce.

JUSTICE O’CONNOR, with whom the CHIEF JUSTICE and JUSTICE THOMAS join . . . , dissenting.

We enforce the “outer limits” of Congress’ Commerce Clause authority not for their own sake, but to protect historic spheres of state sovereignty from excessive federal encroachment and thereby to maintain the distribution of power fundamental to our federalist system of government. One of federalism’s chief virtues, of course, is that it promotes innovation by allowing for the possibility that “a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” New State Ice Co. v. Liebmann (1932) (Brandeis, J., dissenting).

This case exemplifies the role of States as laboratories. The States’ core police powers have always included authority to define criminal law and to protect the health, safety, and welfare of their citizens. Exercising those powers, California (by ballot initiative and then by legislative codification) has come to its own conclusion about the difficult and sensitive question of whether marijuana should be available to relieve severe pain and suffering. Today the Court sanctions an application of the federal Controlled Substances Act that extinguishes that experiment, without any proof that the personal cultivation, possession, and use of marijuana for medicinal purposes, if economic activity in the first place, has a substantial effect on interstate commerce and is therefore an appropriate subject of federal regulation. In so doing, the Court announces a rule that gives Congress a perverse incentive to legislate broadly pursuant to the Commerce Clause—nestling questionable assertions of its authority into comprehensive regulatory schemes—rather than with precision. That rule and the result it produces in this case are irreconcilable with our decisions in Lopez and United States v. Morrison (2000). . . .

The Court’s definition of economic activity is breathtaking. It defines as economic any activity involving the production, distribution, and consumption of commodities. And it appears to reason that when an interstate market for a commodity exists, regulating the intrastate manufacture or possession of that commodity is constitutional either because that intrastate activity is itself economic, or because regulating it is a rational part of regulating its market. . . . [T]he Court’s definition of economic activity for purposes of Commerce Clause jurisprudence threatens to sweep all of productive human activity into federal regulatory reach.

The Court uses a dictionary definition of economics to skirt the real problem of drawing a meaningful line between “what is national and what is local.” It will not do to say that Congress may regulate noncommercial activity simply because it may have an effect on the demand for commercial goods, or because the noncommercial endeavor can, in some sense, substitute for commercial activity. Most commercial goods or services have some sort of privately producible analogue. Home care substitutes for daycare. Charades games substitute for movie tickets. Backyard or windowsill gardening substitutes for going to the supermarket. To draw the line wherever private activity affects the demand for market goods is to draw no line at all, and to declare everything economic. . . .

The Government has not overcome empirical doubt that the number of Californians engaged in personal cultivation, possession, and use of medical marijuana, or the amount of marijuana they produce, is enough to threaten the federal regime. Nor has it shown that Compassionate Use Act marijuana users have been or are realistically likely to be responsible for the drug’s seeping into the market in a significant way. . . .

Relying on Congress’ abstract assertions, the Court has endorsed making it a federal crime to grow small amounts of marijuana in one’s own home for one’s own medicinal use. This overreaching stifles an express choice by some States, concerned for the lives and liberties of their people, to regulate medical marijuana differently. If I were a California citizen, I would not have voted for the medical marijuana ballot initiative; if I were a California legislator I would not have supported the Compassionate Use Act. But whatever the wisdom of California’s experiment with medical marijuana, the federalism principles that have driven our Commerce Clause cases require that room for experiment be protected in this case. For these reasons I dissent.

JUSTICE THOMAS, dissenting.

Respondents Diane Monson and Angel Raich use marijuana that has never been bought or sold, that has never crossed state lines, and that has had no demonstrable effect on the national market for marijuana. If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything—and the Federal Government is no longer one of limited and enumerated powers. . . .

Even the majority does not argue that respondents’ conduct is itself “Commerce among the several States.” Monson and Raich neither buy nor sell the marijuana that they consume. They cultivate their cannabis entirely in the State of California—it never crosses state lines, much less as part of a commercial transaction. Certainly no evidence from the founding suggests that “commerce” included the mere possession of a good or some purely personal activity that did not involve trade or exchange for value. In the early days of the Republic, it would have been unthinkable that Congress could prohibit the local cultivation, possession, and consumption of marijuana. . . .

Moreover, even a Court interested more in the modern than the original understanding of the Constitution ought to resolve cases based on the meaning of words that are actually in the document. Congress is authorized to regulate “Commerce,” and respondents’ conduct does not qualify under any definition of that term. The majority’s opinion only illustrates the steady drift away from the text of the Commerce Clause. There is an inexorable expansion from “‘commerce,’” to “commercial” and “economic” activity, and finally to all “production, distribution, and consumption” of goods or services for which there is an “established . . . interstate market.” Federal power expands, but never contracts, with each new locution. The majority is not interpreting the Commerce Clause, but rewriting it. . . .

. . . The majority’s rush to embrace federal power “is especially unfortunate given the importance of showing respect for the sovereign States that comprise our Federal Union.” Our federalist system, properly understood, allows California and a growing number of other States to decide for themselves how to safeguard the health and welfare of their citizens. I would affirm the judgment of the Court of Appeals. I respectfully dissent.

National Federation of Independent Business v. Sebelius

567 U.S. _____ (2012)

http://laws.findlaw.com/us/000/11–393.html

Oral arguments are available at https://www.oyez.org.

Vote on the commerce clause challenge to the Affordable Care Act:

5 (Alito, Kennedy, Roberts, Scalia, Thomas)

4 (Breyer, Ginsburg, Kagan, Sotomayor)

OPINION ANNOUNCING THE JUDGMENT OF THE COURT AND THE OPINION OF THE COURT: Roberts

OPINION CONCURRING IN PART AND DISSENTING IN PART: Ginsburg

JOINT OPINION CONCURRING ON THE COMMERCE

CLAUSE ISSUE BUT DISSENTING FROM THE FINAL

CASE OUTCOME: Alito, Kennedy, Scalia, and Thomas

DISSENTING OPINION: Thomas

FACTS:

In 2010 Congress passed the Patient Protection and Affordable Care Act (ACA). The purpose of the law was to increase the number of Americans covered by health insurance and to decrease the cost of health care. The law was passed along partisan lines, with Democrats supporting the bill and Republicans opposed. The American public also was closely divided over the policies to be implemented by the act. The legislation was quite complex, with the statute running more than nine hundred pages in length. It introduced major changes in the health insurance industry, expanded insurance coverage and benefits, eliminated coverage limitations for preexisting conditions, and significantly expanded Medicaid.

At the heart of the ACA is a requirement known as the “individual mandate” (also known as the “minimum coverage” requirement). This provision directs that most Americans purchase “minimum essential” health insurance coverage for themselves and their dependents if they do not receive such coverage from their employers. Those who do not comply with this provision are required to make a “shared responsibility” payment to the federal government. The act provides that this “penalty” will be paid to the Internal Revenue Service and “shall be assessed and collected in the same manner” as tax penalties. The mandate was intended to ensure that health costs are evenly distributed throughout the population and to prohibit individuals from refusing to buy health insurance until they develop medical conditions requiring treatment.

Almost immediately after President Obama signed the bill into law, a series of lawsuits were filed challenging the constitutionality of the ACA. The lower federal courts reached differing opinions on the validity of the law. In order to resolve this conflict, the Supreme Court granted a petition to review a decision of the Eleventh Circuit Court of Appeals striking down portions of the law but allowing the balance of the statute to remain in effect. The appealed decision involved a suit initiated by the National Federation of Independent Business, twenty-six state governments, and several individuals against Kathleen Sebelius, then secretary of health and human services.

Challengers of the law argued that Congress exceeded its commerce clause powers by compelling individuals to purchase insurance when they may not wish to do so. Commercial inactivity, they argued, is not commerce. Secretary Sebelius responded that health care is an integral part of the national economy. Therefore, the commerce clause and the necessary and proper clause give Congress ample authority to enact a comprehensive health-care law that includes an individual mandate. She asserted that the ACA was also a legitimate action under Congress’s constitutional power to tax and spend. In another line of attack, the challengers claimed that the expansion of the federal Medicaid program unconstitutionally infringed on the powers of the states.

In the excerpted material appearing here, we focus exclusively on the question of whether the individual mandate provision can legitimately rest on Congress’s power to regulate interstate commerce and the necessary and proper clause. In the next chapter we will return to this decision and highlight arguments related to the authority of Congress to tax and spend.

ARGUMENTS:

For the petitioners, National Federation of Independent Business et al.:

The individual mandate is an unprecedented law that rests on an extraordinary and unbounded assertion of federal power.

The Constitution grants Congress the power to regulate commerce, not the power to compel individuals to enter into commerce.

The federal government may not save the individual mandate by resorting to the necessary and proper clause. The mandate is not a law for carrying into execution the commerce power. It is a law for carrying into execution an independent power that the Constitution does not grant to the federal government.

For the respondents, Health and Human Services Secretary Kathleen Sebelius et al.:

Congress has authority under the commerce and necessary and proper clauses to enact the minimum coverage provision. The Affordable Care Act expands access to health care services and controls health care costs. The minimum coverage provision plays a critical role in that comprehensive regulatory scheme by regulating how health care consumption is financed.

The act’s minimum coverage provision is a particularly well-adapted means of accomplishing Congress’s concededly legitimate ends. It is necessary to effectuate Congress’s comprehensive reforms of the insurance market and is itself an economic regulation of the timing and method of financing health care services. This provision regulates economic activity that substantially affects interstate commerce. Its links to interstate commerce are tangible, direct, and strong.

There is no textual support in the commerce clause for the opponents’ “inactivity” limitation. Furthermore, the uninsured as a class are active in the market for health care, which they regularly seek and obtain.

CHIEF JUSTICE ROBERTS ANNOUNCED THE JUDGMENT OF THE COURT AND DELIVERED . . . AN OPINION WITH RESPECT TO [THE COMMERCE CLAUSE CHALLENGE TO THE INDIVIDUAL MANDATE].

In our federal system, the National Government possesses only limited powers; the States and the people retain the remainder. Nearly two centuries ago, Chief Justice Marshall observed that “the question respecting the extent of the powers actually granted” to the Federal Government “is perpetually arising, and will probably continue to arise, as long as our system shall exist.” McCulloch v. Maryland (1819). In this case we must again determine whether the Constitution grants Congress powers it now asserts, but which many States and individuals believe it does not possess. Resolving this controversy requires us to examine both the limits of the Government’s power, and our own limited role in policing those boundaries.

The Federal Government “is acknowledged by all to be one of enumerated powers.” Ibid. That is, rather than granting general authority to perform all the conceivable functions of government, the Constitution lists, or enumerates, the Federal Government’s powers. Congress may, for example, “coin Money,” “establish Post Offices,” and “raise and support Armies.” Art. I, §8, cls. 5, 7, 12. The enumeration of powers is also a limitation of powers, because “[t]he enumeration presupposes something not enumerated.” Gibbons v. Ogden (1824). The Constitution’s express conferral of some powers makes clear that it does not grant others. And the Federal Government “can exercise only the powers granted to it.” McCulloch.

.. If no enumerated power authorizes Congress to pass a certain law, that law may not be enacted, even if it would not violate any of the express prohibitions in the Bill of Rights or elsewhere in the Constitution.

. . . The Federal Government has expanded dramatically over the past two centuries, but it still must show that a constitutional grant of power authorizes each of its actions. See, e.g., United States v. Comstock (2010).

The same does not apply to the States, because the Constitution is not the source of their power. . . . The States thus can and do perform many of the vital functions of modern government—punishing street crime, running public schools, and zoning property for development, to name but a few—even though the Constitution’s text does not authorize any government to do so. Our cases refer to this general power of governing, possessed by the States but not by the Federal Government, as the “police power.” See, e.g., United States v. Morrison (2000). . . .

This case concerns . . . powers that the Constitution does grant the Federal Government, but which must be read carefully to avoid creating a general federal authority akin to the police power. The Constitution authorizes Congress to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Our precedents read that to mean that Congress may regulate “the channels of interstate commerce,” “persons or things in interstate commerce,” and “those activities that substantially affect interstate commerce.” Morrison. The power over activities that substantially affect interstate commerce can be expansive. That power has been held to authorize federal regulation of such seemingly local matters as a farmer’s decision to grow wheat for himself and his livestock, and a loan shark’s extortionate collections from a neighborhood butcher shop. See Wickard v. Filburn (1942); Perez v. United States (1971). . . .

The reach of the Federal Government’s enumerated powers is broader still because the Constitution authorizes Congress to “make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers.” We have long read this provision to give Congress great latitude in exercising its powers: “Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.” McCulloch.

Our permissive reading of these powers is explained in part by a general reticence to invalidate the acts of the Nation’s elected leaders. . . .

Our deference in matters of policy cannot, however, become abdication in matters of law. “The powers of the legislature are defined and limited; and that those limits may not be mistaken, or forgotten, the constitution is written.” Marbury v. Madison (1803). Our respect for Congress’s policy judgments thus can never extend so far as to disavow restraints on federal power that the Constitution carefully constructed. . . . And there can be no question that it is the responsibility of this Court to enforce the limits on federal power by striking down acts of Congress that transgress those limits. Marbury v. Madison.

The questions before us must be considered against the background of these basic principles. . . .

The Government’s . . . argument is that the individual mandate is a valid exercise of Congress’s power under the Commerce Clause and the Necessary and Proper Clause. According to the Government, the health care market is characterized by a significant cost-shifting problem. Everyone will eventually need health care at a time and to an extent they cannot predict, but if they do not have insurance, they often will not be able to pay for it. Because state and federal laws nonetheless require hospitals to provide a certain degree of care to individuals without regard to their ability to pay, hospitals end up receiving compensation for only a portion of the services they provide. To recoup the losses, hospitals pass on the cost to insurers through higher rates, and insurers, in turn, pass on the cost to policy holders in the form of higher premiums. Congress estimated that the cost of uncompensated care raises family health insurance premiums, on average, by over $1,000 per year. . . .

The Government contends that the individual mandate is within Congress’s power because the failure to purchase insurance “has a substantial and deleterious effect on interstate commerce” by creating the cost-shifting problem. . . .

Given its expansive scope, it is no surprise that Congress has employed the commerce power in a wide variety of ways to address the pressing needs of the time. But Congress has never attempted to rely on that power to compel individuals not engaged in commerce to purchase an unwanted product. Legislative novelty is not necessarily fatal; there is a first time for everything. But sometimes “the most telling indication of [a] severe constitutional problem . . . is the lack of historical precedent” for Congress’s action. Free Enterprise Fund v. Public Company Accounting Oversight Bd. (2010). At the very least, we should “pause to consider the implications of the Government’s arguments” when confronted with such new conceptions of federal power. Lopez.

The Constitution grants Congress the power to “regulate Commerce.” The power to regulate commerce presupposes the existence of commercial activity to be regulated. If the power to “regulate” something included the power to create it, many of the provisions in the Constitution would be superfluous. For example, the Constitution gives Congress the power to “coin Money,” in addition to the power to “regulate the Value thereof.” And it gives Congress the power to “raise and support Armies” and to “provide and maintain a Navy,” in addition to the power to “make Rules for the Government and Regulation of the land and naval Forces.” If the power to regulate the armed forces or the value of money included the power to bring the subject of the regulation into existence, the specific grant of such powers would have been unnecessary. The language of the Constitution reflects the natural understanding that the power to regulate assumes there is already something to be regulated.

Our precedent also reflects this understanding. As expansive as our cases construing the scope of the commerce power have been, they all have one thing in common: They uniformly describe the power as reaching “activity.” . . .

The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority. Every day individuals do not do an infinite number of things. In some cases they decide not to do something; in others they simply fail to do it. Allowing Congress to justify federal regulation by pointing to the effect of inaction on commerce would bring countless decisions an individual could potentially make within the scope of federal regulation, and—under the Government’s theory—empower Congress to make those decisions for him.

Applying the Government’s logic to the familiar case of Wickard v. Filburn shows how far that logic would carry us from the notion of a government of limited powers. In Wickard, the Court famously upheld a federal penalty imposed on a farmer for growing wheat for consumption on his own farm. That amount of wheat caused the farmer to exceed his quota under a program designed to support the price of wheat by limiting supply. The Court rejected the farmer’s argument that growing wheat for home consumption was beyond the reach of the commerce power. It did so on the ground that the farmer’s decision to grow wheat for his own use allowed him to avoid purchasing wheat in the market. That decision, when considered in the aggregate along with similar decisions of others, would have had a substantial effect on the interstate market for wheat.

Wickard has long been regarded as “perhaps the most far reaching example of Commerce Clause authority over intrastate activity,” Lopez, but the Government’s theory in this case would go much further. . . . The farmer in Wickard was at least actively engaged in the production of wheat, and the Government could regulate that activity because of its effect on commerce. The Government’s theory here would effectively override that limitation, by establishing that individuals may be regulated under the Commerce Clause whenever enough of them are not doing something the Government would have them do.

Indeed, the Government’s logic would justify a mandatory purchase to solve almost any problem. To consider a different example in the health care market, many Americans do not eat a balanced diet. That group makes up a larger percentage of the total population than those without health insurance. The failure of that group to have a healthy diet increases health care costs, to a greater extent than the failure of the uninsured to purchase insurance. Those increased costs are borne in part by other Americans who must pay more, just as the uninsured shift costs to the insured. Congress addressed the insurance problem by ordering everyone to buy insurance. Under the Government’s theory, Congress could address the diet problem by ordering everyone to buy vegetables.

People, for reasons of their own, often fail to do things that would be good for them or good for society. Those failures—joined with the similar failures of others—can readily have a substantial effect on interstate commerce. Under the Government’s logic, that authorizes Congress to use its commerce power to compel citizens to act as the Government would have them act.

That is not the country the Framers of our Constitution envisioned. . . . Congress already enjoys vast power to regulate much of what we do. Accepting the Government’s theory would give Congress the same license to regulate what we do not do, fundamentally changing the relation between the citizen and the Federal Government.

To an economist, perhaps, there is no difference between activity and inactivity; both have measurable economic effects on commerce. But the distinction between doing something and doing nothing would not have been lost on the Framers, who were “practical statesmen,” not metaphysical philosophers. . . . The Framers gave Congress the power to regulate commerce, not to compel it, and for over 200 years both our decisions and Congress’s actions have reflected this understanding. There is no reason to depart from that understanding now.

The Government sees things differently. It argues that because sickness and injury are unpredictable but unavoidable, “the uninsured as a class are active in the market for health care, which they regularly seek and obtain.” The individual mandate “merely regulates how individuals finance and pay for that active participation—requiring that they do so through insurance, rather than through attempted self-insurance with the back-stop of shifting costs to others.” . . .

The individual mandate’s regulation of the uninsured as a class is, in fact, particularly divorced from any link to existing commercial activity. The mandate primarily affects healthy, often young adults who are less likely to need significant health care and have other priorities for spending their money. It is precisely because these individuals, as an actuarial class, incur relatively low health care costs that the mandate helps counter the effect of forcing insurance companies to cover others who impose greater costs than their premiums are allowed to reflect. If the individual mandate is targeted at a class, it is a class whose commercial inactivity rather than activity is its defining feature.

The Government, however, claims that this does not matter. The Government regards it as sufficient to trigger Congress’s authority that almost all those who are uninsured will, at some unknown point in the future, engage in a health care transaction. . . .

The proposition that Congress may dictate the conduct of an individual today because of prophesied future activity finds no support in our precedent. . . .

Everyone will likely participate in the markets for food, clothing, transportation, shelter, or energy; that does not authorize Congress to direct them to purchase particular products in those or other markets today. The Commerce Clause is not a general license to regulate an individual from cradle to grave, simply because he will predictably engage in particular transactions. . . .

The Government says that health insurance and health care financing are “inherently integrated.” But that does not mean the compelled purchase of the first is properly regarded as a regulation of the second. No matter how “inherently integrated” health insurance and health care consumption may be, they are not the same thing: They involve different transactions, entered into at different times, with different providers. And for most of those targeted by the mandate, significant health care needs will be years, or even decades, away. The proximity and degree of connection between the mandate and the subsequent commercial activity is too lacking to justify an exception of the sort urged by the Government. The individual mandate forces individuals into commerce precisely because they elected to refrain from commercial activity. Such a law cannot be sustained under a clause authorizing Congress to “regulate Commerce.”

The Government next contends that Congress has the power under the Necessary and Proper Clause to enact the individual mandate because the mandate is an “integral part of a comprehensive scheme of economic regulation.” . . .

The power to “make all Laws which shall be necessary and proper for carrying into Execution” the powers enumerated in the Constitution vests Congress with authority to enact provisions “incidental to the [enumerated] power, and conducive to its beneficial exercise.” McCulloch. Although the Clause gives Congress authority to “legislate on that vast mass of incidental powers which must be involved in the constitution,” it does not license the exercise of any “great substantive and independent power[s]” beyond those specifically enumerated. Instead, the Clause is “‘merely a declaration, for the removal of all uncertainty, that the means of carrying into execution those [powers] otherwise granted are included in the grant.’” Kinsella v. United States ex rel. Singleton (1960).

As our jurisprudence under the Necessary and Proper Clause has developed, we have been very deferential to Congress’s determination that a regulation is “necessary.” We have thus upheld laws that are “‘convenient, or useful’ or ‘conducive’ to the authority’s ‘beneficial exercise.’” Comstock. But we have also carried out our responsibility to declare unconstitutional those laws that undermine the structure of government established by the Constitution. Such laws, which are not “consist[ent] with the letter and spirit of the constitution,” McCulloch, are not “proper [means] for carrying into Execution” Congress’s enumerated powers. Rather, they are, “in the words of The Federalist, ‘merely acts of usurpation’ which ‘deserve to be treated as such.’” Printz v. United States (1997).

Applying these principles, the individual mandate cannot be sustained under the Necessary and Proper Clause as an essential component of the insurance reforms. Each of our prior cases upholding laws under that Clause involved exercises of authority derivative of, and in service to, a granted power. For example, we have upheld provisions permitting continued confinement of those already in federal custody when they could not be safely released, Comstock. The individual mandate, by contrast, vests Congress with the extraordinary ability to create the necessary predicate to the exercise of an enumerated power.

This is in no way an authority that is “narrow in scope,” Comstock, or “incidental” to the exercise of the commerce power, McCulloch. Rather, such a conception of the Necessary and Proper Clause would work a substantial expansion of federal authority. No longer would Congress be limited to regulating under the Commerce Clause those who by some preexisting activity bring themselves within the sphere of federal regulation. Instead, Congress could reach beyond the natural limit of its authority and draw within its regulatory scope those who otherwise would be outside of it. Even if the individual mandate is “necessary” to the Act’s insurance reforms, such an expansion of federal power is not a “proper” means for making those reforms effective. . . .

Just as the individual mandate cannot be sustained as a law regulating the substantial effects of the failure to purchase health insurance, neither can it be upheld as a “necessary and proper” component of the insurance reforms. The commerce power thus does not authorize the mandate.

JUSTICE GINSBURG, with whom JUSTICE SOTOMAYOR joins, and with whom JUSTICE BREYER and JUSTICE KAGAN join . . . concurring in part, concurring in the judgment in part, and dissenting in part.

Unlike The Chief Justice, . . . I would hold . . . that the Commerce Clause authorizes Congress to enact the minimum coverage provision. . . .

Since 1937, our precedent has recognized Congress’ large authority to set the Nation’s course in the economic and social welfare realm. See United States v. Darby (1941); NLRB v. Jones & Laughlin Steel Corp. (1937). The Chief Justice’s crabbed reading of the Commerce Clause harks back to the era in which the Court routinely thwarted Congress’ efforts to regulate the national economy in the interest of those who labor to sustain it. It is a reading that should not have staying power.

In enacting the Patient Protection and Affordable Care Act (ACA), Congress comprehensively reformed the national market for health-care products and services. By any measure, that market is immense. Collectively, Americans spent $2.5 trillion on health care in 2009, accounting for 17.6% of our Nation’s economy. Within the next decade, it is anticipated, spending on health care will nearly double.

The health-care market’s size is not its only distinctive feature. Unlike the market for almost any other product or service, the market for medical care is one in which all individuals inevitably participate. Virtually every person residing in the United States, sooner or later, will visit a doctor or other health-care professional. . . .

When individuals make those visits, they face another reality of the current market for medical care: its high cost. In 2010, on average, an individual in the United States incurred over $7,000 in health-care expenses. Over a lifetime, costs mount to hundreds of thousands of dollars. . . .

Although every U.S. domiciliary will incur significant medical expenses during his or her lifetime, the time when care will be needed is often unpredictable. . . .

To manage the risks associated with medical care—its high cost, its unpredictability, and its inevitability—most people in the United States obtain health insurance. . . .

Not all U.S. residents, however, have health insurance. In 2009, approximately 50 million people were uninsured, either by choice or, more likely, because they could not afford private insurance and did not qualify for government aid. As a group, uninsured individuals annually consume more than $100 billion in health-care services, nearly 5% of the Nation’s total. Over 60% of those without insurance visit a doctor’s office or emergency room in a given year.

The large number of individuals without health insurance, Congress found, heavily burdens the national health-care market. . . . Unlike markets for most products, however, the inability to pay for care does not mean that an uninsured individual will receive no care. Federal and state law, as well as professional obligations and embedded social norms, require hospitals and physicians to provide care when it is most needed, regardless of the patient’s ability to pay.

As a consequence, medical-care providers deliver significant amounts of care to the uninsured for which the providers receive no payment. In 2008, for example, hospitals, physicians, and other health-care professionals received no compensation for $43 billion worth of the $116 billion in care they administered to those without insurance.

Health-care providers do not absorb these bad debts. Instead, they raise their prices, passing along the cost of uncompensated care to those who do pay reliably: the government and private insurance companies. In response, private insurers increase their premiums, shifting the cost of the elevated bills from providers onto those who carry insurance. The net result: Those with health insurance subsidize the medical care of those without it. As economists would describe what happens, the uninsured “free ride” on those who pay for health insurance.

The size of this subsidy is considerable. Congress found that the cost-shifting just described “increases family [insurance] premiums by on average over $1,000 a year.” Higher premiums, in turn, render health insurance less affordable, forcing more people to go without insurance and leading to further cost-shifting. . . .

States cannot resolve the problem of the uninsured on their own. . . .

Aware that a national solution was required, . . . Congress enacted the ACA, a solution that retains a robust role for private insurers and state governments. To make its chosen approach work, however, Congress had to use some new tools, including a requirement that most individuals obtain private health insurance coverage. . . . [B]y employing these tools, Congress was able to achieve a practical, altogether reasonable, solution. . . .

. . . Congress passed the minimum coverage provision as a key component of the ACA to address an economic and social problem that has plagued the Nation for decades: the large number of U.S. residents who are unable or unwilling to obtain health insurance. Whatever one thinks of the policy decision Congress made, it was Congress’ prerogative to make it. Reviewed with appropriate deference, the minimum coverage provision, allied to the guaranteed-issue and community-rating prescriptions, should survive measurement under the Commerce and Necessary and Proper Clauses.

The Commerce Clause, it is widely acknowledged, “was the Framers’ response to the central problem that gave rise to the Constitution itself.” Under the Articles of Confederation, the Constitution’s precursor, the regulation of commerce was left to the States. This scheme proved unworkable, because the individual States, understandably focused on their own economic interests, often failed to take actions critical to the success of the Nation as a whole.

. . . The Framers’ solution was the Commerce Clause, which, as they perceived it, granted Congress the authority to enact economic legislation “in all Cases for the general Interests of the Union, and also in those Cases to which the States are separately incompetent.” . . .

Consistent with the Framers’ intent, we have repeatedly emphasized that Congress’ authority under the Commerce Clause is dependent upon “practical” considerations, including “actual experience.” We afford Congress the leeway “to undertake to solve national problems directly and realistically.”

Until today, this Court’s pragmatic approach to judging whether Congress validly exercised its commerce power was guided by two familiar principles. First, Congress has the power to regulate economic activities “that substantially affect interstate commerce.” Gonzales v. Raich (2005). This capacious power extends even to local activities that, viewed in the aggregate, have a substantial impact on interstate commerce.

Second, we owe a large measure of respect to Congress when it frames and enacts economic and social legislation. When appraising such legislation, we ask only (1) whether Congress had a “rational basis” for concluding that the regulated activity substantially affects interstate commerce, and (2) whether there is a “reasonable connection between the regulatory means selected and the asserted ends.” In answering these questions, we presume the statute under review is constitutional and may strike it down only on a “plain showing” that Congress acted irrationally.

Straightforward application of these principles would require the Court to hold that the minimum coverage provision is proper Commerce Clause legislation. Beyond dispute, Congress had a rational basis for concluding that the uninsured, as a class, substantially affect interstate commerce. Those without insurance consume billions of dollars of health-care products and services each year. Those goods are produced, sold, and delivered largely by national and regional companies who routinely transact business across state lines. The uninsured also cross state lines to receive care. Some have medical emergencies while away from home. Others, when sick, go to a neighboring State that provides better care for those who have not prepaid for care.

Not only do those without insurance consume a large amount of health care each year; critically, as earlier explained, their inability to pay for a significant portion of that consumption drives up market prices, foists costs on other consumers, and reduces market efficiency and stability. Given these far-reaching effects on interstate commerce, the decision to forgo insurance is hardly inconsequential or equivalent to “doing nothing”; it is, instead, an economic decision Congress has the authority to address under the Commerce Clause.

The minimum coverage provision, furthermore, bears a “reasonable connection” to Congress’ goal of protecting the health-care market from the disruption caused by individuals who fail to obtain insurance. By requiring those who do not carry insurance to pay a toll, the minimum coverage provision gives individuals a strong incentive to insure. This incentive, Congress had good reason to believe, would reduce the number of uninsured and, correspondingly, mitigate the adverse impact the uninsured have on the national health-care market.

Congress also acted reasonably in requiring uninsured individuals, whether sick or healthy, either to obtain insurance or to pay the specified penalty. As earlier observed, because every person is at risk of needing care at any moment, all those who lack insurance, regardless of their current health status, adversely affect the price of health care and health insurance. . . .

Rather than evaluating the constitutionality of the minimum coverage provision in the manner established by our precedents, The Chief Justice relies on a newly minted constitutional doctrine. The commerce power does not, The Chief Justice announces, permit Congress to “compe[1] individuals to become active in commerce by purchasing a product.”

The Chief Justice’s novel constraint on Congress’ commerce power gains no force from our precedent and for that reason alone warrants disapprobation. But even assuming, for the moment, that Congress lacks authority under the Commerce Clause to “compel individuals not engaged in commerce to purchase an unwanted product,” such a limitation would be inapplicable here. Everyone will, at some point, consume health-care products and services. Thus, if The Chief Justice is correct that an insurance-purchase requirement can be applied only to those who “actively” consume health care, the minimum coverage provision fits the bill. . . .

Our decisions . . . acknowledge Congress’ authority, under the Commerce Clause, to direct the conduct of an individual today (the farmer in Wickard, stopped from growing excess wheat; the plaintiff in Raich, ordered to cease cultivating marijuana) because of a prophesied future transaction (the eventual sale of that wheat or marijuana in the interstate market). Congress’ actions are even more rational in this case, where the future activity (the consumption of medical care) is certain to occur, the sole uncertainty being the time the activity will take place. . . .

In any event, The Chief Justice’s limitation of the commerce power to the regulation of those actively engaged in commerce finds no home in the text of the Constitution or our decisions. Article I, §8, of the Constitution grants Congress the power “[t]o regulate Commerce . . . among the several States.” Nothing in this language implies that Congress’ commerce power is limited to regulating those actively engaged in commercial transactions. . . .

For the reasons explained above, the minimum coverage provision is valid Commerce Clause legislation. When viewed as a component of the entire ACA, the provision’s constitutionality becomes even plainer.

The Necessary and Proper Clause “empowers Congress to enact laws in effectuation of its [commerce] powe[r] that are not within its authority to enact in isolation.” Hence, “[a] complex regulatory program . . . can survive a Commerce Clause challenge without a showing that every single facet of the program is independently and directly related to a valid congressional goal.” “It is enough that the challenged provisions are an integral part of the regulatory program and that the regulatory scheme when considered as a whole satisfies this test.”

Recall that one of Congress’ goals in enacting the Affordable Care Act was to eliminate the insurance industry’s practice of charging higher prices or denying coverage to individuals with preexisting medical conditions. The commerce power allows Congress to ban this practice, a point no one disputes.

Congress knew, however, that simply barring insurance companies from relying on an applicant’s medical history would not work in practice. Without the individual mandate, Congress learned, guaranteed-issue and community-rating requirements would trigger an adverse-selection death-spiral in the health-insurance market: Insurance premiums would skyrocket, the number of uninsured would increase, and insurance companies would exit the market. When complemented by an insurance mandate, on the other hand, guaranteed issue and community rating would work as intended, increasing access to insurance and reducing uncompensated care. The minimum coverage provision is thus an “essential par[t] of a larger regulation of economic activity”; without the provision, “the regulatory scheme [w]ould be undercut.” Raich. Put differently, the minimum coverage provision, together with the guaranteed-issue and community-rating requirements, is “‘reasonably adapted’ to the attainment of a legitimate end under the commerce power”: the elimination of pricing and sales practices that take an applicant’s medical history into account.

Asserting that the Necessary and Proper Clause does not authorize the minimum coverage provision, The Chief Justice focuses on the word “proper.” A mandate to purchase health insurance is not “proper” legislation, The Chief Justice urges, because the command “undermine[s] the structure of government established by the Constitution.” If long on rhetoric, The Chief Justice’s argument is short on substance. . . .

The Chief Justice [does not] pause to explain why the power to direct either the purchase of health insurance or, alternatively, the payment of a penalty collectible as a tax is more far-reaching than other implied powers this Court has found meet under the Necessary and Proper Clause. These powers include the power to enact criminal laws; the power to imprison, including civil imprisonment, see, e.g., Comstock; and the power to create a national bank, see McCulloch.

In failing to explain why the individual mandate threatens our constitutional order, The Chief Justice disserves future courts. How is a judge to decide, when ruling on the constitutionality of a federal statute, whether Congress employed an “independent power” or merely a “derivative” one. Whether the power used is “substantive” or just “incidental”? The instruction The Chief Justice, in effect, provides lower courts: You will know it when you see it. . . .

In the early 20th century, this Court regularly struck down economic regulation enacted by the peoples’ representatives in both the States and the Federal Government. See, e.g., Carter Coal Co., Dagenhart, Lochner v. New York (1905). The Chief Justice’s Commerce Clause opinion, and even more so the joint dissenters’ reasoning, bear a disquieting resemblance to those long-overruled decisions.

Joint Opinion of JUSTICE SCALIA, JUSTICE KENNEDY, JUSTICE THOMAS, and JUSTICE ALITO, dissenting.

Congress has set out to remedy the problem that the best health care is beyond the reach of many Americans who cannot afford it. It can assuredly do that, by exercising the powers accorded to it under the Constitution. The question in this case, however, is whether the complex structures and provisions of the Patient Protection and Affordable Care Act go beyond those powers. We conclude that they do.

. . . What is absolutely clear, affirmed by the text of the 1789 Constitution, by the Tenth Amendment ratified in 1791, and by innumerable cases of ours in the 220 years since, is that there are structural limits upon federal power—upon what it can prescribe with respect to private conduct, and upon what it can impose upon the sovereign States. . . .

That clear principle carries the day here. The striking case of Wickard v. Filburn (1942), which held that the economic activity of growing wheat, even for one’s own consumption, affected commerce sufficiently that it could be regulated, always has been regarded as the ne plus ultra of expansive Commerce Clause jurisprudence. To go beyond that, and to say the failure to grow wheat (which is not an economic activity, or any activity at all) nonetheless affects commerce and therefore can be federally regulated, is to make mere breathing in and out the basis for federal prescription and to extend federal power to virtually all human activity. . . .

Article I, §8, of the Constitution gives Congress the power to “regulate Commerce . . . among the several States.” The Individual Mandate in the Act commands that every “applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage.” If this provision “regulates” anything, it is the failure to maintain minimum essential coverage. One might argue that it regulates that failure by requiring it to be accompanied by payment of a penalty. But that failure—that abstention from commerce—is not “Commerce.” To be sure, purchasing insurance is “Commerce”; but one does not regulate commerce that does not exist by compelling its existence. . . .

. . . Congress has impressed into service third parties, healthy individuals who could be but are not customers of the relevant industry, to offset the undesirable consequences of the regulation. Congress’ desire to force these individuals to purchase insurance is motivated by the fact that they are further removed from the market than unhealthy individuals with pre-existing conditions, because they are less likely to need extensive care in the near future. If Congress can reach out and command even those furthest removed from an interstate market to participate in the market, then the Commerce Clause becomes a font of unlimited power, or in Hamilton’s words, “the hideous monster whose devouring jaws . . . spare neither sex nor age, nor high nor low, nor sacred nor profane.” The Federalist No. 3. . . .

Wickard v. Filburn has been regarded as the most expansive assertion of the commerce power in our history. A close second is Perez v. United States (1971), which upheld a statute criminalizing the eminently local activity of loan-sharking. Both of those cases, however, involved commercial activity. To go beyond that, and to say that the failure to grow wheat or the refusal to make loans affects commerce, so that growing and lending can be federally compelled, is to extend federal power to virtually everything. All of us consume food, and when we do so the Federal Government can prescribe what its quality must be and even how much we must pay. But the mere fact that we all consume food and are thus, sooner or later, participants in the “market” for food, does not empower the Government to say when and what we will buy. That is essentially what this Act seeks to do with respect to the purchase of health care. It exceeds federal power.

COMMERCE POWER OF THE STATES

Resolving the question of federal power over interstate and foreign commerce leaves unsettled the question of state commercial regulation. Marshall wrote in Gibbons that commerce completely internal to the state that does not extend to or affect other states is reserved for state regulation. This grant of power was substantial prior to the Civil War, when most commercial activity was distinctly local and subject to state regulation. But with the Industrial Revolution and improved transportation systems, business quickly became interstate in nature. Finally, the Supreme Court’s 1937 redefinition of interstate commerce left little that met Marshall’s notion of commerce that is “completely internal.”

If the regulation of any business activity that affects interstate commerce were the exclusive preserve of the federal government, the role of the states would be minimal indeed. But this is not the case. The decisions of the Supreme Court have left a substantial sphere of authority for the states to regulate commerce. The dividing line between federal and state power, however, has varied over time as the Court has struggled to formulate an appropriate doctrine to govern this difficult area of federal–state relations.

Doctrine of Selected Exclusiveness

Constructing the parameters of state power began in 1829 with the decision in Willson v. Black-Bird Creek Marsh Company.23 The dispute involved a Delaware law that authorized the building of a dam on a creek to stop water from entering a local marsh. Thompson Willson owned and operated a vessel that was federally licensed under the Coastal Licensing Act of 1793, the same legislation under which Thomas Gibbons had operated his steamboats. Willson objected to the dam as an impediment to commerce on a navigable stream. His ship purposefully rammed the dam, causing it considerable damage. The dam’s owner took legal action against Willson, and the state courts ruled against Willson, who appealed, claiming that the Delaware law authorizing the dam was in conflict with the Constitution. He argued that only Congress had the power to pass a law permitting the construction of an impediment to commerce on a navigable stream.

Chief Justice Marshall, speaking for the Court, rejected Willson’s position. The justices concluded that, in the absence of federal laws to the contrary, the police powers of the state to regulate for the health and general welfare of its citizens were sufficient to authorize the dam. Indeed, Congress had not enacted any legislation dealing with commercial streams and the problems associated with marshland. “If congress had passed any act . . . the object of which was to control state legislation over those small navigable creeks into which the tide flows,” Marshall’s opinion stated, “we should feel not much difficulty in saying that a state law coming in conflict with such act would be void.” The Court’s decision in Willson began to carve out an area of state authority over commerce that is not purely intrastate, but where the boundaries of that authority were not yet settled.

With Marshall’s death in 1835, his successor, Chief Justice Roger Taney, was left with the task of more sharply defining the commerce powers of the states. Taney was far more sympathetic to the states than Marshall had been, and it is not surprising that the rulings of the Taney era strike a balance between federal and state authority. The Taney Court first grappled with the problem in Mayor of New York v. Miln (1837), a case that had been carried over from the last Marshall term.

The dispute arose over the validity of New York’s Passenger Act of 1824, which was designed to curb the flow of foreign indigents into the state. The law required the masters of incoming ships to supply the mayor of New York with comprehensive information on all passengers. This material was necessary for the city to enforce a regulation that allowed it to exclude people likely to require public assistance. Ship captains who did not comply were liable for fines and penalties of $75 per passenger. In addition, the law required that passengers who were refused entry be returned to their point of origin at the shipowner’s expense. George Miln, who had a financial interest in a ship called The Emily, was fined when the ship’s master refused to comply with the law. Miln protested the stiff $7,500 penalty on the ground that regulating foreign commerce was the exclusive jurisdiction of Congress, leaving no room for state action.

The Supreme Court upheld the New York law. In doing so, the justices did everything possible to avoid the complicated commerce issues the case presented. Instead, the Court followed the lead taken by Marshall in Willson and focused on the state’s police powers. According to Justice Philip Barbour’s majority opinion, the states have the sovereign power to regulate for the well-being of their residents. That power is complete and unqualified. In the absence of federal commercial legislation to the contrary, there is nothing to bar the state from using its police authority, even if it affects foreign commerce as in the matter here. In fact, Barbour argued that it was the duty of the state to protect its citizens from the financial obligations that would result from admitting “multitudes of poor persons, who come from foreign countries without possessing the means of supporting themselves.” As a consequence, a state may use its police powers to ward off the “moral pestilence of paupers, vagabonds, and possibly convicts.” The Court has long since abandoned this attitude toward the poor.24

What the Miln decision revealed is the Taney Court’s readiness to support state regulations in the absence of federal action. This thinking was consistent with the dual federalism philosophy of that time (see chapter 6). But because the Court relied so heavily on the police powers, it failed to develop a complete doctrine of state commercial authority.

The License Cases of 1847 further revealed the difficulty the Taney Court had in crafting an adequate policy for the commerce powers of the states. These appeals came from New Hampshire, Rhode Island, and Massachusetts, where the legislatures had passed statutes licensing and taxing alcoholic beverages.25 The regulations applied to domestic liquors as well as imported alcoholic beverages. Once again the Court upheld the laws as exercises of state police power, but the justices were badly divided as to rationale. No majority opinion was reached, an unusual occurrence for that time. In fact, six justices wrote opinions. All supported the state laws, but the highly fractionalized opinions provided no authoritative guidance for the states.

Two years later the Court heard arguments in Smith v. Turner and Norris v. Boston, which are known as the Passenger Cases (1849). These appeals tested the constitutionality of New York and Massachusetts laws seeking to regulate foreigners coming into the United States. The legislation was intended to discourage indigent immigrants and to provide for the treatment of individuals who arrived for entry in a diseased condition. The laws included provisions for taxing, bonding, and record keeping. The New York law taxed each incoming ship $1.00–$1.50 per passenger. These fees were used to fund a hospital to treat arriving immigrants. The Massachusetts law prohibited the importation of passengers who were indigent or had physical or mental disabilities. In addition, Massachusetts charged arriving ships $2.00 for each passenger, with the proceeds going to a fund for immigrants who later required public assistance. George Smith and James Norris were British shipmasters. Smith landed in New York City with 290 immigrant passengers, and Norris docked in Boston with 19. Both protested the constitutionality of the taxes on commerce clause grounds.

The Court found these cases difficult to resolve. In fact, they were argued three times, and still the justices had trouble reaching a majority decision. Finally, by a 5–4 vote, the Court struck down the laws as being in conflict with the authority of Congress to regulate foreign commerce. The five justices in the majority each wrote an opinion. The four dissenters, led by Taney, adhered to the view that such regulations to protect a state’s citizens from indigent and sick immigrants were within the states’ police powers.

The Passenger Cases left the law unsettled. Not only was the decision in conflict with previous rulings, but also the Court had failed to produce an opinion supported by a majority of the justices. This situation demanded a ruling that would authoritatively explain the constitutional division between federal and state commerce powers, but instead many questions remained unanswered. Did Congress have the exclusive power to regulate interstate and foreign commerce, leaving no authority for the states? Could the states regulate such commerce only if Congress had failed to enact any relevant legislation? Was the commerce power concurrent? Could Congress delegate its regulatory power to the states? Three years after the Passenger Cases, in Cooley v. Board of Wardens, the justices issued a ruling that resolved some of the confusion.

Philadelphia’s ordinance regulating the use of pilots in the city’s harbor was challenged as an infringement on the commerce power of the federal government. The Supreme Court upheld the ordinance in Cooley v. Board of Wardens, stating that some aspects of interstate and foreign commerce are essentially local and can be regulated locally if Congress has not already passed laws to the contrary.

Library of Congress

Justice Benjamin Curtis’s opinion in Cooley nicely outlines the basic constitutional principles governing the state’s power to regulate commerce. From this decision and those that preceded it, we can begin to build some understanding of how far the states may go in regulating commercial enterprise:

The states retain the power to regulate purely intrastate commerce.

Congress has the power to regulate interstate and foreign commerce. When it exercises this power, any contrary state laws are preempted.

The power of Congress to regulate interstate and foreign commerce is exclusive over those elements of commercial activity that are national in scope or require uniform regulation.

Those elements of interstate and foreign commerce that are not national in scope or do not require uniformity, and that have not been regulated by Congress, may be subject to state authority, including the states’ police powers.

This division of authority is known as the doctrine of selected exclusiveness. It designates certain aspects of interstate and foreign commerce over which the powers of Congress are exclusive, allowing no state action. This exclusiveness, however, is not complete; in the absence of federal legislation, states may regulate some local business activity affecting interstate commerce. The regulation of the Philadelphia port is an obvious part of interstate and foreign commerce where local harbor conditions require state supervision.

Cooley v. Board of Wardens

53 U.S. (12 How.) 299 (1852)

http://laws.findlaw.com/us/53/299.html

Vote: 7 (Catron, Curtis, Daniel, Grier, McKinley, Nelson, Taney)

2 (McLean, Wayne)

OPINION OF THE COURT: Curtis

CONCURRING OPINION: Daniel

DISSENTING OPINION: McLean

Facts:

Based on its power over interstate and foreign commerce, Congress passed a statute in 1789 pertaining to the regulation of ports. The legislation said that until Congress acted otherwise, state and local authorities would continue to control the nation’s ports and harbors. In 1803 Pennsylvania passed a port regulation law requiring that all vessels hire a local pilot to guide ships in and out of the Port of Philadelphia. Shipowners who did not comply were fined. The money from these fines was placed in a “charitable fund for the distressed or decayed pilots, their widows and children.”

Aaron Cooley owned a vessel that sailed into Philadelphia without hiring a local pilot. The port’s Board of Wardens took legal action against him, and Cooley was fined. He responded by claiming that the Pennsylvania law was unconstitutional; only Congress, he asserted, could regulate the port because the harbor was an integral part of interstate and foreign commerce, and the states had no constitutional authority to set regulations for such commerce. By implication, Cooley also was challenging the 1789 act of Congress that had delegated the powers to the states. The Pennsylvania Supreme Court upheld the law and the fine, and Cooley pressed his case to the U.S. Supreme Court.

Arguments:

For the plaintiff in error, Aaron B. Cooley:

The Pennsylvania law violates the commerce clause because the power to regulate interstate and foreign commerce is exclusive to Congress. Regulations of navigation are regulations of commerce and within the jurisdiction of Congress.

In legislation of the type at issue here, Congress can neither confer on the states powers not given them by the Constitution nor enable them to legislate on subjects clearly within the powers of Congress.

For the defendants in error, the Board of Wardens of the Port of Philadelphia et al.:

The Pennsylvania law does not violate the commerce clause because the law does not regulate commerce. It was passed pursuant to the exercise of powers by the state—powers that the states never surrendered: to control their ports and to protect the property and lives of their citizens.

The law is local in character and is an exercise of state police power designed to aid, not to regulate, commerce. See City of New York v. Miln.

Even if the law is a regulation of commerce, the power of Congress is not exclusive. Because Congress has passed no conflicting legislation, the state law is valid.

MR. JUSTICE CURTIS DELIVERED THE OPINION OF THE COURT.

That the power to regulate commerce includes the regulation of navigation, we consider settled. And when we look to the nature of the service performed by pilots, to the relations which that service and its compensations bear to navigation between the several States, and between the ports of the United States and foreign countries, we are brought to the conclusion, that the regulation of the qualifications of pilots, of the modes and times of offering and rendering their services, of the responsibilities which shall rest upon them, of the powers they shall possess, of the compensation they may demand, and of the penalties by which their rights and duties may be enforced, do constitute regulations of navigation, and consequently of commerce, within the just meaning of this clause of the Constitution. . . .

Nor should it be lost sight of, that this subject of the regulation of pilots and pilotage has an intimate connection with, and an important relation to the general subject of commerce with foreign nations and among the several States, over which it was one main object of the Constitution to create a national control. Conflicts between the laws of neighboring States, and discriminations favorable or adverse to commerce with particular foreign nations, might be created by State laws regulating pilotage, deeply affecting that equality of commercial rights, and that freedom from State interference, which those who formed the Constitution were so anxious to secure, and which the experience of more than half a century has taught us to value so highly. . . .

It becomes necessary, therefore, to consider whether this law of Pennsylvania, being a regulation of commerce, is valid.

The act of Congress of the 7th of August, 1789, sect. 4, is as follows:

“That all pilots in the bays, inlets, rivers, harbors, and ports of the United States shall continue to be regulated in conformity with the existing laws of the States, respectively, wherein such pilots may be, or with such laws as the States may respectively hereafter enact for the purpose, until further legislative provision shall be made by Congress.”

If the law of Pennsylvania, now in question, had been in existence at the date of this act of Congress, we might hold it to have been adopted by Congress, and thus made a law of the United States, and so valid. Because this act does, in effect, give the force of an act of Congress, to the then existing State laws on this subject, so long as they should continue unrepealed by the State which enacted them.

But the law on which these actions are founded was not enacted till 1803. What effect then can be attributed to so much of the act of 1789, as declares, that pilots shall continue to be regulated in conformity, “with such laws as the States may respectively hereafter enact for the purpose, until further legislative provision shall be made by Congress”?

If the States were divested of the power to legislate on this subject by the grant of the commercial power to Congress, it is plain this act could not confer upon them power thus to legislate. If the Constitution excluded the States from making any law regulating commerce, certainly Congress cannot regrant, or in any manner reconvey to the States that power. And yet this act of 1789 gives its sanction only to laws enacted by the States. This necessarily implies a constitutional power to legislate; for only a rule created by the sovereign power of a State acting in its legislative capacity, can be deemed a law, enacted by a State; and if the State has so limited its sovereign power that it no longer extends to a particular subject, manifestly it cannot, in any proper sense, be said to enact laws thereon. Entertaining these views we are brought directly and unavoidably to the consideration of the question, whether the grant of the commercial power to Congress, did per se deprive the States of all power to regulate pilots. This question has never been decided by this court, nor, in our judgment, has any case depending upon all the considerations which must govern this one, come before this court. The grant of commercial power to Congress does not contain any terms which expressly exclude the States from exercising an authority over its subject matter. If they are excluded it must be because the nature of the power, thus granted to Congress, requires that a similar authority should not exist in the States. If it were conceded on the one side, that the nature of this power, like that to legislate for the District of Columbia, is absolutely and totally repugnant to the existence of similar power in the States, probably no one would deny that the grant of the power to Congress, as effectually and perfectly excludes the States from all future legislation on the subject, as if express words had been used to exclude them. And on the other hand, if it were admitted that the existence of this power in Congress, like the power of taxation, is compatible with the existence of a similar power in the States, then it would be in conformity with the contemporary exposition of the Constitution (Federalist, No. 32) and with the judicial construction, given from time to time by this court, after the most deliberate consideration, to hold that the mere grant of such a power to Congress, did not imply a prohibition on the States to exercise the same power; that it is not the mere existence of such a power, but its exercise by Congress, which may be incompatible with the exercise of the same power by the States, and that the States may legislate in the absence of congressional regulations.

The diversities of opinion, therefore, which have existed on this subject, have arisen from the different views taken of the nature of this power. But when the nature of a power like this is spoken of, when it is said that the nature of the power requires that it should be exercised exclusively by Congress, it must be intended to refer to the subjects of that power, and to say they are of such a nature as to require exclusive legislation by Congress. Now the power to regulate commerce, embraces a vast field, containing not only many, but exceedingly various subjects, quite unlike in their nature; some imperatively demanding a single uniform rule, operating equally on the commerce of the United States in every port; and some, like the subject now in question, as imperatively demanding that diversity, which alone can meet the local necessities of navigation.

Either absolutely to affirm, or deny that the nature of this power requires exclusive legislation by Congress, is to lose sight of the nature of the subjects of this power, and to assert concerning all of them, what is really applicable but to a part. Whatever subjects of this power are in their nature national, or admit only of one uniform system, or plan of regulation, may justly be said to be of such a nature as to require exclusive legislation by Congress. That this cannot be affirmed of laws for the regulation of pilots and pilotage is plain. The act of 1789 contains a clear and authoritative declaration by the first Congress, that the nature of this subject is such, that until Congress should find it necessary to exert its power, it should be left to the legislation of the States; that it is local and not national; that it is likely to be the best provided for, not by one system, or plan of regulations, but by as many as the legislative discretion of the several States should deem applicable to the local peculiarities of the ports within their limits.

Viewed in this light, so much of this act of 1789 as declares that pilots shall continue to be regulated “by such laws as the States may respectively hereafter enact for that purpose,” instead of being held to be inoperative, as an attempt to confer on the States a power to legislate, of which the Constitution had deprived them, is allowed an appropriate and important signification. It manifests the understanding of Congress, at the outset of the government, that the nature of this subject is not such as to require its exclusive legislation. The practice of the States, and of the national government, has been in conformity with this declaration, from the origin of the national government to this time; and the nature of the subject when examined, is such as to leave no doubt of the superior fitness and propriety, not to say the absolute necessity, of different systems of regulation, drawn from local knowledge and experience, and conformed to local wants. How then can we say, that by the mere grant of power to regulate commerce, the States are deprived of all the power to legislate on this subject, because from the nature of the power the legislation of Congress must be exclusive. . . .

It is the opinion of a majority of the court that the mere grant to Congress of the power to regulate commerce, did not deprive the States of power to regulate pilots, and that although Congress has legislated on this subject, its legislation manifests an intention, with a single exception, not to regulate this subject, but to leave its regulation to the several States. To these precise questions, which are all we are called on to decide, this opinion must be understood to be confined. It does not extend to the question what other subjects, under the commercial power, are within the exclusive control of Congress, or may be regulated by the States in the absence of all congressional legislation; nor to the general question how far any regulation of a subject by Congress, may be deemed to operate as an exclusion of all legislation by the States upon the same subject. We decide the precise questions before us, upon what we deem sound principles, applicable to this particular subject in the state in which the legislation of Congress has left it. We go no further. . . .

We are of opinion that this State law was enacted by virtue of a power, residing in the State to legislate; that it is not in conflict with any law of Congress; that it does not interfere with any system which Congress has established by making regulations, or by intentionally leaving individuals to their own unrestricted action; that this law is therefore valid, and the judgment of the Supreme Court of Pennsylvania in each case must be affirmed.

State Burdens on Interstate Commerce: The Dormant Commerce Clause

Under the Articles of Confederation the states often imposed protective barriers that obstructed interstate business activity and impeded the growth of the national economy. To protect against such state policies, the framers gave Congress the authority to regulate interstate and foreign commerce. The goal was to promote free and robust commercial activity. Under the doctrine of selective exclusiveness, however, the states retained some powers to regulate commerce and potentially could use those powers to thwart the purposes of the commerce clause.

In 1803 John Marshall, writing in Marbury v. Madison, declared, “Affirmative words are often, in their operation, negative of other objects than those affirmed.” Almost two centuries later, Justice John Paul Stevens echoed this proposition, noting in Quill Corp. v. North Dakota (1992), “[T]he Commerce Clause is more than an affirmative grant of power; it has a negative sweep as well.” Over the years the justices have often applied this principle to the state regulation of commercial activity: the affirmative grant of power to the federal government to regulate interstate and foreign commerce implies that the states are prohibited from regulating in ways that are detrimental to the national economy—even if Congress does not explicitly bar them from doing so. The Court, therefore, creates a balancing situation. In the absence of federal laws to the contrary, states for valid reasons may regulate local commercial activities, but those regulations may not negatively and unreasonably affect interstate commerce.

The justices refer to this interpretation as the “dormant” or “negative” commerce clause. This jurisprudence recognizes that although the commerce clause is a positive grant of power to the federal government, it carries with it a negative command against certain state actions. The Court has been particularly concerned with state policies that either burden interstate and foreign commerce or discriminate against them in favor of state interests. Applying the dormant commerce clause approach, such state regulations are contrary to the Constitution.

State Burdens on Interstate Commerce.

Among the essentially local aspects of interstate commerce are matters of public safety. Interstate trucking provides a good illustration. The use of trucks for the transportation of goods is an integral part of interstate commerce, but trucks use local roads that are the state’s concern. One of the primary elements of a state’s police powers is regulation to ensure the safety of its citizens, and safety regulations may impose a burden on interstate commerce.

The Supreme Court addressed this conflict in 1938 in South Carolina State Highway Department v. Barnwell Brothers. For purposes of public safety and to prevent damage to the state’s highways, the South Carolina legislature passed a statute prohibiting certain trucks from using the highways. No truck with a gross weight in excess of twenty thousand pounds or a width greater than ninety inches was permitted. Barnwell Brothers Trucking Company challenged the regulation as an unreasonable burden on interstate commerce. Evidence presented at trial showed that between 85 percent and 90 percent of all interstate trucks were ninety-six inches wide and weighed more than the prescribed limit. Only four other states had weight limits as low as South Carolina’s, and none had width restrictions as severe. Based on this information, the trial court ruled that the state law was an unconstitutional burden on the flow of interstate commerce.

The Supreme Court reversed. Justice Stone’s opinion for the Court noted that “[t]he commerce clause, by its own force, prohibits discrimination against interstate commerce, whatever its form or method.” States consequently are prohibited from giving a preference to intrastate businesses at the expense of interstate commerce or placing unreasonable burdens on out-of-state businesses. Stone, however, wrote, “There are matters of local concern, the regulation of which unavoidably involves some regulation of interstate commerce but which, because of their local character and their number and diversity, may never be fully dealt with by Congress.” The regulation of such matters, in the absence of federal legislation, is best left to the states. Congress has recognized this situation by allowing state and local governments to have a say in the regulation of highways, ports, harbors, rivers, and docks. Congress also has not prohibited certain quarantine laws imposed by the states. Naturally, Congress may act in any of these areas when it determines that uniform national legislation is required.

In their 7–0 decision the justices held that South Carolina’s regulation of trucks using the state highways fell into this category. Because of an absence of federal legislation over highway safety and because the state regulations applied to vehicles in intra- and interstate commerce equally, the state law was not in violation of the Constitution.

Still, Barnwell Brothers left a number of issues unresolved: How far may a state go in regulating interstate commerce for safety purposes? How much of a burden may be imposed on the free flow of commerce among the states to achieve greater safety? Were the highways, which the states built, owned, and maintained, a special case, or did state authority similarly extend to other areas of interstate commerce? The justices took another look at these issues in Southern Pacific Company v. Arizona (1945). Once again Stone wrote the opinion for the Court, but this time the outcome was different. Was Southern Pacific consistent with Barnwell Brothers, or did the Court modify its position?

Chief Justice Stone’s opinion in Southern Pacific is a strong declaration of how state requirements affect the flow of interstate traffic and commerce. Under the dormant commerce clause doctrine, the Constitution leaves no room for state legislation that is inimical to national commerce, even if the subject of that regulation has not been touched by federal legislation. A state law that obstructs interstate commerce, going beyond what is clearly necessary for safety regulation, cannot stand in the face of the commerce clause.

Southern Pacific Company v. Arizona

325 U.S. 761 (1945)

http://laws.findlaw.com/us/325/761.html

Vote: 7 (Frankfurter, Jackson, Murphy, Reed, Roberts, Rutledge, Stone)

2 (Black, Douglas)

OPINION FOR THE COURT: Stone

DISSENTING OPINIONS: Black, Douglas

Facts:

On May 16, 1912, the Arizona legislature passed the Train Limit Law, making it unlawful for any individual or corporation to operate a train with more than fourteen passenger cars or seventy freight cars within the state. Violators were subject to fines. In 1940 the state brought a legal action against Southern Pacific Company, which acknowledged operating passenger and freight trains in excess of the state limits. The company argued that the state law was unconstitutional because it conflicted with the commerce clause.

The jury returned a verdict for the company, but the state supreme court reversed, holding that Arizona was free to enact such regulations because Congress had not legislated the length of railroad trains. The Arizona law was a safety measure that could be justified as an exercise of the state’s police powers to act in the interests of local health, safety, and well-being. The railroad appealed the ruling to the U.S. Supreme Court, arguing that the state law placed an undue burden on the flow of interstate commerce. In presenting its case, Southern Pacific enjoyed the support of two powerful allies: the U.S. government and the Association of American Railroads submitted amicus curiae briefs attacking the constitutionality of the state law.

Arguments:

For the appellant, Southern Pacific Company:

The state law violates the commerce clause because it regulates a matter of national, not solely local, concern. Only Congress can determine whether a uniform system of regulation is needed, and only Congress can enact such measures. The power to regulate commerce is necessarily exclusive when it is exercised over subjects that are national in character or require a single plan of regulation.

The Court must strike down the state law because it frustrates the principal goals of the commerce clause as outlined in previous decisions: to preserve the interests of the nation against conflicting and discriminatory state legislation and to guard against obstructions of the free flow of commerce. This law imposes a serious burden on interstate commerce by hindering efficient train service.

The law invades a field of regulation of commerce that Congress fully occupies, as previous federal laws regulating trains indicate. Congressional silence or inaction over the matter here is the same as a declaration that interstate commerce should remain free and unobstructed.

For the appellee, state of Arizona:

The state law does not invade a national field exclusively reserved to Congress. It has a real relation to the safety and protection of Arizona’s citizens and is not an area in which Congress has regulated.

It is up to Congress, not the courts, to determine whether a state can exercise its reserved police powers in a way that might indirectly affect interstate commerce. Congress does this by permissibly occupying a field under its commerce power, which it has not done here. But even the courts have recognized that states have legitimately regulated in areas that require regulation until Congress intervenes.

Whether the state law imposes an impermissible burden on interstate commerce is a question Congress, not the courts, should address through appropriate legislative means. Even so, the financial burden is not as substantial as appellant contends.

MR. CHIEF JUSTICE STONE DELIVERED THE OPINION OF THE COURT.

Although the commerce clause conferred on the national government power to regulate commerce, its possession of the power does not exclude all state power of regulation. Ever since Willson v. Black-Bird Creek Marsh Co. and Cooley v. Board of Wardens, it has been recognized that, in the absence of conflicting legislation by Congress, there is a residuum of power in the state to make laws governing matters of local concern which nevertheless in some measure affect interstate commerce or even, to some extent, regulate it. Thus the states may regulate matters which, because of their number and diversity, may never be adequately dealt with by Congress. Cooley v. Board of Wardens, South Carolina Highway Dept. v. Barnwell Bros. When the regulation of matters of local concern is local in character and effect, and its impact on the national commerce does not seriously interfere with its operation, and the consequent incentive to deal with them nationally is slight, such regulation has been generally held to be within state authority.

But ever since Gibbons v. Ogden, the states have not been deemed to have authority to impede substantially the free flow of commerce from state to state, or to regulate those phases of the national commerce which, because of the need of national uniformity, demand that their regulation, if any, be prescribed by a single authority. Whether or not this long-recognized distribution of power between the national and the state governments is predicated upon the implications of the commerce clause itself, or upon the presumed intention of Congress, where Congress has not spoken, the result is the same.

In the application of these principles some enactments may be found to be plainly within and others plainly without state power. But between these extremes lies the infinite variety of cases, in which regulation of local matters may also operate as a regulation of commerce, in which reconciliation of the conflicting claims of state and national power is to be attained only by some appraisal and accommodation of the competing demands of the state and national interests involved.

For a hundred years it has been accepted constitutional doctrine that the commerce clause, without the aid of Congressional legislation, thus affords some protection from state legislation inimical to the national commerce and that in such cases, where Congress has not acted, this Court, and not the state legislature, is under the commerce clause the final arbiter of the competing demands of state and national interests.

Congress has undoubted power to redefine the distribution of power over interstate commerce. It may either permit the states to regulate the commerce in a manner which would otherwise not be permissible, or exclude state regulation even of matters of peculiarly local concern which nevertheless affect interstate commerce.

But in general Congress has left it to the courts to formulate the rules thus interpreting the commerce clause in its application, doubtless because it has appreciated the destructive consequences to the commerce of the nation if their protection were withdrawn, and has been aware that in their application state laws will not be invalidated without the support of relevant factual material which will “afford a sure basis” for an informed judgment. Meanwhile, Congress has accommodated its legislation, as have the states, to these rules as an established feature of our constitutional system. There has thus been left to the states wide scope for the regulation of matters of local state concern, even though it in some measure affects the commerce, provided it does not materially restrict the free flow of commerce across state lines, or interfere with it in matters with respect to which uniformity of regulation is of predominant national concern.

Hence the matters for ultimate determination here are the nature and extent of the burden which the state regulation of interstate trains, adopted as a safety measure, imposes on interstate commerce, and whether the relative weights of the state and national interests involved are such as to make inapplicable the rule, generally observed, that the free flow of interstate commerce and its freedom from local restraints in matters requiring uniformity of regulation are interests safeguarded by the commerce clause from state interference. . . .

The findings show that the operation of long trains, that is trains of more than fourteen passenger and more than seventy freight cars, is standard practice over the main lines of the railroads of the United States, and that, if the length of trains is to be regulated at all, national uniformity in the regulation adopted, such as only Congress can prescribe, is practically indispensable to the operation of an efficient and economical national railway system. On many railroads passenger trains of more than fourteen cars and freight trains of more than seventy cars are operated, and on some systems freight trains are run ranging from one hundred and twenty-five to one hundred and sixty cars in length. Outside of Arizona, where the length of trains is not restricted, appellant runs a substantial proportion of long trains. In 1939 on its comparable route for through traffic through Utah and Nevada from 66 to 85% of its freight trains were over seventy cars in length and over 43% of its passenger trains included more than fourteen passenger cars.

In Arizona, approximately 93% of the freight traffic and 95% of the passenger traffic is interstate. Because of the Train Limit Law appellant is required to haul over 30% more trains in Arizona than would otherwise have been necessary. The record shows a definite relationship between operating costs and the length of trains, the increase in length resulting in a reduction of operating costs per car. The additional cost of operation of trains complying with the Train Limit Law in Arizona amounts for the two railroads traversing that state to about $1,000,000 a year. The reduction in train lengths also impedes efficient operation. More locomotives and more manpower are required; the necessary conversion and reconversion of train lengths at terminals and the delay caused by breaking up and remaking long trains upon entering and leaving the state in order to comply with the law, delays the traffic and diminishes its volume moved in a given time, especially when traffic is heavy. . . .

The unchallenged findings leave no doubt that the Arizona Train Limit Law imposes a serious burden on the interstate commerce conducted by appellant. It materially impedes the movement of appellant’s interstate trains through that state and interposes a substantial obstruction to the national policy proclaimed by Congress, to promote adequate, economical and efficient railway transportation service. Enforcement of the law in Arizona, while train lengths remain unregulated or are regulated by varying standards in other states, must inevitably result in an impairment of uniformity of efficient railroad operation because the railroads are subjected to regulation which is not uniform in its application. Compliance with a state statute limiting train lengths requires interstate trains of a length lawful in other states to be broken up and reconstituted as they enter each state according as it may impose varying limitations upon train lengths. The alternative is for the carrier to conform to the lowest train limit restriction of any of the states through which its trains pass, whose laws thus control the carriers’ operations both within and without the regulating state.

Although the seventy car maximum for freight trains is the limitation which has been commonly proposed, various bills introduced in the state legislatures provided for maximum freight train lengths of from fifty to one hundred and twenty-five cars, and maximum passenger train lengths of from ten to eighteen cars. With such laws in force in states which are interspersed with those having no limit on train lengths, the confusion and difficulty with which interstate operations would be burdened under the varied system of state regulation and the unsatisfied need for uniformity in such regulation, if any, are evident. . . .

We think, as the trial court found, that the Arizona Train Limit Law, viewed as a safety measure, affords at most slight and dubious advantage, if any, over unregulated train lengths, because it results in an increase in the number of trains and train operations and the consequent increase in train accidents of a character generally more severe than those due to slack action. Its undoubted effect on the commerce is the regulation, without securing uniformity, of the length of trains operated in interstate commerce, which lack is itself a primary cause of preventing the free flow of commerce by delaying it and by substantially increasing its cost and impairing its efficiency. In these respects the case differs from those where a state, by regulatory measures affecting the commerce, has removed or reduced safety hazards without substantial interference with the interstate movement of trains. Such are measures abolishing the car stove, requiring locomotives to be supplied with electric headlights, providing for full train crews, and for the equipment of freight trains with cabooses. . . .

Here we conclude that the state does go too far. Its regulation of train lengths, admittedly obstructive to interstate train operation, and having a seriously adverse effect on transportation efficiency and economy, passes beyond what is plainly essential for safety since it does not appear that it will lessen rather than increase the danger of accident. Its attempted regulation of the operation of interstate trains cannot establish nationwide control such as is essential to the maintenance of an efficient transportation system, which Congress alone can prescribe. The state interest cannot be preserved at the expense of the national interest by an enactment which regulates interstate train lengths without securing such control, which is a matter of national concern. To this the interest of the state here asserted is subordinate. . . .

Reversed.

MR. JUSTICE BLACK, dissenting.

[T]he determination of whether it is in the interest of society for the length of trains to be governmentally regulated is a matter of public policy. Someone must fix that policy—either the Congress, or the state, or the courts. A century and a half of constitutional history and government admonishes this Court to leave that choice to the elected legislative representatives of the people themselves, where it properly belongs both on democratic principles and the requirements of efficient government. . . .

Representatives elected by the people to make their laws, rather than judges appointed to interpret those laws, can best determine the policies which govern the people. That at least is the basic principle on which our democratic society rests. I would affirm the judgment of the Supreme Court of Arizona.

MR. JUSTICE DOUGLAS, dissenting.

I have expressed my doubts whether the courts should intervene in situations like the present and strike down state legislation on the grounds that it burdens interstate commerce. My view has been that the courts should intervene only where the state legislation discriminated against interstate commerce or was out of harmony with laws which Congress had enacted. It seems to me particularly appropriate that that course be followed here. For Congress has given the Interstate Commerce Commission broad powers of regulation over interstate carriers. The Commission is the national agency which has been entrusted with the task of promoting a safe, adequate, efficient, and economical transportation service. It is the expert on this subject. It is in a position to police the field. And if its powers prove inadequate for the task, Congress, which has paramount authority in this field, can implement them.

State Discrimination against Interstate Commerce.

Even though the Court’s decisions in Barnwell Brothers and Southern Pacific deal with transportation and distribution activities, the principles set down in those cases also apply to state regulations that place burdens on other aspects of interstate commerce, especially a state’s attempt to protect local businesses by discriminating against interstate commerce. In Hunt v. Washington State Apple Advertising Commission the justices confronted a state regulation that restricted the kind of information that could be displayed on containers of out-of-state agricultural products. The state claimed that the rule was an exercise of the police powers to protect its citizens from fraud and deception. Does the state make a convincing case, or is the regulation nothing more than a way to prevent interstate commerce from having a negative impact on local producers?

The Southern Pacific and Washington State Apple cases are but two examples from a long line of decisions in which the Court has cast a disapproving eye on state laws that discriminate against interstate commerce or place an unreasonable burden on it. Other examples are summarized in box 7-10.

It would be a mistake to conclude, however, that all state regulations that discriminate against interstate products are unconstitutional. In several cases, including Hughes v. Oklahoma (1979) and New Energy Co. of Indiana v. Limbach (1988), the Court has allowed such unequal treatment under two conditions. First, Congress may pass legislation that permits discrimination by the states and thereby removes the restrictions imposed by the negative commerce clause. Second, the justices have allowed discrimination against interstate commerce when the states can advance a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.

Maine v. Taylor (1986) involves a dispute over a state law that bans importation of a commodity while allowing the sale of the same article produced within the state. Maine argues that Congress approved the prohibition and that the law is a necessary environmental health regulation. Does the state offer a sufficiently strong case that its trade barrier is not offensive to the Constitution, or is the state using the police power as a means of protecting a domestic industry against interstate competition?

Maine v. Taylor illustrates a successful attempt on the part of a state to gain approval of a statute that clearly discriminated against interstate commerce. Because of the implications of the Lacey Act and the environmental interests at stake, the Court found ample reason to forgo the standard prohibitions imposed by the dormant commerce clause. Such efforts, however, do not always end with victory for state interests. Granholm v. Heald (2005) provides an illustration. As you read this case, consider whether the states’ arguments are compelling. Also ask yourself, Did the precedent set in Maine v. Taylor govern this case, or did the Court find sufficient differences to justify an alternative outcome?

The authority of the states to regulate interstate commerce remains consistent with the principles set out in Cooley v. Board of Wardens (1852). The Constitution without doubt gives supremacy in this area to the national government. If Congress elects to regulate such commerce, the power of the state is preempted. But where Congress does not regulate, the states may have a role. When national uniformity is not necessary, states may pass reasonable forms of regulation to meet legitimate local needs. If these ordinances place unreasonable burdens on interstate commerce or discriminate against interstate commerce in favor of domestic business, the Court will view them with suspicion, requiring the state to meet a heavy obligation of proving their legitimacy. As Maine v. Taylor and Granholm v. Heald illustrate, however, even well-developed legal standards are subject to differing interpretations that the judiciary may be called on to resolve.

Hunt v. Washington State Apple Advertising Commission

432 U.S. 333 (1977)

http://laws.findlaw.com/us/432/333.html

Oral arguments are available at https://www.oyez.org.

Vote: 8 (Blackmun, Brennan, Burger, Marshall, Powell, Stevens, Stewart, White)

0

OPINION OF THE COURT: Burger

NOT PARTICIPATING: Rehnquist

Facts:

In 1972 the North Carolina Board of Agriculture adopted a regulation that required all closed containers of apples shipped into the state to display either the U.S. Department of Agriculture (USDA) grade or nothing at all. It barred information based on the grading systems of the states in which the apples were grown. The reason for the regulation, according to North Carolina, which has a substantial apple industry, was to ensure that all apples coming into the state used the same grading system, thereby removing the danger that multiple systems would confuse purchasers and lead to deception and fraud in the market. No other state had such a regulation.

Through their industry advertising commission, apple growers in Washington State challenged the North Carolina regulations. Washington grows approximately 30 percent of the nation’s apples and is responsible for roughly half of all apples shipped in interstate commerce. Because the industry is so important to that state, it has taken steps to enhance its reputation by imposing a strict mandatory inspection and grading system. Washington’s standards are higher than the USDA’s, and the grading system has widespread acceptance in the apple trade.

The Washington commission asked North Carolina to alter its regulation or to allow certain exceptions. When North Carolina refused, the commission sued to have the regulation declared unconstitutional. The federal trial court found that the regulation violated the commerce clause, and North Carolina governor James Hunt, on behalf of the state, appealed to the U.S. Supreme Court.

Arguments:

For the appellants, James B. Hunt Jr., governor of North Carolina, et al.:

If the law imposes burdens on the sale of Washington apples in North Carolina, the local benefits of North Carolina’s valid exercise of its police power outweigh those burdens. North Carolina is protecting its citizens—and indeed all Americans—from fraud and deception in the marketing of apples.

The law accomplishes this goal of uniformity in an evenhanded manner because it applies to all apples sold in closed containers in the state without regard to their point of origin.

Many Court decisions have held that not every state law imposing burdens on interstate commerce is unconstitutional. Especially when states act to protect their citizens from fraud and deception in the marketing of food, the residuum of power left to the states is particularly broad.

For the appellee, Washington State Apple Advertising Commission:

The law unreasonably burdens interstate commerce in three ways. First, it clearly discriminates against interstate commerce in favor of local growers. Second, it denies Washington growers the ability to use the widely accepted quality grading system and diminishes the marketing advantage the state’s industry had earned. Third, North Carolina’s regulation increases the cost of interstate commerce by requiring out-of-state growers to package their North Carolina–bound products differently from those being sent to the other states.

MR. CHIEF JUSTICE BURGER DELIVERED THE OPINION OF THE COURT.

We turn . . . to the appellant’s claim that the District Court erred in holding that the North Carolina statute violated the Commerce Clause insofar as it prohibited the display of Washington State grades on closed containers of apples shipped into the State. Appellants do not really contest the District Court’s determination that the challenged statute burdened the Washington apple industry by increasing its costs of doing business in the North Carolina market and causing it to lose accounts there. Rather, they maintain that any such burdens on the interstate sale of Washington apples were far outweighed by the local benefits flowing from what they contend was a valid exercise of North Carolina’s inherent police powers designed to protect its citizenry from fraud and deception in the marketing of apples.

Prior to the statute’s enactment, appellants point out, apples from 13 different States were shipped into North Carolina for sale. Seven of those States, including the State of Washington, had their own grading system which, while differing in their standards, used similar descriptive labels (e.g., fancy, extra fancy, etc.). This multiplicity of inconsistent grades, as the District Court itself found, posed dangers of deception and confusion not only in the North Carolina market, but in the Nation as a whole. The North Carolina statute, appellants claim, was enacted to eliminate this source of deception and confusion by replacing the numerous state grades with a single uniform standard. Moreover, it is contended that North Carolina sought to accomplish this goal of uniformity in an evenhanded manner as evidenced by the fact that its statute applies to all apples sold in closed containers in the State without regard to their point of origin. Nonetheless, appellants argue that the District Court gave “scant attention” to the obvious benefits flowing from the challenged legislation and to the long line of decisions from this Court holding that the State possesses “broad powers” to protect local purchasers from fraud and deception in the marketing of foodstuffs.

As the appellants properly point out, not every exercise of state authority imposing some burden on the free flow of commerce is invalid. Although the Commerce Clause acts as a limitation upon state power even without congressional implementation, our opinions have long recognized that,

“in the absence of conflicting legislation by Congress, there is a residuum of power in the state to make laws governing matters of local concern which nevertheless in some measure affect interstate commerce or even, to some extent, regulate it.” Southern Pacific Co. v. Arizona (1945).

Moreover, as appellants correctly note, that “residuum” is particularly strong when the State acts to protect its citizenry in matters pertaining to the sale of foodstuffs. By the same token, however, a finding that state legislation furthers matters of legitimate local concern, even in the health and consumer protection areas, does not end the inquiry. Such a view, we have noted, “would mean that the Commerce Clause of itself imposes no limitations on state action . . . save for the rare instance where a state artlessly discloses an avowed purpose to discriminate against interstate goods.” Dean Milk Co. v. Madison (1951). Rather, when such state legislation comes into conflict with the Commerce Clause’s overriding requirement of a national “common market,” we are confronted with the task of effecting an accommodation of the competing national and local interests. We turn to that task.

As the District Court correctly found, the challenged statute has the practical effect of not only burdening interstate sales of Washington apples, but also discriminating against them. This discrimination takes various forms. The first, and most obvious, is the statute’s consequence of raising the costs of doing business in the North Carolina market for Washington apple growers and dealers, while leaving those of their North Carolina counterparts unaffected. As previously noted, this disparate effect results from the fact that North Carolina apple producers, unlike their Washington competitors, were not forced to alter their marketing practices in order to comply with the statute. They were still free to market their wares under the USDA grade or none at all as they had done prior to the statute’s enactment. Obviously, the increased costs imposed by the statute would tend to shield the local apple industry from the competition of Washington apple growers and dealers who are already at a competitive disadvantage because of their great distance from the North Carolina market.

Second, the statute has the effect of stripping away from the Washington apple industry the competitive and economic advantages it has earned for itself through its expensive inspection and grading system. The record demonstrates that the Washington apple-grading system has gained nationwide acceptance in the apple trade. Indeed, it contains numerous affidavits from apple brokers and dealers located both inside and outside of North Carolina who state their preference, and that of their customers, for apples graded under the Washington, as opposed to the USDA, system because of the former’s greater consistency, its emphasis on color, and its supporting mandatory inspections. Once again, the statute had no similar impact on the North Carolina apple industry and thus operated to its benefit.

Third, by prohibiting Washington growers and dealers from marketing apples under their State’s grades, the statute has a leveling effect which insidiously operates to the advantage of local apple producers. As noted earlier, the Washington State grades are equal or superior to the USDA grades in all corresponding categories. Hence, with free market forces at work, Washington sellers would normally enjoy a distinct market advantage vis-à-vis local producers in those categories where the Washington grade is superior. However, because of the statute’s operation, Washington apples which would otherwise qualify for and be sold under the superior Washington grades will now have to be marketed under their inferior USDA counterparts. Such “down-grading” offers the North Carolina apple industry the very sort of protection against competing out-of-state products that the Commerce Clause was designed to prohibit. At worst, it will have the effect of an embargo against those Washington apples in the superior grades as Washington dealers withhold them from the North Carolina market. At best, it will deprive Washington sellers of the market premium that such apples would otherwise command.

Despite the statute’s facial neutrality, the Commission suggests that its discriminatory impact on interstate commerce was not an unintended byproduct and there are some indications in the record to that effect. The most glaring is the response of the North Carolina Agriculture Commissioner to the Commission’s request for an exemption following the statute’s passage in which he indicated that before he could support such an exemption, he would “want to have the sentiment from our apple producers since they were mainly responsible for this legislation being passed . . .” [emphasis added]. Moreover, we find it somewhat suspect that North Carolina singled out only closed containers of apples, the very means by which apples are transported in commerce, to effectuate the statute’s ostensible consumer protection purpose when apples are not generally sold at retail in their shipping containers. However, we need not ascribe an economic protection motive to the North Carolina Legislature to resolve this case; we conclude that the challenged statute cannot stand insofar as it prohibits the display of Washington State grades even if enacted for the declared purpose of protecting consumers from deception and fraud in the marketplace.

When discrimination against commerce of the type we have found is demonstrated, the burden falls on the State to justify it both in terms of the local benefits flowing from the statute and the unavailability of nondiscriminatory alternatives adequate to preserve the local interests at stake. North Carolina has failed to sustain that burden on both scores.

The several States unquestionably possess a substantial interest in protecting their citizens from confusion and deception in the marketing of foodstuffs, but the challenged statute does remarkably little to further that laudable goal at least with respect to Washington apples and grades. The statute, as already noted, permits the marketing of closed containers of apples under no grades at all. Such a result can hardly be thought to eliminate the problems of deception and confusion created by the multiplicity of differing state grades; indeed, it magnifies them by depriving purchasers of all information concerning the quality of the contents of closed apple containers. Moreover, although the statute is ostensibly a consumer protection measure, it directs its primary efforts, not at the consuming public at large, but at apple wholesalers and brokers who are the principal purchasers of closed containers of apples. And those individuals are presumably the most knowledgeable individuals in this area. Since the statute does nothing at all to purify the flow of information at the retail level, it does little to protect consumers against the problems it was designed to eliminate. Finally, we note that any potential for confusion and deception created by the Washington grades was not of the type that led to the statute’s enactment. Since Washington grades are in all cases equal or superior to their USDA counterparts, they could only “deceive” or “confuse” a consumer to his benefit, hardly a harmful result.

In addition, it appears that nondiscriminatory alternatives to the outright ban of Washington State grades are readily available. For example, North Carolina could effectuate its goal by permitting out-of-state growers to utilize state grades only if they also marked their shipments with the applicable USDA label. In that case, the USDA grade would serve as a benchmark against which the consumer could evaluate the quality of the various state grades. If this alternative was for some reason inadequate to eradicate problems caused by state grades inferior to those adopted by the USDA, North Carolina might consider banning those state grades which, unlike Washington’s, could not be demonstrated to be equal or superior to the corresponding USDA categories. Concededly, even in this latter instance, some potential for “confusion” might persist. However, it is the type of “confusion” that the national interest in the free flow of goods between the States demands be tolerated.

The judgment of the District Court is

Affirmed.

BOX 7-10 EXAMPLES OF SUPREME COURT DECISIONS STRIKING DOWN STATE AND LOCAL RESTRICTIONS ON INTERSTATE COMMERCE

Maine v. Taylor

477 U.S. 131 (1986)

http://laws.findlaw.com/us/477/131.html

Oral arguments are available at https://www.oyez.org.

Vote: 8 (Blackmun, Brennan, Burger, Marshall, O’Connor, Powell, Rehnquist, White)

1 (Stevens)

OPINION OF THE COURT: Blackmun

DISSENTING OPINION: Stevens

Facts:

Maine passed a law prohibiting the importation of any live fish to be used as bait in any of the state’s inland waters. The state said the law was to protect indigenous fish from parasites and diseases that are common among imported baitfish and to prevent the introduction of fish that might be detrimental to the state’s ecology. Coupled with this state law was the Lacey Act, a federal statute that, among other things, made it a crime to transport any fish or wildlife in violation of state laws.

In a clear violation of the state statute, Robert J. Taylor, operator of a bait business in Maine, imported 158,000 live golden shiners. The fish were intercepted at the state border, and the federal government indicted Taylor for violating the Lacey Act. In his defense, Taylor attacked the constitutionality of the Maine law. He claimed that the ban on the interstate shipment of baitfish was a direct violation of the commerce clause. Maine intervened to defend its statute. In a hearing before a U.S. magistrate, Maine introduced testimony showing that the law served a legitimate local purpose that could not be adequately served by reasonable nondiscriminatory alternatives. The judge and later a U.S. district court agreed that the state had met its burden and upheld its law. But the court of appeals, also considering the purpose and possible alternatives, reversed. The reversal cast doubt on the state’s claim that its law served a legitimate local purpose on the grounds that the law was unique and had an “aura of economic protectionism.” Even if it assumed the law had a legitimate local purpose, the court held that less-discriminatory alternatives existed, including the inspection of the fish before they are released into Maine waters. Maine and the United States petitioned the U.S. Supreme Court to review the case.

Arguments:

For the appellant, state of Maine:

Congress, in enacting the Lacey Act, encouraged the enactment of statutes such as Maine’s.

The law satisfies the purpose and alternative requirements, as the magistrate and later district court judge found. The court of appeals’ decision to the contrary is at odds with evidence that the lower court found persuasive. Under existing case law (and the rules of civil procedure) courts of appeals are not free to set aside findings of fact by the lower court unless they are clearly erroneous, which they are not in this case.

For the appellee, Robert J. Taylor:

When a state law discriminates against interstate commerce in a way that is not incidental or evenhanded, the state must show that its law serves a legitimate local purpose and that no reasonable alternative exists to promote the purpose without discriminating against commerce. Because the state has shown neither, the law violates the commerce clause.

The state has not demonstrated that its law serves a legitimate local purpose that outweighs the national interest in the free flow of commerce throughout the United States. At trial an expert indicated that the dangers posed by parasites may be overstated.

Even if the law served a legitimate local purpose, the court of appeals was right to rule that Maine has not taken advantage of less discriminatory alternatives.

JUSTICE BLACKMUN DELIVERED THE OPINION OF THE COURT.

Once again, a little fish has caused a commotion. See Hughes v. Oklahoma (1979); TVA v. Hill (1978); Cappaert v. United States (1976). The fish in this case is the golden shiner, a species of minnow commonly used as live bait in sport fishing. . . .

The Commerce Clause of the Constitution grants Congress the power “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Art. I, §8, cl. 3. “Although the Clause thus speaks in terms of powers bestowed upon Congress, the Court long has recognized that it also limits the power of the States to erect barriers against interstate trade.” Maine’s statute restricts interstate trade in the most direct manner possible, blocking all inward shipments of live baitfish at the State’s border. Still, as both the District Court and the Court of Appeals recognized, this fact alone does not render the law unconstitutional. The limitation imposed by the Commerce Clause on state regulatory power “is by no means absolute,” and “the States retain authority under their general police powers to regulate matters of ‘legitimate local concern,’ even though interstate commerce may be affected.”

In determining whether a State has overstepped its role in regulating interstate commerce, this Court has distinguished between state statutes that burden interstate transactions only incidentally, and those that affirmatively discriminate against such transactions. While statutes in the first group violate the Commerce Clause only if the burdens they impose on interstate trade are “clearly excessive in relation to the putative local benefits,” statutes in the second group are subject to more demanding scrutiny. The Court explained in Hughes v. Oklahoma that once a state law is shown to discriminate against interstate commerce “either on its face or in practical effect,” the burden falls on the State to demonstrate both that the statute “serves a legitimate local purpose,” and that this purpose could not be served as well by available nondiscriminatory means. . . .

No matter how one describes the abstract issue whether “alternative means could promote this local purpose as well without discriminating against interstate commerce,” Hughes v. Oklahoma, the more specific question whether scientifically accepted techniques exist for the sampling and inspection of live baitfish is one of fact, and the District Court’s finding that such techniques have not been devised cannot be characterized as clearly erroneous. Indeed, the record probably could not support a contrary finding. Two prosecution witnesses testified to the lack of such procedures, and appellee’s expert conceded the point, although he disagreed about the need for such tests. That Maine has allowed the importation of other freshwater fish after inspection hardly demonstrates that the District Court clearly erred in crediting the corroborated and uncontradicted expert testimony that standardized inspection techniques had not yet been developed for baitfish. . . .

After reviewing the expert testimony . . . we cannot say that the District Court clearly erred in finding that substantial scientific uncertainty surrounds the effect that baitfish parasites and nonnative species could have on Maine’s fisheries. Moreover, we agree with the District Court that Maine has a legitimate interest in guarding against imperfectly understood environmental risks, despite the possibility that they may ultimately prove to be negligible. “[T]he constitutional principles underlying the commerce clause cannot be read as requiring the State of Maine to sit idly by and wait until potentially irreversible environmental damage has occurred or until the scientific community agrees on what disease organisms are or are not dangerous before it acts to avoid such consequences.”

Nor do we think that much doubt is cast on the legitimacy of Maine’s purposes by what the Court of Appeals took to be signs of protectionist intent. Shielding in-state industries from out-of-state competition is almost never a legitimate local purpose, and state laws that amount to “simple economic protectionism” consequently have been subject to a “virtually per se rule of invalidity.” But there is little reason in this case to believe that the legitimate justifications the State has put forward for its statute are merely a sham or a “post hoc rationalization.” . . .

The Commerce Clause significantly limits the ability of States and localities to regulate or otherwise burden the flow of interstate commerce, but it does not elevate free trade above all other values. As long as a State does not needlessly obstruct interstate trade or attempt to “place itself in a position of economic isolation,” it retains broad regulatory authority to protect the health and safety of its citizens and the integrity of its natural resources. The evidence in this case amply supports the District Court’s findings that Maine’s ban on the importation of live baitfish serves legitimate local purposes that could not adequately be served by available nondiscriminatory alternatives. This is not a case of arbitrary discrimination against interstate commerce; the record suggests that Maine has legitimate reasons “apart from their origin, to treat [out-of-state baitfish] differently.” The judgment of the Court of Appeals setting aside appellee’s conviction is therefore reversed.

JUSTICE STEVENS, dissenting.

There is something fishy about this case. Maine is the only State in the Union that blatantly discriminates against out-of-state baitfish by flatly prohibiting their importation. Although golden shiners are already present and thriving in Maine (and, perhaps not coincidentally, the subject of a flourishing domestic industry), Maine excludes golden shiners grown and harvested (and, perhaps not coincidentally, sold) in other States. This kind of stark discrimination against out-of-state articles of commerce requires rigorous justification by the discriminating State. “When discrimination against commerce of the type we have found is demonstrated, the burden falls on the State to justify it both in terms of the local benefits flowing from the statute and the unavailability of nondiscriminatory alternatives adequate to preserve the local interests at stake.” Hunt v. Washington State Apple Advertising Comm’n (1977).

. . . [T]he Court concludes that uncertainty about possible ecological effects from the possible presence of parasites and nonnative species in shipments of out-of-state shiners suffices to carry the State’s burden of proving a legitimate public purpose. The Court similarly concludes that the State has no obligation to develop feasible inspection procedures that would make a total ban unnecessary. It seems clear, however, that the presumption should run the other way. Since the State engages in obvious discrimination against out-of-state commerce, it should be put to its proof. Ambiguity about dangers and alternatives should actually defeat, rather than sustain, the discriminatory measure.

This is not to derogate the State’s interest in ecological purity. But the invocation of environmental protection or public health has never been thought to confer some kind of special dispensation from the general principle of nondiscrimination in interstate commerce. “A different view, that the ordinance is valid simply because it professes to be a health measure, would mean that the Commerce Clause of itself imposes no restraints on state action other than those laid down by the Due Process Clause, save for the rare instance where a state artlessly discloses an avowed purpose to discriminate against interstate goods.” If Maine wishes to rely on its interest in ecological preservation, it must show that interest, and the infeasibility of other alternatives, with far greater specificity. Otherwise, it must further that asserted interest in a manner far less offensive to the notions of comity and cooperation that underlie the Commerce Clause.

Significantly, the Court of Appeals, which is more familiar with Maine’s natural resources and with its legislation than we are, was concerned by the uniqueness of Maine’s ban. That court felt, as I do, that Maine’s unquestionable natural splendor notwithstanding, the State has not carried its substantial burden of proving why it cannot meet its environmental concerns in the same manner as other States with the same interest in the health of their fish and ecology.

I respectfully dissent.

Granholm v. Heald

544 U.S. 460 (2005)

http://laws.findlaw.com/us/544/460.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Breyer, Ginsburg, Kennedy, Scalia, Souter)

4 (O’Connor, Rehnquist, Stevens, Thomas)

OPINION OF THE COURT: Kennedy

DISSENTING OPINIONS: O’Connor, Thomas

Facts:

This case consolidates two appeals—one from Michigan, the other from New York—involving challenges to the constitutionality of certain wine sales regulations. Both states operate three-tier regulatory systems that separately license wine producers, wholesalers, and retailers. Although the specifics of the two schemes differ, both lead to the same result: in-state wineries may legally sell and ship their products directly to residents of that state, but, either by direct prohibition or the imposition of prohibitive costs, out-of-state wineries may not. Consequently, Michigan consumers can buy wine directly from a Michigan winery and have it delivered to their homes, but they cannot have wine purchased from an out-of-state vineyard shipped to their residences.

A coalition of several wine producers who relied on direct consumer sales and private individuals who wanted to purchase wines from out-of-state sources challenged the constitutionality of these regulations on the ground that they discriminate against interstate commerce in violation of the commerce clause. In response, the states argued that they were not attempting to promote domestic wineries but instead were legislating to protect minors from easy access to alcohol and to facilitate the collection of liquor taxes. They also claimed that the Twenty-first Amendment permits such discriminatory legislation. In addition, the states argued that Congress expressed its support for such state regulations when it passed the Webb-Kenyon Act of 1913. In that statute Congress prohibited the importation of alcohol into any state in violation of that state’s laws.

The Sixth Circuit Court of Appeals struck down the Michigan regulations, but the Second Circuit Court of Appeals upheld the constitutionality of the New York law. The U.S. Supreme Court accepted the appeals to resolve the conflict between the findings of the two lower appellate courts.

Arguments:

For the petitioners, Jennifer M. Granholm, governor of Michigan, et al.:

The Twenty-first Amendment gives the states broad power to adopt any reasonable regulation on the importation of alcoholic beverages for use by their residents. It was designed to create an exception to the dormant commerce clause, giving the states the same power over alcohol traffic that the commerce clause gives to the traffic of all other products. As long as the laws bear a rational connection to their regulatory objectives and do not violate other provisions of the Constitution, they are constitutional.

Congress reaffirmed this power by exercising its power under the commerce clause to enact and reenact the Webb-Kenyon Act.

Michigan’s differential treatment of foreign and domestic wineries reflects an entirely rational legislative judgment. In-state wineries may ship directly to consumers because these wineries are subject to effective oversight and regulation. Michigan cannot, as a practical matter, check the backgrounds, inspect the records, or otherwise monitor the regulatory compliance of out-of-state wineries.

For the respondents, Eleanor Heald et al.:

Michigan’s law amounts to classic discrimination within the meaning of the dormant commerce clause: “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.”

The Supreme Court has made clear that the same nondiscrimination principle applies to the sale of alcoholic products. The Twenty-first Amendment does not allow states to violate core commerce clause principles by explicitly discriminating against out-of-state alcohol producers. The Webb-Kenyon Act does not confer upon the states the power to discriminate against interstate commerce; it merely mirrors the language of the Twenty-first Amendment.

The Court has left open the possibility that a state may discriminate against interstate commerce “by showing that it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” Michigan has not met this test. Michigan asserts that the discrimination is necessary to prevent the sale of wine to minors, prevent loss of revenue, and protect public health and safety, but has not supported this assertion with any proof. In fact, the Federal Trade Commission has found that the twenty-six states that allow direct shipping have encountered none of these problems.

JUSTICE KENNEDY DELIVERED THE OPINION OF THE COURT.

Time and again this Court has held that, in all but the narrowest circumstances, state laws violate the Commerce Clause if they mandate “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore. (1994). This rule is essential to the foundations of the Union. The mere fact of nonresidence should not foreclose a producer in one State from access to markets in other States. States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses. This mandate “reflect[s] a central concern of the Framers that was an immediate reason for calling the Constitutional Convention: the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation.” Hughes v. Oklahoma (1979). . . .

Laws of the type at issue in the instant cases contradict these principles. They deprive citizens of their right to have access to the markets of other States on equal terms. The perceived necessity for reciprocal sale privileges risks generating the trade rivalries and animosities, the alliances and exclusivity, that the Constitution and, in particular, the Commerce Clause were designed to avoid. . . . The current patchwork of laws—with some States banning direct shipments altogether, others doing so only for out-of-state wines, and still others requiring reciprocity—is essentially the product of an ongoing, low-level trade war. Allowing States to discriminate against out-of-state wine “invite[s] a multiplication of preferential trade areas destructive of the very purpose of the Commerce Clause.” Dean Milk Co. v. Madison (1951). . . .

State laws that discriminate against interstate commerce face “a virtually per se rule of invalidity.” Philadelphia v. New Jersey (1978). The Michigan and New York laws by their own terms violate this proscription. The two States, however, contend their statutes are saved by §2 of the Twenty-first Amendment, which provides:

“The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”

The States’ position is inconsistent with our precedents and with the Twenty-first Amendment’s history. Section 2 does not allow States to regulate the direct shipment of wine on terms that discriminate in favor of in-state producers. . . .

The aim of the Twenty-first Amendment was to allow States to maintain an effective and uniform system for controlling liquor by regulating its transportation, importation, and use. The Amendment did not give States the authority to pass nonuniform laws in order to discriminate against out-of-state goods, a privilege they had not enjoyed at any earlier time. . . .

Our more recent cases, furthermore, confirm that the Twenty-first Amendment does not supersede other provisions of the Constitution and, in particular, does not displace the rule that States may not give a discriminatory preference to their own producers. . . .

Our determination that the Michigan and New York direct-shipment laws are not authorized by the Twenty-first Amendment does not end the inquiry. We still must consider whether either State regime “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” New Energy Co. of Ind. [v. Limbach, 1988]. The States offer two primary justifications for restricting direct shipments from out-of-state wineries: keeping alcohol out of the hands of minors and facilitating tax collection. . . .

The States, aided by several amici, claim that allowing direct shipment from out-of-state wineries undermines their ability to police underage drinking. Minors, the States argue, have easy access to credit cards and the Internet and are likely to take advantage of direct wine shipments as a means of obtaining alcohol illegally.

The States provide little evidence that the purchase of wine over the Internet by minors is a problem. Indeed, there is some evidence to the contrary. . . . Without concrete evidence that direct shipping of wine is likely to increase alcohol consumption by minors, we are left with the States’ unsupported assertions. Under our precedents, which require the “clearest showing” to justify discriminatory state regulation, C & A Carbone, Inc. [v. Clarkstown, 1994], this is not enough. . . .

The States’ tax-collection justification is also insufficient. Increased direct shipping, whether originating in state or out of state, brings with it the potential for tax evasion. . . .

In summary, the States provide little concrete evidence for the sweeping assertion that they cannot police direct shipments by out-of-state wineries. Our Commerce Clause cases demand more than mere speculation to support discrimination against out-of-state goods. The “burden is on the State to show that ‘the discrimination is demonstrably justified,’” Chemical Waste Management, Inc. v. Hunt (1992) (emphasis in original). The Court has upheld state regulations that discriminate against interstate commerce only after finding, based on concrete record evidence, that a State’s nondiscriminatory alternatives will prove unworkable. Michigan and New York have not satisfied this exacting standard.

States have broad power to regulate liquor under §2 of the Twenty-first Amendment. This power, however, does not allow States to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers. If a State chooses to allow direct shipment of wine, it must do so on evenhanded terms. Without demonstrating the need for discrimination, New York and Michigan have enacted regulations that disadvantage out-of-state wine producers. Under our Commerce Clause jurisprudence, these regulations cannot stand.

It is so ordered.

JUSTICE THOMAS, with whom THE CHIEF JUSTICE, JUSTICE STEVENS, and JUSTICE O’CONNOR join, dissenting.

The Court devotes much attention to the Twenty-first Amendment, yet little to the terms of the Webb-Kenyon Act. This is a mistake, because that Act’s language displaces any negative Commerce Clause barrier to state regulation of liquor sales to in-state consumers.

The Webb-Kenyon Act immunizes from negative Commerce Clause review the state liquor laws that the Court holds are unconstitutional. The Act “prohibit[s]” any “shipment or transportation” of alcoholic beverages “into any State” when those beverages are “intended, by any person interested therein, to be received, possessed, sold, or in any manner used . . . in violation of any law of such State.” State laws that regulate liquor imports in the manner described by the Act are exempt from judicial scrutiny under the negative Commerce Clause, as this Court has long held. . . .

The Michigan and New York direct-shipment laws are within the Webb-Kenyon Act’s terms and therefore do not run afoul of the negative Commerce Clause. . . .

. . . [T]he state laws the Court strikes down [also] are lawful under the plain meaning of §2 of the Twenty-first Amendment, as this Court’s case law in the wake of the Amendment and the contemporaneous practice of the States reinforce.

Section 2 of the Twenty-first Amendment provides: “The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.” . . . [T]his language tracked the Webb-Kenyon Act by authorizing state regulation that would otherwise conflict with the negative Commerce Clause. To remove any doubt regarding its broad scope, the Amendment simplified the language of the Webb-Kenyon Act and made clear that States could regulate importation destined for in-state delivery free of negative Commerce Clause restraints. Though the Twenty-first Amendment mirrors the basic terminology of the Webb-Kenyon Act, its language is broader, authorizing States to regulate all “transportation or importation” that runs afoul of state law. The broader language even more naturally encompasses discriminatory state laws. Its terms suggest, for example, that a State may ban imports entirely while leaving in-state liquor unregulated, for they do not condition the State’s ability to prohibit imports on the manner in which state law treats domestic products. . . .

The Court begins its opinion by detailing the evils of state laws that restrict the direct shipment of wine. . . . The Twenty-first Amendment and the Webb-Kenyon Act took those policy choices away from judges and returned them to the States. Whatever the wisdom of that choice, the Court does this Nation no service by ignoring the textual commands of the Constitution and Acts of Congress. The Twenty-first Amendment and the Webb-Kenyon Act displaced the negative Commerce Clause as applied to regulation of liquor imports into a State. They require sustaining the constitutionality of Michigan’s and New York’s direct-shipment laws. I respectfully dissent.

ANNOTATED READINGS

For pre–New Deal studies of the Court, see Maurice G. Baxter, The Steamboat Monopoly: Gibbons v. Ogden (New York: Knopf, 1972); Felix Frankfurter, The Commerce Clause under Marshall, Taney, and Waite (Chapel Hill: University of North Carolina Press, 1937); Calvin H. Johnson, Righteous Anger at the Wicked States: The Meaning of the Founders’ Constitution (New York: Cambridge University Press, 2005); Herbert Alan Johnson, Gibbons v. Ogden: John Marshall, Steamboats, and the Commerce Clause (Lawrence: University Press of Kansas, 2010); and Stephen B. Wood, Constitutional Politics in the Progressive Era: Child Labor and the Law (Chicago: University of Chicago Press, 1968).

On the New Deal period, see Leonard Baker, Back to Back: The Duel between FDR and the Supreme Court (New York: Macmillan, 1967); Richard Cortner, The Wagner Act Cases (Knoxville: University of Tennessee Press, 1964); Edward S. Corwin, The Commerce Power versus States’ Rights (Princeton, NJ: Princeton University Press, 1936); Barry Cushman, Rethinking the New Deal Court: The Structure of a Constitutional Revolution (New York: Oxford University Press, 1998); Nelson Dawson, Louis D. Brandeis, Felix Frankfurter, and the New Deal (Hamden, CT: Archon Books, 1980); Robert Himmelberg, The Origins of the National Recovery Administration (New York: Fordham University Press, 1976); Peter H. Irons, The New Deal Lawyers (Princeton, NJ: Princeton University Press, 1982); William E. Leuchtenburg, The Supreme Court Reborn: The Constitutional Revolution in the Age of Roosevelt (New York: Oxford University Press, 1995); Drew Pearson and Robert S. Allen, The Nine Old Men (Garden City, NY: Doubleday, 1936); C. Herman Pritchett, The Roosevelt Court: A Study in Judicial Politics and Values (New York: Macmillan, 1948); and Ronen Shamir, Managing Legal Uncertainty: Elite Lawyers in the New Deal (Durham, NC: Duke University Press, 1995).

Books that address the post–New Deal era include Richard Cortner, Civil Rights and Public Accommodations: The Heart of Atlanta Motel and McClung Cases (Lawrence: University Press of Kansas, 2001); Thomas M. Keck, The Most Activist Supreme Court in History: The Road to Modern Judicial Conservatism (Chicago: University of Chicago Press, 2004); Robert D. Loevy, ed., The Civil Rights Act of 1964: The Passage of the Law That Ended Racial Segregation (Albany: State University of New York Press, 1997); and Jeffrey Toobin, The Oath: The Obama White House and the Supreme Court (New York: Doubleday, 2012).

1. Savage, Guide to the U.S. Supreme Court,102.

2. Addyston Pipe and Steel Co. v. United States (1899).

3. Wabash, St. Louis & Pacific Railway Co. v. Illinois (1886).

4. Interstate Commerce Commission v. Brimson (1894); Interstate Commerce Commission v. Cincinnati, New Orleans & Texas Pacific Railway Co. (1897); Interstate Commerce Commission v. Alabama-Midland Railway Co. (1897).

5. Hipolite Egg Company v. United States (1911).

6. We derive what follows from Lee Epstein, Conservatives in Court (Knoxville: University of Tennessee Press, 1985); and Stephen B. Wood, Constitutional Politics in the Progressive Era (Chicago: University of Chicago Press, 1968).

7. Railroad Retirement Board v. Alton Railroad Co. (1935).

8. Louisville Bank v. Radford (1935).

9. For a good discussion of the Schechter case, see Irons, The New Deal Lawyers, chap. 5.

10. Not everyone predicted a Roosevelt victory. The Literary Digest published a famous poll during that election year forecasting a Roosevelt defeat. The poll has become universally regarded as a classic case of defective research procedures. Within months after the election, the Literary Digest was defunct.

11. See Gregory A. Caldeira, “Public Opinion and the U.S. Supreme Court: FDR’s Court-Packing Plan,” American Political Science Review 81 (December 1987): 1139–1153.

12. The letter from Hughes to Wheeler, dated March 21, 1937, is reprinted in Joan Biskupic and Elder Witt, Guide to the U.S. Supreme Court, 3rd ed. (Washington, DC: Congressional Quarterly, 1997), 1039–1040.

13. See William E. Leuchtenburg, “The Origins of Franklin D. Roosevelt’s ‘Court-Packing’ Plan,” in Supreme Court Review 1966, ed. Philip B. Kurland (Chicago: University of Chicago Press, 1966), 347–400; and Leuchtenburg, Franklin D. Roosevelt and the New Deal, 1932–1940 (New York: Harper & Row, 1963).

14. Morehead v. New York ex rel. Tipaldo (1936).

15. For a full account of the events surrounding this compromise plan, see William E. Leuchtenburg, “FDR’s Court-Packing Plan: A Second Life, a Second Death,” Duke Law Journal (June-September 1985): 673–689.

16. See, for example, his opinion for the Court in Nebbia v. New York (1934).

17. Merlo J. Pusey, “Justice Roberts’ 1937 Turnaround,” in Yearbook of the Supreme Court Historical Society (Washington, DC: Supreme Court Historical Society, 1983), 107.

18. Ibid., 106.

19. As Justice Scalia wrote in Gonzales v. Raich (2005), “The first two categories are self-evident, since they are the ingredients of interstate commerce itself. See Gibbons v. Ogden (1824).”

20. Keep in mind that in National League of Cities and New York the Court invalidated the federal laws not because they were beyond Congress’s power to regulate interstate commerce but because they violated the Tenth Amendment.

21. The Court reinforced this revised view of the federal commerce power in Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers (2001), a case presenting a factual story very different from those challenging the authority of Congress to regulate gun possession, rape, or arson. At issue was an application of the federal Clean Water Act. A consortium of twenty-three Chicago-area cities attempted to develop a solid waste facility on a 533-acre parcel that previously had been used as a sand and gravel pit operation. The site included a series of small ponds, some permanent and others seasonal. The Army Corps of Engineers claimed that federal approval was necessary before development could take place because the ponds were habitats for migratory birds that crossed state lines. The Court, in another 5–4 ruling, held that the Corps’ action impinged on the states’ traditional power over land and water use, and that there was no evidence that Congress’s regulation of navigable waters extended to abandoned gravel pits.

22. Rarely is not never. For some early examples, see Einer Elhauge, “If Health Insurance Mandates Are Unconstitutional, Why Did the Founding Fathers Back Them?,” New Republic, April 13, 2012.

23. Disputes over the power of the states to impose taxes on interstate and foreign commerce actually had begun two years earlier in Brown v. Maryland (1827). We discuss the taxation issues in chapter 8, where the fiscal authority to tax and spend is our focus.

24. Edwards v. California (1941) effectively overruled Miln. In Edwards the justices struck down an “anti-Okie” law passed to discourage large numbers of people from Oklahoma and other states from moving into California in an effort to escape the economic depression caused by the effects of the Dust Bowl in the central states. The Court found that the law violated the right of citizens to travel freely among the various states.

25. The License Cases (1847) is the collective name given to the cases Peirce v. New Hampshire, Fletcher v. Rhode Island, and Thurlow v. Massachusetts.

8 The Power to Tax and Spend

PERHAPS no government power affects Americans more directly than the authority to tax and spend. Each year federal, state, and local governments collect billions of dollars in taxes imposed on a wide variety of activities, transactions, and goods. The federal government reminds us of its power to tax when we receive our paychecks, to say nothing of every April 15, the annual deadline for filing tax returns. Many state governments lay taxes on our incomes as well, and a majority of them also impose a levy each time we make a retail purchase. If we own a house, we must annually pay a tax on its value. We pay state and/or federal excise taxes whenever we put gas in the car or buy an airline ticket. When we buy goods from abroad, the price includes a duty imposed on imports.

Americans have strong opinions about the government’s taxing and spending activities. Given the importance the public places on these issues, it is not surprising that government fiscal policies are often at the center of political battles. Presidential election contests often focus on taxing and spending policies. How should we deal with the growing national debt? What constitutes a fair income tax rate? What should be done to reform government spending on entitlement programs such as Social Security, Medicare, and Medicaid? Do we spend too much (or too little) on national defense? If the goal is to stimulate the economy, which is the more-effective alternative: increasing government spending or cutting taxes?

Today the government’s power to tax and spend is firmly established, with reasonably well-defined contours, but this was not always the case. Some of the country’s greatest constitutional battles have been fought over the fiscal powers. The results of these legal disputes have significantly shaped the powers and constraints of American political institutions. In this chapter, we examine the Supreme Court’s interpretations of the twin fiscal powers of taxation and spending.

THE CONSTITUTIONAL POWER TO TAX AND SPEND

The power to tax was a fundamental issue at the Constitutional Convention. The government under the Articles of Confederation was ineffective in part because it had no authority to levy taxes. It could only request funds from the states and had no power to collect payments if the states refused to cooperate. The taxing authority resided solely with the states, which left the national government unable to execute public policies unless the states overwhelmingly supported them, a situation that did not occur with any regularity. It was clear that the central government would have to gain some revenue-gathering powers under the new constitution while the states retained concurrent authority to impose taxes.

Article I, Section 8, of the Constitution enumerates the powers of the federal government, and the first of those listed is the power to tax and spend: “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.”

The wording of this grant of authority is quite broad. The revenue function breaks into three categories. The first is the general grant of taxation power. Second is the authority to collect duties, which are taxes levied on imports, the primary source of revenue at that time. The third is the power to impose excises, which are taxes on the manufacture, sale, or use of goods, or on occupational or other activities.

The power to spend is also broadly constructed. The revenues gathered through the various taxing mechanisms may be used to pay government debts, to fund the nation’s defense, and to provide for the general welfare. Although James Madison (and others) argued that the framers intended the spending power to be limited to funding those government activities explicitly authorized in the Constitution, the wording of Article I, Section 8, does not impose any such restriction. As we shall see later in this chapter, that Congress may spend federal funds to provide for the general welfare is indeed a broad grant of authority.

This is not to say that the federal power to tax and spend is without limits. The framers were wary enough of the dangers of a strong central government to impose some restrictions.

First, Article I, Section 8, stipulates that “all Duties, Imposts and Excises shall be uniform throughout the United States.” The purpose of this provision was to prevent Congress from imposing different tax rates on various regions or requiring the citizens of one state to pay a tax rate higher than that paid by citizens of other states. Geographical uniformity is the only stated constitutional requirement for excise taxes and taxes on imports. If this standard is met, the tax is likely to be valid.

Second, Article I, Section 9, holds that “[n]o capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” This same admonition is found in Article I, Section 2, where the framers wrote that “direct Taxes shall be apportioned among the several States... according to their respective Numbers” as determined by the national census. The term direct tax is not defined in the Constitution, and it is a difficult concept to understand. When the framers referred to a direct tax, they most likely meant a head tax—a tax imposed on each person—or a tax on land. As we shall see in the next section, the requirement that direct taxes be apportioned on the basis of population has proved troublesome, and Congress has generally avoided such levies.

Third, Article I, Section 9, also dictates that “[n]o Tax or Duty shall be laid on Articles exported from any State.” Consistent with the prevailing philosophy of increased commerce and trade, the framers wanted to ensure that the products of the states would move freely without the burden of federal taxes being placed on them.

The framers generally allowed the states to retain their taxing authority as it existed prior to the ratification of the Constitution. Consequently, state and local governments today tax a wide array of activities and goods, including individual and corporate incomes, personal property, real estate, retail sales, investment holdings, and inheritances. But the Constitution imposed some new restraints on state taxing authority. These limitations specifically removed from the states any power to place taxes on certain forms of commerce. Article I, Section 10, prohibits them from imposing any duty on imports or exports, as well as from placing any tax on the cargo capacity of vessels using the nation’s ports. The framers were interested in the promotion of commerce, and these provisions precluded states from retarding commerce by using foreign trade as a source of tax revenue.

In addition to these specific restrictions, state and federal taxation must be consistent with the other provisions of the Constitution. It would be a violation of the Constitution if a state or the federal government taxed the exercise of a constitutional right, such as the freedom of speech or the exercise of religion. By the same token, if the government were to impose varying tax rates based on sex or race, such levies would be in violation of the constitutional rights of due process and equal protection of the laws.

DIRECT TAXES AND THE POWER TO TAX INCOME

The Constitution stipulates two standards for assessing federal taxes. The first is geographical uniformity. Duties, imposts, and excise taxes all must be applied according to this standard. If Congress taxes a particular product entering the ports of the United States, the tax rate on the article must be the same regardless of the point of entry. Excise taxes also must be applied uniformly throughout the nation. If an excise is placed on automobiles, the amount assessed must be the same in California as it is in Tennessee.

The second standard for imposing taxes is population distribution. The Constitution says that all direct taxes must be apportioned among the states on the basis of population. The document does not define the term direct tax, but we know that historically the concept was considered at a minimum to include a tax levied on every individual (often called a capitation tax or a head tax) and taxes on land.

The delegates from the sparsely populated states supported this provision because they feared that the larger states, with greater representation in the House of Representatives, would craft tax measures in such a way that the burden would fall disproportionately on the citizens of the smaller states. Southern states particularly supported the requirement that direct taxes be apportioned on the basis of population. These states had smaller populations than the northern states and were larger in geographical size. Without apportioning on the basis of population, for example, the states in the south would be much harder hit by a federal tax on land than would the states in the north. The apportionment requirement also led the southern states to demand that slaves be counted as less than full persons for taxation purposes. Counting a slave as three-fifths of a person, as the Constitutional Convention ultimately decided, would reduce the tax liability of the southern states in the event that Congress imposed a head tax or other direct tax.

Do direct taxes include more than just taxes on individual persons and taxes on land? The question is an important one. As box 8-1 illustrates, whether a tax is levied uniformly (as the Constitution requires for excise taxes) or is apportioned on the basis of population (required for direct taxes) makes a great deal of difference as to who pays how much. In Federalist No. 21 Alexander Hamilton claimed that direct taxes were only those imposed on land and buildings, but Hamilton’s opinion did not settle the issue. It required a Supreme Court decision to do that.

Defining Direct Taxation

In one of the Court’s earliest cases, Hylton v. United States (1796), the justices defined the term direct tax. The dispute stemmed from a tax on carriages Congress had passed in June 1794. The statute classified the tax as an excise and, therefore, applied the same rate on carriages nationwide. The Federalist majorities in Congress passed the statute over Anti-Federalist opposition, and the tax was completely partisan. The Federalists generally represented the states in the Northeast with large populations but relatively few carriages; the Anti-Federalist strongholds were the less densely populated and more agricultural states with larger numbers of carriages. Because the carriage tax was deemed an excise, the Anti-Federalist areas would pay a much greater share of it than would the residents of the Northeast. The Anti-Federalists would have preferred to classify the measure as a direct tax and apportion it on the basis of population.

Daniel Hylton, a resident of Richmond, Virginia, challenged the constitutionality of the assessment, claiming that it was a direct tax, not an excise, and should have been apportioned on the basis of population. The government took the position that, as a tax on an article, the carriage tax was an excise.

By almost every rule of judicial authority developed since that time, the Court should have refused to hear the dispute.1 The evidence showed that the case did not involve adverse parties. In fact, the suit appeared to be little more than a ploy by the government to obtain Court approval of its interpretation of the taxation provisions of the Constitution. Both sides to the dispute agreed that Hylton owned 125 carriages exclusively for his private use. In reality, he had only a single carriage. Under federal law at that time, a circuit court decision in a civil case could not be appealed to the Supreme Court unless the dispute involved a claim of at least $2,000. If Hylton owned 125 carriages, the taxes and penalties due ($16 per carriage) would reach the required threshold. This jurisdictional point was important because the Federalists anticipated that the Supreme Court would give the law a sympathetic interpretation. Administration officials also agreed that if the Court found the tax valid they would demand that Hylton pay only $16. Perhaps an even greater indication of collusion was that the government paid the fees of the attorneys for both sides as well as court costs.

Alexander Hamilton, former secretary of the Treasury, presented the government’s case. Hamilton was a vigorous supporter of a strong national government and of broad federal taxation powers. He understood the problems associated with apportioning taxes on the basis of population and consequently wanted the Court to set down a narrow definition of direct taxes.

Hamilton’s side was victorious. The three justices who participated in the decision each voted in favor of the statute and in agreement with Congress’s determination that the carriage tax was an excise tax.2 As was the custom in the years before John Marshall became chief justice, each justice wrote a separate opinion explaining his vote.3 The opinions of James Iredell and Samuel Chase stressed the inappropriateness of attempting to apportion a tax on carriages and the inevitable inequities that would result. William Paterson’s opinion emphasized the intention of the framers. His opinion had particular credibility because Paterson, having been a New Jersey delegate to the Constitutional Convention, was one of the framers.4 All three agreed that only two kinds of taxes fell into the direct tax category: taxes on land and capitation taxes.

Apportioning taxes on the basis of population is very cumbersome and almost inevitably leads to unjust tax burdens. By limiting the kinds of taxes that fell into the direct taxation category, the Hylton decision significantly strengthened federal taxation powers. It freed Congress from having to apply unpopular apportionment standards to most taxes. In fact, Congress has imposed taxes requiring apportionment on only five occasions, the last time occurring in 1861.5

Hylton was the first case in which the Supreme Court heard a challenge to the constitutionality of a federal statute; the decision predated Marbury v. Madison by seven years. It is clear from the arguments before the Court and the justices’ opinions that the law was tested for its constitutionality. Hylton is not as well known as Marbury because in Hylton the Court found the act of Congress to be valid.

BOX 8-1 DIRECT AND INDIRECT TAXES: APPORTIONMENT VERSUS GEOGRAPHICAL UNIFORMITY

THIS EXAMPLE demonstrates the difference between direct and indirect taxing methods. The facts and figures used are purely hypothetical.

Assume that Congress decides to raise $1 million through a tax on the nation’s 100,000 thoroughbred horses. If this tax is considered an excise tax, it must conform to the constitutional requirement of geographical uniformity. In order to achieve the $1 million goal, Congress would have to require that all thoroughbred horse owners pay a tax of $10 per horse. The rate would be the same in Maine as in Oregon. If, however, the tax on thoroughbred horses is classified as a direct tax, a different set of calculations would have to be made to meet the constitutionally required apportionment standard. Three factors would need to be known: first, the amount of money Congress intends to raise; second, the proportion of the national population residing in each state; and third, the number of thoroughbred horses in each state. Apportionment means that the proportion of the revenue obtained from a state must equal the proportion of the country’s population living there.

The following calculations show the differing impacts of apportionment in the application of the $1 million horse tax to three states. State A is a densely populated, urban state with few horses. State B is a moderately populated state with some ranching areas. State C is a sparsely populated, primarily agricultural state, with a relatively large number of thoroughbreds.

Obviously, the horse owners in State A would be greatly disadvantaged if the horse tax were classified as a direct tax and apportioned among the states on the basis of population. State C, on the other hand, would be greatly benefited. Because State C has only 1 percent of the nation’s population, it would be responsible for raising only 1 percent of the $1,000,000 tax revenues. Furthermore, that smaller tax obligation would be distributed over a disproportionately large number of horses.

Horse owners in State A clearly would prefer that the tax on thoroughbreds be defined as an excise tax, with its required geographical uniformity. State C’s thoroughbred owners obviously would argue for the horse tax to be considered a direct tax and thus apportioned among the states on the basis of population.

The Constitutionality of the Income Tax

From Hylton in 1796 to the 1860s, federal taxing authority remained generally unchanged. The government financed its activities largely through import duties and excise taxes. The Civil War, however, placed an incredible financial strain on the federal government. Between 1858 and the end of the war, it ran unusually high budget deficits and needed to find new sources of revenue to fund the war effort. To address the crisis, Congress in 1862 and 1864 imposed the first taxes on individual incomes. The 1881 case of Springer v. United States involved a challenge to the validity of that tax. William M. Springer, an attorney, claimed that the income tax was a direct tax and should have been apportioned on the basis of population. The justices unanimously rejected this position, once again holding that only capitation taxes and taxes on land were direct taxes. Although the challenged tax was a levy on the income of individuals, it could not be considered a capitation tax within the normal meaning of that term because it was not a tax equally levied on all individuals. Springer, then, set precedent that the federal government had the power to tax incomes.

As the government reduced its war debts, Congress in 1872 was able to repeal the income tax law.6 But the issue of taxing income did not go away. The populist movement favored the use of the progressive income tax as the primary method of raising federal revenues. In addition, labor groups and farm organizations began arguing that new revenue sources should be developed to shift the burden away from reliance on import duties. Members of the Democratic Party criticized the regressive aspects of the tax structure of that time.

In response to these demands, Congress enacted an income tax law in 1894. The statute, part of the Wilson-Gorman Tariff Act, imposed a 2 percent tax on all corporate profits and on individual incomes. Income derived from salaries and wages, gifts, inheritances, dividends, rents, and interest, including interest from state and municipal bonds, was subject to this tax. People with annual incomes of less than $4,000 paid no tax. This exemption, set at a level much higher than the average worker earned, meant that most of the burden fell on the wealthy. For this reason, the tax received overwhelming support from rank-and-file citizens and bitter opposition from businesses and those individuals enjoying high incomes. The wealthy classes, in fact, claimed that the income tax would destroy the very fabric of the nation, replacing historic principles of private property with communism and socialism.

The income tax law was promptly challenged in the Supreme Court in an 1895 appeal, Pollock v. Farmers’ Loan & Trust Co. One of the primary arguments of the law’s opponents was that the income tax was a direct tax, and because Congress had not apportioned it, the law was unconstitutional. Given precedents such as Hylton and Springer, would you anticipate that this position would be successful?

Pollock v. Farmers’ Loan & Trust Co.

158 U.S. 601 (1895)

http://laws.findlaw.com/us/158/601.html

Vote: 5 (Brewer, Field, Fuller, Gray, Shiras)

4 (Brown, Harlan, Jackson, White)

OPINION OF THE COURT: Fuller

DISSENTING OPINIONS: Brown, Harlan, Jackson, White

FACTS:

Charles Pollock, a shareholder in Farmers’ Loan & Trust Company of New York, filed suit on behalf of himself and his fellow stockholders to block the company from paying the national income tax on the ground that the tax was unconstitutional. The lawsuit was obviously collusive: the company no more wanted to pay the tax than did its shareholders. Opponents of the law claimed (1) that taxing income from state and city bonds was an unconstitutional encroachment on the state’s power to borrow money, (2) that a tax on income from real property was a direct tax and must be apportioned on the basis of population, and (3) that these taxes were so integral to the entire tax act that the whole law should be declared unconstitutional.

The Court heard arguments in the Pollock case twice. In its first decision, the majority declared the tax on state and municipal bonds unconstitutional.7 It further ruled that a tax on income from land was essentially the same as taxing land itself. Because a tax on land is a direct tax, so too is a tax on the income from land; therefore, such taxes must be apportioned on the basis of population. But the Court was unable to reach a decision on whether the entire law should be declared unconstitutional. On this question the justices divided 4–4 because Justice Howell Jackson, ill with tuberculosis, was absent.

Pollock filed a petition for a second hearing, and Jackson made it known that he would be present for it. The second decision reviewed much of what the Court concluded in the first, but this time the Court went on to rule on the question of the general constitutionality of the income tax act.

Farmers’ Loan & Trust made no attempt to defend the law. It only urged the Court to decide the case expeditiously. In its place, U.S. Justice Department attorneys presented the case supporting the constitutionality of the income tax.

The Pollock decision was one of the most controversial and important of its day. It contained all the elements of high drama. The case pitted the interests of businesses and wealthy individuals against those supporting social and fiscal reform. Both sides believed that a victory for their opponents would have disastrous consequences for the nation. Newspapers editorialized with enthusiasm. After the first decision ended in a tie, the suspense surrounding the second hearing grew tremendously. The human-interest factor was heightened when Justice Jackson, who died three months later, was transported to Washington to cast what he believed would be the deciding vote in favor of the tax. Oral arguments took place from May 6 to May 8, and apparently the justices did not act in a manner consistent with detached objectivity. As political science professor Loren P. Beth has described it, “Harlan wrote privately that Justice Stephen J. Field acted like a ‘madman’ throughout the case, but the dissenters’ own opinions were similarly emotional.”8 In the end the opponents of the tax were victorious. Although Jackson, as expected, voted to uphold the law, Justice George Shiras, who had supported the tax in the first hearing, changed positions and became the crucial fifth vote to strike it down.

ARGUMENTS:

For the appellant, Charles Pollock:

Taxes on property or the income from property are direct taxes subject to the constitutional requirement of apportionment.

The direct taxes levied by this act are not apportioned among the states on the basis of population and are therefore unconstitutional.

The tax on income from state and municipal bonds is a tax on the power of states and their subdivisions to raise revenue and is therefore unconstitutional.

The unconstitutional provisions of this statute are so integral to the entire piece of legislation that the whole act is void.

For the appellee, Farmers’ Loan & Trust (presented by the U.S. government):

A tax on income is an excise. It is an indirect tax and therefore subject only to the constitutional requirement of geographical uniformity. This tax is geographically uniform and is therefore constitutional.

A tax on income, to the extent that the income is derived from rents, is not a tax on land and is therefore not a direct tax.

This is a tax on an individual’s total income, not a tax that targets income from land or from state/local government bonds.

If any provision of the tax act is found unconstitutional, the remaining portions of the statute are not significantly affected and may continue to be enforced.

MR. CHIEF JUSTICE FULLER DELIVERED THE OPINION OF THE COURT.

Whenever this court is required to pass upon the validity of an act of Congress as tested by the fundamental law enacted by the people, the duty imposed demands in its discharge the utmost deliberation and care, and invokes the deepest sense of responsibility. And this is especially so when the question involves the exercise of a great governmental power, and brings into consideration, as vitally affected by the decision, that complex system of government, so sagaciously framed to secure and perpetuate “an indestructible Union, composed of indestructible States.”...

As heretofore stated, the Constitution divided Federal taxation into two great classes, the class of direct taxes, and the class of duties, imposts and excises; and prescribed two rules which qualified the grant of power as to each class.

The power to lay direct taxes apportioned among the several States in proportion to their representation in the popular branch of Congress, a representation based on population as ascertained by the census, was plenary and absolute; but to lay direct taxes without apportionment was forbidden. The power to lay duties, imposts, and excises was subject to the qualification that the imposition must be uniform throughout the United States.

Our previous decision was confined to the consideration of the validity of the tax on the income from real estate, and on the income from municipal bonds. The question thus limited was whether such taxation was direct or not, in the meaning of the Constitution; and the court went no farther, as to the tax on the income from real estate, than to hold that it fell within the same class as the source whence the income was derived, that is, that a tax upon the realty and a tax upon the receipts therefrom were alike direct; while as to the income from municipal bonds, that could not be taxed because of want of power to tax the source, and no reference was made to the nature of the tax as being direct or indirect.

We are now permitted to broaden the field of inquiry, and to determine to which of the two great classes a tax upon a person’s entire income, whether derived from rents, or products, or otherwise, of real estate, or from bonds, stocks, or other forms of personal property, belongs; and we are unable to conclude that the enforced subtraction from the yield of all the owner’s real or personal property, in the manner prescribed, is so different from a tax upon the property itself, that it is not a direct, but an indirect tax, in the meaning of the Constitution....

The reasons for the clauses of the Constitution in respect of direct taxation are not far to seek. The States, respectively, possessed plenary powers of taxation. They could tax the property of their citizens in such manner and to such extent as they saw fit; they had unrestricted powers to impose duties or imposts on imports from abroad, and excises on manufactures, consumable commodities, or otherwise. They gave up the great sources of revenue derived from commerce. They retained the concurrent power of levying excises, and duties if covering anything other than excises; but in respect of them the range of taxation was narrowed by the power granted over interstate commerce, and by the danger of being put at disadvantage in dealing with excises on manufactures. They retained the power of direct taxation, and to that they looked as their chief resource; but even in respect of that, they granted the concurrent power, and if the tax were placed by both governments on the same subject, the claim of the United States had preference. Therefore, they did not grant the power of direct taxation without regard to their own condition and resources as States; but they granted the power of apportioned direct taxation, a power just as efficacious to serve the needs of the general government, but securing to the States the opportunity to pay the amount apportioned, and to recoup from their own citizens in the most feasible way, and in harmony with their systems of local self-government. If, in the changes of wealth and population in particular States, apportionment produced inequality, it was an inequality stipulated for, just as the equal representation of the States, however small, in the Senate, was stipulated for. The Constitution ordains affirmatively that each State shall have two members of that body, and negatively that no State shall by amendment be deprived of its equal suffrage in the Senate without its consent. The Constitution ordains affirmatively that representatives and direct taxes shall be apportioned among the several States according to numbers, and negatively that no direct tax shall be laid unless in proportion to the enumeration.

The founders anticipated that the expenditures of the States, their counties, cities, and towns, would chiefly be met by direct taxation on accumulated property, while they expected that those of the Federal government would be for the most part met by indirect taxes. And in order that the power of direct taxation by the general government should not be exercised, except on necessity; and, when the necessity arouse, should be so exercised as to leave the States at liberty to discharge their respective obligations, and should not be so exercised, unfairly and discriminatingly, as to particular States or otherwise, by a mere majority vote, possibly of those whose constituents were intentionally not subjected to any part of the burden, the qualified grant was made....

It is said that a tax on the whole income of property is not a direct tax in the meaning of the Constitution, but a duty, and, as a duty, leviable without apportionment, whether direct or indirect. We do not think so. Direct taxation was not restricted in one breath, and the restriction blown to the winds in another....

We have unanimously held in this case that, so far as this law operates on the receipts from municipal bonds, it cannot be sustained, because it is a tax on the power of the States, and on their instrumentalities to borrow money, and consequently repugnant to the Constitution. But if, as contended, the interest when received has become merely money in the recipient’s pocket, and taxable as such without reference to the source from which it came, the question is immaterial whether it could have been originally taxed at all or not. This was admitted by the Attorney General with characteristic candor; and it follows that, if the revenue derived from municipal bonds cannot be taxed because the source cannot be, the same rule applies to revenue from any other source not subject to the tax; and the lack of power to levy any but an apportioned tax on real and personal property equally exists as to the revenue therefrom.

Admitting that this act taxes the income of property irrespective of its source, still we cannot doubt that such a tax is necessarily a direct tax in the meaning of the Constitution....

We are not here concerned with the question whether an income tax be or be not desirable, nor whether such a tax would enable the government to diminish taxes on consumption and duties on imports, and to enter upon what may be believed to be a reform of its fiscal and commercial system. Questions of that character belong to the controversies of political parties, and cannot be settled by judicial decision. In these cases our province is to determine whether this income tax on the revenue from property does or does not belong to the class of direct taxes. If it does, it is, being unapportioned, in violation of the Constitution, and we must so declare....

We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such.

Being of opinion that so much of the sections of this law as lays a tax on income from real and personal property is invalid, we are brought to the question of the effect of that conclusion upon these sections as a whole.

It is elementary that the same statute may be in part constitutional and in part unconstitutional, and if the parts are wholly independent of each other, that which is constitutional may stand while that which is unconstitutional will be rejected. And in the case before us there is no question as to the validity of this act, except sections twenty-seven to thirty-seven, inclusive, which relate to the subject which has been under discussion; and as to them we think... that if the different parts “are so mutually connected with and dependent on each other, as to warrant a belief that the legislature intended them as a whole, and that, if all could not be carried into effect, the legislature would not pass the residue independently, and some parts are unconstitutional, all the provisions which are thus dependent, conditional or connected, must fall with them.”...

According to the census, the true valuation of real and personal property in the United States in 1890 was $65,037,091,197, of which real estate with improvements thereon made up $39,544,544,333. Of course, from the latter must be deducted, in applying these sections, all unproductive property and all property whose net yield does not exceed four thousand dollars; but, even with such deductions, it is evident that the income from realty formed a vital part of the scheme for taxation embodied therein. If that be stricken out, and also the income from all invested personal property, bonds, stocks, investments of all kinds, it is obvious that by far the largest part of the anticipated revenue would be eliminated, and this would leave the burden of the tax to be borne by professions, trades, employments, or vocations; and in that way what was intended as a tax on capital would remain in substance a tax on occupations and labor. We cannot believe that such was the intention of Congress. We do not mean to say that an act laying by apportionment a direct tax on all real estate and personal property, or the income thereof, might not also lay excise taxes on business, privileges, employments, and vocations. But this is not such an act; and the scheme must be considered as a whole. Being invalid as to the greater part, and falling, as the tax would, if any part were held valid, in a direction which could not have been contemplated except in connection with the taxation considered as an entirety, we are constrained to conclude that sections twenty-seven to thirty-seven, inclusive, of the act, which became a law without the signature of the President on August 28, 1894, are wholly inoperative and void.

Our conclusions may, therefore, be summed up as follows:

First. We adhere to the opinion already announced, that, taxes on real estate being indisputably direct taxes, taxes on the rents or income of real estate are equally direct taxes.

Second. We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes.

Third. The tax imposed by sections twenty-seven to thirty-seven, inclusive, of the act of 1894, so far as it falls on the income of real estate and of personal property, being a direct tax within the meaning of the Constitution, and, therefore, unconstitutional and void because not apportioned according to representation, all those sections, constituting one entire scheme of taxation, are necessarily invalid.

The decrees herein before entered in this court will be vacated. The decrees below will be reversed, and the cases remanded, with instructions to grant the relief prayed.

MR. JUSTICE HARLAN, dissenting.

Assuming it to be the settled construction of the constitution that the general government cannot tax lands,... except by apportioning the tax among the states according to their respective numbers, does it follow that a tax on incomes derived from rents is a direct tax on the real estate from which such rents arise?

In my judgment, a tax on income derived from real property ought not to be, and until now has never been, regarded by any court as a direct tax on such property, within the meaning of the constitution. As the great mass of lands in most of the states do not bring any rents, and as incomes from rents vary in the different states, such a tax cannot possibly be apportioned among the states, on the basis merely of numbers, with any approach to equality of right among taxpayers, any more than a tax on carriages or other personal property could be so apportioned. And in view of former adjudications, beginning with the Hylton Case, and ending with the Springer Case, a decision now that a tax on income from real property can be laid and collected only by apportioning the same among the states on the basis of numbers may not improperly be regarded as a judicial revolution that may sow the seeds of hate and distrust among the people of different sections of our common country....

This 1895 editorial cartoon, published after the Supreme Court’s decision in Pollock v. Farmers’ Loan & Trust, illustrates the defeat of the federal income tax law of 1894. In 1913, however, the situation was reversed when the states ratified the Sixteenth Amendment, which gave the federal government the power to tax income regardless of source.

Library of Congress

While a tax on the land itself, whether at a fixed rate applicable to all lands, without regard to their value, or by the acre, or according to their market value, might be deemed a direct tax, within the meaning of the constitution, as interpreted in the Hylton Case, a duty on rents is a duty on something distinct and entirely separate from, although issuing out of, the land....

But the court, by its judgment just rendered, goes far in advance, not only of its former decisions, but of any decision heretofore rendered by an American court....

In my judgment,—to say nothing of the disregard of the former adjudications of this court, and of the settled practice of the government,—this decision may well excite the gravest apprehensions. It strikes at the very foundations of national authority, in that it denies to the general government a power which is or may become vital to the very existence and preservation of the Union in a national emergency, such as that of war with a great commercial nation, during which the collection of all duties upon imports will cease or be materially diminished. It tends to re-establish that condition of helplessness in which congress found itself during the period of the Articles of Confederation, when it was without authority, by laws operating directly upon individuals, to lay and collect, through its own agents, taxes sufficient to pay the debts and defray the expenses of government, but was dependent in all such matters upon the good will of the states, and their promptness in meeting requisitions made upon them by congress.

Why do I say that the decision just rendered impairs or menaces the national authority? The reason is so apparent that it need only be stated. In its practical operation this decision withdraws from national taxation not only all incomes derived from real estate, but tangible personal property, “invested personal property, bonds, stocks, investments of all kinds,” and the income that may be derived from such property. This results from the fact that, by the decision of the court, all such personal property and all incomes from real estate and personal property are placed beyond national taxation otherwise than by apportionment among the states on the basis simply of population. No such apportionment can possibly be made without doing gross injustice to the many for the benefit of the favored few in particular states. Any attempt upon the part of congress to apportion among the states, upon the basis simply of their population, taxation of personal property or of incomes, would tend to arouse such indignation among the freemen of America that it would never be repeated. When, therefore, this court adjudges, as it does now adjudge, that congress cannot impose a duty or tax upon personal property, or upon income arising either from rents of real estate or from personal property, including invested personal property, bonds, stocks, and investments of all kinds, except by apportioning the sum to be so raised among the states according to population, it practically decides that, without an amendment of the constitution,—two-thirds of both houses of congress and three-fourths of the states concurring,—such property and incomes can never be made to contribute to the support of the national government....

I dissent from the opinion and judgment of the court.

The Sixteenth Amendment

The decision to invalidate the entire income tax act was quite unpopular. Because that statute had placed a greater obligation on the wealthy, the ruling convinced the middle and working classes that the Supreme Court was little more than the defender of the rich. Various political groups immediately began working to reverse the impact of the Court’s decision by means of either a constitutional amendment or revised federal legislation. Labor and farming interests supported a new income tax, as did Progressive Republicans and Democratic Populists. Opposition came primarily from conservative Republicans in the Northeast.

Finally, in 1909 Congress began serious work on an income tax measure. There were sufficient votes in the legislature to reform the tax structure, moving the federal government away from excessive reliance on regressive tariffs and excise taxes. The major question for legislators was whether to pass another income tax bill or to propose a constitutional amendment. Finding themselves in a minority, conservative Republicans threw their support to an amendment. They hoped the state legislatures would not ratify it, but, even if they did, that the process would take several years to complete.

Congress proposed a constitutional amendment to authorize a federal income tax in July 1909 by overwhelming votes of 77–0 in the Senate and 318–14 in the House. The amendment received the required number of approvals from the state legislatures in February 1913 and became the Sixteenth Amendment to the United States Constitution: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

The amendment is one of only four designed to overturn a Supreme Court precedent. It gave Congress sufficient taxing authority to fund the federal government without having to resort to direct taxes. The Constitution now made all sources of income subject to Congress’s taxing power and removed any requirement that a tax on income be apportioned on the basis of population.

SOURCES: Historical Statistics of the United States: Colonial Times to 1970 (Washington, DC: U.S. Bureau of the Census, 1975); World Almanac and Book of Facts 2006 (New York: World Almanac Books, 2006), 90; Budget of the United States (Washington, DC: Office of Management and Budget, various years).

NOTE: The data represent the percentage of total federal revenues for each of seven sources of taxation. The data prior to ratification of the Sixteenth Amendment in 1913 demonstrate the federal government’s reliance on customs duties and excise taxes. Data from the period after 1913 illustrate the shift to income taxes as the primary sources for federal tax dollars. Estimates for 2020 are from the Budget of the United States for fiscal year 2016.

Congress wasted no time. In 1913 the legislature imposed a 1 percent tax rate on individual incomes in excess of $3,000 and on incomes of married couples over $4,000. Not surprisingly, the statute’s constitutionality was challenged in the Court, but the justices upheld the law three years later in Brushaber v. Union Pacific Railroad (1916) by a 7–2 vote. As shown in table 8-1, the income tax is now the primary source of federal revenue.

TAXATION OF EXPORTS

Article I, Section 9, of the Constitution contains a prohibition against the taxation of exports: “No Tax or Duty shall be laid on Articles exported from any State.” The purpose of this provision was to promote trade by removing impediments to the sale of American goods to other nations. In spite of the absolute language of the ban, Congress on occasion has passed assessments that have been attacked as taxes on exports. Such was the issue under consideration in United States v. United States Shoe Corp.

United States v. United States Shoe Corp.

523 U.S. 360 (1998)

http://laws.findlaw.com/us/523/360.html

Oral arguments are available at https://www.oyez.org.

Vote: 9 (Breyer, Ginsburg, Kennedy, O’Connor, Rehnquist, Scalia, Souter, Stevens, Thomas)

0

OPINION OF THE COURT: Ginsburg

FACTS:

As part of the Water Resources Development Act of 1986, Congress imposed the Harbor Maintenance Tax (HMT). This legislation assessed a uniform charge on shipments of commercial cargo through the nation’s ports. The charge was set at 0.125 percent of the cargo’s value. Exporters, importers, and domestic shippers were liable for the HMT, which was imposed at the time of loading for exports and at the time of unloading for other shipments. The Customs Service collected the HMT and deposited the money in the Harbor Maintenance Trust Fund. Congress could appropriate amounts from the fund to pay for harbor maintenance and development projects, including costs associated with the St. Lawrence Seaway, or related expenses.

United States Shoe Corporation paid the HMT for articles the company exported from April to June 1994 and then filed a protest with the Customs Service alleging that the toll was unconstitutional to the extent it applied to exports. The Customs Service responded with a form letter stating that the HMT was a statutorily mandated user fee, not an unconstitutional tax on exports. U.S. Shoe filed suit in the Court of International Trade challenging the constitutionality of the tax. The federal government defended the HMT, claiming that it was a legitimate user fee. The Court of International Trade held that the tax was not a user fee but a tax prohibited by Article I, Section 10. A divided court of appeals agreed, and the United States took its case to the Supreme Court.

ARGUMENTS:

For the petitioner, United States:

The Harbor Maintenance Tax is a permissible fee on the use of the ports of the United States.

Revenue measures that operate to compensate the government for benefits supplied are not prohibited by the export clause.

The fees are assessed only on those who use the harbors. They do not discriminate against any constitutionally protected interest. Importers, exporters, and domestic shippers are all subject to the same fees.

The funds collected are deposited in the Harbor Maintenance Trust Fund and are used only for the designated purpose of maintaining the nation’s ports.

For the respondent, United States Shoe Corp.:

There are no exceptions to the export clause’s broad prohibition against any tax or duty placed on exports.

To be permissible a fee must be applied narrowly, be directly related to the services provided by the government, and be no greater than necessary to compensate the government for the services rendered.

This revenue measure is based on the worth of the cargo (ad valorem) and not on the size of the vessel, the manner or extent of the use of the harbor, or any attributes of the port. Ad valorem assessments are taxes, not fees for services rendered.

The Harbor Maintenance Tax is not remotely related to the exporter’s use of harbor services.

JUSTICE GINSBURG DELIVERED THE OPINION OF THE COURT.

The Export Clause of the Constitution states: “No Tax or Duty shall be laid on Articles exported from any State.” We held in United States v. International Business Machines Corp. (IBM) (1996), that the Export Clause categorically bars Congress from imposing any tax on exports. The Clause, however, does not rule out a “user fee,” provided that the fee lacks the attributes of a generally applicable tax or duty and is, instead, a charge designed as compensation for government-supplied services, facilities, or benefits. This case presents the question whether the Harbor Maintenance Tax (HMT), as applied to goods loaded at United States ports for export, is an impermissible tax on exports or, instead, a legitimate user fee. We hold, in accord with the Federal Circuit, that the tax, which is imposed on an ad valorem basis, is not a fair approximation of services, facilities, or benefits furnished to the exporters, and therefore does not qualify as a permissible user fee.

Two Terms ago, in IBM, this Court considered the question whether a tax on insurance premiums paid to protect exports against loss violated the Export Clause. Distinguishing case law developed under the Commerce Clause and the Import-Export Clause, the Court held that the Export Clause allows no room for any federal tax, however generally applicable or nondiscriminatory, on goods in export transit. Before this Court’s decision in IBM, the Government argued that the HMT, even if characterized as a “tax” rather than a “user fee,” should survive constitutional review “because it applies without discrimination to exports, imports and domestic commerce alike.” Recognizing that IBM “rejected an indistinguishable contention,” the Government now asserts only that HMT is “‘a permissible user fee,’” a toll within the tolerance of Export Clause precedent. Adhering to the Court’s reasoning in IBM, we reject the Government’s current position.

The HMT bears the indicia of a tax. Congress expressly described it as “a tax on any port use,” and codified the HMT as part of the Internal Revenue Code. In like vein, Congress provided that, for administrative, enforcement, and jurisdictional purposes, the HMT should be treated “as if [it] were a customs duty.” However, “we must regard things rather than names,” in determining whether an imposition on exports ranks as a tax. The crucial question is whether the HMT is a tax on exports in operation as well as nomenclature or whether, despite the label Congress has put on it, the exaction is instead a bona fide user fee.

In arguing that the HMT constitutes a user fee, the Government relies on our decisions in United States v. Sperry Corp. (1989), Massachusetts v. United States (1978), and Evansville-Vanderburgh Airport Authority Dist. v. Delta Airlines, Inc. (1972). In those cases, this Court upheld flat and ad valorem charges as valid user fees.... Those decisions involved constitutional provisions other than the Export Clause, however, and thus do not govern here. IBM plainly stated that the Export Clause’s simple, direct, unqualified prohibition on any taxes or duties distinguishes it from other constitutional limitations on governmental taxing authority. The Court there emphasized that the “text of the Export Clause... expressly prohibits Congress from laying any tax or duty on exports.” Accordingly, the Court reasoned in IBM “[o]ur decades-long struggle over the meaning of the nontextual negative command of the dormant Commerce Clause does not lead to the conclusion that our interpretation of the textual command of the Export Clause is equally fluid.”...

The guiding precedent for determining what constitutes a bona fide user fee in the Export Clause context remains our time-tested decision in Pace [v. Burgess, 1876]. Pace involved a federal excise tax on tobacco. Congress provided that the tax would not apply to tobacco intended for export. To prevent fraud, however, Congress required that tobacco the manufacturer planned to export carry a stamp indicating that intention. Each stamp cost 25 cents (later 10 cents) per package of tobacco. Congress did not limit the quantity or value of the tobacco packaged for export or the size of the stamped package; “[t]hese were unlimited, except by the description of the exporter or the convenience of handling.”

The Court upheld the charge, concluding that it was “in no sense a duty on exportation,” but rather “compensation given for services [in fact] rendered.” In so ruling, the Court emphasized two characteristics of the charge: It “bore no proportion whatever to the quantity or value of the package on which [the stamp] was affixed”; and the fee was not excessive, taking into account the cost of arrangements needed both “to give to the exporter the benefit of exemption from taxation, and... to secure... against the perpetration of fraud.” Pace establishes that, under the Export Clause, the connection between a service the Government renders and the compensation it receives for that service must be closer than is present here. Unlike the stamp charge in Pace, the HMT is determined entirely on an ad valorem basis. The value of export cargo, however, does not correlate reliably with the federal harbor services used or usable by the exporter. As the Federal Circuit noted, the extent and manner of port use depend on factors such as the size and tonnage of a vessel, the length of time it spends in port, and the services it requires, for instance, harbor dredging.

In sum, if we are “to guard against... the imposition of a [tax] under the pretext of fixing a fee,” Pace v. Burgess, and resist erosion of the Court’s decision in IBM, we must hold that the HMT violates the Export Clause as applied to exports. This does not mean that exporters are exempt from any and all user fees designed to defray the cost of harbor development and maintenance. It does mean, however, that such a fee must fairly match the exporters’ use of port services and facilities.

For the foregoing reasons, the judgment of the Court of Appeals for the Federal Circuit is

Affirmed.

INTERGOVERNMENTAL TAX IMMUNITY

The operation of a federal system carries within it inherent risks of conflict between the national government and the states. When both levels of government are authorized to tax, one government can use the power as a weapon against the other. No specific provision of the Constitution prohibits the federal government from taxing state governments or vice versa, but for the federal system to operate effectively, the entities need to avoid such conflicts.

Establishing the Tax Immunity Doctrine

The issue of intergovernmental tax immunity was first raised in McCulloch v. Maryland (1819), which tested the constitutional validity of the national bank. The Supreme Court’s decision in McCulloch was tremendously important in a number of ways. We have already discussed it in terms of the development of congressional power and the concept of federalism, but McCulloch also is relevant to the constitutional limitations on the power to tax.

McCulloch involved a challenge to a tax imposed by the state of Maryland on the national bank, a creation of the federal government. Supporters of federal power argued that the Union could not be maintained if the states were permitted to place debilitating taxes on any operation of the federal government of which they disapproved. States’ rights advocates claimed that the power of the states to tax within their own borders was absolute and that there was no constitutional bar to such taxes. The Supreme Court ruled in favor of the federal government, declaring the state tax unconstitutional. With his hard-hitting opinion for a unanimous Court, Chief Justice Marshall put an immediate stop to a conflict that would have severely weakened the Union if allowed to continue.

In doing so, Marshall created the doctrine of intergovernmental tax immunity. He wrote, “[T]he power to tax involves the power to destroy;... the power to destroy may defeat and render useless the power to create;... there is plain repugnance, in conferring on one government a power to control the constitutional measures of another.” The ability of the states to tax the legitimate operations of the federal government is simply incompatible with the framers’ intent of creating viable government units at both the national and state levels.

Marshall’s decision in McCulloch was consistent with his general philosophy of favoring a strong national government. But was the doctrine of intergovernmental tax immunity a two-way street? Marshall’s opinion fell short of proclaiming that the national government was prohibited from taxing the legitimate operations of the states. He was more concerned in this case with reinforcing principles of federal supremacy. Yet a strong case can be made that it would also violate the principles of the Constitution for the federal government to be permitted to destroy the states through its taxing power.

The first case that tested whether the states enjoyed immunity from federal taxation was Collector v. Day (1871), which stemmed from an application of the Civil War federal income tax law. Judge J. M. Day of the probate court in Massachusetts objected to paying a federal tax on his income on intergovernmental tax immunity grounds. Three decades earlier the Supreme Court had ruled that the state governments could not tax the income of federal officeholders,9 and now Day was asking the Court to adopt the converse of that. The Supreme Court held, in an 8–1 vote, that Day’s judicial income was immune from federal taxation. The Court reasoned that the Constitution protects the legitimate functions of the state. The federal government cannot use its taxation powers to curtail or destroy the operations or instruments of the state, and the probate court system is a legitimate and necessary agency of state government. To allow the federal government to tax the income of state judges would be to open the door for Congress to tax all state government functions.

For several decades the justices vigorously maintained the doctrine that the Constitution did not allow one government to tax the essential functions of another. In the Pollock income tax decisions, as we have already seen, the Court struck down a federal tax on interest income from state and municipal bonds as an unconstitutional burden on the state’s authority to borrow. The Court struck down state taxes on income from federal land leases and federally granted patents and copyrights, and from the sales of petroleum products to the federal government.10 It also invalidated a federal tax on revenues derived from the sales of goods to state agencies.11 The only significant standard the Court imposed in this line of cases was that immunity covered only essential government functions. Consequently, the justices upheld a federal tax on the profits of South Carolina’s state-run liquor stores.12 As a merchant of alcoholic beverages, the state was acting as a private business, not exercising a government function, and therefore was not immune from federal taxation.

Erosion of the Tax Immunity Doctrine

The Court’s general support for the tax immunity doctrine in the early 1900s was closely related to its conservatism and adherence to dual federalism; it opposed both a big federal government and comprehensive regulation of the economy. When the New Deal justices took control of the Court, however, support for the tax immunity doctrine began to wane. A series of Court decisions modified or reversed the earlier rulings that had established an almost impenetrable barrier against one government taxing the instruments or operations of another.

In Helvering v. Gerhardt (1938) the Court overruled Dobbins v. Commissioners of Erie County (1842) and permitted states to tax the income of federal officials. The very next year the justices overruled Collector v. Day in Graves v. New York ex rel. O’Keefe (1939), holding that there was no constitutional bar to the federal government taxing the income of state employees. “The theory,” said the Court, “that a tax on income is legally or economically a tax on its source, is no longer tenable.” Also falling were bans on taxing profits from doing business with state or federal government agencies. The Court went so far as to allow a state to impose taxes on a federal contractor even when those taxes were passed on to the federal government through a cost-plus contract.13

Although these rulings seriously weakened the doctrine of intergovernmental tax immunity, the principle still has some vitality. It would be unconstitutional for a state to place a tax on cases filed in the federal courts operating within its boundaries, or for the federal government to impose an excise tax on the tickets issued by a state highway patrol. But aside from these obvious examples, where is the line between permissible and impermissible taxation? The Court helped answer that question in South Carolina v. Baker (1988), which involved a challenge to a federal law taxing the income from long-term state and city bonds. To uphold the federal tax, the Court would have to overrule that portion of the Pollock decision that conferred immunity on such debt instruments issued by the state. The opinion by Justice William Brennan not only answered the specific question presented to the Court but also provided an informative review of the status of the intergovernmental tax immunity doctrine. Also instructive is the dissenting opinion of Justice Sandra Day O’Connor, who vigorously defended the immunity position.

South Carolina v. Baker continued a long-standing trend of the Court toward eroding the doctrine of intergovernmental tax immunity. A statement of the contemporary status of the doctrine, in Justice Brennan’s words, is that “the States can never tax the United States directly but can tax any private parties with whom it does business, even though the financial burden falls on the United States, as long as the tax does not discriminate against the United States or those with whom it deals.” A similar, though not quite as rigid, prohibition applies to federal taxes on the states.

Even in cases such as South Carolina v. Baker that limited intergovernmental tax immunity, the Court repeatedly has stressed the principle that taxes must be nondiscriminatory. If a state wishes to tax a company’s profits from a business transaction with the federal government, the tax obligation must be the same as that imposed on profits from business with nongovernment parties. This bar against discriminatory taxation was tested in Davis v. Michigan Dept. of Treasury (1989). At issue was a Michigan tax exemption given to state government retirees but not to federal government retirees. Justice Anthony Kennedy’s opinion for the Court reviews the immunity doctrine’s development and answers the challenge presented by the case.

As a result of this decision, Paul Davis received tax refunds of $4,299. But the impact of the decision extended far beyond Davis. Fourteen other states had similar discriminatory tax provisions. As a consequence, this ruling cost these states hundreds of millions of dollars in tax refunds to federal retirees and lost future revenues. The states were required to revise their laws, making a choice between extending the tax exemptions to retired federal employees or eliminating the exemption granted to state and local retirees. The Court’s decision in Davis reminds us that the tax immunity doctrine remains viable in spite of decisions that have imposed limitations on it.

South Carolina v. Baker

485 U.S. 505 (1988)

http://laws.findlaw.com/us/485/505.html

Oral arguments are available at https://www.oyez.org.

Vote: 7 (Blackmun, Brennan, Marshall, Rehnquist, Scalia, Stevens, White)

1 (O’Connor)

OPINION OF THE COURT: Brennan

CONCURRING OPINIONS: Rehnquist, Scalia, Stevens

DISSENTING OPINION: O’Connor

NOT PARTICIPATING: Kennedy

FACTS:

State and municipal bonds traditionally have been issued either as bearer bonds or as registered bonds. Interest from bearer bonds is presumed to belong to the person who owns the bonds, and the interest is paid when the owner redeems coupons attached to the bonds. Owners of registered bonds are recorded on a central list, and if a bond is sold the transaction must be recorded. The owner of record automatically receives interest payments by check or electronic transfer of funds. State and municipal bonds of both types have been free from federal taxation on interest earned since the Supreme Court’s decision in Pollock.

In 1982 Congress passed the Tax Equity and Fiscal Responsibility Act. Section 310(b)(1) of that statute removed the federal income tax exemption for interest earned on publicly offered long-term bonds issued by state and local governments unless the bonds were issued in registered form. The primary purpose of Section 310 was to increase compliance with federal tax laws and thereby increase federal revenues. Congress estimated that income of $97 billion was going unreported. Bearer bonds became a target of reform efforts because of the ease with which they could be bought and sold. If the ownership transfer was not registered, the bondholder could evade income tax on capital gains. Unregistered bonds also were used to evade estate taxes. Other provisions in this law encouraged the federal government and private corporations to stop issuing nonregistered long-term bonds.

The state of South Carolina sued the United States, in the name of Secretary of the Treasury James Baker, to have the law declared unconstitutional as a violation of the Tenth Amendment and the intergovernmental tax immunity doctrine. The case was heard on original jurisdiction. A special master appointed by the Court recommended that the justices uphold the validity of the law.

ARGUMENTS:

For the plaintiff, state of South Carolina:

The federal government lacks the authority to dictate how a state carries out its essential functions. This law violates state autonomy guaranteed by the Tenth Amendment and other constitutional provisions.

Placing a federal tax on income from state and local bonds will require the states to increase the interest rates paid to those who buy the state’s bonds. As a consequence, the federal government will be placing a significant burden on the states’ revenue powers.

The Court should not overrule Pollock v. Farmers’ Loan & Trust, but it should honor the doctrine of intergovernmental tax immunity.

For the defendant, James A. Baker III, U.S. Secretary of the Treasury:

The Court should reconsider the holding in Pollock v. Farmers’ Loan & Trust that interest income from state and local bonds is immune from nondiscriminatory federal taxation.

The law targets the form in which state and local bonds are issued. It does not restrict the states’ revenue-gathering authority. The law does not violate the Tenth Amendment.

The tax is applied to those who do business with the state, not to the state itself.

Any administrative cost associated with issuing registered bonds is incidental and cannot be considered a tax on the state.

JUSTICE BRENNAN DELIVERED THE OPINION OF THE COURT.

South Carolina contends that even if a statute banning state bearer bonds entirely would be constitutional, §310 unconstitutionally violates the doctrine of intergovernmental tax immunity because it imposes a tax on the interest earned on a state bond. We agree with South Carolina that §310 is inconsistent with Pollock v. Farmers’ Loan & Trust Co. (1895), which held that any interest earned on a state bond was immune from federal taxation....

Under the intergovernmental tax immunity jurisprudence prevailing at the time, Pollock did not represent a unique immunity limited to income derived from state bonds. Rather, Pollock merely represented one application of the more general rule that neither the federal nor the state governments could tax income an individual directly derived from any contract with another government. Not only was it unconstitutional for the Federal Government to tax a bondowner on the interest she received on any state bond, but it was also unconstitutional to tax a state employee on the income earned from his employment contract, to tax a lessee on income derived from lands leased from a State, or to impose a sales tax on proceeds a vendor derived from selling a product to a state agency. Income derived from the same kinds of contracts with the Federal Government were likewise immune from taxation by the States....

This general rule was based on the rationale that any tax on income a party received under a contract with the government was a tax on the contract and thus a tax “on” the government because it burdened the government’s power to enter into the contract.... Thus, although a tax was collected from an independent private party, the tax was considered to be “on” the government because the tax burden might be passed on to it through the contract. This reasoning was used to define the basic scope of both federal and state tax immunities with respect to all types of government contracts....

The rationale underlying Pollock and the general immunity for government contract income has been thoroughly repudiated by modern intergovernmental immunity case-law....

With the rationale for conferring a tax immunity on parties dealing with another government rejected, the government contract immunities recognized under prior doctrine were, one by one, eliminated....

In sum, then, under current intergovernmental tax immunity doctrine the States can never tax the United States directly but can tax any private parties with whom it does business, even though the financial burden falls on the United States, as long as the tax does not discriminate against the United States or those with whom it deals. A tax is considered to be directly on the Federal Government only “when the levy falls on the United States itself, or on an agency or instrumentality so closely connected to the Government that the two cannot realistically be viewed as separate entities.” The rule with respect to state tax immunity is essentially the same, except that at least some nondiscriminatory federal taxes can be collected directly from the States even though a parallel state tax could not be collected directly from the Federal Government.

We thus confirm that subsequent case law has overruled the holding in Pollock that state bond interest is immune from a nondiscriminatory federal tax. We see no constitutional reason for treating persons who receive interest on government bonds differently than persons who receive income from other types of contracts with the government, and no tenable rationale for distinguishing the costs imposed on States by a tax on state bond interest from the costs imposed by a tax on the income from any other state contract.... Likewise, the owners of state bonds have no constitutional entitlement not to pay taxes on income they earn from state bonds, and States have no constitutional entitlement to issue bonds paying lower interest rates than other issuers....

TEFRA [Tax Equity and Fiscal Responsibility Act] §310 thus clearly imposes no direct tax on the States. The tax is imposed on and collected from bondholders, not States, and any increased administrative costs incurred by States in implementing the registration system are not “taxes” within the meaning of the tax immunity doctrine.... Nor does §310 discriminate against States. The provisions of §310 seek to assure that all publicly offered long-term bonds are issued in registered form, whether issued by state or local governments, the Federal Government, or private corporations. Accordingly, the Federal Government has directly imposed the same registration requirement on itself that it has effectively imposed on States. The incentives States have to switch to registered bonds are necessarily different than those of corporate bond issuers because only state bonds enjoy any exemption from the federal tax on bond interest, but the sanctions for issuing unregistered corporate bonds are comparably severe. Removing the tax exemption for interest earned on state bonds would not, moreover, create a discrimination between state and corporate bonds since corporate bond interest is already subject to federal tax.

Because the federal imposition of a bond registration requirement on States does not violate the Tenth Amendment and because a nondiscriminatory federal tax on the interest earned on state bonds does not violate the intergovernmental tax immunity doctrine, we uphold the constitutionality of §310....

It is so ordered.

JUSTICE O’CONNOR, dissenting.

The Court today overrules a precedent that it has honored for nearly a hundred years and expresses a willingness to cancel the constitutional immunity that traditionally has shielded the interest paid on state and local bonds from federal taxation. Henceforth the ability of state and local governments to finance their activities will depend in part on whether Congress voluntarily abstains from tapping this permissible source of additional income tax revenue. I believe that state autonomy is an important factor to be considered in reviewing the National Government’s exercise of its enumerated powers. I dissent from the decision to overrule Pollock v. Farmers’ Loan & Trust Co. (1895), and I would invalidate Congress’ attempt to regulate the sovereign States by threatening to deprive them of this tax immunity, which would increase their dependence on the National Government....

Long-term debt obligations are an essential source of funding for state and local governments. In 1974, state and local governments issued approximately $23 billion of new municipal bonds; in 1984, they issued $102 billion of new bonds. State and local governments rely heavily on borrowed funds to finance education, road construction, and utilities, among other purposes. As the Court recognizes, States will have to increase the interest rates they pay on bonds by 28–35% if the interest is subject to the federal income tax. Governmental operations will be hindered severely if the cost of capital rises by one-third. If Congress may tax the interest paid on state and local bonds, it may strike at the very heart of state and local government activities....

Federal taxation of state activities is inherently a threat to state sovereignty. As Chief Justice Marshall observed long ago, “the power to tax involves the power to destroy.” Justice Holmes later qualified this principle, observing that “[t]he power to tax is not the power to destroy while this Court sits.” If this Court is the States’ sole protector against the threat of crushing taxation, it must take seriously its responsibility to sit in judgment of federal tax initiatives. I do not think that the Court has lived up to its constitutional role in this case. The Court has failed to enforce the constitutional safeguards of state autonomy and self-sufficiency that may be found in the Tenth Amendment and the Guarantee Clause, as well as in the principles of federalism implicit in the Constitution. I respectfully dissent.

Davis v. Michigan Dept. of Treasury

489 U.S. 803 (1989)

http://laws.findlaw.com/us/489/803.html

Oral arguments are available at https://www.oyez.org.

Vote: 8 (Blackmun, Brennan, Kennedy, Marshall, O’Connor, Rehnquist, Scalia, White)

1 (Stevens)

OPINION OF THE COURT: Kennedy

DISSENTING OPINION: Stevens

FACTS:

Michigan’s revenue code provided that retirement benefits paid to individuals by the state or any of its political subdivisions were exempt from state income taxes. Retirement benefits from any other source, including federal retirement income, were subject to the tax. Paul S. Davis spent his career in federal service, as a lawyer for the Securities and Exchange Commission and then as an administrative law judge. As a Michigan resident, he paid state income taxes on his federal retirement benefits. In 1984, however, Davis petitioned the state for a refund of taxes paid on his federal benefits for the 1979–1984 tax years.

He based his case on a federal statute (4 U.S.C. §111) passed in 1939 to clarify the doctrine of intergovernmental tax immunity. The law provided,

The United States consents to the taxation of pay or compensation for personal service as an officer or employee of the United States... by a duly constituted taxing authority having jurisdiction, if the taxation does not discriminate against the officer or employee because of the source of the pay or compensation.

State revenue authorities and state courts rejected Davis’s claim. The state argued that Davis was not covered by the act because he was no longer an “employee” of the federal government but simply a receiver of annuity benefits. Furthermore, Michigan claimed that the state law did not discriminate against federal employees but only provided a special exemption for state retirees, a reasonable incentive intended to attract and keep qualified people in state government service.

Davis appealed to the U.S. Supreme Court and, in fact, personally argued his case before the justices. He enjoyed the help of a powerful ally, however, when the U.S. government supported his claim as a friend of the court.

ARGUMENTS:

For the appellant, Paul S. Davis:

Under federal law states may tax the compensation of federal employees as long as the tax does not discriminate on the basis of the source of the income.

Michigan taxes the income from federal retirement programs but does not tax the income from state retirement programs.

Treating the income from federal and state retirement plans differently violates the intergovernmental tax immunity doctrine and the federal law allowing the nondiscriminatory taxation of income from federal employment.

For the appellee, state of Michigan Department of Treasury:

The intergovernmental tax immunity doctrine is based on the supremacy clause and protects only governments, not individuals, from the taxation efforts of other governments.

The intergovernmental tax immunity doctrine protects the federal government from state taxation that is aimed at or threatens the efficient operation of the government. There is no evidence that Michigan’s tax on retirement incomes of former federal employees places any burden on any federal government program.

Federal law bans discriminatory state taxes on the income of federal employees. Davis is no longer a federal employee. His retirement program income is not “compensation for personal service as an officer or employee of the United States.”

Exempting retirement income from taxation for former state government employees serves a legitimate public purpose of fostering Michigan public employment.

JUSTICE KENNEDY DELIVERED THE OPINION OF THE COURT.

Section 111 was enacted as part of the Public Salary Tax Act of 1939, the primary purpose of which was to impose federal income tax on the salaries of all state and local government employees. Prior to the adoption of the Act, salaries of most government employees, both state and federal, generally were thought to be exempt from taxation by another sovereign under the doctrine of intergovernmental tax immunity. This doctrine had its genesis in McCulloch v. Maryland (1819), which held that the State of Maryland could not impose a discriminatory tax on the Bank of the United States. Chief Justice Marshall’s opinion for the Court reasoned that the Bank was an instrumentality of the Federal Government used to carry into effect the Government’s delegated powers, and taxation by the State would unconstitutionally interfere with the exercise of those powers.

For a time, McCulloch was read broadly to bar most taxation by one sovereign of the employees of another. See Collector v. Day (1871) (invalidating federal income tax on salary of state judge); Dobbins v. Commissioners of Erie County (1842) (invalidating state tax on federal officer). This rule “was based on the rationale that any tax on income a party received under a contract with the government was a tax on the contract and thus a tax ‘on’ the government because it burdened the government’s power to enter into the contract.” South Carolina v. Baker (1988).

In subsequent cases, however, the Court began to turn away from its more expansive applications of the immunity doctrine. Thus, in Helvering v. Gerhardt (1938), the Court held that the Federal Government could levy nondiscriminatory taxes on the incomes of most state employees. The following year, Graves v. New York ex rel. O’Keefe (1939) overruled the Day-Dobbins line of cases that had exempted government employees from nondiscriminatory taxation. After Graves, therefore, intergovernmental tax immunity barred only those taxes that were imposed directly on one sovereign by the other or that discriminated against a sovereign or those with whom it dealt.

It was in the midst of this judicial revision of the immunity doctrine that Congress decided to extend the federal income tax to state and local government employees. The Public Salary Tax Act was enacted after Helvering v. Gerhardt had upheld the imposition of federal income taxes on state civil servants, and Congress relied on that decision as support for its broad assertion of federal taxing authority. However, the Act was drafted, considered in Committee, and passed by the House of Representatives before the announcement of the decision in Graves v. New York ex rel. O’Keefe, which for the first time permitted state taxation of federal employees. As a result, during most of the legislative process leading to adoption of the Act it was unclear whether state taxation of federal employees was still barred by intergovernmental tax immunity despite the abrogation of state employees’ immunity from federal taxation....

Dissatisfied with this uncertain state of affairs, and concerned that considerations of fairness demanded equal tax treatment for state and federal employees, Congress decided to ensure that federal employees would not remain immune from state taxation at the same time that state government employees were being required to pay federal income taxes. Accordingly, section 4 of the proposed Act (now section 111) expressly waived whatever immunity would have otherwise shielded federal employees from nondiscriminatory state taxes....

Section 111 did not waive all aspects of intergovernmental tax immunity, however. The final clause of the section contains an exception for state taxes that discriminate against federal employees on the basis of the source of their compensation. This nondiscrimination clause closely parallels the nondiscrimination component of the constitutional immunity doctrine which has, from the time of McCulloch v. Maryland, barred taxes that “operat[e] so as to discriminate against the Government of those with whom it deals.”

... When Congress codifies a judicially defined concept, it is presumed, absent an express statement to the contrary, that Congress intended to adopt the interpretation placed on that concept by the courts. Hence, we conclude that the retention of immunity in section 111 is coextensive with the prohibition against discriminatory taxes embodied in the modern constitutional doctrine of intergovernmental tax immunity.

... Thus, the dispositive question in this case is whether the tax imposed on appellant is barred by the doctrine of intergovernmental tax immunity.

It is undisputed that Michigan’s tax system discriminates in favor of retired state employees and against retired federal employees. The State argues, however, that appellant is not entitled to claim the protection of the immunity doctrine, and that in any event the State’s inconsistent treatment of Federal and State Government retirees is justified by meaningful differences between the two classes.

In support of its first contention, the State points out that the purpose of the immunity doctrine is to protect the governments and not private entities or individuals. As a result, so long as the challenged tax does not interfere with the Federal Government’s ability to perform its governmental functions, the constitutional doctrine has not been violated.

It is true that intergovernmental tax immunity is based on the need to protect each sovereign’s governmental operations from undue interference by the other. But it does not follow that private entities or individuals who are subjected to discriminatory taxation on account of their dealings with a sovereign cannot themselves receive the protection of the constitutional doctrine. Indeed, all precedent is to the contrary....

Under our precedents, “[t]he imposition of a heavier tax burden on [those who deal with one sovereign] than is imposed on [those who deal with the other] must be justified by significant differences between the two classes.” Phillips Chemical Co. v. Dumas Independent School District [1960]....

The State points to two allegedly significant differences between federal and state retirees. First, the State suggests that its interest in hiring and retaining qualified civil servants through the inducement of a tax exemption for retirement benefits is sufficient to justify the preferential treatment of its retired employees. This argument is wholly beside the point, however, for it does nothing to demonstrate that there are “significant differences between the two classes” themselves; rather, it merely demonstrates that the State has a rational reason for discriminating between two similar groups of retirees. The State’s interest in adopting the discriminatory tax, no matter how substantial, is simply irrelevant to an inquiry into the nature of the two classes receiving inconsistent treatment.

Second, the State argues that its retirement benefits are significantly less munificent than those offered by the Federal Government, in terms of vesting requirements, rate of accrual, and computation of benefit amounts. The substantial differences in the value of the retirement benefits paid the two classes should, in the State’s view, justify the inconsistent tax treatment.

Even assuming the State’s estimate of the relative value of state and federal retirement benefits is generally correct, we do not believe this difference suffices to justify the type of blanket exemption at issue in this case. While the average retired federal civil servant receives a larger pension than his state counterpart, there are undoubtedly many individual instances in which the opposite holds true. A tax exemption truly intended to account for differences in retirement benefits would not discriminate on the basis of the source of those benefits, as Michigan’s statute does; rather, it would discriminate on the basis of the amount of benefits received by individual retirees....

For these reasons, we conclude that the Michigan Income Tax Act violates principles of intergovernmental tax immunity by favoring retired state and local government employees over retired federal employees....

... The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

JUSTICE STEVENS, dissenting.

The Court today strikes down a state tax that applies equally to the vast majority of Michigan residents, including federal employees, because it treats retired state employees differently from retired federal employees. The Court’s holding is not supported by the rationale for the intergovernmental immunity doctrine and is not compelled by our previous decisions. I cannot join the unjustified, court-imposed restriction on a State’s power to administer its own affairs....

If Michigan were to tax the income of federal employees without imposing a like tax on others, the tax would be plainly unconstitutional. Cf. McCulloch v. Maryland (1819). On the other hand, if the State taxes the income of all its residents equally, federal employees must pay the tax. Graves v. New York ex rel. O’Keefe (1939). The Michigan tax here applies to approximately 4½ million individual taxpayers in the State, including the 24,000 retired federal employees. It exempts only the 130,000 retired state employees. Once one understands the underlying reason for the McCulloch holding [the immunity doctrine is a check against the abusive use of the taxing power by one sovereign against the other], it is plain that this tax does not unconstitutionally discriminate against federal employees....

Today, it is not the great Chief Justice’s dictum about how the power to tax includes the power to destroy that obscures the issue in a web of unreality; it is the virtually automatic rejection of anything that can be labeled “discriminatory.” The question in this case deserves more careful consideration than is provided by the mere use of that label. It should be answered by considering whether the ratio decidendi of our holding in McCulloch v. Maryland is applicable to this quite different case. It is not. I, therefore, respectfully dissent.

TAXATION AS A REGULATORY POWER

Normally, we think of taxation as a method of funding the government. Yet Marshall’s well-known statement that the “power to tax involves the power to destroy” was an early recognition that taxes can be used for purposes other than raising revenue. Excessive taxation can make the targeted activities so unprofitable that engaging in them is no longer feasible. The converse also is true. Favorable tax status, including tax exemptions, can encourage preferred activities. These observations raise several important constitutional questions regarding the taxation powers of the federal government: Is it proper for the United States to impose taxes for reasons other than revenue raising? Is it constitutional for the government to use taxation as a method of regulation? Is it valid for Congress to enact tax laws as means of controlling activities not otherwise within the jurisdiction of the federal government? Here we are confronting a question similar to one we examined relative to the commerce clause: May the federal government use the power to tax as the equivalent of a state’s police power?

Taxation for Nonrevenue Purposes

From the beginning, Congress has used its authority to tax for purposes other than raising revenue. Before the ratification of the Sixteenth Amendment, the federal government relied heavily on the funds raised through customs duties. In deciding what imported products to tax and at what level, the legislators clearly were guided by their policy preferences. Certain industries received protection from imports and were able to grow with little foreign competition. The practice of combining revenue gathering with other policy objectives continues to this day.

The only serious challenge to the use of import taxes as a regulatory mechanism came in J. W. Hampton, Jr. & Co. v. United States (1928). Hampton Company imported into New York a quantity of barium dioxide that was assessed a duty of six cents per pound, two cents higher than the rate set by Congress. The legislature had, however, authorized the president to raise or lower tariff duties up to 50 percent of the amount set by Congress whenever the chief executive found that such adjustments were necessary for equitable foreign trade. In this case President Calvin Coolidge had concluded that an increased tariff was necessary to equalize the barium dioxide production costs between Germany and the United States. Hampton objected to the tax, claiming that the flexible tariff was an improper delegation of legislative power to the executive branch and that Congress violated the Constitution by using the taxation powers for reasons other than revenue gathering. As we saw in Chapter 5, the Supreme Court ruled that the delegation was proper.

The justices also held in Hampton that Congress did not have to rely exclusively on revenue needs when it constructed tariff laws. In reaching this conclusion, the Court showed a deference to history. Chief Justice William Howard Taft, writing for the majority, noted that the very first revenue act in 1789 imposed import duties with an eye toward encouraging growth of domestic industry and protecting it from foreign competition. The Court was not likely to rule unconstitutional a practice that had been followed uninterrupted for almost a century and a half. “So long as the motive of Congress and the effect of its legislative action are to secure revenue for the benefit of the general government,” Taft wrote, “the existence of other motives in the selection of the subjects of taxes cannot invalidate Congressional action.”

Deciding that Congress may impose import duties with regulatory purposes does not necessarily answer a similar question with respect to excise taxes. Customs duties, after all, have a limited range. They can be applied only to those goods that are brought into the country from abroad. Excise taxes can be applied to the broad spectrum of domestic goods, services, and activities. The only restriction on such taxes explicitly mentioned in the Constitution is that they be geographically uniform. But is there an implied requirement that excise taxes can be generated only by revenue objectives, or can Congress regulate through the use of the excise? If Congress is allowed to regulate domestic activities through the power to tax, does that not give the federal government the equivalent of a police power that the framers reserved to the states?

Shortly after the Civil War, the Court heard Veazie Bank v. Fenno (1869), which presented a challenge to a federal excise tax that was imposed far more to regulate the economy than to raise revenue. In 1866 Congress passed a law placing a 10 percent tax on notes issued by state banks. The law was intended to protect the newly chartered national bank from state competition by making these notes far too costly for state banks to issue. Veazie Bank paid the tax under protest, claiming that Congress had no authority to issue such an excise. But in a 5–2 decision, the Court held that the tax was proper given the constitutional power of Congress to regulate the monetary system.

Does the Veazie Bank decision mean that Congress may impose excise taxes for any regulatory purpose or only as a means of promoting a power already granted to the federal government? The first major case to confront this question focused on a federal excise tax placed on margarine.

With decisions such as Veazie, McCray, and others, Congress reasonably concluded that the power to tax could be used as a regulatory weapon. The legislators were encouraged by statements such as Justice Edward Douglass White’s in McCray: “The decisions of this court from the beginning lend no support whatever to the assumption that the judiciary may restrain the exercise of lawful power on the assumption that a wrongful purpose or motive has caused the power to be exerted.” The Court seemed committed to a policy of approving legislation that took the proper form of an excise tax and met the geographical uniformity requirement regardless of the congressional motives behind it. If the judiciary was not inclined to probe the legislative branch’s motives, Congress would have a free hand in using taxation to regulate or even destroy certain activities lawmakers considered detrimental to the nation.

McCay v. United States

195 U.S. 27 (1904)

http://laws.findlaw.com/us/195/27.html

Vote: 6 (Brewer, Day, Harlan, Holmes, McKenna, White)

3 (Brown, Fuller, Peckham)

OPINION OF THE COURT: White

FACTS:

In the latter half of the nineteenth century, food producers developed a commercially marketable oleomargarine. The product was made of oleo oil, lard, milk, cream, and salt. It had a taste and consistency similar to butter but was less expensive. Especially successful was a margarine that was artificially colored to make the naturally white product look like butter. As margarine grew in popularity, the dairy industry became concerned and demanded protection. In response, Congress passed the Oleomargarine Act of 1886 and amended it in 1902. In addition to licensing producers and retailers of margarine, the statute imposed an excise tax of one-quarter cent per pound on uncolored margarine and a tax of ten cents per pound on artificially colored margarine. The margarine manufacturers were responsible for paying the tax. Although the act raised revenue, its central purpose was to protect the dairy industry by raising the price of margarine and discouraging the sale of the artificially colored product.

Leo McCray, a licensed retail seller of margarine, was assessed a $50 penalty for knowingly purchasing from the Ohio Butterine Company a fifty-pound package of margarine for resale on which sufficient taxes had not been paid. The package bore the one-quarter cent tax stamps, but the margarine was artificially colored and thus subject to the higher tax. McCray challenged his fine, claiming that the federal tax was unconstitutional. The lower courts upheld the validity of the tax.

ARGUMENTS:

For the plaintiff in error, Leo W. McCray:

The tax on oleomargarine colored like butter places an unreasonable burden on a wholesome food product. As a consequence it deprives McCray of his property without due process of law.

The United States has no authority to impose such a regulatory tax and is interfering with the police powers of the states by doing so.

This arbitrary tax discriminates against oleomargarine in favor of butter. The purpose of the law is not to gain revenue for the federal government but to destroy the oleomargarine industry for the benefit of the butter industry. This violates the fundamental principles of justice and equity inherent in the Constitution.

For the defendant in error, United States:

The tax on oleomargarine is an excise tax on a product.

The Constitution places no restraints on the government’s power to levy excise taxes except geographical uniformity. This tax meets that requirement and is therefore constitutional.

MR. JUSTICE WHITE DELIVERED THE OPINION OF THE COURT.

Did Congress in passing the acts which are assailed, exert a power not conferred by the Constitution?

That the acts in question on their face impose excise taxes which Congress had the power to levy is so completely established as to require only statement....

It is, however, argued if a lawful power may be exerted for an unlawful purpose, and thus by abusing the power it may be made to accomplish a result not intended by the Constitution, all limitations of power must disappear, and the grave function lodged in the judiciary, to confine all the departments within the authority conferred by the Constitution, will be of no avail. This, when reduced to its last analysis, comes to this, that, because a particular department of the government may exert its lawful powers with the object or motive of reaching an end not justified, therefore it becomes the duty of the judiciary to restrain the exercise of a lawful power wherever it seems to the judicial mind that such lawful power has been abused. But this reduces itself to the contention that, under our constitutional system, the abuse by one department of the government of its lawful powers is to be corrected by the abuse of its powers by another department.

The proposition, if sustained, would destroy all distinction between the powers of the respective departments of the government, would put an end to that confidence and respect for each other which it was the purpose of the Constitution to uphold, and would thus be full of danger to the permanence of our institutions....

It is, of course, true, as suggested, that if there be no authority in the judiciary to restrain a lawful exercise of power by another department of the government, where a wrong motive or purpose has impelled to the exertion of the power, that abuses of a power conferred may be temporarily effectual. The remedy for this, however, lies, not in the abuse by the judicial authority of its functions, but in the people, upon whom, after all, under our institutions, reliance must be placed for the correction of abuses committed in the exercise of a lawful power....

The decisions of this court from the beginning lend no support whatever to the assumption that the judiciary may restrain the exercise of lawful power on the assumption that a wrongful purpose or motive has caused the power to be exerted. As we have previously said, from the beginning no case can be found announcing such a doctrine, and on the contrary the doctrine of a number of cases is inconsistent with its existence. As quite recently pointed out by this court in Knowlton v. Moore (1900), the often quoted statement of Chief Justice Marshall in McCulloch v. Maryland, that the power to tax is the power to destroy, affords no support whatever to the proposition that where there is a lawful power to impose a tax its imposition may be treated as without the power because of the destructive effect of the exertion of the authority....

It being thus demonstrated that the motive or purpose of Congress in adopting the acts in question may not be inquired into, we are brought to consider the contentions relied upon to show that the acts assailed were beyond the power of Congress, putting entirely out of view all considerations based upon purpose or motive.

1. Undoubtedly, in determining whether a particular act is within a granted power, its scope and effect are to be considered. Applying this rule to the acts assailed, it is self-evident that on their face they levy an excise tax. That being their necessary scope and operation, it follows that the acts are within the grant of power. The argument to the contrary rests on the proposition that, although the tax be within the power, as enforcing it will destroy or restrict the manufacture of artificially colored oleomargarine, therefore the power to levy the tax did not obtain. This, however, is but to say that the question of power depends, not upon the authority conferred by the Constitution but upon what may be the consequence arising from the exercise of the lawful authority.

Since, as pointed out in all the decisions referred to, the taxing power conferred by the Constitution knows no limits except those expressly stated in that instrument, it must follow, if a tax be within the lawful power, the exertion of that power may not be judicially restrained because of the results to arise from its exercise....

2. The proposition that where a tax is imposed which is within the grant of powers, and which does not conflict with any express constitutional limitation, the courts may hold the tax to be void because it is deemed that the tax is too high, is absolutely disposed of by the opinions in the cases hitherto cited, and which expressly hold... that “The judicial department cannot prescribe to the legislative department limitations upon the exercise of its acknowledged powers. The power to tax may be exercised oppressively upon persons; but the responsibility of the legislature is not to the courts, but to the people by whom its members are elected.”

3. Whilst undoubtedly both the Fifth and Tenth Amendments qualify, in so far as they are applicable, all the provisions of the Constitution, nothing in those amendments operates to take away the grant of power to tax conferred by the Constitution upon Congress. The contention on this subject rests upon the theory that the purpose and motive of Congress in exercising its undoubted powers may be inquired into by the courts, and the proposition is therefore disposed of by what has been said on that subject.

The right of Congress to tax within its delegated power being unrestrained, except as limited by the Constitution, it was within the authority conferred on Congress to select the objects upon which an excise should be laid. It therefore follows that, in exerting its power, no want of due process of law could possibly result, because that body chose to impose an excise on artificially colored oleomargarine and not upon natural butter artificially colored....

4. Lastly we come to consider the argument that, even though as a general rule a tax of the nature of the one in question would be within the power of Congress, in this case the tax should be held not to be within such power, because of its effect. This is based on the contention that, as the tax is so large as to destroy the business of manufacturing oleomargarine artificially colored, to look like butter, it thus deprives the manufacturers of that article of their freedom to engage in a lawful pursuit, and hence, irrespective of the distribution of powers made by the Constitution, the taxing laws are void, because they violate those fundamental rights which it is the duty of every free government to safeguard, and which, therefore, should be held to be embraced by implied though none the less potential guaranties, or in any event to be within the protection of the due process clause of the Fifth Amendment.

Let us concede, for the sake of argument only, the premise of fact upon which the proposition is based. Moreover, concede for the sake of argument only, that even although a particular exertion of power by Congress was not restrained by any express limitation of the Constitution, if by the perverted exercise of such power so great an abuse was manifested as to destroy fundamental rights which no free government could consistently violate, that it would be the duty of the judiciary to hold such acts to be void upon the assumption that the Constitution by necessary implication forbade them.

Such concession, however, is not controlling in this case. This follows when the nature of oleomargarine, artificially colored to look like butter, is recalled. As we have said, it has been conclusively settled by this court that the tendency of that article to deceive the public into buying it for butter is such that the States may, in the exertion of their police powers, without violating the due process clause of the Fourteenth Amendment, absolutely prohibit the manufacture of the article. It hence results, that even though it be true that the effect of the tax in question is to repress the manufacture of artificially colored oleomargarine, it cannot be said that such repression destroys rights which no free government could destroy, and, therefore, no ground exists to sustain the proposition that the judiciary may invoke an implied prohibition, upon the theory that to do so is essential to save such rights from destruction. And the same considerations dispose of the contention based upon the due process clause of the Fifth Amendment. That provision, as we have previously said, does not withdraw or expressly limit the grant of power to tax conferred upon Congress by the Constitution. From this it follows, as we have also previously declared, that the judiciary is without authority to avoid an act of Congress exerting the taxing power, even in a case where to the judicial mind it seems that Congress had in putting such power in motion abused its lawful authority by levying a tax which was unwise or oppressive, or the result of the enforcement of which might be to indirectly affect subjects not within the powers delegated to Congress.

Let us concede that if a case was presented where the abuse of the taxing power was so extreme as to be beyond the principles which we have previously stated, and where it was plain to the judicial mind that the power had been called into play not for revenue but solely for the purpose of destroying rights which could not be rightfully destroyed consistently with the principles of freedom and justice upon which the Constitution rests, that it would be the duty of the courts to say that such an arbitrary act was not merely an abuse of a delegated power, but was the exercise of an authority not conferred. This concession, however, like the one previously made, must be without influence upon the decision of this cause for the reasons previously stated; that is, that the manufacture of artificially colored oleomargarine may be prohibited by a free government without a violation of fundamental rights.

Affirmed.

Rejection and Reestablishment of Regulatory Taxation

Among Congress’s targets was child labor. As we saw in our discussions of federalism and the commerce clause, Congress first attempted to regulate child labor in the 1916 Keating-Owen Act, which prohibited the shipment in interstate and foreign commerce of articles produced by child labor. Just two years after that law was enacted, the Supreme Court, in Hammer v. Dagenhart, struck it down on the ground that Congress, under the guise of interstate commerce regulation, was actually controlling manufacturing and mining, considered at that time to be intrastate activities that states must regulate.

After suffering this defeat at the hands of the Court, Congress drafted a second statute to attack child labor, this time using the power to tax. Could the national legislature constitutionally use the excise tax as a means of eliminating child labor? Would the justices once again refuse to examine congressional motives? The answer to these questions came in Bailey v. Drexel Furniture Co. (1922). As you read Chief Justice Taft’s opinion, note his distinction between a tax and a penalty. Does he make a compelling argument? And does it surprise you that progressive members of the Court, such as Oliver Wendell Holmes and Louis Brandeis, voted to strike down the law?

With the Court’s rejection of both its attempts to regulate child labor through the commerce and taxation powers, Congress pursued yet another alternative. In 1924, two years after Drexel, Congress proposed a constitutional amendment that gave the national government power to regulate and prohibit child labor. Unlike most proposed amendments, this one had no congressionally determined deadline on the states for ratification. Slightly more than half of the state legislatures endorsed the amendment before support for it began to decline. In the end, the amendment was unnecessary. Many states responded to decisions such as Hammer and Drexel by passing their own child labor laws. In addition, the 1937 constitutional revolution that redefined the concept of interstate commerce, along with subsequent employment regulation decisions such as United States v. Darby (1941), gave the federal government ample authority to control child labor.

The decision in Drexel was a reversal of the position on excise taxes the Court had held since the early 1800s. It proved to be out of line with Supreme Court rulings both before and after. The Court repeatedly has faced the question of taxation and regulation and generally has ruled in favor of the federal power to tax; the Court has even acknowledged that to some degree all taxes have regulatory effects. In United States v. Doremus (1919) and Nigro v. United States (1928) the Court upheld federal excise taxes on narcotics, and in United States v. Sanchez (1950) it upheld a tax on marijuana. Similarly, an excise tax on objectionable firearms was declared valid in Sonzinsky v. United States (1937), even though the Court admitted that the law had an unmistakable “legislative purpose to regulate rather than to tax.” In United States v. Kahriger (1953) the justices found no constitutional defects with an excise levied on professional gamblers. Such taxes expand federal regulatory powers. If Congress has the power to impose the tax, then the federal government also has the power to enforce the tax laws, creating, to an extent, “police powers” within the federal government that originally resided with the states.

The authority to use the excise tax as a regulatory power is not unlimited. Such taxes cannot be levied or enforced in a manner that violates other provisions of the Constitution. Kahriger provides an illustration. The tax imposed required those engaged in accepting bets to pay an annual excise of $50 and to register with the collector of internal revenue. Although it is constitutionally valid for Congress to impose an occupational excise tax, the law cannot compel a person to admit to criminal activity. To do so would be a violation of the Fifth Amendment’s self-incrimination clause. Joseph Kahriger raised these objections in his appeal, but the majority upheld the statute’s requirements that gamblers register with the government. Fifteen years later, however, the Court reexamined this position in Marchetti v. United States (1968). Here the Court held that no laws, including tax laws, can constitutionally require a person to admit to criminal activities. To the extent that the Kahriger decision permitted such procedures, it was overruled.

Bailey v. Drexel Furniture Co.

259 U.S. 20 (1922)

http://laws.findlaw.com/us/259/20.html

Vote: 8 (Brandeis, Day, Holmes, McKenna, McReynolds, Pitney, Taft, Van Devanter)

1 (Clarke)

OPINION OF THE COURT: Taft

FACTS:

Congress passed the Child Labor Tax Law on February 24, 1919. The statute imposed an excise tax of 10 percent on the net profits of any company hiring child labor. Under the law, child labor was defined as the employment of children under the age of sixteen in any mine or quarry or under the age of fourteen in any mill, cannery, workshop, factory, or manufacturing establishment. The definition also included the use of children between the ages of fourteen and sixteen who worked more than eight hours a day or more than six days a week, or who worked between the hours of 7:00 p.m. and 6:00 a.m.

Drexel was a furniture manufacturing company in North Carolina. On September 20, 1921, it received from J. W. Bailey, the IRS collector for the Western District of North Carolina, a notice that it had been assessed $6,312.79 in excise taxes for having employed a boy under the age of fourteen during the 1919 tax year. The company paid the tax under protest and sued for a refund. The lower court ruled in favor of the company.

Young boys working a loom in Macon, Georgia, circa 1910. Conditions such as these were the target of reform legislation passed by Congress and declared unconstitutional by the Supreme Court in Hammer v. Dagenhart (1918) and Bailey v. Drexel Furniture Co. (1922).

National Archives Records Administration

ARGUMENTS:

For the plaintiff in error, J. W. Bailey, collector of internal revenue for the Western District of North Carolina:

The challenged act is an excise tax that raises revenue for the federal government. As long as the tax is geographically uniform and is not levied on exports, it is constitutional. The law meets these requirements.

The Court should not restrain the lawful power of Congress on the assumption that a wrongful purpose or motive caused the power to be exercised (McCray v. United States).

Federal laws should not be invalidated where there is unquestioned power to act but there exists an incidental effect on some right reserved to the states.

For the defendant in error, Drexel Furniture Company:

This legislation regulates child labor, a subject over which the federal government is without authority (Hammer v. Dagenhart).

Congress has used the power to tax as a pretext for regulating a subject reserved for the states.

The law is much more a criminal statute that imposes a penalty on those who violate it than it is a revenue measure.

MR. CHIEF JUSTICE TAFT DELIVERED THE OPINION OF THE COURT.

The law is attacked on the ground that it is a regulation of the employment of child labor in the States—an exclusively state function under the Federal Constitution and within the reservations of the Tenth Amendment. It is defended on the ground that it is a mere excise tax levied by the Congress of the United States under its broad power of taxation conferred by §8, Article I, of the Federal Constitution. We must construe the law and interpret the intent and meaning of Congress from the language of the act. The words are to be given their ordinary meaning unless the context shows that they are differently used. Does this law impose a tax with only that incidental restraint and regulation which a tax must inevitably involve? Or does it regulate by the use of the so-called tax as a penalty? If a tax, it is clearly an excise. If it were an excise on a commodity or other thing of value we might not be permitted under previous decisions of this court to infer solely from its heavy burden that the act intends a prohibition instead of a tax. But this act is more. It provides a heavy exaction for a departure from a detailed and specified course of conduct in business. That course of business is that employers shall employ in mines and quarries, children of an age greater than sixteen years; in mills and factories, children of an age greater than fourteen years, and shall prevent children of less than sixteen years in mills and factories from working more than eight hours a day or six days in the week. If an employer departs from this prescribed course of business, he is to pay to the Government one-tenth of his entire net income in the business for a full year. The amount is not to be proportioned in any degree to the extent or frequency of the departures, but is to be paid by the employer in full measure whether he employs five hundred children for a year, or employs only one for a day. Moreover, if he does not know the child is within the named age limit, he is not to pay; that is to say, it is only where he knowingly departs from the prescribed course that payment is to be exacted. Scienter is associated with penalties, not with taxes. The employer’s factory is to be subject to inspection at any time not only by the taxing officers of the Treasury, the Department normally charged with the collection of taxes, but also by the Secretary of Labor and his subordinates, whose normal function is the advancement and protection of the welfare of the workers. In the light of these features of the act, a court must be blind not to see that the so-called tax is imposed to stop the employment of children within the age limits prescribed. Its prohibitory and regulatory effect and purpose are palpable. All others can see and understand this. How can we properly shut our minds to it?

It is the high duty and function of this court in cases regularly brought to its bar to decline to recognize or enforce seeming laws of Congress, dealing with subjects not entrusted to Congress but left or committed by the supreme law of the land to the control of the States. We cannot avoid the duty, even though it require us to refuse to give effect to legislation designed to promote the highest good. The good sought in unconstitutional legislation is an insidious feature because it leads citizens and legislators of good purpose to promote it without thought of the serious breach it will make in the ark of our covenant or the harm which will come from breaking down recognized standards. In the maintenance of local self-government, on the one hand, and the national power, on the other, our country has been able to endure and prosper for near a century and a half.

Out of a proper respect for the acts of a co-ordinate branch of the Government, this court has gone far to sustain taxing acts as such, even though there has been ground for suspecting from the weight of the tax it was intended to destroy its subject. But, in the act before us, the presumption of validity cannot prevail, because the proof of the contrary is found on the very face of its provisions. Grant the validity of this law, and all that Congress would need to do, hereafter, in seeking to take over to its control any one of the great number of subjects of public interest, jurisdiction of which the States have never parted with, and which are reserved to them by the Tenth Amendment, would be to enact a detailed measure of complete regulation of the subject and enforce it by a so-called tax upon departures from it. To give such magic to the word “tax” would be to break down all constitutional limitation of the powers of Congress and completely wipe out the sovereignty of the States.

The difference between a tax and a penalty is sometimes difficult to define and yet the consequences of the distinction in the required method of their collection often are important. Where the sovereign enacting the law has power to impose both tax and penalty, the difference between revenue production and mere regulation may be immaterial, but not so when one sovereign can impose a tax only, and the power of regulation rests in another. Taxes are occasionally imposed in the discretion of the legislature on proper subjects with the primary motive of obtaining revenue from them and with the incidental motive of discouraging them by making their continuance onerous. They do not lose their character as taxes because of the incidental motive. But there comes a time in the extension of the penalizing features of the so-called tax when it loses its character as such and becomes a mere penalty with the characteristics of regulation and punishment. Such is the case in the law before us. Although Congress does not invalidate the contract of employment or expressly declare that the employment within the mentioned ages is illegal, it does exhibit its intent practically to achieve the latter result by adopting the criteria of wrongdoing and imposing its principal consequence on those who transgress its standard. The case before us cannot be distinguished from that of Hammer v. Dagenhart. Congress there enacted a law to prohibit transportation in interstate commerce of goods made at a factory in which there was employment of children within the same ages and for the same number of hours a day and days in a week as are penalized by the act in this case. This court held the law in that case to be void. It said:

“In our view the necessary effect of this act is, by means of a prohibition against the movement in interstate commerce of ordinary commercial commodities, to regulate the hours of labor of children in factories and mines within the States, a purely state authority.”

In the case at the bar, Congress in the name of a tax which on the face of the act is a penalty seeks to do the same thing, and the effort must be equally futile.

The analogy of the Dagenhart Case is clear. The congressional power over interstate commerce is, within its proper scope, just as complete and unlimited as the congressional power to tax, and the legislative motive in its exercise is just as free from judicial suspicion and inquiry. Yet when Congress threatened to stop interstate commerce in ordinary and necessary commodities, unobjectionable as subjects of transportation, and to deny the same to the people of a State in order to coerce them into compliance with Congress’s regulation of state concerns, the court said this was not in fact regulation of interstate commerce, but rather that of State concerns and was invalid. So here the so-called tax is a penalty to coerce people of a State to act as Congress wishes them to act in respect of a matter completely the business of the state government under the Federal Constitution....

... For the reasons given, we must hold the Child Labor Tax Law invalid and the judgment of the District Court is

Affirmed.

TAXING AND SPENDING FOR THE GENERAL WELFARE

The Constitution authorizes Congress to tax and spend for the general welfare. Whether the term general welfare was intended to expand the powers of Congress beyond those explicitly stated in the Constitution is subject to debate. James Madison argued that the Constitution’s use of the term was only a reference to the other enumerated powers. Because the federal government is one of limited and specified powers, he asserted, the authority to tax and spend must be confined to those spheres of authority the Constitution explicitly granted. Alexander Hamilton took the opposite position. He interpreted the power to tax and spend for the general welfare to be a separate power altogether. For Hamilton, taxing and spending authority was given in addition to the other granted powers, not limited by them. The conflict between these two opposing interpretations was the subject of legal disputes throughout much of the nation’s history. During the constitutional crisis over legislation passed during implementation of the New Deal, however, the final battle between the two was waged.

A Restricted View of Taxing and Spending

Many of the programs Franklin Roosevelt recommended to reestablish the nation’s economic strength involved regulatory activity far more extensive than ever before proposed. Several depended on the power of the federal government to tax and spend for the general welfare. Opponents of the New Deal claimed that these programs, while ostensibly based on the taxing and spending authority, in reality were regulations of matters the Constitution reserved for the states.

The Roosevelt administration placed great importance on stabilizing agricultural markets and on creating conditions that would make farms profitable. To accomplish these goals, Congress passed the Agricultural Adjustment Act (AAA) of 1933, which was challenged in United States v. Butler (1936). Although the issues were crucial both to the economic welfare of the nation and to the constitutional future of federalism, Justice Owen Roberts, writing for the majority, presented an uncomplicated formula for deciding the case: “Lay the article of the Constitution which is invoked beside the statute which is challenged and... decide whether the latter squares with the former.” Do you believe the process of judicial review is that simple—especially when so much is riding on the outcome of the Court’s deliberations?

Butler had a mixed outcome. The Court concluded that the federal government had broad powers to tax and spend for the general welfare. The justices decided, consistent with Alexander Hamilton’s position, that Congress’s fiscal authority was not limited to those subjects specifically enumerated in Article I. This philosophy did not, however, mean that congressional powers had no limits. The majority in Butler concluded that the law was unconstitutional because what it imposed was not truly a tax. Instead, the government was taking money from one group (the processors) to give to another (the farmers), and it was doing this to regulate farm production, a matter of intrastate commerce reserved for state regulation.

United States v. Butler

297 U.S. 1 (1936)

http://laws.findlaw.com/us/297/1.html

Vote: 6 (Butler, Hughes, McReynolds, Roberts, Sutherland, Van Devanter)

3 (Brandeis, Cardozo, Stone)

OPINION OF THE COURT: Roberts

DISSENTING OPINION: Stone

William M. Butler, receiver for Hoosac Mills, objected to paying the federal tax on processing cotton. His lawsuit successfully challenged the constitutionality of the Agricultural Adjustment Act of 1933.

© Bettman/Corbis

FACTS:

During the Great Depression, agriculture was one of the hardest-hit sectors of the economy. The nation’s farmers were overproducing, which caused prices for farm products to drop. In many cases the cost of production was higher than the income from crop sales, leaving farmers in desperate straits. Most had their farms mortgaged, and all owed taxes on their land. The more the farmers fell behind economically, the more they produced to improve their situation, but this strategy made matters even worse. At that time agriculture was responsible for a much larger proportion of the nation’s economy than it is today, and conditions in the farming sector had dire effects on the entire country.

In response, Roosevelt proposed, and Congress passed, the Agricultural Adjustment Act (AAA), which combined the taxing and spending powers to combat the crisis. The central purpose of the plan was to reduce the amount of acreage being farmed. To accomplish this goal, the federal government would “rent” a percentage of the nation’s farmland and leave this acreage unplanted. In effect, the government would pay the farmers not to farm. If the plan succeeded, production would drop, prices would rise, and the farmers would have sufficient income. Making payments to the nation’s farmers would be costly, and to fund these expenditures the AAA imposed an excise tax on the processing of agricultural products.

The program was a success until William M. Butler challenged the constitutionality of the law. Butler was the bankruptcy receiver for Hoosac Mills Corporation, a cotton processor. When the government imposed the processing tax on Hoosac, Butler took legal action to avoid payment, claiming that the AAA exceeded the taxing and spending powers granted to the federal government. The district court upheld the law, but the court of appeals reversed. The United States appealed to the Supreme Court.

A number of groups having a direct interest in the outcome of the case filed amicus curiae briefs. Supporting the validity of the act were groups of farmers and other agricultural producers, such as the American Farm Bureau Federation. Arguing to strike down the AAA were agricultural processing interests such as the National Association of Cotton Manufacturers, National Biscuit Company, P. Lorillard Co., and General Mills.

ARGUMENTS:

For the petitioner, United States:

The taxes levied by the Agricultural Adjustment Act are excises. They are geographically uniform and meet the only constitutional restriction on such taxes.

The power to tax and spend should be construed broadly to allow such actions for any purposes conducive to the national welfare.

The question of what is best for the nation’s welfare is a matter for legislative determination.

The act is an exercise of the power to tax and spend only. No attempt is made to exercise any powers that are reserved for the states or the people by the Tenth Amendment.

For the respondents, William M. Butler et al., receivers of Hoosac Mills Corporation:

The Agricultural Adjustment Act is an attempt by Congress to regulate the local production of agricultural commodities. The authority to regulate agricultural production is reserved for the states by the Tenth Amendment.

The tax is not for a public purpose because it takes the processors’ money for the benefit of the producers. This is confiscation of the property of one class for the economic advantage of another.

The general welfare clause should not be interpreted to allow Congress the power to regulate by taxation the conduct and activities of citizens in spheres otherwise beyond congressional control.

The act is not a temporary measure and therefore cannot be defended as an emergency action to cope with the current economic crisis.

MR. JUSTICE ROBERTS DELIVERED THE OPINION OF THE COURT.

The Government asserts that even if the respondents may question the propriety of the appropriation embodied in the statute their attack must fail because Article I, §8 of the Constitution authorizes the contemplated expenditure of the funds raised by the tax. This contention presents the great and the controlling question in the case. We approach its decision with a sense of our grave responsibility to render judgment in accordance with the principles established for the governance of all three branches of the Government.

There should be no misunderstanding as to the function of this court in such a case. It is sometimes said that the court assumes a power to overrule or control the action of the people’s representatives. This is a misconception. The Constitution is the supreme law of the land ordained and established by the people. All legislation must conform to the principles it lays down. When an act of Congress is appropriately challenged in the courts as not conforming to the constitutional mandate the judicial branch of the Government has only one duty,—to lay the article of the Constitution which is invoked beside the statute which is challenged and to decide whether the latter squares with the former. All the court does, or can do, is to announce its considered judgment upon the question. The only power it has, if such it may be called, is the power of judgment. This court neither approves nor condemns any legislative policy. Its delicate and difficult office is to ascertain and declare whether the legislation is in accordance with, or in contravention of, the provisions of the Constitution; and, having done that, its duty ends.

The question is not what power the Federal Government ought to have but what powers in fact have been given by the people. It hardly seems necessary to reiterate that ours is a dual form of government; that in every state there are two governments,—the state and the United States. Each State has all governmental powers save such as the people, by their Constitution, have conferred upon the United States, denied to the States, or reserved to themselves. The federal union is a government of delegated powers. It has only such as are expressly conferred upon it and such as are reasonably to be implied from those granted. In this respect we differ radically from nations where all legislative power, without restriction or limitation, is vested in a parliament or other legislative body subject to no restrictions except the discretion of its members.

Article I, §8, of the Constitution vests sundry powers in the Congress. But two of its clauses have any bearing upon the validity of the statute under review.

The third clause endows the Congress with power “to regulate Commerce... among the several States.” Despite a reference in its first section to a burden upon, and an obstruction of the normal currents of commerce, the act under review does not purport to regulate transactions in interstate or foreign commerce. Its stated purpose is the control of agricultural production, a purely local activity, in an effort to raise the prices paid the farmer. Indeed, the Government does not attempt to uphold the validity of the act on the basis of the commerce clause, which, for the purpose of the present case, may be put aside as irrelevant.

The clause thought to authorize the legislation,—the first,—confers upon the Congress 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....” It is not contended that this provision grants power to regulate agricultural production upon the theory that such legislation would promote the general welfare. The Government concedes that the phrase “to provide for the general welfare” qualifies the power “to lay and collect taxes.” The view that the clause grants power to provide for the general welfare, independently of the taxing power, has never been authoritatively accepted.... The true construction undoubtedly is that the only thing granted is the power to tax for the purpose of providing funds for payment of the nation’s debts and making provision for the general welfare.

Nevertheless the Government asserts that warrant is found in this clause for the adoption of the Agricultural Adjustment Act. The argument is that Congress may appropriate and authorize the spending of moneys for the “general welfare”; that the phrase should be liberally construed to cover anything conducive to national welfare; that decision as to what will promote such welfare rests with Congress alone, and the courts may not review its determination; and finally that the appropriation under attack was in fact for the general welfare of the United States.

The Congress is expressly empowered to lay taxes to provide for the general welfare. Funds in the Treasury as a result of taxation may be expended only through appropriation. (Art. I, §9, cl. 7.) They can never accomplish the objects for which they were collected unless the power to appropriate is as broad as the power to tax. The necessary implication from the terms of the grant is that the public funds may be appropriated “to provide for the general welfare of the United States.” These words cannot be meaningless, else they would not have been used. The conclusion must be that they were intended to limit and define the granted power to raise and to spend money. How shall they be construed to effectuate the intent of the instrument?

Since the foundation of the Nation, sharp differences of opinion have persisted as to the true interpretation of the phrase. Madison asserted it amounted to no more than a reference to the other powers enumerated in the subsequent clauses of the same section; that, as the United States is a government of limited and enumerated powers, the grant of power to tax and spend for the general national welfare must be confined to the enumerated legislative fields committed to the Congress. In this view the phrase is mere tautology, for taxation and appropriation are or may be necessary incidents of the exercise of any of the enumerated legislative powers. Hamilton, on the other hand, maintained the clause confers a power separate and distinct from those later enumerated, is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and to appropriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States. Each contention has had the support of those whose views are entitled to weight. This court has noticed the question, but has never found it necessary to decide which is the true construction. Mr. Justice Story, in his Commentaries, espouses the Hamiltonian position. We shall not review the writings of public men and commentators or discuss the legislative practice. Study of all these leads us to conclude that the reading advocated by Mr. Justice Story is the correct one. While, therefore, the power to tax is not unlimited, its confines are set in the clause which confers it, and not in those of §8 which bestow and define the legislative powers of the Congress. It results that the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution....

We are not now required to ascertain the scope of the phrase “general welfare of the United States” or to determine whether an appropriation in aid of agriculture falls within it. Wholly apart from that question, another principle embedded in our Constitution prohibits the enforcement of the Agricultural Adjustment Act. The act invades the reserved rights of the states. It is a statutory plan to regulate and control agricultural production, a matter beyond the powers delegated to the federal government. The tax, the appropriation of the funds raised, and the direction for their disbursement, are but parts of the plan. They are but means to an unconstitutional end.

From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited. None to regulate agricultural production is given, and therefore legislation by Congress for that purpose is forbidden.

It is an established principle that the attainment of a prohibited end may not be accomplished under the pretext of the exertion of powers which are granted....

The power of taxation, which is expressly granted, may, of course, be adopted as a means to carry into operation another power also expressly granted. But resort to the taxing power to effectuate an end which is not legitimate, not within the scope of the Constitution, is obviously inadmissible....

... If the taxing power may not be used as the instrument to enforce a regulation of matters of state concern with respect to which the Congress has no authority to interfere, may it, as in the present case, be employed to raise the money necessary to purchase a compliance which the Congress is powerless to command? The Government asserts that whatever might be said against the validity of the plan if compulsory, it is constitutionally sound because the end is accomplished by voluntary cooperation. There are two sufficient answers to the contention. The regulation is not in fact voluntary. The farmer, of course, may refuse to comply, but the price of such refusal is the loss of benefits. The amount offered is intended to be sufficient to exert pressure on him to agree to the proposed regulation. The power to confer or withhold unlimited benefits is the power to coerce or destroy. If the cotton grower elects not to accept the benefits, he will receive less for his crops; those who receive payments will be able to undersell him. The result will be financial ruin. The coercive purpose and intent of the statute is not obscured by the fact that it has not been perfectly successful. It is pointed out that, because there still remained a minority whom the rental and benefit payments were insufficient to induce to surrender their independence of action, the Congress has gone further and, in the Bankhead Cotton Act, used the taxing power in a more directly minatory fashion to compel submission. This progression only serves more fully to expose the coercive purpose of the so-called tax imposed by the present act. It is clear that the Department of Agriculture has properly described the plan as one to keep a non-cooperating minority in line. This is coercion by economic pressure. The asserted power of choice is illusory....

But if the plan were one for purely voluntary cooperation it would stand no better so far as federal power is concerned. At best it is a scheme for purchasing with federal funds submission to federal regulation of a subject reserved to the states....

Congress has no power to enforce its commands on the farmer to the ends sought by the Agricultural Adjustment Act. It must follow that it may not indirectly accomplish those ends by taxing and spending to purchase compliance. The Constitution and the entire plan of our government negative any such use of the power to tax and to spend as the act undertakes to authorize. It does not help to declare that local conditions throughout the nation have created a situation of national concern; for this is but to say that whenever there is a widespread similarity of local conditions, Congress may ignore constitutional limitations upon its own powers and usurp those reserved to the states. If, in lieu of compulsory regulation of subjects within the states’ reserved jurisdiction, which is prohibited, the Congress could invoke the taxing and spending power as a means to accomplish the same end, clause 1 of §8 of Article I would become the instrument for total subversion of the governmental powers reserved to the individual states.

If the act before us is a proper exercise of the federal taxing power, evidently the regulation of all industry throughout the United States may be accomplished by similar exercises of the same power. It would be possible to exact money from one branch of an industry and pay it to another branch in every field of activity which lies within the province of the states. The mere threat of such a procedure might well induce the surrender of rights and the compliance with federal regulation as the price of continuance in business....

The judgment is

Affirmed.

MR. JUSTICE STONE, dissenting.

I think the judgment should be reversed.

The present stress of widely held and strongly expressed differences of opinion of the wisdom of the Agricultural Adjustment Act makes it important, in the interest of clear thinking and sound result, to emphasize at the outset certain propositions which should have controlling influence in determining the validity of the Act. They are:

The power of the courts to declare a statute unconstitutional is subject to two guiding principles of decision which ought never to be absent from judicial consciousness. One is that courts are concerned only with the power to enact statutes, not with their wisdom. The other is that while unconstitutional exercise of power by the legislative and executive branches of the government is subject to judicial restraint, the only check upon our own exercise of power is our own sense of self-restraint. For the removal of unwise laws from the statute books appeal lies not to the courts but to the ballot and to the processes of democratic government.

The constitutional power of Congress to levy an excise tax upon the processing of agricultural products is not questioned. The present levy is held invalid, not for any want of power in Congress to lay such a tax to defray public expenditures, including those for the general welfare, but because the use to which its proceeds are put is disapproved.

As the present depressed state of agriculture is nationwide in its extent and effects, there is no basis for saying that the expenditure of public money in aid of farmers is not within the specifically granted power of Congress to levy taxes to “provide for the... general welfare.” The opinion of the Court does not declare otherwise.

No question of a variable tax fixed from time to time by fiat of the Secretary of Agriculture, or of unauthorized delegation of legislative power, is now presented. The schedule of rates imposed by the Secretary in accordance with the original command of Congress has since been specifically adopted and confirmed by Act of Congress, which has declared that it shall be the lawful tax. That is the tax which the government now seeks to collect. Any defects there may have been in the manner of laying the tax by the Secretary have now been removed by the exercise of the power of Congress to pass a curative statute validating an intended, though defective, tax. The Agricultural Adjustment Act as thus amended declares that none of its provisions shall fail because others are pronounced invalid.

It is with these preliminary and hardly controverted matters in mind that we should direct our attention to the pivot on which the decision of the Court is made to turn. It is that a levy unquestionably within the taxing power of Congress may be treated as invalid because it is a step in a plan to regulate agricultural production and is thus a forbidden infringement of state power. The levy is not any less an exercise of taxing power because it is intended to defray an expenditure for the general welfare rather than for some other support of government. Nor is the levy and collection of the tax pointed to as effecting the regulation. While all federal taxes inevitably have some influence on the internal economy of the states, it is not contended that the levy of a processing tax upon manufacturers using agricultural products as raw material has any perceptible regulatory effect upon either their production or manufacture.... Here regulation, if any there be, is accomplished not by the tax but by the method by which its proceeds are expended, and would equally be accomplished by any like use of public funds, regardless of their source.

... [T]he power to tax and spend includes the power to relieve a nationwide economic maladjustment by conditional gifts of money.

Expanding the Powers to Tax and Spend

The impact of the Butler case was short-lived. Following the Court’s dramatic change in position after Roosevelt’s threat to add new members, the justices ruled that agriculture could be regulated under the commerce power.14 As for the power to tax and spend for the general welfare, the position taken in Butler was reevaluated the very next year in Steward Machine Co. v. Davis (1937), a challenge to the constitutionality of the newly formed Social Security system. The Social Security Act of 1935 shared several characteristics with the AAA the Court had condemned in Butler: both used the taxing and spending powers to combat the effects of the Depression, both took money from one group of people to give to another, and both regulated areas previously thought to be reserved to the states. But in Steward Machine the justices upheld the validity of the act. Note that in this case Chief Justice Hughes and Justice Roberts desert the Butler majority and join with the liberal wing of the Court to forge new constitutional interpretations.

In a second case decided the same day, the Court upheld the old-age benefits provisions of the Social Security Act.15 From that point on, the Social Security program became a permanent fixture in the lives of American workers. The Social Security cases also firmly established that the taxing and spending powers are to be broadly construed. If Congress decides that the general welfare of the United States demands a program requiring the use of these fiscal powers, the Supreme Court likely will find it constitutionally valid unless parts of the law violate specific provisions of the Constitution. Since these 1937 decisions, Congress has used the spending authority to expand greatly the role of the federal government.

Steward Machine Co. v. Davis

301 U.S. 548 (1937)

http://laws.findlaw.com/us/301/548.html

Vote: 5 (Brandeis, Cardozo, Hughes, Roberts, Stone)

4 (Butler, McReynolds, Sutherland, Van Devanter)

OPINION OF THE COURT: Cardozo

DISSENTING OPINIONS: Butler, McReynolds, Sutherland

FACTS:

On August 14, 1935, Congress passed the Social Security Act, a comprehensive law designed to provide economic security to groups of individuals who were particularly in need. Its three most important programs were the creation of an old-age and survivors benefits program; the implementation of benefits for dependent children, the handicapped, and the sight-impaired; and the development of a cooperative federal–state unemployment compensation system. The unemployment provisions were the focus of the constitutional challenge in this case.

The act, as originally passed, imposed an excise tax on employers who hired more than eight workers. The tax was based on the total amount of wages paid. Employers could receive a tax credit, not to exceed 90 percent of their unemployment tax obligations, for contributions made to an approved state unemployment compensation program.

The state programs had to meet federal specifications. The money that employers contributed to these state funds was deposited with the secretary of the U.S. Treasury. The secretary would pay funds back to the states for their unemployment compensation programs. Congress also authorized additional federal funds to be used to assist the states in administering their compensation systems.

Steward Machine Company, an Alabama corporation, paid the taxes due under the program and then sued the collector of internal revenue for a refund, claiming that the Social Security Act violated the Constitution on a number of grounds. The amount of the contested refund was $46.14. The district court and the court of appeals upheld the validity of the act.

ARGUMENTS:

For the petitioner, Charles C. Steward Machine Co.:

Congress lacks the constitutional power to establish a system of contributions and benefits for the purpose of regulating unemployment.

The law coerces the states to create unemployment compensation programs. If states do not comply, their citizens are penalized by being required to supply millions of dollars in tax payments to the federal government to be used for the administration of unemployment programs in the states that do participate.

The use of the taxing power is a mere pretext to allow Congress to regulate employer-employee relationships, a regulatory area reserved for the states.

The law exempts certain employers, such as those who employ fewer than eight workers, household domestics, or agricultural workers, which makes the law arbitrary and unconstitutional under the due process clause of the Fifth Amendment.

For the respondent, Harwell G. Davis, collector of internal revenue for the district of Alabama:

This tax is a valid excise that meets the constitutional requirement of geographical uniformity. The taxing and spending are being used for the general welfare.

The tax cannot be considered a penalty. The tax payer pays the same amount whether the state participates in the program or not.

Congress is not attempting to regulate employer-employee relationships.

The law does not coerce the states to participate. Rather, it encourages state-federal cooperation. States remain free not to participate.

MR. JUSTICE CARDOZO DELIVERED THE OPINION OF THE COURT.

The assault on the statute proceeds on an extended front. Its assailants take the ground that the tax is not an excise; that it is not uniform throughout the United States as excises are required to be; that its exceptions are so many and arbitrary as to violate the Fifth Amendment; that its purpose was not revenue, but an unlawful invasion of the reserved powers of the states; and that the states in submitting to it have yielded to coercion and have abandoned governmental functions which they are not permitted to surrender.

The objections will be considered seriatim with such further explanation as may be necessary to make their meaning clear.

First. The tax, which is described in the statute as an excise, is laid with uniformity throughout the United States as a duty, an impost or an excise upon the relation of employment....

The subject matter of taxation open to the power of the Congress is as comprehensive as that open to the power of the states, though the method of apportionment may at times be different.... The statute books of the states are strewn with illustrations of taxes laid on occupations pursued of common right. We find no basis for a holding that the power in that regard which belongs by accepted practice to the legislatures of the states, has been denied by the Constitution to the Congress of the nation.

The tax being an excise, its imposition must conform to the canon of uniformity. There has been no departure from this requirement. According to the settled doctrine the uniformity exacted is geographical, not intrinsic.

Second. The excise is not invalid under the provisions of the Fifth Amendment by force of its exemptions.

The statute does not apply, as we have seen, to employers of less than eight. It does not apply to agricultural labor, or domestic service in a private home or to some other classes of less importance. Petitioner contends that the effect of these restrictions is an arbitrary discrimination vitiating the tax....

The classifications and exemptions directed by the statute now in controversy have support in considerations of policy and practical convenience that cannot be condemned as arbitrary.... The act of Congress is therefore valid, so far at least as its system of exemptions is concerned, and this though we assume that discrimination, if gross enough, is equivalent to confiscation and subject under the Fifth Amendment to challenge and annulment.

Third. The excise is not void as involving the coercion of the States in contravention of the Tenth Amendment or of restrictions implicit in our federal form of government.

The proceeds of the excise when collected are paid into the Treasury at Washington, and thereafter are subject to appropriation like public moneys generally. No presumption can be indulged that they will be misapplied or wasted. Even if they were collected in the hope or expectation that some other and collateral good would be furthered as an incident, that without more would not make the act invalid. This indeed is hardly questioned. The case for the petitioner is built on the contention that here an ulterior aim is wrought into the very structure of the act, and what is even more important that the aim is not only ulterior, but essentially unlawful. In particular, the 90 per cent credit is relied upon as supporting that conclusion. But before the statute succumbs to an assault upon these lines, two propositions must be made out by the assailant. There must be a showing in the first place that separated from the credit the revenue provisions are incapable of standing by themselves. There must be a showing in the second place that the tax and the credit in combination are weapons of coercion, destroying or impairing the autonomy of the states. The truth of each proposition being essential to the success of the assault, we pass for convenience to a consideration of the second, without pausing to inquire whether there has been a demonstration of the first.

To draw the line intelligently between duress and inducement there is need to remind ourselves of facts as to the problem of unemployment that are now matters of common knowledge. The relevant statistics are gathered in the brief of counsel for the Government. Of the many available figures a few only will be mentioned. During the years 1929 to 1936, when the country was passing through a cyclical depression, the number of the unemployed mounted to unprecedented heights. Often the average was more than 10 million; at times a peak was attained of 16 million or more. Disaster to the breadwinner meant disaster to dependents. Accordingly the roll of the unemployed, itself formidable enough, was only a partial roll of the destitute or needy. The fact developed quickly that the states were unable to give the requisite relief. The problem had become national in area and dimensions. There was need of help from the nation if the people were not to starve. It is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare....

In the presence of this urgent need for some remedial expedient, the question is to be answered whether the expedient adopted has overleapt the bounds of power. The assailants of the statute say that its dominant end and aim is to drive the state legislatures under the whip of economic pressure into the enactment of unemployment compensation laws at the bidding of the central government. Supporters of the statute say that its operation is not constraint, but the creation of a larger freedom, the states and the nation joining in a co-operative endeavor to avert a common evil....

The Social Security Act is an attempt to find a method by which all these public agencies may work together to a common end. Every dollar of the new taxes will continue in all likelihood to be used and needed by the nation as long as states are unwilling, whether through timidity or for other motives, to do what can be done at home. At least the inference is permissible that Congress so believed, though retaining undiminished freedom to spend the money as it pleased. On the other hand fulfillment of the home duty will be lightened and encouraged by crediting the taxpayer upon his account with the Treasury of the nation to the extent that his contributions under the laws of the locality have simplified or diminished the problem of relief and the probable demand upon the resources of the fisc. Duplicated taxes, or burdens that approach them, are recognized hardships that government, state or national, may properly avoid. If Congress believed that the general welfare would better be promoted by relief through local units than by the system then in vogue, the cooperating localities ought not in all fairness to pay a second time.

Who then is coerced through the operation of this statute? Not the taxpayer. He pays in fulfillment of the mandate of the local legislature. Not the state. Even now she does not offer a suggestion that in passing the unemployment law she was affected by duress. For all that appears she is satisfied with her choice, and would be sorely disappointed if it were now to be annulled. The difficulty with the petitioner’s contention is that it confuses motive with coercion. “Every tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed.” (Sonzinsky v. United States, 1937.) In like manner every rebate from a tax when conditioned upon conduct is in some measure a temptation. But to hold that motive or temptation is equivalent to coercion is to plunge the law in endless difficulties. The outcome of such a doctrine is the acceptance of a philosophical determinism by which choice becomes impossible. Till now the law has been guided by a robust common sense which assumes the freedom of the will as a working hypothesis in the solution of its problems....

United States v. Butler is cited by petitioner as a decision to the contrary. There a tax was imposed on processors of farm products, the proceeds to be paid to farmers who would reduce their acreage and crops under agreements with the Secretary of Agriculture, the plan of the act being to increase the prices of certain farm products by decreasing the quantities produced. The court held (1) that the so-called tax was not a true one, the proceeds being earmarked for the benefit of farmers complying with the prescribed conditions, (2) that there was an attempt to regulate production without the consent of the state in which production was affected, and (3) that the payments to farmers were coupled with coercive contracts, unlawful in their aim and oppressive in their consequences. The decision was by a divided court, a minority taking the view that the objections were untenable. None of them is applicable to the situation here developed.

The proceeds of the tax in controversy are not earmarked for a special group.

The unemployment compensation law which is a condition of the credit has had the approval of the state and could not be a law without it.

The condition is not linked to an irrevocable agreement, for the state at its pleasure may repeal its unemployment law, terminate the credit, and place itself where it was before the credit was accepted.

The condition is not directed to the attainment of an unlawful end, but to an end, the relief of unemployment, for which nation and state may lawfully cooperate.

Fourth. The statute does not call for a surrender by the states of powers essential to their quasi-sovereign existence....

The judgment is

Affirmed.

Separate opinion of MR. JUSTICE McREYNOLDS.

That portion of the Social Security legislation here under consideration, I think, exceeds the power granted to Congress. It unduly interferes with the orderly government of the state by her own people and otherwise offends the Federal Constitution.

In Texas v. White (1869), a cause of momentous importance, this Court, through Chief Justice Chase, declared—“But the perpetuity and indissolubility of the Union, by no means implies the loss of distinct and individual existence, or of the right of self-government by the States....”

The doctrine thus announced and often repeated, I had supposed was firmly established. Apparently the states remained really free to exercise governmental powers, not delegated or prohibited, without interference by the federal government through threats of punitive measures or offers of seductive favors. Unfortunately, the decision just announced opens the way for practical annihilation of this theory; and no cloud of words or ostentatious parade of irrelevant statistics should be permitted to obscure that fact.

Separate opinion of MR. JUSTICE SUTHERLAND.

With most of what is said in the opinion just handed down, I concur....

But the question with which I have difficulty is whether the administrative provisions of the act invade the governmental administrative powers of the several states reserved by the Tenth Amendment....

The precise question, therefore, which we are required to answer by an application of these principles is whether the congressional act contemplates a surrender by the state to the federal government, in whole or in part, of any state governmental power to administer its own unemployment law or the state pay roll-tax funds which it has collected for the purposes of that law. An affirmative answer to this question, I think, must be made....

If we are to survive as the United States, the balance between the powers of the nation and those of the states must be maintained. There is grave danger in permitting it to dip in either direction, danger—if there were no other—in the precedent thereby set for further departures from the equipoise. The threat implicit in the present encroachment upon the administrative functions of the states is that greater encroachments, and encroachments upon other functions, will follow.

For the foregoing reasons, I think the judgment below should be reversed.

MR. JUSTICE VAN DEVANTER joins in this opinion.

MR. JUSTICE BUTLER, dissenting.

I think that the objections to the challenged enactment expressed in the separate opinions of MR. JUSTICE MCREYNOLDS and MR. JUSTICE SUTHERLAND are well taken. I am also of opinion that, in principle and as applied to bring about and to gain control over state unemployment compensation, the statutory scheme is repugnant to the Tenth Amendment.... The Constitution grants to the United States no power to pay unemployed persons or to require the states to enact laws or to raise or disburse money for that purpose. The provisions in question, if not amounting to coercion in a legal sense, are manifestly designed and intended directly to affect state action in the respects specified. And, if valid as so employed, this “tax and credit” device may be made effective to enable federal authorities to induce, if not indeed to compel, state enactments for any purpose within the realm of state power and generally to control state administration of state laws....

The terms of the measure make it clear that the tax and credit device was intended to enable federal officers virtually to control the exertion of powers of the states in a field in which they alone have jurisdiction and from which the United States is by the Constitution excluded.

I am of opinion that the judgment of the Circuit Court of Appeals should be reversed.

Federal–State Fiscal Tensions

Because the justices now tend to defer to Congress on such matters, serious challenges to federal spending programs are now unusual, although battles over federal and state authority with respect to spending programs do occasionally flare up. An important example is provided by South Dakota v. Dole (1987), which involved a conflict over federal spending power and the state’s authority to regulate highway safety and alcoholic beverages. The use of federal funds to coerce the states into taking particular policy positions was criticized in much the same manner as arguments in Steward Machine attacked the establishment of state unemployment compensation programs. It is interesting to note that Chief Justice William Rehnquist, who was considered a strong defender of states’ rights, wrote the majority opinion upholding the exercise of federal authority over the states. Justice Brennan cast a dissenting vote, another surprise because Brennan usually could be counted on to support federal power. Not surprising was Justice O’Connor’s stinging dissent on behalf of state interests.

Rehnquist’s opinion gave strong support to the federal spending power. The majority held that only four basic requirements must be met for a federal spending statute to be valid: (1) the expenditure must be for the general welfare, (2) any conditions imposed on the expenditure must be unambiguous, (3) the conditions must be reasonably related to the purpose of the expenditure, and (4) the legislation must not violate any independent constitutional provision. These are minimal requirements indeed, especially since the Court acknowledged a policy of deferring to the legislature as to determinations of what promotes the general welfare. O’Connor’s dissent, which praised much of what the Court concluded in Butler, is not likely to find a great deal of support today.

Five years after the Dole decision the justices confronted another spending power dispute in the case of New York v. United States (1992). As we discussed in chapter 6, this case involved the federal government’s use of financial incentives to encourage the states to provide for the disposal of low-level radioactive waste generated within their borders. Although the justices found fault with portions of the challenged law that required the states to enact or enforce a federal regulatory program, they approved the financial incentive provisions. The Court concluded that the federal radioactive waste program was appropriately justified under the commerce clause and did not intrude on the sovereignty reserved to the states under the Tenth Amendment. Consequently, the use of financial incentives was a proper exercise of Congress’s constitutional power to spend.

Decisions such as Dole and New York gave Congress ample discretion to use the taxing and spending power to “encourage” states to comply with federal policy preferences. If Congress uses this power effectively and within the limitations imposed by the Court, it can extend its influence by providing financial incentives for states to adopt federally favored policies.

As the Court entered the twenty-first century, it had not invalidated any federal spending legislation since 1936, when, in United States v. Butler, the justices struck down the AAA. Yet the continuing judicial support for federal taxing and spending programs seemed to be running at odds with another line of decisions. In cases such as United States v. Lopez (1995) and Printz v. United States (1997), the justices applied principles of federalism to strike down congressional actions that encroached on the policy-making authority of the states. What would happen if Congress provided financial incentives that were viewed by the states as being excessive, leaving the state no choice but to participate in a federal program? Would the Court under these circumstances continue to support federal use of the taxing and spending powers? Or would the Court find such incentives to have a coercive effect that would be destructive to the traditional relationship between the federal government and the states? A major clash over just these questions occurred in 2012 when the justices reviewed the constitutionality of the Patient Protection and Affordable Care Act (ACA).

We introduced the case of National Federation of Independent Business v. Sebelius in the previous chapter, where we focused on the federal government’s argument that Congress has ample authority under the commerce clause to require all Americans not already covered by medical insurance to buy a health-care policy or pay a “shared responsibility” penalty for failure to do so. We saw that the Court concluded that the commerce power did not extend so far as to allow Congress to command unwilling individuals to purchase a commercial product. The Court’s ruling, however, did not invalidate the ACA. The government had an alternative position, an argument that Congress could enact the individual mandate through the use of the constitutional power to tax.

Another significant provision of the ACA involved an enlargement of the Medicaid program. This section of the ACA expanded both the number of persons eligible for Medicaid and the benefits provided. Because Medicaid is jointly financed by the federal and state governments, the expanded program would be costly to the states. In the law, Congress stipulated that state participation in the expanded program was voluntary and also used the spending power to provide generous funds to cover most of the initial state costs of expanding the program. However, if a state elected not to participate in the program, it would lose all of its federal Medicaid money. The federal government argued that the spending clause gave Congress ample authority to impose this requirement as a condition for receiving federal dollars. A number of states objected, however, claiming that the nonparticipation penalty was a way to coerce the states into joining the expanded program.

In the excerpt that appears below we highlight the Court’s response to the taxing power justification for the individual mandate and the spending power rationale for the Medicaid expansion. Throughout the opinions in this decision you will see references to many of the perennial taxing and spending power issues the Court has confronted since the beginning of the Republic.

National Federation of Independent Business v. Sebelius was a landmark ruling on the power of Congress. First, it narrowed the range of federal regulatory power under the commerce clause by declaring that Congress does not have the authority to order individuals to engage in a commercial transaction. Second, it once again upheld the use of the taxing power as a way to justify legislation that Congress might not otherwise have the authority to enact. And third, for the first time in seventy-five years the justices struck down a federal spending initiative, finding that the Medicaid expansion violated the principles of federalism by coercing the states to participate in a federal program.

South Dakota v. Dole

483 U.S. 203 (1987)

http://laws.findlaw.com/us/483/203.html

Oral arguments are available at https://www.oyez.org.

Vote: 7 (Blackmun, Marshall, Powell, Rehnquist, Scalia, Stevens, White)

2 (Brennan, O’Connor)

OPINION OF THE COURT: Rehnquist

DISSENTING OPINIONS: Brennan, O’Connor

FACTS:

In 1984 Congress passed a statute, 23 U.S.C. 158, directing the secretary of transportation to withhold a portion of federal highway funds from any state that did not establish a minimum age of twenty-one years for the legal consumption of alcoholic beverages. Many states at that time had lower minimum drinking ages. The purpose of the law was to decrease the number of serious automobile accidents among young people, a group that statistics showed had a high percentage of accidents. The legislators correctly believed that withholding federal dollars would be an effective way of encouraging the states to comply with the federal program.

South Dakota, which allowed the purchase of beer containing 3.2 percent alcohol by persons nineteen years or older, objected to the statute, arguing that Congress was infringing on the rights of the states. The Twenty-first Amendment repealed Prohibition in 1933 and gave the states full authority to regulate alcoholic beverages. South Dakota, therefore, claimed that Congress had no authority to set a minimum drinking age. According to the state, the federal government was using its considerable spending power to coerce the states into enacting laws that were otherwise outside congressional authority.

The state sued Secretary of Transportation Elizabeth Dole, asking the courts to declare the law unconstitutional. Both the district court and the court of appeals ruled against the state and upheld the law.

ARGUMENTS:

For the petitioner, state of South Dakota:

From their inception the states had the authority under their police powers to control the distribution of alcohol within their borders. The Twenty-first Amendment, repealing the Eighteenth Amendment, gave the states additional authority to regulate alcohol.

The states are not merely subdivisions or departments of the federal government; rather, they are sovereign within all areas not granted to the national government.

The right of the states has particular force when the Constitution has explicitly conferred an authority on them, as the Twenty-first Amendment has done.

Federal regulation of the minimum drinking age invades the reserved powers of the states and violates both the Twenty-first Amendment and the Tenth Amendment.

For the respondent, Elizabeth H. Dole, secretary of transportation:

Congress passed section 158 in response to alcohol-related accidents that occur when young people living in states with a minimum drinking age of twenty-one travel on interstate highways to obtain alcohol in states with lower drinking ages.

The federal law does not set a minimum drinking age. The state retains this authority. Congress has only provided a financial incentive for states to set a uniform drinking age at twenty-one.

It is within the authority of Congress to place conditions on the awarding of federal funds.

The reduction in federal funds for states that do not set their drinking age at twenty-one is modest and well under the level that would be considered coercive.

CHIEF JUSTICE REHNQUIST DELIVERED THE OPINION OF THE COURT.

The Constitution empowers Congress 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.” Art. I, §8, cl. 1. Incident to this power, Congress may attach conditions on the receipt of federal funds, and has repeatedly employed the power “to further broad policy objectives by conditioning receipt of federal moneys upon compliance by the recipient with federal statutory and administrative directives.” The breadth of this power was made clear in United States v. Butler (1936), where the Court, resolving a longstanding debate over the scope of the Spending Clause, determined that “the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution.” Thus, objectives not thought to be within Article I’s “enumerated legislative fields” may nevertheless be attained through the use of the spending power and the conditional grant of federal funds.

The spending power is of course not unlimited, but is instead subject to several general restrictions articulated in our cases. The first of these limitations is derived from the language of the Constitution itself: the exercise of the spending power must be in pursuit of “the general welfare.” In considering whether a particular expenditure is intended to serve general public purposes, courts should defer substantially to the judgment of Congress. Second, we have required that if Congress desires to condition the States’ receipt of federal funds, it “must do so unambiguously..., enabl[ing] the States to exercise their choice knowingly, cognizant of the consequences of their participation.” Third, our cases have suggested (without significant elaboration) that conditions on federal grants might be illegitimate if they are unrelated “to the federal interest in particular national projects or programs.” Finally, we have noted that other constitutional provisions may provide an independent bar to the conditional grant of federal funds.

South Dakota does not seriously claim that §158 is inconsistent with any of the first three restrictions mentioned above. We can readily conclude that the provision is designed to serve the general welfare, especially in light of the fact that “the concept of welfare or the opposite is shaped by Congress....” Congress found that the differing drinking ages in the States created particular incentives for young persons to combine their desire to drink with their ability to drive, and that this interstate problem required a national solution. The means it chose to address this dangerous situation were reasonably calculated to advance the general welfare. The conditions upon which States receive the funds, moreover, could not be more clearly stated by Congress. And the State itself, rather than challenging the germaneness of the condition to federal purposes, admits that it “has never contended that the congressional action was... unrelated to a national concern in the absence of the Twenty-first Amendment.” Indeed, the condition imposed by Congress is directly related to one of the main purposes for which highway funds are expended—safe interstate travel. This goal of the interstate highway system had been frustrated by varying drinking ages among the States.... By enacting §158, Congress conditioned the receipt of federal funds in a way reasonably calculated to address this particular impediment to a purpose for which the funds are expended.

The remaining question about the validity of §158—and the basic point of disagreement between the parties—is whether the Twenty-first Amendment constitutes an “independent constitutional bar” to the conditional grant of federal funds. Petitioner, relying on its view that the Twenty-first Amendment prohibits direct regulation of drinking ages by Congress, asserts that “Congress may not use the spending power to regulate that which it is prohibited from regulating directly under the Twenty-first Amendment.” But our cases show that this “independent constitutional bar” limitation on the spending power is not of the kind petitioner suggests. United States v. Butler, for example, established that the constitutional limitations on Congress when exercising its spending power are less exacting than those on its authority to regulate directly....

... [T]he “independent constitutional bar” limitation on the spending power is not, as petitioner suggests, a prohibition on the indirect achievement of objectives which Congress is not empowered to achieve directly. Instead, we think that the language in our earlier opinions stands for the unexceptionable proposition that the power may not be used to induce the States to engage in activities that would themselves be unconstitutional. Thus, for example, a grant of federal funds conditioned on invidiously discriminatory state action or the infliction of cruel and unusual punishment would be an illegitimate exercise of the Congress’ broad spending power. But no such claim can be or is made here. Were South Dakota to succumb to the blandishments offered by Congress and raise its drinking age to 21, the State’s action in so doing would not violate the constitutional rights of anyone.

Our decisions have recognized that in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which “pressure turns into compulsion.” Here, however, Congress has directed only that a State desiring to establish a minimum drinking age lower than 21 lose a relatively small percentage of certain federal highway funds. Petitioner contends that the coercive nature of this program is evident from the degree of success it has achieved. We cannot conclude, however, that a conditional grant of federal money of this sort is unconstitutional simply by reason of its success in achieving the congressional objective.

When we consider, for a moment, that all South Dakota would lose if she adheres to her chosen course as to a suitable minimum drinking age is 5% of the funds otherwise obtainable under specified highway grant programs, the argument as to coercion is shown to be more rhetoric than fact....

Here Congress has offered relatively mild encouragement to the States to enact higher minimum drinking ages than they would otherwise choose. But the enactment of such laws remains the prerogative of the States not merely in theory but in fact. Even if Congress might lack the power to impose a national minimum drinking age directly, we conclude that encouragement to state action found in §158 is a valid use of the spending power. Accordingly, the judgment of the Court of Appeals is

Affirmed.

JUSTICE O’CONNOR, dissenting.

The Court today upholds the National Minimum Drinking Age Amendment, 23 U.S.C. §158, as a valid exercise of the spending power conferred by Article I, §8. But §158 is not a condition on spending reasonably related to the expenditure of federal funds and cannot be justified on that ground. Rather, it is an attempt to regulate the sale of liquor, an attempt that lies outside Congress’ power to regulate commerce because it falls within the ambit of §2 of the Twenty-first Amendment....

When Congress appropriates money to build a highway, it is entitled to insist that the highway be a safe one. But it is not entitled to insist as a condition of the use of highway funds that the State impose or change regulations in other areas of the State’s social and economic life because of an attenuated or tangential relationship to highway use or safety. Indeed, if the rule were otherwise, the Congress could effectively regulate almost any area of a State’s social, political, or economic life on the theory that use of the interstate transportation system is somehow enhanced. If, for example, the United States were to condition highway moneys upon moving the state capital, I suppose it might argue that interstate transportation is facilitated by locating local governments in places easily accessible to interstate highways—or, conversely, that highways might become overburdened if they had to carry traffic to and from the state capital. In my mind, such a relationship is hardly more attenuated than the one which the Court finds supports §158.

There is a clear place at which the Court can draw the line between permissible and impermissible conditions on federal grants. It is the line identified in the Brief for the National Conference of State Legislatures et al. as Amici Curiae:

“Congress has the power to spend for the general welfare, it has the power to legislate only for the delegated purposes.”...

This approach harks back to United States v. Butler (1936), the last case in which this Court struck down an Act of Congress as beyond the authority granted by the Spending Clause....

While Butler’s authority is questionable insofar as it assumes that Congress has no regulatory power over farm production, its discussion of the spending power and its description of both the power’s breadth and its limitations remain sound. The Court’s decision in Butler also properly recognizes the gravity of the task of appropriately limiting the spending power. If the spending power is to be limited only by Congress’ notion of the general welfare, the reality, given the vast financial resources of the Federal Government, is that the Spending Clause gives “power to the Congress to tear down the barriers, to invade the states’ jurisdiction, and to become a parliament of the whole people, subject to no restrictions save such as are self-imposed.” This, of course, as Butler held, was not the Framers’ plan and it is not the meaning of the Spending Clause....

The immense size and power of the Government of the United States ought not obscure its fundamental character. It remains a Government of enumerated powers. Because 23 U.S.C. §158 cannot be justified as an exercise of any power delegated to the Congress, it is not authorized by the Constitution. The Court errs in holding it to be the law of the land, and I respectfully dissent.

JUSTICE BRENNAN, dissenting.

I agree with Justice O’CONNOR that regulation of the minimum age of purchasers of liquor falls squarely within the ambit of those powers reserved to the States by the Twenty-first Amendment. Since States possess this constitutional power, Congress cannot condition a federal grant in a manner that abridges this right. The Amendment, itself, strikes the proper balance between federal and state authority. I therefore dissent.

National Federation of Independent Business v. Sebelius

567 U.S. _____ (2012)

http://laws.findlaw.com/us/000/11–393.html

Oral arguments are available at https://www.oyez.org.

Vote on the taxing power challenge to the Affordable Care Act:

5 (Breyer, Ginsburg, Kagan, Roberts, Sotomayor)

4 (Alito, Kennedy, Scalia, Thomas)

Vote on the expansion of Medicaid:

7 (Alito, Breyer, Kagan, Kennedy, Roberts, Scalia, Thomas)

2 (Ginsburg, Sotomayor)

OPINION ANNOUNCING THE JUDGMENT OF THE COURT AND THE OPINION OF THE COURT: Roberts

OPINION CONCURRING IN PART, CONCURRING IN JUDGMENT, AND DISSENTING IN PART: Ginsburg

JOINT OPINION DISSENTING: Alito, Kennedy, Scalia, and Thomas

DISSENTING OPINION: Thomas

FACTS:

In 2010, Congress passed the Patient Protection and Affordable Care Act (ACA) with the goal of increasing the number of Americans covered by medical insurance and decreasing the cost of health care. The constitutionality of the law was challenged in several suits, including this one filed by the National Federation of Independent Business, twenty-six state governments, and several individuals against Kathleen Sebelius, then secretary of health and human services.

Two provisions of the ACA provoked the most significant constitutional attacks. The first was the “individual mandate” that directs most Americans to purchase “minimum essential” health insurance coverage for themselves and their dependents if they do not receive such coverage from their employers. Section 5000A directs that those who do not comply with this provision are required to make a “shared responsibility” payment to the federal government. The act provides that this “penalty” will be paid to the Internal Revenue Service and “shall be assessed and collected in the same manner” as tax penalties.

The challengers argued that Congress exceeded its constitutional power in passing the law. The government countered that Congress acted properly under its power to regulate interstate commerce and its power to tax. In chapter 7 we presented an excerpt from this decision in which the Court concluded that the commerce clause did not give Congress the authority to compel inactive individuals to enter into commercial transactions. With the excerpt below, we focus on the Court’s reaction to the government’s claim that the power to tax allows Congress to impose the individual mandate.

The second provision in this controversy called for an expansion of Medicaid. This program, administered by the states but jointly funded by state and federal governments, provides health care for the poor. It is by far the largest of source of federal dollars granted to the states. About two-thirds of all Medicaid funds come from the federal government. Medicaid expenditures constitute a state’s largest budget item, accounting for about 20 percent of a typical state’s expenditures.

The ACA called for an enlarged Medicaid program that would expand the health-care services available to the poor. It would also increase the number of people eligible for program benefits by including all those whose incomes fall below 133 percent of federal poverty line. Once the program was fully implemented the federal government would cover 90 percent of the costs of the newly eligible persons. The law did not require the states to participate in the expanded program, but nonparticipating states would face the loss of all of their federal Medicaid dollars. The states involved in this litigation claimed that Congress had abused its spending powers by using financial coercion to force the states to accept the new Medicaid provisions.

The Eleventh Circuit Court of Appeals upheld the Medicaid expansion but struck down the individual mandate. The Supreme Court granted review.

ARGUMENTS:

For the petitioners, National Federation of Independent Business et al.:

It is settled law that a penalty imposed for a violation of a legal requirement is not a tax.

The mandate and the “tax” are separate issues. Congress cannot justify the unconstitutional mandate by classifying the penalty for violating it as a tax.

The wording used in the Affordable Care Act clearly indicates that Congress considered the consequences for violating the law to be a penalty and not a tax. But if the “shared responsibility” payment is a tax, then it is a direct tax and must be apportioned on the basis of population.

Congress may not use the spending power to commandeer the legislative powers of the states.

The ACA is an extreme and unprecedented abuse of the spending power designed to coerce the states into complying with the will of Congress. The act leaves the states with no reasonable alternative choices.

Approval of the ACA would mean that the congressional spending power has no bounds.

For the respondent, Health and Human Services Secretary Kathleen Sebelius:

The minimum coverage provision operates as a tax. It raises revenue, it is collected and enforced by the Internal Revenue Service, and the amount owed is based in part on income level.

Taxes can have regulatory objectives as well as revenue-generation goals.

The fact that the ACA uses the term penalty rather than tax is not germane to the constitutional inquiry.

It is settled law that Congress may fix the terms on which it appropriates federal funds.

From the very beginning of the Medicaid program Congress has reserved the right to alter, amend, or repeal any provision of the act and has done so many times.

The Medicaid expansion is so generous that the states overwhelmingly will choose to participate in it. This does not mean that the law is coercive.

CHIEF JUSTICE ROBERTS ANNOUNCED THE JUDGMENT OF THE COURT AND DELIVERED... AN OPINION WITH RESPECT TO [THE AUTHORITY OF CONGRESS TO IMPOSE THE INDIVIDUAL MANDATE UNDER THE TAXING POWER AND THE CONSTITUTIONALITY OF THE MEDICAID EXPANSION].

Today we resolve constitutional challenges to two provisions of the Patient Protection and Affordable Care Act of 2010: the individual mandate, which requires individuals to purchase a health insurance policy providing a minimum level of coverage; and the Medicaid expansion, which gives funds to the States on the condition that they provide specified health care to all citizens whose income falls below a certain threshold....

The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many respects. The “[s]hared responsibility payment,” as the statute entitles it, is paid into the Treasury by “taxpayer[s]” when they file their tax returns. It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code. For taxpayers who do owe the payment, its amount is determined by such familiar factors as taxable income, number of dependents, and joint filing status. The requirement to pay is found in the Internal Revenue Code and enforced by the IRS, which... must assess and collect it “in the same manner as taxes.” This process yields the essential feature of any tax: it produces at least some revenue for the Government. Indeed, the payment is expected to raise about $4 billion per year by 2017.

It is of course true that the Act describes the payment as a “penalty,” not a “tax.” But [this] does not determine whether the payment may be viewed as an exercise of Congress’s taxing power....

We have... held that exactions not labeled taxes nonetheless were authorized by Congress’s power to tax. In the License Tax Cases [1866], for example, we held that federal licenses to sell liquor and lottery tickets—for which the licensee had to pay a fee—could be sustained as exercises of the taxing power. And in New York v. United States [1992] we upheld as a tax a “surcharge” on out-of-state nuclear waste shipments, a portion of which was paid to the Federal Treasury. We thus ask whether the shared responsibility payment falls within Congress’s taxing power, “[d]isregarding the designation of the exaction, and viewing its substance and application.” United States v. Constantine (1935).

Our cases confirm this functional approach. For example, in [Bailey v.] Drexel Furniture [1922], we focused on three practical characteristics of the so-called tax on employing child laborers that convinced us the “tax” was actually a penalty. First, the tax imposed an exceedingly heavy burden—10 percent of a company’s net income—on those who employed children, no matter how small their infraction. Second, it imposed that exaction only on those who knowingly employed underage laborers. Such scienter requirements are typical of punitive statutes, because Congress often wishes to punish only those who intentionally break the law. Third, this “tax” was enforced in part by the Department of Labor, an agency responsible for punishing violations of labor laws, not collecting revenue.

The same analysis here suggests that the shared responsibility payment may for constitutional purposes be considered a tax, not a penalty: First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the “prohibitory” financial punishment in Drexel Furniture. Second, the individual mandate contains no scienter requirement. Third, the payment is collected solely by the IRS through the normal means of taxation—except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution. The reasons the Court in Drexel Furniture held that what was called a “tax” there was a penalty support the conclusion that what is called a “penalty” here may be viewed as a tax.

None of this is to say that the payment is not intended to affect individual conduct. Although the payment will raise considerable revenue, it is plainly designed to expand health insurance coverage. But taxes that seek to influence conduct are nothing new. Some of our earliest federal taxes sought to deter the purchase of imported manufactured goods in order to foster the growth of domestic industry. Today, federal and state taxes can compose more than half the retail price of cigarettes, not just to raise more money, but to encourage people to quit smoking. And we have upheld such obviously regulatory measures as taxes on selling marijuana and sawed-off shotguns. Indeed, “[e]very tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed.” That §5000A seeks to shape decisions about whether to buy health insurance does not mean that it cannot be a valid exercise of the taxing power.

In distinguishing penalties from taxes, this Court has explained that “if the concept of penalty means anything, it means punishment for an unlawful act or omission.” United States v. Reorganized CF&I Fabricators of Utah, Inc. (1996). While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. The Government agrees with that reading, confirming that if someone chooses to pay rather than obtain health insurance, they have fully complied with the law.

Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. We would expect Congress to be troubled by that prospect if such conduct were unlawful. That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance....

Even if the taxing power enables Congress to impose a tax on not obtaining health insurance, any tax must still comply with other requirements in the Constitution. Plaintiffs argue that the shared responsibility payment does not do so, citing Article I, §9, clause 4. That clause provides: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” This requirement means that any “direct Tax” must be apportioned so that each State pays in proportion to its population. According to the plaintiffs, if the individual mandate imposes a tax, it is a direct tax, and it is unconstitutional because Congress made no effort to apportion it among the States....

A tax on going without health insurance does not fall within any recognized category of direct tax. It is not a capitation. Capitations are taxes paid by every person, “without regard to property, profession, or any other circumstance.” Hylton [v. United States, 1796]. The whole point of the shared responsibility payment is that it is triggered by specific circumstances—earning a certain amount of income but not obtaining health insurance. The payment is also plainly not a tax on the ownership of land or personal property. The shared responsibility payment is thus not a direct tax that must be apportioned among the several States.

There may, however, be a more fundamental objection to a tax on those who lack health insurance. Even if only a tax, the payment under §5000A(b) remains a burden that the Federal Government imposes for an omission, not an act. If it is troubling to interpret the Commerce Clause as authorizing Congress to regulate those who abstain from commerce, perhaps it should be similarly troubling to permit Congress to impose a tax for not doing something.

... [I]t is abundantly clear the Constitution does not guarantee that individuals may avoid taxation through inactivity. A capitation, after all, is a tax that everyone must pay simply for existing, and capitations are expressly contemplated by the Constitution. The Court today holds that our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity. But from its creation, the Constitution has made no such promise with respect to taxes....

The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.

... The Federal Government does have the power to impose a tax on those without health insurance. Section 5000A is therefore constitutional, because it can reasonably be read as a tax.

* * *

The States also contend that the Medicaid expansion exceeds Congress’s authority under the Spending Clause. They claim that Congress is coercing the States to adopt the changes it wants by threatening to withhold all of a State’s Medicaid grants, unless the State accepts the new expanded funding and complies with the conditions that come with it. This, they argue, violates the basic principle that the “Federal Government may not compel the States to enact or administer a federal regulatory program.” New York....

The Spending Clause grants Congress the power “to pay the Debts and provide for the... general Welfare of the United States.” We have long recognized that Congress may use this power to grant federal funds to the States, and may condition such a grant upon the States’ “taking certain actions that Congress could not require them to take.” Such measures “encourage a State to regulate in a particular way, [and] influenc[e] a State’s policy choices.” New York. The conditions imposed by Congress ensure that the funds are used by the States to “provide for the... general Welfare” in the manner Congress intended.

At the same time, our cases have recognized limits on Congress’s power under the Spending Clause to secure state compliance with federal objectives.... [The] “Constitution has never been understood to confer upon Congress the ability to require the States to govern according to Congress’ instructions.” New York. Otherwise the two-government system established by the Framers would give way to a system that vests power in one central government, and individual liberty would suffer.

That insight has led this Court to strike down federal legislation that commandeers a State’s legislative or administrative apparatus for federal purposes. See, e.g., Printz [v. United States, 1997], New York. It has also led us to scrutinize Spending Clause legislation to ensure that Congress is not using financial inducements to exert a “power akin to undue influence.” Steward Machine Co. v. Davis (1937). Congress may use its spending power to create incentives for States to act in accordance with federal policies. But when “pressure turns into compulsion,” the legislation runs contrary to our system of federalism. “[T]he Constitution simply does not give Congress the authority to require the States to regulate.” New York. That is true whether Congress directly commands a State to regulate or indirectly coerces a State to adopt a federal regulatory system as its own.

Permitting the Federal Government to force the States to implement a federal program would threaten the political accountability key to our federal system.... Spending Clause programs do not pose this danger when a State has a legitimate choice whether to accept the federal conditions in exchange for federal funds. In such a situation, state officials can fairly be held politically accountable for choosing to accept or refuse the federal offer. But when the State has no choice, the Federal Government can achieve its objectives without accountability, just as in New York and Printz. Indeed, this danger is heightened when Congress acts under the Spending Clause, because Congress can use that power to implement federal policy it could not impose directly under its enumerated powers....

The States... object that Congress has “crossed the line distinguishing encouragement from coercion,” New York, in the way it has structured the funding: Instead of simply refusing to grant the new funds to States that will not accept the new conditions, Congress has also threatened to withhold those States’ existing Medicaid funds. The States claim that this threat serves no purpose other than to force unwilling States to sign up for the dramatic expansion in health care coverage effected by the Act.

Given the nature of the threat and the programs at issue here, we must agree....

In South Dakota v. Dole, we considered a challenge to a federal law that threatened to withhold five percent of a State’s federal highway funds if the State did not raise its drinking age to 21....

We accordingly asked whether “the financial inducement offered by Congress” was “so coercive as to pass the point at which ‘pressure turns into compulsion.’” By “financial inducement” the Court meant the threat of losing five percent of highway funds; no new money was offered to the States to raise their drinking ages. We found that the inducement was not impermissibly coercive, because Congress was offering only “relatively mild encouragement to the States.” Dole. We observed that “all South Dakota would lose if she adheres to her chosen course as to a suitable minimum drinking age is 5%” of her highway funds. In fact, the federal funds at stake constituted less than half of one percent of South Dakota’s budget at the time....

In this case, the financial “inducement” Congress has chosen is much more than “relatively mild encouragement”—it is a gun to the head. Section 1396c of the Medicaid Act provides that if a State’s Medicaid plan does not comply with the Act’s requirements, the Secretary of Health and Human Services may declare that “further payments will not be made to the State.” A State that opts out of the Affordable Care Act’s expansion in health care coverage thus stands to lose not merely “a relatively small percentage” of its existing Medicaid funding, but all of it. Medicaid spending accounts for over 20 percent of the average State’s total budget, with federal funds covering 50 to 83 percent of those costs. The Federal Government estimates that it will pay out approximately $3.3 trillion between 2010 and 2019 in order to cover the costs of pre-expansion Medicaid. In addition, the States have developed intricate statutory and administrative regimes over the course of many decades to implement their objectives under existing Medicaid. It is easy to see how the Dole Court could conclude that the threatened loss of less than half of one percent of South Dakota’s budget left that State with a “prerogative” to reject Congress’s desired policy, “not merely in theory but in fact.” The threatened loss of over 10 percent of a State’s overall budget, in contrast, is economic dragooning that leaves the States with no real option but to acquiesce in the Medicaid expansion....

Nothing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availability of health care, and requiring that States accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.... In light of the Court’s holding, the Secretary cannot... withdraw existing Medicaid funds for failure to comply with the requirements set out in the expansion....

We have no way of knowing how many States will accept the terms of the expansion, but we do not believe Congress would have wanted the whole Act to fall, simply because some may choose not to participate. The other reforms Congress enacted, after all, will remain “fully operative as a law” and will still function in a way “consistent with Congress’ basic objectives in enacting the statute.” Confident that Congress would not have intended anything different, we conclude that the rest of the Act need not fall in light of our constitutional holding.

* * *

The Affordable Care Act is constitutional in part and unconstitutional in part. The individual mandate cannot be upheld as an exercise of Congress’s power under the Commerce Clause. That Clause authorizes Congress to regulate interstate commerce, not to order individuals to engage in it. In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Congress’s power to tax.

As for the Medicaid expansion, that portion of the Affordable Care Act violates the Constitution by threatening existing Medicaid funding. Congress has no authority to order the States to regulate according to its instructions. Congress may offer the States grants and require the States to comply with accompanying conditions, but the States must have a genuine choice whether to accept the offer. The States are given no such choice in this case: They must either accept a basic change in the nature of Medicaid, or risk losing all Medicaid funding. The remedy for that constitutional violation is to preclude the Federal Government from imposing such a sanction. That remedy does not require striking down other portions of the Affordable Care Act.

The Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people.

The judgment of the Court of Appeals for the Eleventh Circuit is affirmed in part and reversed in part.

It is so ordered.

JUSTICE GINSBURG... concurring in part, concurring in the judgment in part, and dissenting in part.

I agree with The Chief Justice that the... minimum coverage provision is a proper exercise of Congress’ taxing power.... I would also hold that the Spending Clause permits the Medicaid expansion exactly as Congress enacted it....

The Spending Clause authorizes Congress “to pay the Debts and provide for the... general Welfare of the United States.” To ensure that federal funds granted to the States are spent “to ‘provide for the... general Welfare’ in the manner Congress intended,” Congress must of course have authority to impose limitations on the States’ use of the federal dollars. This Court, time and again, has respected Congress’ prescription of spending conditions, and has required States to abide by them. In particular, we have recognized Congress’ prerogative to condition a State’s receipt of Medicaid funding on compliance with the terms Congress set for participation in the program.

Congress’ authority to condition the use of federal funds is not confined to spending programs as first launched. The legislature may, and often does, amend the law, imposing new conditions grant recipients henceforth must meet in order to continue receiving funds....

The ACA... relates solely to the federally funded Medicaid program; if States choose not to comply, Congress has not threatened to withhold funds earmarked for any other program. Nor does the ACA use Medicaid funding to induce States to take action Congress itself could not undertake. The Federal Government undoubtedly could operate its own health-care program for poor persons, just as it operates Medicare for seniors’ health care.

That is what makes this such a simple case, and the Court’s decision so unsettling. Congress, aiming to assist the needy, has appropriated federal money to subsidize state health-insurance programs that meet federal standards. The principal standard the ACA sets is that the state program cover adults earning no more than 133% of the federal poverty line. Enforcing that prescription ensures that federal funds will be spent on health care for the poor in furtherance of Congress’ present perception of the general welfare....

Congress has broad authority to construct or adjust spending programs to meet its contemporary understanding of “the general Welfare.” Helvering v. Davis (1937). Courts owe a large measure of respect to Congress’ characterization of the grant programs it establishes. See Steward Machine....

At bottom, my colleagues’ position is that the States’ reliance on federal funds limits Congress’ authority to alter its spending programs. This gets things backwards: Congress, not the States, is tasked with spending federal money in service of the general welfare. And each successive Congress is empowered to appropriate funds as it sees fit. When the 110th Congress reached a conclusion about Medicaid funds that differed from its predecessors’ view, it abridged no State’s right to “existing,” or “pre-existing,” funds. For, in fact, there are no such funds. There is only money States anticipate receiving from future Congresses.

Congress has delegated to the Secretary of Health and Human Services the authority to withhold, in whole or in part, federal Medicaid funds from States that fail to comply with the Medicaid Act as originally composed and as subsequently amended. The Chief Justice, however, holds that the Constitution precludes the Secretary from withholding “existing” Medicaid funds based on States’ refusal to comply with the expanded Medicaid program.... I disagree that any such withholding would violate the Spending Clause. Accordingly, I would affirm the decision of the Court of Appeals for the Eleventh Circuit in this regard.

But in view of The Chief Justice’s disposition, I agree with him that the Medicaid Act’s severability clause determines the appropriate remedy. That clause provides that “[i]f any provision of [the Medicaid Act], or the application thereof to any person or circumstance, is held invalid, the remainder of the chapter, and the application of such provision to other persons or circumstances shall not be affected thereby.”...

Editorial cartoon published in the Columbus Dispatch commenting on the Supreme Court’s decision to uphold the Patient Protection and Affordable Care Act’s individual mandate provision as an appropriate use of Congress’s power to tax. Initially supporters of the legislation argued that the financial sanctions for noncompliance with the law were penalties and not taxes.

Nate Beeler, Courtesy of Cagle Cartoons

Joint Opinion of JUSTICE SCALIA, JUSTICE KENNEDY, JUSTICE THOMAS, and JUSTICE ALITO, dissenting.

The Government contends... that “the minimum coverage provision is independently authorized by Congress’s taxing power.” The phrase “independently authorized” suggests the existence of a creature never hitherto seen in the United States Reports: A penalty for constitutional purposes that is also a tax for constitutional purposes. In all our cases the two are mutually exclusive. The provision challenged under the Constitution is either a penalty or else a tax.... The issue is not whether Congress had the power to frame the minimum-coverage provision as a tax, but whether it did so.

In answering that question we must, if “fairly possible,” construe the provision to be a tax rather than a mandate-with-penalty, since that would render it constitutional rather than unconstitutional. But we cannot rewrite the statute to be what it is not. “[A]lthough this Court will often strain to construe legislation so as to save it against constitutional attack, it must not and will not carry this to the point of perverting the purpose of a statute... or judicially rewriting it.” Commodity Futures Trading Comm’n v. Schor (1986). In this case, there is simply no way, “without doing violence to the fair meaning of the words used,” to escape what Congress enacted: a mandate that individuals maintain minimum essential coverage, enforced by a penalty.

Our cases establish a clear line between a tax and a penalty: “[A] tax is an enforced contribution to provide for the support of government; a penalty... is an exaction imposed by statute as punishment for an unlawful act.” United States v. Reorganized CF&I Fabricators of Utah, Inc. (1996)....

So the question is, quite simply, whether the exaction here is imposed for violation of the law. It unquestionably is. The minimum-coverage provision is... entitled “Requirement to maintain minimum essential coverage.” It commands that every “applicable individual shall... ensure that the individual... is covered under minimum essential coverage.” And the immediately following provision states that, “[i]f... an applicable individual... fails to meet the requirement of subsection (a)... there is hereby imposed... a penalty.” And several of Congress’ legislative “findings” with regard to §5000A confirm that it sets forth a legal requirement and constitutes the assertion of regulatory power, not mere taxing power....

Quite separately, the fact that Congress (in its own words) “imposed... a penalty,” for failure to buy insurance is alone sufficient to render that failure unlawful....

... [T]o say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it.

We now consider respondents’ second challenge to the constitutionality of the ACA, namely, that the Act’s dramatic expansion of the Medicaid program exceeds Congress’ power to attach conditions to federal grants to the States.

The ACA does not legally compel the States to participate in the expanded Medicaid program, but the Act authorizes a severe sanction for any State that refuses to go along: termination of all the State’s Medicaid funding. For the average State, the annual federal Medicaid subsidy is equal to more than one-fifth of the State’s expenditures.—A State forced out of the program would not only lose this huge sum but would almost certainly find it necessary to increase its own health-care expenditures substantially, requiring either a drastic reduction in funding for other programs or a large increase in state taxes. And these new taxes would come on top of the federal taxes already paid by the State’s citizens to fund the Medicaid program in other States....

When federal legislation gives the States a real choice whether to accept or decline a federal aid package, the federal-state relationship is in the nature of a contractual relationship. And just as a contract is voidable if coerced, “[t]he legitimacy of Congress’ power to legislate under the spending power... rests on whether the State voluntarily and knowingly accepts the terms of the ‘contract.’” If a federal spending program coerces participation the States have not “exercise[d] their choice”—let alone made an “informed choice.”

Coercing States to accept conditions risks the destruction of the “unique role of the States in our system.” “[T]he Constitution has never been understood to confer upon Congress the ability to require the States to govern according to Congress’ instructions.” Congress may not “simply commandeer the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program. Congress effectively engages in this impermissible compulsion when state participation in a federal spending program is coerced, so that the States’ choice whether to enact or administer a federal regulatory program is rendered illusory.

Where all Congress has done is to “encourag[e] state regulation rather than compe[1] it, state governments remain responsive to the local electorate’s preferences; state officials remain accountable to the people. [But] where the Federal Government compels States to regulate, the accountability of both state and federal officials is diminished.”...

... [T]he legitimacy of attaching conditions to federal grants to the States depends on the voluntariness of the States’ choice to accept or decline the offered package. Therefore, if States really have no choice other than to accept the package, the offer is coercive, and the conditions cannot be sustained under the spending power. And as our decision in South Dakota v. Dole makes clear, theoretical voluntariness is not enough....

... When a heavy federal tax is levied to support a federal program that offers large grants to the States, States may, as a practical matter, be unable to refuse to participate in the federal program and to substitute a state alternative. Even if a State believes that the federal program is ineffective and inefficient, withdrawal would likely force the State to impose a huge tax increase on its residents, and this new state tax would come on top of the federal taxes already paid by residents to support subsidies to participating States....

Whether federal spending legislation crosses the line from enticement to coercion is often difficult to determine, and courts should not conclude that legislation is unconstitutional on this ground unless the coercive nature of an offer is unmistakably clear. In this case, however, there can be no doubt. In structuring the ACA, Congress unambiguously signaled its belief that every State would have no real choice but to go along with the Medicaid Expansion. If the anticoercion rule does not apply in this case, then there is no such rule....

In sum, it is perfectly clear from the goal and structure of the ACA that the offer of the Medicaid Expansion was one that Congress understood no State could refuse. The Medicaid Expansion therefore exceeds Congress’ spending power and cannot be implemented....

For the reasons here stated, we would find the Act invalid in its entirety. We respectfully dissent.

RESTRICTIONS ON THE REVENUE POWERS OF THE STATES

Taxation is a concurrent power: the states exercised the power to tax prior to the ratification of the Constitution and retain that authority today. The powers of the states to tax are very broad, limited primarily by provisions in the states’ own constitutions and laws. Taxes on property, income, and sales provide the bulk of funds for state government activities.

The Constitution, however, removed certain sources of revenue from the states. Article I, Section 10, explicitly prohibits the states from taxing imports or exports without the approval of Congress. In addition, the commerce clause blocks the states from imposing taxes that place an unreasonable burden on interstate or foreign commerce. Aside from these limitations, the states remain free to develop their own tax structures and sources of revenue.

State Taxes on Foreign Commerce

In Brown v. Maryland (1827) the Supreme Court first faced a question of the validity of state taxes on imports. The dispute centered on a Maryland law that required importers of foreign goods to pay a license fee. The Supreme Court struck down the statute as a tax on imports and as infringing on the authority of the federal government to regulate foreign commerce. An important part of the Court’s opinion, however, dealt with the following question: When does an imported article cease to be an import and become part of the taxable goods within a state? The Court’s answer to this question was the “original package” doctrine. For the majority, John Marshall wrote, “While [the imported article remains] the property of the importer, in his warehouse, in the original form or package in which it was imported, a tax upon it is too plainly a duty on imports to escape the prohibition in the constitution.”

The original package doctrine meant that goods flowing into the United States remained within the federal government’s taxing and regulating power until they were sold, processed, or broken out of their original packaging. Once any of those events took place, the articles became normal property within the state and subject to state taxation. The impact of this interpretation was that large warehouses filled with imported goods ready for shipment to other parts of the United States were free from state taxation as long as no sale took place and the materials remained in their original packages. The states balked at this rule, arguing that they should be able to levy property taxes on such goods as long as the taxes were nondiscriminatory—that is, if imported articles stored in warehouses were taxed on exactly the same basis as other property within the state. In Low v. Austin (1872) the Court rejected the constitutionality of such nondiscriminatory taxes, adhering to Marshall’s rationale in Brown.

Although attacked by legal scholars and those promoting the interests of the states, the original package doctrine survived until 1976, when the justices accepted an appeal from a decision by the Georgia Supreme Court that approved certain nondiscriminatory taxes on warehoused imports. After reanalyzing the issues involved, the Court altered a rule of law that had been in effect for more than a century.

Michelin Tire Corp. v. Wages

423 U.S. 276 (1976)

http://laws.findlaw.com/us/423/276.html

Oral arguments are available at https://www.oyez.org.

Vote: 8 (Blackmun, Brennan, Burger, Marshall, Powell, Rehnquist, Stewart, White)

0

OPINION OF THE COURT: Brennan

CONCURRING OPINION: White

NOT PARTICIPATING: Stevens

FACTS:

Michelin Tire Corporation operated a warehouse in Gwinnett County, Georgia, just outside of Atlanta. The company imported tires and tire products into the United States from France and Nova Scotia and stored them in the Georgia warehouse for later distribution to retail outlets. When the county tax assessors levied a nondiscriminatory ad valorem property tax on the inventory, the company sued W. L. Wages, the county tax commissioner, for relief, claiming that, except for some tire tubes that had been removed from their original containers, the warehouse contents were constitutionally free from state taxation.

The local court granted the relief requested, and the Georgia Supreme Court heard the county’s appeal. The state high court ruled that the tires were subject to tax because, after being imported in bulk, they had been sorted and arranged for sale. Michelin sought a reversal by the U.S. Supreme Court, which ignored subtle questions regarding the application of the original package doctrine and instead focused on the fundamental issue of whether any warehoused imports are subject to state taxation.

Arguments:

For the petitioner, Michelin Tire Corporation:

The taxed goods in question are located in the importer’s warehouse in their original package or form. Segregating the tires by size and style does not constitute taking them out of their original packages.

The articles taxed remain imports under Brown v. Maryland’s original package doctrine.

Michelin paid the United States a duty for the right to import and sell the tires as well as to have the tires free from state and local taxation until they lose their status as an import.

The Constitution forbids state and local taxation of imports. Brown v. Maryland should be reaffirmed.

For the respondent, W. L. Wages, county tax commissioner:

A state has the power to levy nondiscriminatory ad valorem taxes on property located in its jurisdiction.

When Michelin organizes the tires by size and style, it takes its goods out of their original package.

Exempting from taxation warehoused goods of an importer imposes a competitive burden on domestic companies that similarly store goods in warehouses and are taxed.

Brown v. Maryland has become outdated and should be overruled.

MR. JUSTICE BRENNAN DELIVERED THE OPINION OF THE COURT.

Low v. Austin [1872] is the leading decision of this Court holding that the States are prohibited by the Import-Export Clause from imposing a nondiscriminatory ad valorem property tax on imported goods until they lose their character as imports and become incorporated into the mass of property in the State. The Court there reviewed a decision of the California Supreme Court that had sustained the constitutionality of California’s nondiscriminatory ad valorem tax on the ground that the Import-Export Clause only prohibited taxes upon the character of the goods as imports and therefore did not prohibit nondiscriminatory taxes upon the goods as property. This Court reversed on its reading of the seminal opinion construing the Import-Export Clause, Brown v. Maryland (1827), as holding that “[w]hilst retaining their character as imports, a tax upon them, in any shape, is within the constitutional prohibition.”

Scholarly analysis has been uniformly critical of Low v. Austin. It is true that Mr. Chief Justice Marshall, speaking for the Court in Brown v. Maryland, said that “while [the thing imported remains] the property of the importer, in his warehouse, in the original form or package in which it was imported, a tax upon it is too plainly a duty on imports to escape the prohibition in the constitution.” Commentators have uniformly agreed that Low v. Austin misread this dictum in holding that the Court in Brown included nondiscriminatory ad valorem property taxes among prohibited “imposts” or “duties,” for the contrary conclusion is plainly to be inferred from consideration of the specific abuses which led the Framers to include the Import-Export Clause in the Constitution.

Our independent study persuades us that a nondiscriminatory ad valorem property tax is not the type of state exaction which the Framers of the Constitution or the Court in Brown had in mind as being an “impost” or “duty” and that Low v. Austin’s reliance upon the Brown dictum to reach the contrary conclusion was misplaced.

One of the major defects of the Articles of Confederation, and a compelling reason for the calling of the Constitutional Convention of 1787, was the fact that the Articles essentially left the individual States free to burden commerce both among themselves and with foreign countries very much as they pleased. Before 1787 it was commonplace for seaboard States with port facilities to derive revenue to defray the costs of state and local government by imposing taxes on imported goods destined for customers in other States. At the same time, there was no secure source of revenue for the central government....

The Framers of the Constitution thus sought to alleviate three main concerns by committing sole power to lay imposts and duties on imports in the Federal Government, with no concurrent state power: the Federal Government must speak with one voice when regulating commercial relations with foreign governments, and tariffs, which might affect foreign relations, could not be implemented by the States consistently with that exclusive power; import revenues were to be the major source of revenue of the Federal Government and should not be diverted to the States; and harmony among the States might be disturbed unless seaboard States, with their crucial ports of entry, were prohibited from levying taxes on citizens of other States by taxing goods merely flowing through their ports to the other States not situated as favorably geographically.

Nothing in the history of the Import-Export Clause even remotely suggests that a nondiscriminatory ad valorem property tax which is also imposed on imported goods that are no longer in import transit was the type of exaction that was regarded as objectionable by the Framers of the Constitution. For such an exaction, unlike discriminatory state taxation against imported goods as imports, was not regarded as an impediment that severely hampered commerce or constituted a form of tribute by seaboard States to the disadvantage of the other States.

It is obvious that such nondiscriminatory property taxation can have no impact whatsoever on the Federal Government’s exclusive regulation of foreign commerce, probably the most important purpose of the Clause’s prohibition. By definition, such a tax does not fall on imports as such because of their place of origin. It cannot be used to create special protective tariffs or particular preferences for certain domestic goods, and it cannot be applied selectively to encourage or discourage any importation in a manner inconsistent with federal regulation.

Nor will such taxation deprive the Federal Government of the exclusive right to all revenues from imposts and duties on imports and exports, since that right by definition only extends to revenues from exactions of a particular category; if nondiscriminatory ad valorem taxation is not in that category, it deprives the Federal Government of nothing to which it is entitled. Unlike imposts and duties, which are essentially taxes on the commercial privilege of bringing goods into a country, such property taxes are taxes by which a State apportions the cost of such services as police and fire protection among the beneficiaries according to their respective wealth; there is no reason why an importer should not bear his share of these costs along with his competitors handling only domestic goods. The Import-Export Clause clearly prohibits state taxation based on the foreign origin of the imported goods, but it cannot be read to accord imported goods preferential treatment that permits escape from uniform taxes imposed without regard to foreign origin for services which the State supplies....

Finally, nondiscriminatory ad valorem property taxes do not interfere with the free flow of imported goods among the States, as did the exactions by States under the Articles of Confederation directed solely at imported goods....

Since prohibition of nondiscriminatory ad valorem property taxation would not further the objectives of the Import-Export Clause, only the clearest constitutional mandate should lead us to condemn such taxation....

The Court in Low v. Austin nevertheless expanded the prohibition of the Clause to include nondiscriminatory ad valorem property taxes, and did so with no analysis, but with only the statement that Brown v. Maryland had marked the line “where the power of Congress over the goods imported ends, and that of the State begins, with as much precision as the subject admits.” But the opinion in Brown v. Maryland cannot properly be read to propose such a broad definition of “imposts” or “duties.” The tax there held to be prohibited by the Import-Export Clause was imposed under a Maryland statute that required importers of foreign goods, and wholesalers selling the same by bale or package, to obtain a license and pay a $50 fee therefor, subject to certain forfeitures and penalties for noncompliance. The importers contested the validity of the statute, arguing that the license was a “palpable evasion” of the Import-Export Clause because it was essentially equivalent to a duty on imports. Since the power to impose a license on importers would also entail a power to price them out of the market or prohibit them entirely, the importers concluded that such a power must be repugnant to the exclusive federal power to regulate foreign commerce.

The Attorney General of Maryland, Roger Taney, later Chief Justice, defended the constitutionality of Maryland’s law. He argued that the fee was not a prohibited “impost” or “duty” because the license fee was not a tax upon the imported goods, but on the importers, a tax upon the occupation and nothing more, and the Import-Export Clause prohibited only exactions on the right of importation and not an exaction upon the occupation of importers....

The Court in Brown refused to define “imposts” or “duties” comprehensively, since the Maryland statute presented only the question “whether the legislature of a State can constitutionally require the importer of foreign articles to take out a license from the State, before he shall be permitted to sell a bale or package so imported.” However, in holding that the Maryland license fee was within prohibited “imposts, or duties on imports...” the Court significantly characterized an impost or duty as “a custom or a tax levied on articles brought into a country,” although also holding that, while normally levied before the articles are permitted to enter, the exactions are no less within the prohibition if levied upon the goods as imports after entry; since “imports” are the goods imported, the prohibition of imposts or duties on “imports” was more than a prohibition of a tax on the act of importation; it “extends to a duty levied after [the thing imported] has entered the country.” And since the power to prohibit sale of an article is the power to prohibit its introduction into the country, the privilege of sale must be a concomitant of the privilege of importation, and licenses on the right to sell must therefore also fall within the constitutional prohibition.

Taney’s argument was persuasive, however, to the extent that the Court “was prompted to declare that the words of the prohibition ought not to be pressed to their utmost extent;... in our complex system, the object of the powers conferred on the government of the Union, and the nature of the often conflicting powers which remain in the States, must always be taken into view.... [T]here must be a point of time when the prohibition ceases, and the power of the State to tax commences....”

Despite the language and objectives of the Import-Export Clause, and despite the limited nature of the holding in Brown v. Maryland, the Court in Low v. Austin ignored the warning that the boundary between the power of States to tax persons and property within their jurisdictions and the limitations on the power of the States to impose imposts or duties with respect to “imports” was a subtle and difficult line which must be drawn as the cases arise. Low v. Austin also ignored the cautionary remark that, for those reasons, it “might be premature to state any rule as being universal in its application.” Although it was “sufficient” in the context of Maryland’s license tax on the right to sell imported goods to note that a tax imposed directly on imported goods which have not been acted upon in any way would clearly fall within the constitutional prohibition, that observation did not apply, as the foregoing analysis indicates, to a state tax which treated those same goods without regard to the fact of their foreign origin....

It follows from the foregoing that Low v. Austin was wrongly decided. That decision must be, and is, overruled.

Petitioner’s tires in this case were no longer in transit. They were stored in a distribution warehouse from which petitioner conducted a wholesale operation, taking orders from franchised dealers and filling them from a constantly replenished inventory. The warehouse was operated no differently than would be a distribution warehouse utilized by a wholesaler dealing solely in domestic goods, and we therefore hold that the nondiscriminatory property tax levied on petitioner’s inventory of imported tires was not interdicted by the Import-Export Clause of the Constitution. The judgment of the Supreme Court of Georgia is accordingly

Affirmed.

State Taxes on Interstate Commerce

State taxes on interstate commerce have provided another source of constitutional disputes. A state has the right to tax commerce that occurs within its borders, but taxes that discriminate against or place an undue burden on interstate commerce violate the commerce clause. In the nation’s formative years this rule of constitutional interpretation was relatively easy to apply, but given the changes in economic realities and the significant alterations in the definition of interstate commerce, the situation is now much more complex.

Today, relatively little commercial activity is purely intrastate. Consequently, whenever a state imposes a tax on business activity, it can be charged that the state is placing a burden on interstate commerce. The Supreme Court has attempted to fashion a rule that copes with modern economic conditions and yet is mindful of three important considerations. First, if the states are to remain viable entities, they must retain the ability to tax commercial activities. Second, true burdens on interstate commerce, as well as taxes that discriminate against it, must be avoided. Third, simply engaging in an interstate commercial activity should not suffice to exempt a company from paying its fair share in state taxes. Naturally, these principles are far easier to state than to apply to real situations.

In Complete Auto Transit v. Brady (1977) the justices concluded that their previous decisions were inconsistent with contemporary conditions and that a new statement on the authority of states to tax activities affecting interstate commerce was required. In his opinion for the Court, Justice Harry A. Blackmun found fault with some leading precedents and replaced them with a four-pronged test to be used in determining the validity of state taxation.

The Complete Auto Transit decision established four criteria that a state tax on interstate commerce must meet to be valid: (1) the targeted activity must be sufficiently connected to the state to justify a tax, (2) the tax must be fairly apportioned so that the levy is based on intrastate activity or income not subject to taxation by other states, (3) the tax must not discriminate against interstate commerce, and (4) the tax must be fairly related to the services provided by the state. These criteria assume that Congress has not preempted the state tax by imposing conflicting regulations on the interstate commerce activities involved.

In an unusual occurrence by today’s standards, the entire Court supported Justice Blackmun’s opinion in Complete Auto Transit: not a single justice wrote a concurring or dissenting view. Given this unanimity, it is not surprising that the Court has applied the precedent to subsequent disputes over the validity of state taxes on activities affecting interstate and foreign commerce. In Wardair Canada v. Florida Department of Revenue (1986) the justices ruled that a state tax on the sale of aviation fuel to an airline engaged in foreign commerce satisfied the four requirements. Similarly, in Goldberg v. Sweet (1989) the justices upheld an Illinois excise tax on interstate telephone calls, and in Oklahoma Tax Commission v. Jefferson Lines (1995) the Court concluded that a state tax on tickets for interstate bus travel did not violate the constitutional principles established in Complete Auto Transit.

Therefore, the four-pronged test established in 1977 constitutes the Court’s current policy on state taxation of interstate activities. It appears to provide a workable compromise between the needs of the states to secure revenue and the Constitution’s mandate that interstate commerce not be unreasonably burdened.

Complete Auto Transit v. Brady dealt with a state’s attempt to tax the intrastate portion of a larger interstate enterprise. Because the company used its trucks to transport GM cars from the railroad station to dealers across the state, it was clear that the company had both an economic and a physical presence in Mississippi. But what if a company does business within a state and yet has no physical presence there—in other words, no offices, warehouses, stores, or employees?

A company might do business exclusively by interstate mail, the Internet, or telephone. May the state impose a tax on that economic activity? Or would this be an unconstitutional burden on interstate commerce?

Generally, the courts have allowed states to levy taxes on residents’ purchases of goods out of state for use in the home state. These are called “use” taxes and are normally the equivalent of the state’s sales tax. A man who lives in a state with a 7 percent sales tax might be tempted to buy a new automobile in a neighboring state that has no sales tax. By avoiding his home state sales tax, the purchaser could save $2,000 or more on the purchase. When he tries to register his new car in his home state, however, he may face a use tax of about 7 percent. Such taxes place in-state and out-of-state car dealers on equal footing.

Smaller items purchased online, by mail order, or by telephone may be subject to the same use tax. However, such purchases, unlike automobiles, do not require registration or licensing. This makes the collection of the use tax nearly impossible. To create a means of collecting such taxes, some states passed laws requiring out-of-state vendors to collect taxes on each sale and remit the proceeds to the purchaser’s state. But are such laws constitutional? Does a state have any authority to require out-of-state companies to enforce the state’s tax laws?

These questions were first answered in National Bellas Hess, Inc. v. Department of Revenue of Illinois (1967). Bellas Hess, a Missouri mail-order retailer, challenged an Illinois law that imposed a use tax on goods Illinois residents purchased from out-of-state sources. The law further required the out-of-state vendor to collect the tax and deposit it with the Illinois Revenue Department. Bellas Hess claimed that the law imposed an unconstitutional burden on interstate commerce and that Illinois violated due process guarantees because it had no authority to impose any law on a company that was located in a different state. The Supreme Court agreed with Bellas Hess. It struck down the law and announced an easily followed rule to govern such situations: a state cannot impose tax collection obligations on a company unless the business has a physical presence—offices, employees, warehouses, and the like—in the state. Because Bellas Hess did all of its business by mail and telephone and had no physical operations in Illinois, it was constitutionally exempt from the Illinois law.

For the next twenty-five years, the National Bellas Hess precedent was good law. But during this time, the mail-order business grew significantly, aided in part by the fact that individuals could often buy goods from out-of-state firms and evade paying any sales or use taxes on the purchases. Concerned about the revenue lost through out-of-state retail purchases, in 1992 the states asked the Court to reconsider its National Bellas Hess ruling in Quill Corp. v. North Dakota.

The Quill decision backed away from the position that due process of law is violated when a state requires businesses with no physical presence in the state to collect and remit sales taxes. Yet the Court remained committed to the proposition that such laws violate the commerce clause. This precludes the states from tapping a very large potential revenue source. The growth of the Internet has further magnified the issue. The volume of commerce conducted electronically now far surpasses the mail-order operations at issue in National Bellas Hess and Quill. Most companies that engage in online sales operate nationally or internationally with physical presences in no more than a few states. As such, under current legal interpretations these retailers may conduct most of their transactions free from the obligation of collecting state sales taxes.

With its expansive powers over interstate commerce, Congress could grant states the authority to enact the kind of law struck down in Quill. Congress has, however, expressed little enthusiasm to change the physical presence rule announced in National Bellas Hess and Quill. The lack of action is consistent with the legislature’s policy of protecting the Internet from taxation that might stunt its growth. In addition, supporters of the status quo argue that obliging online businesses to collect taxes consistent with the particular tax laws of all fifty states and remit the proceeds to those states would place a crushing administrative burden especially on small Internet retailers. The states respond by arguing that e-commerce is no longer a fledgling enterprise that deserves protection from taxation to allow it to grow; rather, the Internet is fully operational, and its future is secure. It is now appropriate, they say, for online businesses to participate in the collection of taxes in the same manner that brick-and-mortar businesses do. Some states have already reached voluntary agreements with large Internet retailers in which the companies have pledged to begin collecting such taxes at a specified future date in return for certain economic concessions from the states.

Over the last several years Congress has struggled to develop a uniform policy on the collection of Internet and mail order sales taxes. The proposed Marketplace Fairness Act of 2015 is the most recent attempt. It would allow states to compel out-of-state businesses to collect and remit taxes from in-state sales even if the business had no physical presence in the state. The bill would exempt from this obligation any business with annual gross sales of less that $1 million. Thus far, while several versions of this legislation have been offered, Congress has failed to pass any of them into law.

Complete Auto Transit v. Brady

430 U.S. 274 (1977)

http://laws.findlaw.com/us/430/274.html

Oral arguments are available at https://www.oyez.org.

Vote: 9 (Blackmun, Brennan, Burger, Marshall, Powell, Rehnquist, Stevens, Stewart, White)

0

OPINION OF THE COURT: Blackmun

FACTS:

Complete Auto Transit was a Michigan corporation doing business in Mississippi. Under its contract with General Motors (GM), Complete’s job was to transport new vehicles manufactured out of state and then brought into Mississippi by rail. The automobiles were loaded onto Complete’s trucks in the Jackson, Mississippi, rail yards and delivered to GM dealerships around the state. There is no doubt that Complete’s business was interstate commerce. The company provided the last segment in the transportation of goods manufactured out of state to their retail destinations within the state.

Mississippi imposed a tax on transportation companies for the privilege of doing business in the state at a rate of 5 percent of gross income from state business. The state applied the tax to businesses operating in intra- and interstate commerce. In 1971 the Mississippi Tax Commission informed Complete that it owed $122,160.59 in taxes from a three-year period beginning in 1968. In 1972 Complete received a second bill for $42,990.89 for taxes due over the previous year. Complete paid the taxes under protest and sued for a refund.

Complete based its case on a 1951 Supreme Court precedent, Spector Motor Service v. O’Connor, which held that a state tax on the privilege of doing business is unconstitutional if imposed on any activity that is part of interstate commerce. The Mississippi Supreme Court upheld the tax, saying that Complete enjoyed the various services of the state and should be obliged to pay its fair share of state taxes. Because the tax did not discriminate against interstate commerce and was based exclusively on income derived from Mississippi sources, it was not constitutionally defective. Complete appealed to the U.S. Supreme Court, asking it to strike down the tax on the basis of the Spector precedent.

Arguments:

For the appellant, Complete Auto Transit, Inc.:

Complete Auto’s business of providing the final stage in the movement of motor vehicles from out of state to designated Mississippi dealers is exclusively part of interstate commerce.

That the mode of transportation changes from rail to truck does not alter the interstate nature of the transportation.

Mississippi’s “privilege of doing business” tax places a direct burden on interstate commerce. Such taxes are constitutionally impermissible even if fairly apportioned and nondiscriminatory, according to Spector Motor Service v. O’Connor.

Allowing such taxes would have severe impacts on companies like Complete Auto. Spector Motor should be reaffirmed.

For the appellee, Charles R. Brady, chairman, Mississippi State Tax Commission:

The Mississippi tax is levied based on business activities occurring inside Mississippi, where Complete Auto enjoys the protections and services provided by the state. No tax is placed on interstate shipments leaving Mississippi.

The tax is nondiscriminatory. Businesses engaged in purely intrastate transportation services pay similar taxes. Removing the tax on Complete Auto would give it an advantage over intrastate transportation providers.

The tax is based on taxable events that occur inside Mississippi. Therefore, the tax on those activities cannot be duplicated by any other state.

Spector Motor has been roundly criticized and should be overruled.

MR. JUSTICE BLACKMUN DELIVERED THE OPINION OF THE COURT.

Once again we are presented with “‘the perennial problem of the validity of a state tax for the privilege of carrying on within a state, certain activities’ related to a corporation’s operation of an interstate business.” The issue in this case is whether Mississippi runs afoul of the Commerce Clause when it applies the tax it imposes on “the privilege of... doing business” within the State to appellant’s activity in interstate commerce. The Supreme Court of Mississippi unanimously sustained the tax against appellant’s constitutional challenge. We noted probable jurisdiction in order to consider anew the applicable principles in this troublesome area....

Appellant’s attack is based solely on decisions of this Court holding that a tax on the “privilege” of engaging in an activity in the State may not be applied to an activity that is part of interstate commerce. See, e.g., Spector Motor Service v. O’Connor (1951); Freeman v. Hewit (1946). This rule looks only to the fact that the incidence of the tax is the “privilege of doing business”; it deems irrelevant any consideration of the practical effect of the tax. The rule reflects an underlying philosophy that interstate commerce should enjoy a sort of “free trade” immunity from state taxation.

Appellee, in its turn, relies on decisions of this Court stating that “[i]t was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of state tax burden even though it increases the cost of doing the business,” Western Live Stock v. Bureau of Revenue (1938). These decisions have considered not the formal language of the tax statute but rather its practical effect, and have sustained a tax against Commerce Clause challenge when the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.

Over the years, the Court has applied this practical analysis in approving many types of tax that avoided running afoul of the prohibition against taxing the “privilege of doing business,” but in each instance it has refused to overrule the prohibition. Under the present state of the law, the Spector rule, as it has come to be known, has no relationship to economic realities. Rather it stands only as a trap for the unwary draftsman.

The modern origin of the Spector rule may be found in Freeman v. Hewit....

Mr. Justice Frankfurter, speaking for five Members of the Court, announced a blanket prohibition against any state taxation imposed directly on an interstate transaction. He explicitly deemed unnecessary to the decision of the case any showing of discrimination against interstate commerce or error in apportionment of the tax. He recognized that a State could constitutionally tax local manufacture, impose license taxes on corporations doing business in the State, tax property within the State, and tax the privilege of residence in the State and measure the privilege by net income, including that derived from interstate commerce. Nevertheless, a direct tax on interstate sales, even if fairly apportioned and nondiscriminatory, was held to be unconstitutional per se....

The rule announced in Freeman was viewed in the commentary as a triumph of formalism over substance, providing little guidance even as to formal requirements....

The prohibition against state taxation of the “privilege” of engaging in commerce that is interstate was reaffirmed in Spector Motor Service v. O’Connor (1951), a case similar on its facts to the instant case. The taxpayer there was a Missouri corporation engaged exclusively in interstate trucking. Some of its shipments originated or terminated in Connecticut. Connecticut imposed on a corporation a “tax or excise upon its franchise for the privilege of carrying on or doing business within the state,” measured by apportioned net income. Spector brought suit in federal court to enjoin collection of the tax as applied to its activities. The District Court issued the injunction. The Second Circuit reversed. This Court, with three Justices in dissent, in turn reversed the Court of Appeals and held the tax unconstitutional as applied....

In this case, of course, we are confronted with a situation like that presented in Spector. The tax is labeled a privilege tax “for the privilege of... doing business” in Mississippi, and the activity taxed is, or has been assumed to be, interstate commerce. We note again that no claim is made that the activity is not sufficiently connected to the State to justify a tax, or that the tax is not fairly related to benefits provided the taxpayer, or that the tax discriminates against interstate commerce, or that the tax is not fairly apportioned.

The view of the Commerce Clause that gave rise to the rule of Spector perhaps was not without some substance. Nonetheless, the possibility of defending it in the abstract does not alter the fact that the Court has rejected the proposition that interstate commerce is immune from state taxation:

“It is a truism that the mere act of carrying on business in interstate commerce does not exempt a corporation from state taxation. ‘It was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of state tax burden even though it increases the cost of doing business.’” Western Live Stock v. Bureau of Revenue (1938).

Not only has the philosophy underlying the rule been rejected, but the rule itself has been stripped of any practical significance. If Mississippi had called its tax one on “net income” or on the “going concern value” of appellant’s business, the Spector rule could not invalidate it. There is no economic consequence that follows necessarily from the use of the particular words, “privilege of doing business,” and a focus on that formalism merely obscures the question whether the tax produces a forbidden effect. Simply put, the Spector rule does not address the problems with which the Commerce Clause is concerned. Accordingly, we now reject the rule of Spector Motor Service, Inc. v. O’Connor, that a state tax on the “privilege of doing business” is per se unconstitutional when it is applied to interstate commerce, and that case is overruled.

There being no objection to Mississippi’s tax on appellant except that it was imposed on nothing other than the “privilege of doing business” that is interstate, the judgment of the Supreme Court of Mississippi is affirmed.

It is so ordered.

Quill Corp. v. North Dakota

504 U.S. 298 (1992)

http://laws.findlaw.com/us/504/298.html

Oral arguments are available at https://www.oyez.org.

Vote: 8 (Blackmun, Kennedy, O’Connor, Rehnquist, Scalia, Souter, Stevens, Thomas)

1 (White)

OPINION FOR THE COURT: Stevens

OPINION CONCURRING IN PART: Scalia

OPINION CONCURRING IN PART AND DISSENTING IN PART: White

FACTS:

Quill Corporation was an office supply company with offices and warehouses in California, Georgia, and Illinois. None of its employees worked in North Dakota, and the company had no tangible property in that state. Quill sold its products nationwide via catalog, direct mail, and telephone. Its goods were delivered by mail or shipped by truck or rail. The company had annual sales of about $1 million to some three thousand North Dakota customers, making Quill the sixth-largest vendor of office supplies in the state. In 1987 North Dakota amended its tax code to impose a use tax on sales made by companies that regularly or systematically solicit customers in the state. The law, therefore, required mail-order operators such as Quill to collect and remit to the state taxes on all sales made to North Dakota residents. Quill refused to collect and pay such taxes, claiming, based on National Bellas Hess, that North Dakota had no authority over corporations that did not have a physical presence in the state.

North Dakota filed a legal action to compel Quill to comply with the law. The North Dakota Supreme Court upheld the law, concluding that the enormous growth in the mail-order industry and changes in the U.S. Supreme Court’s interpretation of the law in, for example, Complete Auto Transit v. Brady made it inappropriate to follow the Bellas Hess precedent. The state court concluded that Quill had a sufficient economic presence in the state to justify the North Dakota tax. Quill appealed.

Arguments:

For the petitioner, Quill Corporation:

The fundamental purpose of the commerce clause is to promote and protect interstate free trade. The North Dakota tax conflicts with that purpose.

To require out-of-state vendors who do no more than communicate with customers by mail, telephone, or common carrier to collect sales/use taxes from customers in various states would subject those vendors to unfair burdens and obstruct interstate commerce.

The Court has held that without a physical presence in the state the relationship between the out-of-state vendor and the state’s taxing authority is insufficient to justify laws such as this North Dakota statute. National Bellas Hess provides a clear and workable rule that should be maintained.

This is a question of national commercial significance, and Congress is the body most qualified to set a national policy. Congress so far has rejected legislative attempts to allow laws such as this one. The Court should not intervene.

For the respondent, state of North Dakota:

In today’s commercial environment, the physical presence requirement does not achieve a fair result as required by the due process clause and the commerce clause.

National Bellas Hess should be overruled and the Court should follow the principles set in Complete Auto Transit. The North Dakota tax is consistent with the test established in Complete Auto Transit.

Quill regularly and systematically solicits business in North Dakota. It has 3,427 active customers in the state, sends 230,000 pieces of mail into North Dakota each year, and has $935,000 in annual sales in the state. This establishes a sufficient relationship between Quill and the state’s taxing authority.

Quill’s administrative costs for complying with the tax law are not relevant to the constitutional issues at stake.

Because of the constitutional issues involved, the Court, not Congress, should answer the questions posed by this case.

JUSTICE STEVENS DELIVERED THE OPINION OF THE COURT.

As in a number of other cases involving the application of state taxing statutes to out-of-state sellers, our holding in [National] Bellas Hess [v. Department of Revenue of Illinois, 1967] relied on both the Due Process Clause and the Commerce Clause. Although the “two claims are closely related,” the clauses pose distinct limits on the taxing powers of the States. Accordingly, while a State may, consistent with the Due Process Clause, have the authority to tax a particular taxpayer, imposition of the tax may nonetheless violate the Commerce Clause.

The two constitutional requirements differ fundamentally, in several ways.... [T]he Due Process Clause and the Commerce Clause reflect different constitutional concerns. Moreover, while Congress has plenary power to regulate commerce among the States and thus may authorize state actions that burden interstate commerce, it does not similarly have the power to authorize violations of the Due Process Clause.

Thus, although we have not always been precise in distinguishing between the two, the Due Process Clause and the Commerce Clause are analytically distinct....

The Due Process Clause “requires some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax” and that the “income attributed to the State for tax purposes must be rationally related to ‘values connected with the taxing State.’”...

Applying these principles, we have held that if [an out-of-state] corporation purposefully avails itself of the benefits of an economic market in the forum State, it may subject itself to the State’s in personam jurisdiction even if it has no physical presence in the State....

... Thus, to the extent that our decisions have indicated that the Due Process Clause requires physical presence in a State for the imposition of duty to collect a use tax, we overrule those holdings as superseded by developments in the law of due process.

In this case, there is no question that Quill has purposefully directed its activities at North Dakota residents, that the magnitude of those contacts [is] more than sufficient for due process purposes, and that the use tax is related to the benefits Quill receives from access to the State. We therefore agree with the North Dakota Supreme Court’s conclusion that the Due Process Clause does not bar enforcement of that State’s use tax against Quill.

Article I, §8, cl. 3 of the Constitution expressly authorizes Congress to “regulate Commerce with foreign Nations, and among the several States.” It says nothing about the protection of interstate commerce in the absence of any action by Congress. Nevertheless, as Justice Johnson suggested in his concurring opinion in Gibbons v. Ogden (1824), the Commerce Clause is more than an affirmative grant of power; it has a negative sweep as well. The clause, in Justice Stone’s phrasing, “by its own force” prohibits certain state actions that interfere with interstate commerce. South Carolina State Highway Dept. v. Barnwell Bros., Inc. (1938).

Our interpretation of the “negative” or “dormant” Commerce Clause has evolved substantially over the years, particularly as that clause concerns limitations on state taxation powers....

While contemporary Commerce Clause jurisprudence might not dictate the same result were the issue to arise for the first time today, Bellas Hess is not inconsistent with Complete Auto and our recent cases. Under Complete Auto’s four-part test, we will sustain a tax against a Commerce Clause challenge so long as the “tax 1. is applied to an activity with a substantial nexus with the taxing State, 2. is fairly apportioned, 3. does not discriminate against interstate commerce, and 4. is fairly related to the services provided by the State.” Bellas Hess concerns the first of these tests and stands for the proposition that a vendor whose only contacts with the taxing State are by mail or common carrier lacks the “substantial nexus” required by the Commerce Clause.

Thus, three weeks after Complete Auto was handed down, we cited Bellas Hess for this proposition and discussed the case at some length. In National Geographic Society v. California Bd. of Equalization (1977) we affirmed the continuing vitality of Bellas Hess’ “sharp distinction... between mail-order sellers with [a physical presence in the taxing] State and those... who do no more than communicate with customers in the State by mail or common carrier as part of a general interstate business.” We have continued to cite Bellas Hess with approval ever since.... For these reasons, we disagree with the State Supreme Court’s conclusion that our decision in Complete Auto undercut the Bellas Hess rule.

The State of North Dakota relies less on Complete Auto and more on the evolution of our due process jurisprudence. The State contends that the nexus requirements imposed by the Due Process and Commerce Clauses are equivalent and that if, as we concluded above, a mail-order house that lacks a physical presence in the taxing State nonetheless satisfies the due process “minimum contacts” test, then that corporation also meets the Commerce Clause “substantial nexus” test. We disagree. Despite the similarity in phrasing, the nexus requirements of the Due Process and Commerce Clauses are not identical. The two standards are animated by different constitutional concerns and policies.

Due process centrally concerns the fundamental fairness of governmental activity. Thus, at the most general level, the due process nexus analysis requires that we ask whether an individual’s connections with a State are substantial enough to legitimate the State’s exercise of power over him.... In contrast, the Commerce Clause, and its nexus requirement, are informed not so much by concerns about fairness for the individual defendant as by structural concerns about the effects of state regulation on the national economy. Under the Articles of Confederation, State taxes and duties hindered and suppressed interstate commerce; the Framers intended the Commerce Clause as a cure for these structural ills. It is in this light that we have interpreted the negative implication of the Commerce Clause. Accordingly, we have ruled that that Clause prohibits discrimination against interstate commerce and bars state regulations that unduly burden interstate commerce.

The Complete Auto analysis reflects these concerns about the national economy. The second and third parts of that analysis, which require fair apportionment and nondiscrimination, prohibit taxes that pass an unfair share of the tax burden onto interstate commerce. The first and fourth prongs, which require a substantial nexus and a relationship between the tax and State-provided services, limit the reach of State taxing authority so as to ensure that State taxation does not unduly burden interstate commerce. Thus, the “substantial-nexus” requirement is... a means for limiting state burdens on interstate commerce. Accordingly, contrary to the State’s suggestion, a corporation may have the “minimum contacts” with a taxing State as required by the Due Process Clause, and yet lack the “substantial nexus” with that State as required by the Commerce Clause.

The State Supreme Court reviewed our recent Commerce Clause decisions and concluded that those rulings signaled a “retreat from the formalistic constrictions of a stringent physical presence test in favor of a more flexible substantive approach” and thus supported its decision not to apply Bellas Hess. Although we agree with the State Court’s assessment of the evolution of our cases, we do not share its conclusion that this evolution indicates that the Commerce Clause ruling of Bellas Hess is no longer good law....

Like other bright-line tests, the Bellas Hess rule appears artificial at its edges: whether or not a State may compel a vendor to collect a sales or use tax may turn on the presence in the taxing State of a small sales force, plant, or office. This artificiality, however, is more than offset by the benefits of a clear rule. Such a rule firmly establishes the boundaries of legitimate state authority to impose a duty to collect sales and use taxes and reduces litigation concerning those taxes. This benefit is important, for as we have so frequently noted, our law in this area is something of a “quagmire” and the “application of constitutional principles to specific state statutes leaves much room for controversy and confusion and little in the way of precise guides to the States in the exercise of their indispensable power of taxation.”

Moreover, a bright-line rule in the area of sales and use taxes also encourages settled expectations and, in doing so, fosters investment by businesses and individuals. Indeed, it is not unlikely that the mail-order industry’s dramatic growth over the last quarter-century is due in part to the bright-line exemption from state taxation created in Bellas Hess....

In sum, although in our cases subsequent to Bellas Hess and concerning other types of taxes we have not adopted a similar bright-line, physical-presence requirement, our reasoning in those cases does not compel that we now reject the rule that Bellas Hess established in the area of sales and use taxes. To the contrary, the continuing value of a bright-line rule in this area and the doctrine and principles of stare decisis indicate that the Bellas Hess rule remains good law....

This aspect of our decision is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve. No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions. Indeed, in recent years Congress has considered legislation that would “overrule” the Bellas Hess rule. Its decision not to take action in this direction may, of course, have been dictated by respect for our holding in Bellas Hess that the Due Process Clause prohibits States from imposing such taxes, but today we have put that problem to rest. Accordingly, Congress is now free to decide whether, when, and to what extent the States may burden interstate mail-order concerns with a duty to collect use taxes....

The judgment of the Supreme Court of North Dakota is reversed and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

Taxing and Spending for the Protection of Intrastate Interests

Sometimes the goal of a state taxation policy is not just to raise revenue. States can create tax policies to protect intrastate businesses or to promote intrastate development. When such policies place a burden on interstate commerce and give an advantage to intrastate enterprises, constitutional challenges are common. Tax policies that discriminate against interstate commerce often suffer the same fate as the discriminatory commerce regulation discussed in chapter 7. The Court takes a dim view of state laws that place a financial obligation on interstate commerce that is not equally placed on intrastate business—no matter if those obligations take the form of taxes, fees, tariffs, duties, or similar assessments.

One example is Oregon Waste Systems, Inc. v. Department of Environmental Quality of Oregon (1994). In this case Oregon attempted to increase revenues and protect its environmental resources by imposing fees on solid waste generated in other states and transported to Oregon for disposal. The majority struck down the state’s plan. The two dissenters, Rehnquist and Blackmun, maintained that the Court unnecessarily restricted the state’s taxation power and, in doing so, made it difficult for Oregon to deal effectively with the growing problem of solid waste disposal. That these two justices would be found dissenting together against the rest of the Court was somewhat unusual. Rehnquist and Blackmun had very different ideological positions and regularly found themselves on opposite sides of controversial issues.

Despite the Court’s position that discriminatory taxation is unconstitutional, states continue to search for systems that might survive legal challenge. In West Lynn Creamery v. Healy (1994) the Court reviewed a Massachusetts law that required a “premium” to be paid on all sales of milk products. The assessment was imposed equally on both milk produced in Massachusetts and milk produced out of state. The state used the revenues generated to provide subsidies for Massachusetts farmers. Here the goal of the state was not to gather general revenues; rather, the goal was to promote the interests of Massachusetts dairy farmers.

The Court’s majority, again with Rehnquist and Blackmun in dissent, struck down the Massachusetts plan as using the power to tax and spend in a manner that discriminated against interstate commerce. In effect, this was an old-fashioned protective tariff presented in a redesigned package. The purpose of the plan was to give in-state farmers a significant edge over out-of-state farmers. As such, the plan violated the Constitution’s prohibition against state policies that advantage intrastate commerce and discriminate against interstate concerns.

Similarly, in South Central Bell Telephone v. Alabama (1999) the justices struck down an Alabama law that imposed a franchise tax on each corporation doing business in the state. The tax was based on the company’s capital, but in-state businesses and out-of-state corporations were made to use different formulas to calculate this figure, which, as you might expect, led to higher taxes on out-of-state businesses.

Although the Court has developed relatively clear guidelines on federal and state taxing and spending powers, new disputes continue to demand resolution. It is not likely that this tendency will change in the near future. Policies that impose taxes and distribute funds are among the most politically and emotionally charged of all government programs. Not only do they give rise to questions of constitutional philosophy, but they also affect people’s pocketbooks. It is not surprising, therefore, that when government uses its powers to tax and spend, legal challenges are common.

Oregon Waste Systems, Inc. v. Department of Environmental Quality of Oregon

511 U.S. 93 (1994)

http://laws.findlaw.com/us/511/93.html

Oral arguments are available at https://www.oyez.org.

Vote: 7 (Ginsburg, Kennedy, O’Connor, Scalia, Souter, Stevens, Thomas)

2 (Blackmun, Rehnquist)

OPINION OF THE COURT: Thomas

DISSENTING OPINION: Rehnquist

Facts:

Oregon’s Department of Environmental Quality is in charge of administering the state’s comprehensive policy for the management, reduction, and recycling of solid waste. To fund these activities the state levied various fees on landfill operators. In 1989 the state legislature decided to assess an additional surcharge for disposing of any solid waste generated out of state and authorized the department to set the surcharge rate based on the costs to the state of disposing of the materials. After studying the problem, the department set the surcharge on out-of-state waste at $2.25 per ton. The charge for the disposal of solid waste generated in state was $0.85 per ton.

Oregon Waste Systems was in the business of transporting solid waste from Washington State by barge to landfills in Oregon and as such was subject to the surcharge on solid waste brought into the state for disposal. The company challenged the tax, claiming that the assessment discriminated against interstate commerce in violation of the commerce clause. State courts upheld the Oregon law, concluding that the surcharge was not a discriminatory tax but a compensatory fee that was reasonably related to the cost of the services rendered. Oregon Waste Systems asked the U.S. Supreme Court to review that decision.

Arguments:

For the petitioners, Oregon Waste Systems et al.:

In Chemical Waste Management v. Hunt (1992) the Court struck down as a violation of the commerce clause an Alabama law that taxed the disposal of interstate-generated waste, but not intrastate waste. The Oregon fee system is nearly indistinguishable from the Alabama tax.

Oregon’s discrimination against interstate commerce on its face clearly violates the commerce clause.

Oregon cannot save its program by claiming that the fee is based on the cost of service. This does not justify discrimination against interstate waste.

For the respondent, Oregon Department of Environmental Quality:

The state has established its fee system based on the actual cost of disposal. Intrastate and interstate disposal costs are essentially the same. The cost of disposing of in-state waste is subsidized through general state revenues, but the disposal of out-of-state waste is not subsidized. This fee structure allows the state to reduce the dumping fee charged for the disposal of in-state waste.

The Constitution does not prohibit funding the disposal of in-state waste by a combination of general revenues and dumping fees. Restructuring the fee system by removing the subsidy and financing the full cost through dumping fees would have no impact on interstate commerce.

The purpose of the state’s policy is not economic isolation or protectionism. Nor is it based on the state’s desire to reduce out-of-state waste as a means of preserving state natural resources.

JUSTICE THOMAS DELIVERED THE OPINION OF THE COURT.

Two Terms ago, in Chemical Waste Management, Inc. v. Hunt (1992), we held that the negative Commerce Clause prohibited Alabama from imposing a higher fee on the disposal in Alabama landfills of hazardous waste from other States than on the disposal of identical waste from Alabama. In reaching that conclusion, however, we left open the possibility that such a differential surcharge might be valid if based on the costs of disposing of waste from other States. Today, we must decide whether Oregon’s purportedly cost-based surcharge on the in-state disposal of solid waste generated in other States violates the Commerce Clause....

The Commerce Clause provides that “[t]he Congress shall have Power... [t]o regulate Commerce... among the several States.” Though phrased as a grant of regulatory power to Congress, the Clause has long been understood to have a “negative” aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce. The Framers granted Congress plenary authority over interstate commerce in “the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation.” Hughes v. Oklahoma (1979). “This principle that our economic unit is the Nation, which alone has the gamut of powers necessary to control of the economy,... has as its corollary that the states are not separable economic units.” H. P. Hood & Sons, Inc. v. Du Mond (1949).

Consistent with these principles, we have held that the first step in analyzing any law subject to judicial scrutiny under the negative Commerce Clause is to determine whether it “regulates evenhandedly with only ‘incidental’ effects on interstate commerce, or discriminates against interstate commerce.” Hughes. See also Chemical Waste. As we use the term here, “discrimination” simply means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter. If a restriction on commerce is discriminatory, it is virtually per se invalid....

In Chemical Waste, we easily found Alabama’s surcharge on hazardous waste from other States to be facially discriminatory because it imposed a higher fee on the disposal of out-of-state waste than on the disposal of identical in-state waste. We deem it equally obvious here that Oregon’s $2.25 per ton surcharge is discriminatory on its face. The surcharge subjects waste from other States to a fee almost three times greater than the $0.85 per ton charge imposed on solid in-state waste. The statutory determinant for which fee applies to any particular shipment of solid waste to an Oregon landfill is whether or not the waste was “generated out-of-state.” It is well-established, however, that a law is discriminatory if it “‘tax[es] a transaction or incident more heavily when it crosses state lines than when it occurs entirely within the State.’” Chemical Waste.

Respondents argue, and the Oregon Supreme Court held, that the statutory nexus between the surcharge and “the [otherwise uncompensated] costs to the State of Oregon and its political subdivisions of disposing of solid waste generated out-of-state,” necessarily precludes a finding that the surcharge is discriminatory. We find respondents’ narrow focus on Oregon’s compensatory aim to be foreclosed by our precedents. As we reiterated in Chemical Waste, the purpose of, or justification for, a law has no bearing on whether it is facially discriminatory. Consequently, even if the surcharge merely recoups the costs of disposing of out-of-state waste in Oregon, the fact remains that the differential charge favors shippers of Oregon waste over their counterparts handling waste generated in other States. In making that geographic distinction, the surcharge patently discriminates against interstate commerce.

Because the Oregon surcharge is discriminatory, the virtually per se rule of invalidity provides the proper legal standard here.... As a result, the surcharge must be invalidated unless respondents can “sho[w] that it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” New Energy Co. of Indiana v. Limbach (1988). Our cases require that justifications for discriminatory restrictions on commerce pass the “strictest scrutiny.” Hughes. The State’s burden of justification is so heavy that “facial discrimination by itself may be a fatal defect.” Ibid.

At the outset, we note two justifications that respondents have not presented. No claim has been made that the disposal of waste from other States imposes higher costs on Oregon and its political subdivisions than the disposal of in-state waste. Also, respondents have not offered any safety or health reason unique to nonhazardous waste from other States for discouraging the flow of such waste into Oregon. Consequently, respondents must come forward with other legitimate reasons to subject waste from other States to a higher charge than is levied against waste from Oregon....

Respondents’ principal defense of the higher surcharge on out-of-state waste is that it is a “compensatory tax” necessary to make shippers of such waste pay their “fair share” of the costs imposed on Oregon by the disposal of their waste in the State. In Chemical Waste we noted the possibility that such an argument might justify a discriminatory surcharge or tax on out-of-state waste. In making that observation, we implicitly recognized the settled principle that interstate commerce may be made to “‘pay its way.’” Complete Auto Transit, Inc. v. Brady (1977). See also Maryland [v. Louisiana, 1981]....

To justify a charge on interstate commerce as a compensatory tax, a State must, as a threshold matter, “identif[y]... the [intrastate tax] burden for which the State is attempting to compensate.” Maryland. Once that burden has been identified, the tax on interstate commerce must be shown roughly to approximate—but not exceed—the amount of the tax on intrastate commerce. Finally, the events on which the interstate and intrastate taxes are imposed must be “substantially equivalent”; that is, they must be sufficiently similar in substance to serve as mutually exclusive “prox[ies]” for each other....

Although it is often no mean feat to determine whether a challenged tax is a compensatory tax, we have little difficulty concluding that the Oregon surcharge is not such a tax. Oregon does not impose a specific charge of at least $2.25 per ton on shippers of waste generated in Oregon, for which the out-of-state surcharge might be considered compensatory. In fact, the only analogous charge on the disposal of Oregon waste is $0.85 per ton, approximately one-third of the amount imposed on waste from other States. Respondents’ failure to identify a specific charge on intrastate commerce equal to or exceeding the surcharge is fatal to their claim....

Respondents’ final argument is that Oregon has an interest in spreading the costs of the in-state disposal of Oregon waste to all Oregonians. That is, because all citizens of Oregon benefit from the proper in-state disposal of waste from Oregon, respondents claim it is only proper for Oregon to require them to bear more of the costs of disposing of such waste in the State through a higher general tax burden. At the same time, however, Oregon citizens should not be required to bear the costs of disposing of out-of-state waste, respondents claim. The necessary result of that limited cost-shifting is to require shippers of out-of-state waste to bear the full costs of in-state disposal, but to permit shippers of Oregon waste to bear less than the full cost.

We fail to perceive any distinction between respondents’ contention and a claim that the State has an interest in reducing the costs of handling in-state waste. Our cases condemn as illegitimate, however, any governmental interest that is not “unrelated to economic protectionism,” and regulating interstate commerce in such a way as to give those who handle domestic articles of commerce a cost advantage over their competitors handling similar items produced elsewhere constitutes such protectionism. To give controlling effect to respondents’ characterization of Oregon’s tax scheme as seemingly benign cost-spreading would require us to overlook the fact that the scheme necessarily incorporates a protectionist objective as well....

Respondents counter that if Oregon is engaged in any form of protectionism, it is “resource protectionism,” not economic protectionism. It is true that by discouraging the flow of out-of-state waste into Oregon landfills, the higher surcharge on waste from other States conserves more space in those landfills for waste generated in Oregon. Recharacterizing the surcharge as resource protectionism hardly advances respondents’ cause, however.... As we held more than a century ago, “if the State, under the guise of exerting its police powers, should [impose a burden]... applicable solely to articles [of commerce]... produced or manufactured in other States, the courts would find no difficulty in holding such legislation to be in conflict with the Constitution of the United States.” Guy v. Baltimore (1880)....

We recognize that the States have broad discretion to configure their systems of taxation as they deem appropriate. All we intimate here is that their discretion in this regard, as in all others, is bounded by any relevant limitations of the Federal Constitution, in this case the negative Commerce Clause. Because respondents have offered no legitimate reason to subject waste generated in other States to a discriminatory surcharge approximately three times as high as that imposed on waste generated in Oregon, the surcharge is facially invalid under the negative Commerce Clause. Accordingly, the judgment of the Oregon Supreme Court is reversed, and the cases are remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

CHIEF JUSTICE REHNQUIST, with whom JUSTICE BLACKMUN joins, dissenting.

Landfill space evaporates as solid waste accumulates. State and local governments expend financial and political capital to develop trash control systems that are efficient, lawful, and protective of the environment. The State of Oregon responsibly attempted to address its solid waste disposal problem through enactment of a comprehensive regulatory scheme for the management, disposal, reduction, and recycling of solid waste. For this Oregon should be applauded. The regulatory scheme included a fee charged on out-of-state solid waste. The Oregon Legislature directed the Commission to determine the appropriate surcharge “based on the costs... of disposing of solid waste generated out-of-state.” The Commission arrived at a surcharge of $2.25 per ton, compared to the $0.85 per ton charged on in-state solid waste. The surcharge works out to an increase of about $0.14 per week for the typical out-of-state solid waste producer. This seems a small price to pay for the right to deposit your “garbage, rubbish, refuse...; sewage sludge, septic tank and cesspool pumpings or other sludge;... manure,... dead animals, [and] infectious waste” on your neighbors.

Nearly 20 years ago, we held that a State cannot ban all out-of-state waste disposal in protecting themselves from hazardous or noxious materials brought across the State’s borders. Philadelphia v. New Jersey (1978). Two Terms ago in Chemical Waste Management, Inc. v. Hunt (1992), in striking down the State of Alabama’s $72 per ton fee on the disposal of out-of-state hazardous waste, the Court left open the possibility that such a fee could be valid if based on the costs of disposing of waste from other States. Once again, however, as in Philadelphia and Chemical Waste Management, the Court further cranks the dormant Commerce Clause ratchet against the States by striking down such cost-based fees, and by so doing ties the hands of the States in addressing the vexing national problem of solid waste disposal....

The State of Oregon is not prohibiting the export of solid waste from neighboring States; it is only asking that those neighbors pay their fair share for the use of Oregon landfill sites. I see nothing in the Commerce Clause that compels less densely populated States to serve as the low-cost dumping grounds for their neighbors, suffering the attendant risks that solid waste landfills present. The Court, deciding otherwise, further limits the dwindling options available to States as they contend with the environmental, health, safety, and political challenges posed by the problem of solid waste disposal in modern society.

For the foregoing reasons, I respectfully dissent.

ANNOTATED READINGS

A number of good works focus on the history and development of tax law and policy. These include Gerald Carson, “The Income Tax and How It Grew,” American Heritage, December 1973, 4–7, 79–88; Ann Mumford, Taxing Culture: Toward a Theory of Tax Collection Law (Burlington, VT: Ashgate, 2002); Sheldon D. Pollack, War, Revenue, and State Building: Financing the Development of the American State (Ithaca, NY: Cornell University Press, 2009); Steven R. Weisman, The Great Tax Wars: Lincoln to Wilson—The Fierce Battles over Money and Power (New York: Simon & Schuster, 2001); John F. Witte, The Politics and Development of the Federal Income Tax (Madison: University of Wisconsin Press, 1985); and Joseph F. Zimmerman, The Silence of Congress: State Taxation of Interstate Commerce (Albany: State University of New York Press, 2007).

Other studies focus on monetary and spending policy, such as Edward S. Corwin, “The Spending Power of Congress—Apropos the Maternity Act,” Harvard Law Review 36 (1923): 548–582; Gerald T. Dunne, Monetary Decisions of the Supreme Court (New Brunswick, NJ: Rutgers University Press, 1960); Robert M. Howard, Getting a Poor Return: Courts, Justice, and Taxes (Albany: State University of New York Press, 2009); James Willard Hurst, A Legal History of Money in the United States, 1774–1970 (Lincoln: University of Nebraska Press, 1973); and Dennis S. Ippolito, Deficit, Debt, and the New Politics of Tax Policy (New York: Cambridge University Press, 2012).

1. See Urofsky and Finkelman, A March of Liberty, 177–178. See also Robert F. Cushman, Cases in Constitutional Law, 7th ed. (Englewood Cliffs, NJ: Prentice Hall, 1989), 177–178.

2. The other three members of the Court were absent for various reasons. Oliver Ellsworth had just been sworn in as chief justice and, because he had missed some of the arguments, did not participate in the decision. James Wilson heard arguments but did not vote in the case because he had participated in the lower court decision upholding the tax. William Cushing was not present for the arguments and therefore did not vote on the merits.

3. The practice of each justice writing a separate opinion explaining individual views was borrowed from the British courts. When Marshall became chief justice, he moved away from the use of seriatim opinions to the current practice of a single opinion explaining the views of the majority. Marshall believed that the use of a single opinion increased the Court’s status and effectiveness.

4. Justice Wilson was also a delegate at the Constitutional Convention and, therefore, one of the framers. Although he did not participate in Hylton at the Supreme Court level, Wilson earlier had voted in the lower court to uphold the tax as an excise.

5. Cushman, Cases in Constitutional Law, 178. The direct tax issue, however, is still occasionally raised. As we will see later in this chapter, it was one of the arguments made against the constitutional validity of the Patient Protection and Affordable Care Act of 2010.

6. For an excellent review of the history of the income tax in the United States, see John F. Witte, The Politics and Development of the Federal Income Tax (Madison: University of Wisconsin Press, 1985).

7. Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429 (1895).

8. Loren P. Beth, “Pollock v. Farmers’ Loan & Trust Co.,” in Hall, Oxford Companion to the Supreme Court, 655.

9. Dobbins v. Commissioners of Erie County (1842).

10. Gillespie v. Oklahoma (1922) and Long v. Rockwood (1928) concerned patents and copyrights; Panhandle Oil Co. v. Mississippi (1928) dealt with petroleum sales.

11. Indian Motorcycle Co. v. United States (1931).

12. South Carolina v. United States (1905).

13. Alabama v. King and Boozer (1941).

14. See Mulford v. Smith (1939) and Wickard v. Filburn (1942).

15. Helvering v. Davis (1937).

Part IV Economic Liberties

iStock/DanBrandenburg

Economic Liberties and Individual Rights

9. THE CONTRACT CLAUSE

10. ECONOMIC SUBSTANTIVE DUE PROCESS

11. THE TAKINGS CLAUSE

Economic Liberties and Individual Rights

IF ASKED what we Americans admire about the United States, many of us would answer that we value our guaranteed freedoms of speech, press,and religion. But when asked to make political decisions, such as choosing elected officials, we may put other considerations ahead of these cherished freedoms. As is often remarked, people tend to vote their pocketbooks. Americans might not admit that the state of the economy drives their behavior, but it is clearly one of the most important determinants in choosing the nation’s leaders. That we hold economic well-being as a high priority is not surprising. In Part III we saw that economic issues—commerce, taxing, and spending—have been major sources of friction between the federal government and the states from the very beginning of U.S. history.

Economic questions, however, do not always present themselves as disputes between the national government and the states. Quite the contrary. The Supreme Court often has heard constitutional challenges in which individuals claim that their personal economic liberties have been violated by government actions. In such cases the justices must determine how much authority federal and state governments have to seize private property, to alter freely made contracts, and to restrict private employment agreements as to wages and hours. Seen in this way, a strong relationship exists between civil liberties, such as the freedom of speech, and economic liberties, such as the right to private property. Indeed, both provoke the same fundamental question: To what extent may government enact legislation that infringes on personal rights? Both also involve the same perennial conflict between the interests of the individual and those of the society.

Even so, most people, including elected officials and even Supreme Court justices, tend to separate economic liberties from other civil liberties. We consider the right to express our views as significantly different from the right to conduct business. The framers, however, viewed both as “vested rights”—rights so fundamental to an individual that they cannot be infringed on by government control; these rights were very much on the minds of the men who gathered to write the Constitution in 1787. According to James Madison, one of the framers’ most important objectives as they gathered in Philadelphia in 1787 was to provide “more effectively for the security of private rights and the steady dispensement of justice within the states. Interference with these were the evils which had, more perhaps than anything else, produced this convention.”

But, as Madison’s comment implies, the framers’ conception of liberties and what interfered with their exercise was somewhat different from ours. They equated liberty with the protection of private property, and in their experience the states, not the national government, posed the greater threat to property rights. Given the economic chaos that existed under the Articles of Confederation, we can easily understand the founders’ concerns. They believed that the states had “crippled” both the central government and the economy, and they wanted to create a national government strong enough to protect economic liberty from aggressive state governments. We must also keep in mind that many who attended the convention were wealthy men who wanted to keep the property they had accumulated. In short, the framers were concerned about the nonpropertied masses taking control of state legislatures and using their numerical advantage to promote legislation that would place excessive taxes on business, abrogate contracts, and so forth. Indeed, in an important (albeit controversial) work, An Economic Interpretation of the Constitution of the United States, first published in 1913, historian Charles A. Beard depicted the founders as self-serving—even greedy—men who viewed the Constitution as a vehicle for the protection of their own property interests.

Other analysts have taken issue with Beard’s interpretation. Some contend that we cannot necessarily equate modern definitions of property with those the framers used; that is, the property interests they sought to protect were probably more encompassing than those we envision today. We might consider property as something tangible or of clear monetary value, but to at least some of the framers, property was a catchall term for many individual liberties that may or may not have been related to what modern Americans think of as economic activity.

To protect these paramount property rights, however conceptualized, the framers inserted several provisions into the Constitution. An important provision, which we examine in chapter 9, is the contract clause. Under Article I, Section 10, “No State shall . . . pass any . . . Law impairing the Obligation of Contracts.” To understand the meaning of the clause, we must consider its language within the context of the day. As one book on constitutional interpretation suggests,

For the generation of 1787–91, property was probably a natural right, though the constitutional text did not so label it. And, because the right to property included rights to use and increase property, that basic right included a cognate right to contract with other property holders. Thus did the right to contract borrow a measure of moral status from the broader right in which it originated: the obligation to keep one’s contracts was a duty flowing from the natural right to property.1

If the contract clause was one of the ways the framers sought to protect property interests against the “evils” of government interference, it worked, at least initially. For the Marshall Court, the contract clause was an effective vehicle for promoting federal supremacy and economic growth. That Court read Article I, Section 10, to prohibit state action that infringed on property rights and impeded economic development.

But this interpretation did not endure. With the end of the Marshall Court and the ascendancy of the Taney Court in the mid-1830s, use of the contract clause as a vehicle to protect property interests waned. We consider fully why that occurred in chapter 9; for now, it is important to note that the “death” of the contract clause did not mean that courts were no longer interested in protecting economic liberties. They simply turned to another section of the Constitution to do so. The Fourteenth Amendment’s due process clause says that no state shall “deprive any person of life, liberty, or property, without due process of law.” Under a doctrine called substantive due process, which we review in chapter 10, between the 1890s and 1930s the Supreme Court used the Fourteenth Amendment to prohibit states from interfering with “liberty” interests. For example, the Court struck down legislation mandating maximum work hours on the ground that such legislation interfered with the rights of employers to enter into contracts with their employees. Like the Court’s interpretation of the contract clause, this treatment of the Fourteenth Amendment eventually fell into disuse. In chapter 10 we examine the reasons for its decline.

More recently, the Court has taken a serious look at yet another provision of the Constitution designed to protect property interests—the takings clause of the Fifth Amendment. Here the framers endeavored to protect private property from government seizure by inserting the following words into the Constitution: “nor shall private property be taken for public use, without just compensation.” The founders recognized that the government occasionally would need the power to confiscate property in order to construct roads or erect government buildings, but they limited such seizures to projects having a public purpose, and required that the affected property owners be compensated for their losses. As described in chapter 11, the Court’s interpretation of the takings clause, like its treatment of the contract and due process clauses, has undergone a number of twists and turns. The heyday of the contract clause and economic substantive due process has long since passed, but the takings clause remains a vibrant legal and political issue. Some members of the Roberts Court view the takings clause as a significant vehicle for protecting property rights.

So far these justices have had only limited success—a matter we consider in more detail in chapter 11. Here, we simply note that the current Court seems to be taking a greater interest in all kinds of economic issues than did its immediate predecessors. In recent years about one-fifth of the Court’s docket has involved economic issues of various kinds. This figure pales in comparison to the numbers of the 1930s, a period during which the majority of the cases the Court accepted for review had economic dimensions, or even the 1800s, when fully one-third of the business of the Court involved economic issues. Nevertheless, the proportion of the current Court’s docket devoted to economic questions is substantial and at odds with the popular notion that the contemporary Court is almost exclusively focused on the resolution of civil liberties and criminal justice disputes.

The number of economic cases on the Court’s agenda is important as an indicator of the role the Court plays in American society.2 When the justices were deciding large numbers of economic cases, as they did for the first 150 years of the Court’s history, it is not surprising that they exerted great influence in that area and lesser influence in the areas of civil liberties, rights, and criminal justice. Moreover, if today’s Court is seeking to play a greater role in the economic realm, it will be forced to confront the same fundamental issue that bedeviled its predecessors: the complex relationship between “vested rights” and “community interests.” Although—as we have suggested—many of the founders were concerned about individual liberty (such as the protection of private property rights), we now know that in a mature democratic society the pursuit of such individual interests may impinge on the collective good. When a state enacts a law setting a minimum wage, that statute affects the individual liberty of employers: it would be in their best interest, economically speaking, to pay their employees as little as possible. As a result, they may argue that minimum wage laws violate their constitutional guarantees. But is there another interest at stake? What are the results of paying workers a substandard wage? Does the state have a responsibility to enact legislation for the “health, safety, and welfare” of all its citizens?

It is the clash between these two interests—individual liberty (vested rights) and the state (community interests)—that has been a primary cause of the Court’s involvement in this area. Because that conflict is unlikely to change, our discussion of these issues will center on the approaches different Courts have taken to balance them. As we shall see, during some periods the Court has exalted liberty interests above those of the community, and at other times it has taken precisely the opposite approach. As you read the chapters that follow, think about the political, legal, and historical factors that have contributed to these varying approaches to economic liberties.

9 The Contract Clause

SUPPOSE that some years ago a friend of yours accepted a position with a large corporation. One of the reasons she took this particular job was that the company offered an attractive retirement savings plan as a fringe benefit. Under the terms of the savings plan contract, she regularly placed a portion of her salary into the fund, and the company matched her contributions. Money deposited in the fund belonged to the individual savers, and the company had no authority to use the funds for any corporate purpose. Over the years, your friend’s savings account grew steadily. Then, in a national recession, the company’s fortunes reversed, and it, along with many others, faced bankruptcy. The state rushed to relieve the troubled businesses by passing a law that allowed them unilaterally to use the assets in employee savings plans to finance operations until the economy regained its strength. The company took advantage of this statute, but after it spent all of the savings plan funds, the company still went bankrupt.

This story raises some basic questions: How can the state pass a law that releases a company from its contractual obligations? The company’s employees were cheated out of their money, and the state was involved. Why would one participate in any investment or commercial activity without some assurance that a state will not intervene and change the provisions of contractual agreements or nullify them altogether?

If you were upset upon learning of the fate of your friend’s retirement funds, your reaction would be understandable. One of the hallmarks of a society that values commercial activity is the right to enter into legally binding contracts. It is hard to imagine a market-based economy that does not recognize and protect such agreements. In most instances, we expect the government to enforce contracts and not encourage parties who wish to break them.

The individuals who drafted the Constitution felt much the same way. Disturbed by the actions of state governments in the economic upheaval that followed the Revolution, the delegates to the Constitutional Convention moved to block state interference with contractual obligations. They did this by drafting the contract clause, one of the most important provisions of the Constitution during the nation’s formative years.

THE FRAMERS AND THE CONTRACT CLAUSE

It might be difficult to find a group of people more supportive of the right to enter into binding agreements than the delegates to the Constitutional Convention. For the most part, these individuals represented the propertied classes, and they assembled in Philadelphia at a time of economic turmoil. Many of them feared that as the states coped with their economic problems they might suspend the obligation to honor contracts.

Following the Revolutionary War the economy was very unstable, and the government under the Articles of Confederation was powerless to correct the situation. Hardest hit were small farmers, many of whom had taken out large loans they could not repay. When creditors started foreclosing on real estate and debtors were jailed for failing to pay, farmers and others faced with unmanageable obligations began to agitate for relief. Several states responded by passing laws to help them. Among these acts were bankruptcy laws that erased certain debt obligations or extended the time to pay—legal obstacles that blocked creditors from asserting their contractual rights against their debtors. In addition, state currencies of dubious value were declared legal tender to satisfy debt obligations.

These policies hurt the creditors, many of whom were wealthy landowners. In response, they called for strengthening the national government to deal with economic problems and for a ban on the state governments’ practice of nullifying contractual obligations. This issue was among the more important factors prompting Congress to convene a convention for the purpose of recommending changes in the Articles of Confederation. Once assembled, the delegates, as we know, went much farther than originally authorized and created the Constitution of the United States.

The document drafted in Philadelphia clearly reflected the economic interests of the delegates. Among the provisions they wrote was a protection of contracts against state government infringement. Article I, Section 10, declares: “No State shall . . . pass any . . . Law impairing the Obligation of Contracts.”

The eighteenth century’s understanding of the term contract was much the same as today’s. A contract is an agreement voluntarily entered into by two or more parties in which a promise is made and something of value is given or pledged. Contractual agreements are made in almost every commercial transaction, such as a mining company’s promise to deliver a quantity of coal to a steel mill for a particular sum of money or a lawyer’s promise to represent a client at a specified rate of compensation.

For the framers the right to enter into contracts was an important freedom closely tied to the right of private property. The ownership of private property implies the right to buy, sell, divide, occupy, lease, and use it, but one cannot effectively exercise these various property rights without the ability to enter into legally binding arrangements with others. In commercial transactions the parties rely on each other to carry out the contractual provisions. During the nation’s formative years, those who failed to live up to contractual promises were dealt with harshly. In the minds of the propertied classes of the eighteenth century, this was how it should be, and the government should not be allowed to intervene in such private arrangements.

Evidence from the convention indicates that the framers adopted the contract clause as a means of protecting agreements between private parties from state interference. At that time, however, contracts also were a means of carrying out public policy. Because governments then were much more limited than they are today, the states regularly entered into contracts with individuals or corporations to carry out government policy or to distribute government benefits. These state actions included land grants, commercial monopolies, and licenses to construct roads and bridges. An individual who entered into a contractual agreement with the state expected it to live up to its obligations and not abrogate the arrangement or unilaterally change the terms. In spite of what the framers might have intended, the contract clause is generally worded and therefore offers protection both to contracts among private parties and to agreements between private parties and the government.

Importantly, the framers drafted the contract clause to apply only to the states and not to the national government. They had two reasons for targeting the states in this way. First, the framers had recent experience with states passing laws that nullified contractual provisions, thus they saw the states as a threat to the importance of contractual relationships. Second, the framers envisioned the state governments to be the primary regulators of economic activities.

The contract clause was not a major point of controversy at the convention; rather, the records show that the delegates accepted its wisdom with little debate. The clause was one of several prohibitions the framers imposed on state economic regulation: states also could no longer coin money, issue bills of credit, create tender for payment of debts, or tax and regulate certain forms of interstate or foreign commerce.

The contract clause was not a point of significant controversy during the debates over ratification of the Constitution. In Federalist No. 7, Alexander Hamilton justified the prohibition against state impairment of contract obligations by claiming, “Laws in violation of private contracts . . . may be considered as another probable source of hostility.” And James Madison in Federalist No. 44 declared that “laws impairing the obligation of contracts are contrary to the first principles of the social compact and to every principle of sound legislation.”

In spite of this lack of attention at the drafting and ratification stages, the contract clause became an important legal force in the early years of the nation’s development. As political majorities changed from election to election, it was not unusual for state legislatures to enter into contracts with private parties and then to break or change those agreements in subsequent legislative sessions. In addition, state governments often would adopt policies that ran contrary to contracts among private individuals. When such actions occurred, injured parties would challenge the states in court. Because the states were not obliged to follow principles of due process of law until after ratification of the Fourteenth Amendment in 1868, the contract clause was the primary constitutional ground on which state policies could be challenged. As a result, it was one of the most litigated constitutional provisions in the first decades of U.S. history. One study concluded that roughly 40 percent of all Supreme Court cases prior to 1889 that attacked the validity of state legislation did so on the basis of contract clause arguments.1

JOHN MARSHALL AND THE CONTRACT CLAUSE

The importance of the contract clause increased dramatically through the Marshall Court’s interpretations of its meaning. Chief Justice John Marshall had strong views on private property, economic development, and the role of the federal government. He consistently supported aggressive policies that would result in vigorous economic expansion. Underlying this position was a philosophy that elevated private property to the level of a natural right that government had little authority to limit. Furthermore, Marshall firmly believed that the nation’s interests could be served best if the federal government, rather than the states, became the primary agent for economic policy making. As we have seen in the areas of federalism and commerce, Marshall could be counted on to uphold actions taken by the federal government and to favor it over competing state interests. Marshall’s ideology predisposed him to champion the contract clause, which he viewed as essential to the right to private property. Moreover, the clause’s restriction of the regulatory powers of the states appealed to his views on federalism. Given Marshall’s domination of the Court for more than three decades, it is not surprising that the contract clause achieved an elevated status during those years.

Establishing the Importance of the Contract Clause

The first major Supreme Court decision to consider the contract clause was Fletcher v. Peck (1810), which asked whether a state could nullify a public contract. The suit flowed from one of the most notorious incidents of corruption and bribery in the nation’s early history—the Yazoo River land fraud. In this litigation the beneficiaries of the scheme sought to use the contract clause to protect their gains.

Chief Justice Marshall was caught in a bind. To give force to the contract clause would be to rule in favor of those who profited from state government corruption. To rule against the unpopular fraudulent transactions would be to hand down a precedent significantly curtailing the meaning of the provision. Which option did Marshall choose?

Although Fletcher v. Peck did not fully settle the Yazoo lands controversy (see box 9-1), Marshall’s opinion breathed considerable life into the contract clause. While acknowledging that the original transactions were based on bribery and corruption, Marshall concluded that such matters are beyond the power of the courts to control. He concentrated instead on whether a state could lawfully rescind a previously passed, binding agreement. According to the Court’s holding in this case, the Constitution prohibits the states from impairing the obligation of any contract, even those contrary to the public good. Striking down the 1796 Georgia statute was one of the earliest instances of the Supreme Court nullifying a state law on constitutional grounds. Fletcher v. Peck established the contract clause as an important provision of the new Constitution and encouraged the use of the clause in challenges to the economic regulations of the states.

Marshall’s initial interpretation of the contract clause was reinforced just two years later in New Jersey v. Wilson (1812). This dispute can be traced back to 1758, when the remnants of the Delaware Indian tribe settled their land claims with the state of New Jersey. The Delawares consented to give up their claim to the disputed lands if the state would purchase a tract for the tribe to inhabit. The agreement also freed the tribe from state taxation on the land. In 1801 members of the tribe decided to move to New York, and New Jersey allowed them to sell their land. Three years later the state passed a law subjecting the property to state taxes. The new owners objected, claiming that the repeal of tax-exempt status was an impairment of the 1758 contract. Chief Justice Marshall, for a unanimous Court, ruled in favor of the landowners. The legislature had granted the tax exemption to the land as part of a legally binding contract. That contractual obligation could not later be impaired by the state. The tax status conferred in 1758 remained with the land even though the original parties to the agreement had sold it.

In 1819 the Court heard Sturges v. Crowninshield, an appeal that presented issues hitting squarely on the concerns expressed by the delegates at the Constitutional Convention. Richard Crowninshield, whose business enterprises had suffered hard times, received two loans from Josiah Sturges totaling about $1,500. The loans were secured by promissory notes. When Crowninshield became insolvent, he sought relief from his debts by invoking New York’s recently passed bankruptcy law. Sturges objected, claiming that the New York law was a state impairment of the obligation of contracts in violation of the Constitution. The New York bankruptcy law was an example of just what the framers had intended to prohibit—states interfering with debtor–creditor agreements.

Sturges v. Crowninshield presented two issues to the Supreme Court. The first was whether a state may enact a bankruptcy law at all. Article I, Section 8, Clause 4, of the Constitution expressly gave the federal government power to enact such legislation. Did this power preclude the states from acting? A unanimous Court, again through an opinion written by Chief Justice Marshall, held that in the absence of any federal action the states were free to enact bankruptcy laws. The second issue was whether the New York law was invalid as an impairment of contracts. Here the Court found the law defective. The New York law discharged Crowninshield’s contractual indebtedness entered into prior to the passage of the statute, which, according to the Court, was beyond the power of the state.2

Fletcher v. Peck

10 U.S. (6 Cr.) 87 (1810)

http://laws.findlaw.com/us/10/87.html

Vote: 5 (Johnson, Livingston, Marshall, Todd, Washington)

0

OPINION OF THE COURT: Marshall

CONCURRING OPINION: Johnson

NOT PARTICIPATING: Chase, Cushing

FACTS:

This dispute had its roots in the 1795 session of the Georgia legislature. Clearly motivated by wholesale bribery, the legislators sold about 35 million acres of public lands to several land companies at ridiculously low prices. The territory in question, known as the “Yazoo lands” after one of the major rivers that passes through it, encompassed most of what is now Mississippi and Alabama. Some of the nation’s most prominent public figures, including some members of Congress, supported this transaction or invested in it. The citizens of Georgia were outraged by the sale and turned out most of the legislators in the next election. In 1796 the newly elected legislature promptly rescinded the sales contract and moved to repossess the land. Unfortunately, by this time the land companies had sold numerous parcels to third-party investors and settlers. A massive and complicated set of legal actions ensued to determine ownership of the disputed lands. Attempts to negotiate a settlement proved unsuccessful. Even the president, Thomas Jefferson, was drawn into the controversy as he tried to work out a compromise settlement that would satisfy the state of Georgia as well as the investors.

Fletcher v. Peck was a lawsuit filed to obtain a judicial determination of the ownership question. John Peck bought 600,000 acres of Yazoo land from James Gunn, one of the original buyers. Peck in turn sold 15,000 acres to land speculator Robert Fletcher. The sale was part of a carefully designed strategy between Peck and Fletcher to test the constitutionality of the Georgia repeal statute. Both ultimately would profit if the sales agreements were upheld. After the sale was completed, Fletcher sued Peck for return of the purchase price, claiming that Peck had sold Fletcher a parcel of land for which he did not hold valid title. The real issue, however, rested squarely on the meaning of the contract clause: May a state that has entered into a valid contract later rescind that contract?

John Quincy Adams (who would become the sixth president of the United States), Joseph Story (who would become the youngest person ever appointed to the Supreme Court), and Robert Goodloe Harper (who was a former South Carolina congressman) represented Peck and the interests of the others who had purchased the land. They argued that Peck held valid title to the property because Georgia constitutionally could not abrogate the original sales contracts. Fletcher’s case was handled by Luther Martin, who had been a delegate to the Constitutional Convention but later opposed ratification. According to historical accounts, Martin would often show up in court drunk. His rather ineffective performance, some argue, is further evidence that both sides wanted Peck’s position to prevail.

ARGUMENTS:

For the plaintiff in error, Robert Fletcher:

The state of Georgia had no right to sell the lands in the first place. The western lands had been uncoupled from the colonies. They belonged not to the states but to the United States or to the Indians.

Fraud and bribery influenced passage of the 1795 law that authorized the land sale, and therefore the sale is nullified.

The state legislature properly rescinded the sale in 1796 and reclaimed ownership of the land, invalidating any subsequent sales.

For the defendant in error, John Peck:

The state of Georgia was empowered to sell the land in question.

Even if passage of the law authorizing the sale of the lands was influenced by bribery and the grossest corruption, the law is still valid and cannot be disregarded by the judiciary.

The state of Georgia is forbidden by the U.S. Constitution to pass any law impairing the obligation of contracts. A grant is a contract that once executed cannot be revoked.

The parties now before the Court are innocent of fraud. They were bona fide purchasers of the land. They cannot be affected by any fraud that might have been committed by others.

MARSHALL, CH. J., DELIVERED THE OPINION OF THE COURT AS FOLLOWS:

The importance and the difficulty of the questions, presented by these pleadings, are deeply felt by the court.

The lands in controversy vested absolutely in James Gunn and others, the original grantees, by the conveyance of the governor, made in pursuance of an act of assembly to which the legislature was fully competent. Being thus in full possession of the legal estate, they, for a valuable consideration, conveyed portions of the land to those who were willing to purchase. If the original transaction was infected with fraud, these purchasers did not participate in it, and had no notice of it. They were innocent. Yet the legislature of Georgia has involved them in the fate of the first parties to the transaction, and, if the act be valid, has annihilated their rights also....

If a suit be brought to set aside a conveyance obtained by fraud, and the fraud be clearly proved, the conveyance will be set aside, as between the parties; but the rights of third persons, who are purchasers without notice, for a valuable consideration, cannot be disregarded. Titles, which according to every legal test, are perfect, are acquired with that confidence which is inspired by the opinion that the purchaser is safe. If there be any concealed defect, arising from the conduct of those who had held the property long before he acquired it, of which he had no notice, that concealed defect cannot be set up against him. He has paid the money for a title good at law, he is innocent, whatever may be the guilt of others, and equity will not subject him to the penalties attached to that guilt. All titles would be insecure, and the intercourse between man and man would be very seriously obstructed if this principle be overturned....

If the legislature felt itself absolved from those rules of property which are common to all the citizens of the United States, and from those principles of equity which are acknowledged in all our courts, its act is to be supported by its power alone, and the same power may devest any other individual of his lands, if it shall be the will of the legislature so to exert it....

Is the power of the legislature competent to the annihilation of such title, and to a resumption of the property thus held?

The principle asserted is, that one legislature is competent to repeal any act which a former legislature was competent to pass; and that one legislature cannot abridge the powers of a succeeding legislature.

The correctness of this principle, so far as respects general legislation, can never be controverted. But, if an act be done under a law, a succeeding legislature cannot undo it. The past cannot be recalled by the most absolute power. Conveyances have been made, those conveyances have vested legal estates, and, if those estates may be seized by the sovereign authority, still, that they originally vested is a fact, and cannot cease to be a fact.

When, then, a law is in its nature a contract, when absolute rights have vested under that contract, a repeal of the law cannot devest those rights; and the act of annulling them, if legitimate, is rendered so by a power applicable to the case of every individual in the community.

It may well be doubted whether the nature of society and of government does not prescribe some limits to the legislative power; and, if any be prescribed, where are they to be found, if the property of an individual, fairly and honestly acquired, may be seized without compensation.

To the legislature all legislative power is granted; but the question, whether the act of transferring the property of an individual to the public, be in the nature of the legislative power, is well worthy of serious reflection.

It is the peculiar province of the legislature to prescribe general rules for the government of society; the application of those rules to individuals in society would seem to be the duty of other departments. How far the power of giving the law may involve every other power, in cases where the constitution is silent, never has been, and perhaps never can be, definitely stated.

The validity of this rescinding act, then, might well be doubted, were Georgia a single sovereign power. But Georgia cannot be viewed as a single, unconnected, sovereign power, on whose legislature no other restrictions are imposed than may be found in its own constitution. She is a part of a large empire; she is a member of the American union; and that union has a constitution the supremacy of which all acknowledge, and which imposes limits to the legislature of the several states, which none claim a right to pass. The constitution of the United States declares that no state shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.

Does the case now under consideration come within this prohibitory section of the constitution?

In considering this very interesting question, we immediately ask ourselves what is a contract? Is a grant a contract?

A contract is a compact between two or more parties, and is either executory or executed. An executory contract is one in which a party binds himself to do, or not to do, a particular thing; such was the law under which the conveyance was made by the governor. A contract executed is one in which the object of contract is performed; and this, says Blackstone, differs in nothing from a grant. The contract between Georgia and the purchasers was executed by the grant. A contract executed, as well as one which is executory, contains obligations binding on the parties. A grant, in its own nature, amounts to an extinguishment of the right of the grantor, and implies a contract not to reassert that right. A party is, therefore, always estopped by his own grant.

Since, then, in fact, a grant is a contract executed, the obligation of which still continues, and since the constitution uses the general term contract, without distinguishing between those which are executory and those which are executed, it must be construed to comprehend the latter as well as the former. A law annulling conveyances between individuals, and declaring that the grantors should stand seised of their former estates, notwithstanding those grants, would be as repugnant to the constitution as a law discharging the vendors of property from the obligation of executing their contracts by conveyances. It would be strange if a contract to convey was secured by the constitution, while an absolute conveyance remained unprotected.

If, under a fair construction [of] the constitution, grants are comprehended under the term contracts, is a grant from the state excluded from the operation of the provision? Is the clause to be considered as inhibiting the state from impairing the obligation of contracts between two individuals, but as excluding from that inhibition contracts made with itself?

The words themselves contain no such distinction. They are general, and are applicable to contracts of every description. If contracts made with the state are to be exempted from their operation, the exception must arise from the character of the contracting party, not from the words which are employed.

Whatever respect might have been felt for the state sovereignties, it is not to be disguised that the framers of the constitution viewed, with some apprehension, the violent acts which might grow out of the feelings of the moment; and that the people of the United States, in adopting that instrument, have manifested a determination to shield themselves and their property from the effects of those sudden and strong passions to which men are exposed. The restrictions on the legislative power of the states are obviously founded in this sentiment; and the constitution of the United States contains what may be deemed a bill of rights for the people of each state.

No state shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.

A bill of attainder may affect the life of an individual, or may confiscate his property, or may do both.

In this form the power of the legislature over the lives and fortunes of individuals is expressly restrained. What motive, then, for implying, in words which import a general prohibition to impair the obligation of contracts, an exception in favour of the right to impair the obligation of those contracts into which the state may enter?

The state legislatures can pass no ex post facto law. An ex post facto law is one which renders an act punishable in a manner in which it was not punishable when it was committed. Such a law may inflict penalties on the person, or may inflict pecuniary penalties which swell the public treasury. The legislature is then prohibited from passing a law by which a man’s estate, or any part of it, shall be seized for a crime which was not declared, by some previous law, to render him liable to that punishment. Why, then, should violence be done to the natural meaning of words for the purpose of leaving to the legislature the power of seizing, for public use, the estate of an individual in the form of a law annulling the title by which he holds that estate? The court can perceive no sufficient grounds for making this distinction. This rescinding act would have the effect of an ex post facto law. It forfeits the estate of Fletcher for a crime not committed by himself, but by those from whom he purchased. This cannot be effected in the form of an ex post facto law, or bill of attainder; why, then, is it allowable in the form of a law annulling the original grant?

The argument in favour of presuming an intention to except a case, not excepted by the words of the constitution, is susceptible of some illustration from a principle originally ingrafted in that instrument, though no longer a part of it. The constitution, as passed, gave the courts of the United States jurisdiction in suits brought against individual states. A state, then, which violated its own contract was suable in the courts of the United States for that violation. Would it have been a defence in such a suit to say that the state had passed a law absolving itself from the contract? It is scarcely to be conceived that such a defence could be set up. And yet, if a state is neither restrained by the general principles of our political institutions, nor by the words of the constitution, from impairing the obligation of its own contracts, such a defence would be a valid one. This feature is no longer found in the constitution; but it aids in the construction of those clauses with which it was originally associated.

It is, then, the unanimous opinion of the court, that, in this case, the estate having passed into the hands of a purchaser for a valuable consideration, without notice, the state of Georgia was restrained, either by general principles which are common to our free institutions, or by the particular provisions of the constitution of the United States, from passing a law whereby the estate of the plaintiff in the premises so purchased could be constitutionally and legally impaired and rendered null and void.

box 9-1 AFTERMATH . . . THE YAZOO LANDS CONTROVERSY

THE SUPREME COURT’s decision in Fletcher v. Peck (1810) provided a landmark ruling on the meaning of the contract clause, but it did not fully resolve the issues surrounding the Yazoo land claims. In the period between the original land sale by the Georgia legislature in 1795 and the state’s voiding of the sale in 1796, parcels were bought and sold in a climate of feverish land speculation. About 60 percent of the purchasers were New England residents eager to participate in western land investments. After Georgia repealed the original sale, titles to the Yazoo lands were in considerable doubt. Not only did the actions by the Georgia legislature thoroughly confuse the issue, but also claims by Indian tribes, old Spanish interests, squatters, and those who had been granted lands by Georgia governors over the years clouded the issue. Bogus titles and sales of nonexistent land complicated matters even further.

When purchasers learned that Georgia had passed legislation canceling the original sale, they pressured Congress to provide compensation if their titles proved to be invalid. Northern representatives favored a compensation program to provide relief to constituents who had purchased property, but southerners, especially representatives from Georgia, opposed any compensation as rewarding those who sought to benefit from the original acts of bribery and fraud. Fletcher v. Peck was first filed in federal circuit court in Massachusetts in 1803 in an attempt to have the judiciary settle the matter. Action on the lawsuit and subsequent appeals was delayed, with the parties hoping that Congress would pass a compensation act. When legislation failed in 1804, 1805, and 1806, it appeared that the courts would have to answer the lingering questions. By the time the Supreme Court decided Fletcher v. Peck, fifteen years had elapsed since the original sales, and determining valid title to each parcel of land was impossible.

The decision in Fletcher v. Peck was unpopular in many circles. Some thought the Court should not uphold contracts based on wholesale corruption. Thomas Jefferson used the decision as an opportunity to renew his attacks on Marshall. He claimed the chief justice’s opinion was filled with “twistifications,” “cunning,” and “sophistry.” According to Jefferson, it illustrated once again “how dexterously [Marshall] can reconcile law to his personal biases.”

The decision, however, put pressure on Congress to bring closure to the controversy. Northerners again demanded a compensation program, but southerners still resisted. In 1814 Congress appropriated $5 million from federal land sales to compensate those who held title to the Yazoo lands. Investors released their land claims in return for monetary compensation. It took four years for the claims to be settled. Northern representatives had obtained relief for their constituents, but southern interests also benefited. Resolving the confusion over the Yazoo lands cleared the way for organizing the Mississippi Territory, which was admitted as a slaveholding state in 1817.

SOURCE: C. Peter Magrath, Yazoo: Law and Politics in the New Republic (Providence, RI: Brown University Press, 1966).

Corporate Charters as Contracts

The same year the Supreme Court decided Sturges, the justices announced their decision in Trustees of Dartmouth College v. Woodward (1819), perhaps the most famous contract clause case of the Marshall era. The Dartmouth College case presented a question of particular significance to the business community: Is a corporation charter a contract protected against state impairment? The case had added intrigue because it involved a bitter partisan battle between the Jeffersonian Republicans and the Federalists.

The Dartmouth College case was a clear victory for Webster and the board. The former trustees regained control of the college, and Webster’s reputation as one of the nation’s leading legal advocates was firmly established. The decision was also a victory for business interests. By holding that corporate charters were contracts under the meaning of Article I, Section 10, the Court gave businesses considerable protection against state regulation. The decision, however, was not totally one-sided. Marshall acknowledged the power of the state to include within its contracts and charters provisions reserving the right to make future changes.

The importance of the contract clause reached its zenith under the Marshall Court. These early decisions protecting contractual agreements helped spur economic development and expansion. But an inevitable battle was on the horizon, a battle between the constitutional sanctity of contracts and the states’ authority to regulate for the public good.

Trustees of Dartmouth College v. Woodward

17 U.S. (4 Wheat.) 518 (1819)

http://laws.findlaw.com/us/17/518.html

Vote: 5 (Johnson, Livingston, Marshall, Story, Washington)

1 (Duvall)

OPINION OF THE COURT: Marshall

CONCURRING OPINIONS: Story, Washington

NOT PARTICIPATING: Todd

FACTS:

In 1769 King George III issued a corporate charter establishing Dartmouth College in New Hampshire.3 The charter designated a board of trustees as the ultimate governing body, with the board’s authority extending to the college president. The board was self-perpetuating, with the power to fill its own vacancies. The founder and first president of Dartmouth was Eleazar Wheelock, who also had authority to designate his own successor. He chose his son, John Wheelock, who assumed the presidency upon Eleazar’s death. John Wheelock was ill suited for the position, and for years friction existed between him and the board.

To shore up his position, Wheelock made political alliances with the Jeffersonian Republicans who had gained control of the New Hampshire state legislature in 1816. The Republicans gladly took his side in the dispute with the Federalist-dominated board of trustees and passed a law radically changing the governing structure of the college. The law expanded the board from twelve to twenty-one members to be appointed by the governor, and created a supervisory panel with veto power over the actions of the trustees. This reorganization of the college essentially rendered the old trustees powerless. In effect, the legislature converted Dartmouth College, renamed Dartmouth University under the new law, from a private to a public institution. The result was chaos. The students and faculty for the most part remained loyal to the old trustees, but the state essentially took over the buildings and records of the college. As might be expected, the college soon found itself nearing fiscal collapse.

To resolve the situation, the old trustees hired Daniel Webster to represent them. Webster, an 1801 Dartmouth graduate, agreed to take the case for a fee of $1,000—a considerable sum of money in those days. The old trustees sued William Woodward, the secretary of the college, who had in his possession the college charter, records, and seal. Webster and his clients lost in the state courts and then appealed to the U.S. Supreme Court. When the case was argued in March 1818, Webster engaged in four hours of brilliant oratory before the justices. At times his argument was quite emotional; he is said to have brought tears to the eyes of those present when he spoke his often-quoted line, “It is, sir, as I have said, a small college, and yet there are those that love it.” The justices, however, did not act in the heat of emotion. Almost a full year went by before the Court decided. By the time the opinion was released, both John Wheelock and William Woodward had died.

ARGUMENTS:

For the plaintiffs in error, the trustees of Dartmouth College:

By a grant from the English Crown, Eleazar Wheelock was named president of Dartmouth College and was empowered to name his successor. By the same grant, the original board of twelve trustees was given power to fill its own vacancies. These provisions were to be in effect in perpetuity.

The changes made by the New Hampshire legislature are not binding on the college unless agreed to by the trustees.

It is an improper legislative act under the New Hampshire constitution to take property and rights from one (the old Dartmouth College corporation) and grant them to another (the new Dartmouth University corporation).

The acts of the legislature violate the U.S. Constitution’s provision that states cannot impair the obligation of contracts. The charter establishing the college is a valid contract.

For the defendant in error, William Woodward:

A grant of a public nature for public purposes, such as the Dartmouth College charter, is not the kind of private agreement intended to be protected under the contract clause.

The parties to the contract, King George and Eleazar Wheelock, are not parties to this lawsuit.

Even if the charter is a contract and the old trustees are parties to it, the obligation of contracts has not been impaired. The old trustees remain on the board. The addition of new trustees does not alter the position of the old trustees.

By the Revolution, the powers of the British government devolved to the states. Therefore, the state has the same powers over its public institutions as did the king.

The Reverend Eleazar Wheelock (left) was the founder and first president of Dartmouth College; John Wheelock (middle), son of Eleazar, was the second president, and his dispute with the college board of trustees led to the famed litigation. William H. Woodward (right) was the secretary-treasurer of the college and the defendant in the contract clause case of Dartmouth College v. Woodward.

Courtesy of Dartmouth College

Courtesy of Dartmouth College

Courtesy of Dartmouth College

Drawing of Dartmouth College, 1793.

Courtesy of Dartmouth College

THE OPINION OF THE COURT WAS DELIVERED BY MR. CHIEF JUSTICE MARSHALL.

This Court can be insensible neither to the magnitude nor delicacy of this question. The validity of a legislative act is to be examined; and the opinion of the highest law tribunal of a State is to be revised: an opinion which carries with it intrinsic evidence of the diligence, of the ability, and the integrity, with which it was formed. On more than one occasion, this Court has expressed the cautious circumspection with which it approaches the consideration of such questions; and has declared, that, in no doubtful case, would it pronounce a legislative act to be contrary to the constitution. But the American people have said, in the constitution of the United States, that “no State shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.” In the same instrument they have also said, “that the judicial power shall extend to all cases in law and equity arising under the constitution.” On the judges of this Court, then, is imposed the high and solemn duty of protecting, from even legislative violation, those contracts which the constitution of our country has placed beyond legislative control; and, however irksome the task may be, this is a duty from which we dare not shrink....

It can require no argument to prove, that the circumstances of this case constitute a contract. An application is made to the crown for a charter to incorporate a religious and literary institution. In the application, it is stated that large contributions have been made for the object, which will be conferred on the corporation, as soon as it shall be created. The charter is granted, and on its faith the property is conveyed. Surely in this transaction every ingredient of a complete and legitimate contract is to be found.

The points for consideration are,

Is this contract protected by the constitution of the United States?

Is it impaired by the acts under which the defendant holds?...

. . . . [T]he term “contract” must be understood in a . . . limited sense. . . . [I]t must be understood as intended to guard against a power of at least doubtful utility, the abuse of which had been extensively felt; and to restrain the legislature in future from violating the right to property. That anterior to the formation of the constitution, a course of legislation had prevailed in many, if not in all, of the States, which weakened the confidence of man in man, and embarrassed all transactions between individuals, by dispensing with a faithful performance of engagements. To correct this mischief, by restraining the power which produced it, the State legislatures were forbidden “to pass any law impairing the obligation of contracts,” that is, of contracts respecting property, under which some individual could claim a right to something beneficial to himself; and that since the clause in the constitution must in construction receive some limitation, it may be confined, and ought to be confined, to cases of this description; to cases within the mischief it was intended to remedy....

The parties in this case differ less on general principles, less on the true construction of the constitution in the abstract, than on the application of those principles to this case, and on the true construction of the charter of 1769. This is the point on which the cause essentially depends. If the act of incorporation be a grant of political power, if it create a civil institution to be employed in the administration of the government, or if the funds of the college be public property, or if the State of New Hampshire, as a government, be alone interested in its transactions, the subject is one in which the legislature of the State may act according to its own judgment, unrestrained by any limitation of its power imposed by the constitution of the United States.

But if this be a private eleemosynary institution, endowed with a capacity to take property for objects unconnected with government, whose funds are bestowed by individuals on the faith of the charter; if the donors have stipulated for the future disposition and management of those funds in the manner prescribed by themselves; there may be more difficulty in the case....

It becomes then the duty of the Court most seriously to examine this charter, and to ascertain its true character....

Whence, then, can be derived the idea, that Dartmouth College has become a public institution, and its trustees public officers, exercising powers conferred by the public for public objects? Not from the source whence its funds were drawn; for its foundation is purely private and eleemosynary—Not from the application of those funds; for money may be given for education, and the persons receiving it do not, by being employed in the education of youth, become members of the civil government. Is it from the act of incorporation? Let this subject be considered.

A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it was created. Among the most important are immortality, and, if the expression may be allowed, individuality; properties, by which a perpetual succession of many persons are considered as the same, and may act as a single individual. They enable a corporation to manage its own affairs, and to hold property without the perplexing intricacies, the hazardous and endless necessity of perpetual conveyances for the purpose of transmitting it from hand to hand. It is chiefly for the purpose of clothing bodies of men, in succession, with these qualities and capacities, that corporations were invented, and are in use. By these means, a perpetual succession of individuals are capable of acting for the promotion of the particular object, like one immortal being. But this being does not share in the civil government of the country, unless that be the purpose for which it was created. Its immortality no more confers on it political power, or a political character, than immortality would confer such power or character on a natural person. It is no more a State instrument, than a natural person exercising the same powers would be. If, then, a natural person, employed by individuals in the education of youth, or for the government of a seminary in which youth is educated, would not become a public officer, or be considered as a member of the civil government, how is it, that this artificial being, created by law, for the purpose of being employed by the same individuals for the same purposes, should become a part of the civil government of the country? Is it because its existence, its capacities, its powers, are given by law? Because the government has given it the power to take and to hold property in a particular form, and for particular purposes, has the government a consequent right substantially to change that form, or to vary the purposes to which the property is to be applied? This principle has never been asserted or recognized, and is supported by no authority. Can it derive aid from reason?...

From the fact, then, that a charter of incorporation has been granted, nothing can be inferred which changes the character of the institution, or transfers to the government any new power over it. The character of civil institutions does not grow out of their incorporation, but out of the manner in which they are formed, and the objects for which they are created. The right to change them is not founded on their being incorporated, but on their being the instruments of government, created for its purposes. The same institutions, created for the same objects, though not incorporated, would be public institutions, and, of course, be controllable by the legislature. The incorporating act neither gives nor prevents this control. Neither, in reason, can the incorporating act change the character of a private eleemosynary institution....

From this review of the charter, it appears, that Dartmouth College is an eleemosynary institution, incorporated for the purpose of perpetuating the application of the bounty of the donors, to the specified objects of that bounty; that its trustees or governors were originally named by the founder, and invested with the power of perpetuating themselves; that they are not public officers, nor is it a civil institution, participating in the administration of government; but a charity school, or a seminary of education, incorporated for the preservation of its property, and the perpetual application of that property to the objects of its creation....

This is plainly a contract to which the donors, the trustees, and the crown, (to whose rights and obligations New Hampshire succeeds,) were the original parties. It is a contract made on a valuable consideration. It is a contract for the security and disposition of property. It is a contract, on the faith of which, real and personal estate has been conveyed to the corporation. It is then a contract within the letter of the constitution, and within its spirit also....

The opinion of the Court, after mature deliberation, is, that this is a contract, the obligation of which cannot be impaired, without violating the constitution of the United States. This opinion appears to us to be equally supported by reason, and by the former decisions of this Court.

2. We next proceed to the inquiry, whether its obligation has been impaired by those acts of the legislature of New Hampshire....

From the review of this charter, which has been taken, it appears, that the whole power of governing the college, of appointing and removing tutors, of fixing their salaries, of directing the course of study to be pursued by the students, and of filling up vacancies created in their own body, was vested in the trustees. On the part of the crown it was expressly stipulated, that this corporation, thus constituted, should continue forever; and that the number of trustees should forever consist of twelve, and no more. By this contract the crown was bound, and could have made no violent alteration in its essential terms, without impairing its obligation.

By the revolution, the duties, as well as the powers, of government devolved on the people of New Hampshire. . . . It is too clear to require the support of argument, that all contracts, and rights, respecting property, remained unchanged by the revolution. The obligations then, which were created by the charter to Dartmouth College, were the same in the new, that they had been in the old government. The power of the government was also the same. A repeal of this charter at any time prior to the adoption of the present constitution of the United States, would have been an extraordinary and unprecedented act of power, but one which could have been contested only by the restrictions upon the legislature, to be found in the constitution of the State. But the constitution of the United States has imposed this additional limitation, that the legislature of a State shall pass no act “impairing the obligation of contracts.”...

The whole power of governing the college is transferred from trustees appointed according to the will of the founder, expressed in the charter, to the executive of New Hampshire. The management and application of the funds of this eleemosynary institution, which are placed by the donors in the hands of trustees named in the charter, and empowered to perpetuate themselves, are placed by this act under the control of the government of the State. The will of the State is substituted for the will of the donors, in every essential operation of the college. This is not an immaterial change. The founders of the college contracted, not merely for the perpetual application of the funds which they gave, to the objects for which those funds were given; they contracted also, to secure that application by the constitution of the corporation. They contracted for a system, which should, as far as human foresight can provide, retain forever the government of the literary institution they had formed, in the hands of persons approved by themselves. This system is totally changed. The charter of 1769 exists no longer. It is reorganized; and reorganized in such a manner, as to convert a literary institution, moulded according to the will of its founders, and placed under the control of private literary men, into a machine entirely subservient to the will of the government. This may be for the advantage of this college in particular, and may be for the advantage of literature in general; but it is not according to the will of the donors, and is subversive of that contract, on the faith of which their property was given....

It results from this opinion, that the acts of the legislature of New Hampshire . . . are repugnant to the constitution of the United States. . . . The judgment of the State Court must, therefore, be reversed.

MR. JUSTICE STORY, [concurring].

In my judgment, it is perfectly clear that any act of a legislature which takes away any powers or franchises vested by its charter in a private corporation, or its corporate officers, or which restrains or controls the legitimate exercise of them, or transfers them to other persons without its assent is a violation of the obligations of that charter. If the legislature mean to claim such an authority, it must be reserved in the grant. The charter of Dartmouth College contains no such reservation, and I am therefore bound to declare that the acts of the Legislature of New Hampshire now in question do impair the obligations of that charter, and are consequently unconstitutional and void.

In pronouncing this judgment, it has not for one moment escaped me how delicate, difficult, and ungracious is the task devolved upon us. The predicament in which this Court stands in relation to the nation at large is full of perplexities and embarrassments. It is called to decide on causes between citizens of different States, between a State and its citizens, and between different States. It stands, therefore in the midst of jealousies and rivalries of conflicting parties with the most momentous interests confided to its care. Under such circumstances, it never can have a motive to do more than its duty, and I trust it will always be found to possess firmness enough to do that.

Under these impressions, I have pondered on the case before us with the most anxious deliberation. I entertain great respect for the Legislature whose acts are in question. I entertain no less respect for the enlightened tribunal whose decision we are called upon to review. In the examination, I have endeavored to keep . . . under the guidance of authority and principle. It is not for judges to listen to the voice of persuasive eloquence or popular appeal. We have nothing to do, but to pronounce the law as we find it, and, having done this, our justification must be left to the impartial judgment of our country.

DECLINE OF THE CONTRACT CLAUSE: FROM THE TANEY COURT TO THE NEW DEAL

The Marshall years ended when the chief justice died July 6, 1835, at the age of seventy-nine. Marshall had been appointed in 1801 in one of the last acts of the once-dominant Federalist Party, and he had imposed his political philosophy on the Court’s constitutional interpretations for more than three decades. His decisions in contract clause disputes, as well as in other areas of federalism and economic regulation, encouraged economic development and fostered entrepreneurial activity.

Importance of the Public Good

The days of the Federalist philosophy sympathetic to the interests of business and the economic elite had passed. Andrew Jackson now occupied the White House. Jackson came from the American frontier and was committed to policies beneficial to ordinary citizens; he had little sympathy for the moneyed classes of the Northeast. Within a short period, Jackson had the opportunity to change the course of the Supreme Court. He filled not only the center chair left vacant by Marshall’s death but also those of five associate justices.4 The new appointees all held ideologies consistent with principles of Jacksonian democracy, especially the new chief justice, Roger Brooke Taney, a Maryland Democrat who had served in a number of posts in the Jackson administration. Changes in constitutional interpretation were inevitable, although in the final analysis the Taney Court did not veer as far from Marshall precedents as many had predicted.

Given the differences between Federalist and Jacksonian values, however, the Court was likely to reevaluate the contract clause. The Taney Court’s first opportunity to do so came in Proprietors of Charles River Bridge v. Proprietors of Warren Bridge (1837). As you read the Court’s opinion, compare it with the positions Marshall stated in Fletcher v. Peck and Dartmouth College. Although Taney did not repudiate Marshall’s rulings, his opinion in Charles River Bridge struck a new balance between the inviolability of contracts and the power of the state to legislate for the public good. The Court also held that contracts should be strictly construed, a position at odds with Marshall’s rather expansive interpretations of contractual obligations. Justice Story, who had appeared as an attorney in Fletcher v. Peck and had supported Marshall’s views of the contract clause since he joined the Court in 1811, disagreed with this change in doctrine.

Paying little attention to Justice Story’s protest that the majority had rendered the contract clause meaningless, the Taney Court continued to allow the states more leeway in regulating for the public good. As Taney noted in Charles River Bridge, “While the rights of private property are sacredly guarded, we must not forget that the community also have rights, and that the happiness and well being of every citizen depends on their faithful preservation.” In West River Bridge Company v. Dix (1848) the Court upheld the state’s right to exercise eminent domain authority even when it conflicted with existing contracts. In that case Vermont had previously granted a private company a charter to construct a bridge and collect tolls. When the state later decided to build a public highway to be used without tolls, it canceled the company’s charter. Vermont offered to compensate the company for its loss, but the owners were not satisfied with the amount. In an opinion by Justice Peter V. Daniel the Court rejected the bridge company’s claim that the state had violated the Constitution, holding that the contract clause did not restrict the state’s right to regulate for the public good under the power of eminent domain.

The Taney justices, however, did not totally abandon the Marshall Court’s posture favoring business, nor did they repeal the contract clause by judicial fiat; instead, the Court took a more balanced position. In a number of cases, especially when the contractual provisions were clear, the Taney Court struck down state regulations on contract clause grounds. In Bronson v. Kinzie (1843) the Court invalidated Illinois laws that expanded the rights of debtors. The challenged statutes placed certain limits on mortgage debt, including protecting the rights of owners to repurchase properties lost to foreclosure. To the extent that these laws were applied to contracts in existence before their passage, the laws were unconstitutional. In Piqua Branch of the State Bank of Ohio v. Knoop (1854) the justices declared void the assessment of state taxes on a bank because, in calculating the taxes, Ohio had used a basis different from that specified under the state charter establishing the bank.

Proprietors of Charles River Bridge v. Proprietors of Warren Bridge

36 U.S. (11 Pet.) 420 (1837)

http://laws.findlaw.com/us/36/420.html

Vote: 5 (Baldwin, Barbour, McLean, Taney, Wayne)

2 (Story, Thompson)

OPINION OF THE COURT: Taney

CONCURRING OPINION: McLean

DISSENTING OPINIONS: Story, Thompson

FACTS:

In 1785 the Massachusetts legislature created Charles River Bridge Company by charter. The charter gave the company the right to construct a bridge between Boston and Charlestown and to collect tolls for its use. This agreement replaced a ferry franchise between the two cities that the colonial legislature had granted to Harvard College in 1650. In 1792 the legislature extended the charter. Because of the population growth in the Boston area, the bridge received heavy use, and its investors prospered. In 1828, when traffic congestion on the bridge became a significant problem, the legislature decided that a second bridge was necessary. Consequently, the state incorporated Warren Bridge Company and authorized it to construct a bridge to be located about a hundred yards from the first. The Warren Bridge investors had authority to collect tolls to pay for the expense of construction plus an agreed-on profit. Within six years the state would assume ownership of the Warren Bridge and operate it on a toll-free basis.

Charles River Bridge Company opposed the construction of a second bridge. It claimed that its charter conferred the exclusive right to build and operate a bridge between Boston and Charlestown. A second bridge, eventually to be operated without tolls, would deprive the company of the profits from its investment.

The second charter, the company claimed, was a violation of the contract clause. To represent it, Charles River Bridge Company hired Daniel Webster, who had won Dartmouth College two decades earlier (see box 9-2). When the Massachusetts courts failed to grant relief, Charles River Bridge took its case to the U.S. Supreme Court.

The case was first argued in March 1831. John Marshall still led the Court at that time, and Webster understandably felt confident of victory. But the justices could not agree on a decision, and the case was scheduled for reargument in 1833. Once again, no decision was reached. Before a third hearing could be scheduled, deaths and resignations had changed the ideological complexion of the Court. When Jackson announced Taney as his choice for chief justice, Webster is said to have proclaimed, “The Constitution is gone.” From Webster’s perspective perhaps that was true. The Taney justices scheduled the bridge case to be reargued in 1837, and Webster no longer had a sympathetic audience for his strong contract clause position.

ARGUMENTS:

For the plaintiffs in error, the proprietors of Charles River Bridge:

A contract granting a company the right to build and operate the Charles River Bridge and collect tolls from it implies that the state will not take actions that create injurious competition with that enterprise.

The legislative act authorizing the Warren Bridge impairs the obligation of the contract between the state and Charles River Bridge Company in violation of the contract clause of the U.S. Constitution.

In recognition of the loss suffered when its ferry system was replaced by the Charles River Bridge, Harvard College received annual payments from the toll revenue collected by the bridge company. By this precedent, Charles River Bridge Company merits compensation for its loss of revenue due to the state’s authorization of the Warren Bridge.

The governing principle should be that when the terms of a contract are in doubt, the interpretation shall be strongly against the grantor.

For the defendants in error, the proprietors of the Warren Bridge:

Nothing in the charters of the Harvard ferry or the Charles River Bridge guarantees an exclusive right to provide transportation across the river.

When interpreting a public grant, nothing should pass by implication.

The state cannot contract away its authority to legislate for the security and well-being of society. The state always retains the power to provide transportation systems for its people.

The state’s grant to Charles River Bridge Company included the right to build and operate a bridge, and nothing more.

MR. CHIEF JUSTICE TANEY DELIVERED THE OPINION OF THE COURT.

The plaintiffs in error insist . . . [t]hat . . . the acts of the legislature of Massachusetts . . . by their true construction, necessarily implied that the legislature would not authorize another bridge, and especially a free one, by the side of this, and placed in the same line of travel, whereby the franchise granted to the “proprietors of the Charles River Bridge” should be rendered of no value; and the plaintiffs in error contend, that the grant of the ferry to the college, and of the charter to the proprietors of the bridge, are both contracts on the part of the state; and that the law authorizing the erection of the Warren Bridge in 1828, impairs the obligation of one or both of these contracts....

The Charles River Bridge ran from Prince Street in Boston to Charlestown. The bridge, considered a very advanced design at the time of its construction, was built on seventy-five oak piers and was more than 1,500 feet long.

Library of Congress

... [W]e are not now left to determine, for the first time, the rules by which public grants are to be construed in this country. The subject has already been considered in this Court . . . and the principle recognized, that in grants by the public, nothing passes by implication....

... [T]he object and end of all government is to promote the happiness and prosperity of the community by which it is established; and it can never be assumed, that the government intended to diminish its power of accomplishing the end for which it was created. And in a country like ours, free, active, and enterprising, continually advancing in numbers and wealth; new channels of communication are daily found necessary, both for travel and trade; and are essential to the comfort, convenience, and prosperity of the people. A state ought never to be presumed to surrender this power, because, like the taxing power, the whole community have an interest in preserving it undiminished. And when a corporation alleges, that a state has surrendered for seventy years, its power of improvement, and public accommodation, in a great and important line of travel, along which a vast number of its citizens must daily pass; the community have a right to insist, in the language of this Court above quoted, “that its abandonment ought not to be presumed, in a case, in which the deliberate purpose of the state to abandon it does not appear.” The continued existence of a government would be of no great value, if by implications and presumptions, it was disarmed of the powers necessary to accomplish the ends of its creation; and the functions it was designed to perform, transferred to the hands of privileged corporations. The rule of construction announced by the Court, was not confined to the taxing power; nor is it so limited in the opinion delivered. On the contrary, it was distinctly placed on the ground that the interests of the community were concerned in preserving, undiminished, the power then in question; and whenever any power of the state is said to be surrendered or diminished, whether it be the taxing power or any other affecting the public interest, the same principle applies, and the rule of construction must be the same. No one will question that the interests of the great body of the people of the state, would, in this instance, be affected by the surrender of this great line of travel to a single corporation, with the right to exact toll, and exclude competition for seventy years. While the rights of private property are sacredly guarded, we must not forget that the community also have rights, and that the happiness and well being of every citizen depends on their faithful preservation.

Adopting the rule of construction above stated as the settled one, we proceed to apply it to the charter of 1785, to the proprietors of the Charles River Bridge. This act of incorporation is in the usual form, and the privileges such as are commonly given to corporations of that kind. It confers on them the ordinary faculties of a corporation, for the purpose of building the bridge; and establishes certain rates of toll, which the company are authorized to take. This is the whole grant. There is no exclusive privilege given to them over the waters of Charles River, above or below their bridge. No right to erect another bridge themselves, nor to prevent other persons from erecting one. No engagement from the state, that another shall not be erected; and no undertaking not to sanction competition, nor to make improvements that may diminish the amount of its income. Upon all these subjects the charter is silent; and nothing is said in it about a line of travel, so much insisted on in the argument, in which they are to have exclusive privileges. No words are used, from which an intention to grant any of these rights can be inferred. If the plaintiff is entitled to them, it must be implied, simply, from the nature of the grant; and cannot be inferred from the words by which the grant is made.

The relative position of the Warren Bridge has already been described. It does not interrupt the passage over the Charles River Bridge, nor make the way to it or from it less convenient. None of the faculties or franchises granted to that corporation, have been revoked by the legislature; and its right to take the tolls granted by the charter remains unaltered. In short, all the franchises and rights of property enumerated in the charter, and there mentioned to have been granted to it, remain unimpaired. But its income is destroyed by the Warren Bridge; which, being free, draws off the passengers and property which would have gone over it, and renders their franchise of no value. This is the gist of the complaint. For it is not pretended, that the erection of the Warren Bridge would have done them any injury, or in any degree affected their right of property; if it had not diminished the amount of their tolls. In order then to entitle themselves to relief, it is necessary to show, that the legislature contracted not to do the act of which they complain; and that they impaired, or in other words, violated that contract by the erection of the Warren Bridge.

The inquiry then is, does the charter contain such a contract on the part of the state? Is there any such stipulation to be found in that instrument? It must be admitted on all hands, that there is none—no words that even relate to another bridge or to the diminution of their tolls, or to the line of travel. If a contract on that subject can be gathered from the charter, it must be by implication; and cannot be found in the words used. Can such an agreement be implied? The rule of construction before stated is an answer to the question. In charters of this description, no rights are taken from the public, or given to the corporation, beyond those which the words of the charter, by their natural and proper construction, purport to convey. There are no words which import such a contract as the plaintiffs in error contend for, and none can be implied....

Indeed, the practice and usage of almost every state in the Union, old enough to have commenced the work of internal improvement, is opposed to the doctrine contended for on the part of the plaintiffs in error. Turnpike roads have been made in succession, on the same line of travel; the later ones interfering materially with the profits of the first. These corporations have, in some instances, been utterly ruined by the introduction of newer and better modes of transportation, and travelling. In some cases, rail roads have rendered the turnpike roads on the same line of travel so entirely useless, that the franchise of the turnpike corporation is not worth preserving. Yet in none of these cases have the corporations supposed that their privileges were invaded, or any contract violated on the part of the state. Amid the multitude of cases which have occurred, and have been daily occurring for the last forty or fifty years, this is the first instance in which such an implied contract has been contended for, and this Court called upon to infer it from an ordinary act of incorporation, containing nothing more than the usual stipulations and provisions to be found in every such law. The absence of any such controversy, when there must have been so many occasions to give rise to it, proves that neither states, nor individuals, nor corporations, ever imagined that such a contract could be implied from such charters. It shows that the men who voted for these laws, never imagined that they were forming such a contract; and if we maintain that they have made it, we must create it by a legal fiction, in opposition to the truth of the fact, and the obvious intention of the party. We cannot deal thus with the rights reserved to the states; and by legal intendments and mere technical reasoning, take away from them any portion of that power over their own internal police and improvement, which is so necessary to their well being and prosperity....

The judgment of the supreme judicial court of the commonwealth of Massachusetts, dismissing the plaintiff’s bill, must, therefore, be affirmed, with costs.

MR. JUSTICE STORY, dissenting.

I maintain, that, upon the principles of common reason and legal interpretation, the present grant carries with it a necessary implication that the legislature shall do no act to destroy or essentially to impair the franchise; that, (as one of the learned judges of the state court expressed it,) there is an implied agreement that the state will not grant another bridge between Boston and Charlestown, so near as to draw away the custom from the old one; and, (as another learned judge expressed it,) that there is an implied agreement of the state to grant the undisturbed use of the bridge and its tolls so far as respects any acts of its own, or of any persons acting under its authority. In other words, the state, impliedly, contracts not to resume its grant, or to do any act to the prejudice or destruction of its grant. I maintain, that there is no authority or principle established in relation to the construction of crown grants, or legislative grants; which does not concede and justify this doctrine. Where the thing is given, the incidents, without which it cannot be enjoyed, are also given. . . . I maintain that a different doctrine is utterly repugnant to all the principles of the common law, applicable to all franchises of a like nature; and that we must overturn some of the best securities of the rights of property, before it can be established. I maintain, that the common law is the birthright of every citizen of Massachusetts, and that he holds the title deeds of his property, corporeal, and incorporeal, under it. I maintain, that under the principles of the common law, there exists no more right in the legislature of Massachusetts, to erect the Warren Bridge, to the ruin of the franchise of the Charles River Bridge than exists to transfer the latter to the former, or to authorize the former to demolish the latter. If the legislature does not mean in its grant to give any exclusive rights, let it say so, expressly; directly; and in terms admitting of no misconstruction. The grantees will then take at their peril, and must abide the results of their overweening confidence, indiscretion, and zeal.

My judgment is formed upon the terms of the grant, its nature and objects, its design and duties; and, in its interpretation, I seek for no new principles, but I apply such as are as old as the very rudiments of the common law.

BOX 9-2 DANIEL WEBSTER

Daniel Webster played an influential role in the development of American law and politics during a public career that spanned almost fifty years. He was born in Salisbury, New Hampshire, January 18, 1782, and educated at Phillips Exeter Academy and Dartmouth College. He was admitted to the bar in 1805 and immediately began the practice of law in his home state.

Library of Congress

In 1813 Webster was elected to Congress as a Federalist representative from New Hampshire. This office was only the beginning of an illustrious series of important positions:

United States representative, New Hampshire, 1813–1817

Monroe delegate to Electoral College, 1820

United States representative, Massachusetts, 1823–1827

United States senator, Massachusetts, 1827–1841

Presidential candidate, 1836

Secretary of state (Harrison and Tyler administrations), 1841–1843

United States senator, Massachusetts, 1845–1850

Secretary of state (Fillmore administration), 1850–1852

Webster was perhaps best known for his role as an advocate before the Supreme Court and the brilliant oratorical skills he displayed both in Congress and in the courts. He appeared before the Supreme Court in 168 cases, winning about half of them. In twenty-four of his appearances he was an advocate in a major constitutional dispute. Among the most celebrated of these cases were the following:

McCulloch v. Maryland (1819)

Dartmouth College v. Woodward (1819)

Cohens v. Virginia (1821)

Gibbons v. Ogden (1824)

Osborn v. Bank of the United States (1824)

Ogden v. Saunders (1827)

Wheaton v. Peters (1834)

Charles River Bridge v. Warren Bridge (1837)

Swift v. Tyson (1842)

West River Bridge v. Dix (1848)

Luther v. Borden (1849)

Webster died October 24, 1852, at his home in Marshfield, Massachusetts.

NOTE: For a review of Webster’s legal career, see Maurice G. Baxter, Daniel Webster and the Supreme Court (Amherst: University of Massachusetts Press, 1966).

Post–Civil War Period

After the Taney years, the Court continued to move away from strong enforcement of the contract clause and to accord the states greater freedom to exercise their police powers. Northwestern Fertilizing Company v. Hyde Park (1878) provides a good illustration. In March 1867 the Illinois state legislature passed a statute creating Northwestern Fertilizing Company. The charter authorized the company within a designated territory to operate a facility that converted dead animals to fertilizer and other products. The charter also gave the company the right to transport dead animals and animal parts (offal) through the territory. Based on this authority, the company operated its plant in a sparsely populated, swampy area.

The facility was located within the boundaries of the village of Hyde Park, which was beginning to experience considerable population growth. In 1869 the legislature upgraded the village charter, giving it full powers of local government including the authority to “define or abate nuisances which are, or may be, injurious to the public health.” Recognizing its charter with Northwestern, the legislature stipulated that no village regulations could be applied to the company for at least two years.

At the end of the two years, the village passed an ordinance that said, “No person shall transfer, carry, haul, or convey any offal, dead animals, or other offensive or unwholesome matter or material, into or through the village of Hyde Park.” Parties in violation of the law were subject to fines. In 1873, following the arrest and conviction of railroad workers hauling dead animals to its plant, Northwestern filed suit claiming that the company’s original charter was a contract that could not be abrogated by the state or its local governments. The company was unsuccessful in the state courts and appealed to the U.S. Supreme Court.

Justice Noah Swayne’s opinion made clear at the outset that the company faced a difficult task in its attempt to convince the justices:

The rule of construction in this class of cases is that it shall be most strongly against the corporation. Every reasonable doubt is to be resolved adversely. Nothing is to be taken as conceded but what is given in unmistakable terms, or by an implication equally clear. The affirmative must be shown. Silence is negation, and doubt is fatal to the claim. This doctrine is vital to the public welfare.

The Court then went on to rule against the company’s contract clause arguments. The justices had no doubt that the transportation of offal was a public nuisance or that the state had ample police power to combat such an offensive practice. According to Swayne,

That power belonged to the States when the Federal Constitution was adopted. They did not surrender it, and they all have it now. . . . It rests upon the fundamental principle that every one shall so use his own as not to wrong and injure another. To regulate and abate nuisances is one of its ordinary functions.

The Court was implying that states could not contract away their inherent powers to regulate for their citizens’ health, safety, and welfare.

Two years after Northwestern Fertilizing the justices addressed a similar appeal, this time dealing with questions of public morality. Stone v. Mississippi focused on the use of the state’s police power to combat lotteries, a form of gambling that large portions of the population considered evil at that time. As you read Chief Justice Morrison Waite’s opinion for the Court, compare it with the decisions written during the Marshall era. Note how much the Court’s interpretation of the contract clause had changed.

Following Stone v. Mississippi it was clear that the Court would no longer be sympathetic to contract clause attacks on state regulatory statutes. With contract clause avenues closing, opponents of state regulation of business and commercial activities turned to another provision of the Constitution, the due process clause of the Fourteenth Amendment. From the late 1880s to the 1930s, a period of Court history discussed in chapter 10, the Court heard and often responded favorably to these substantive due process arguments.

Stone v. Mississippi

101 U.S. 814 (1880)

http://laws.findlaw.com/us/101/814.html

Vote: 9 (Bradley, Clifford, Field, Harlan, Hunt, Miller, Strong, Swayne, Waite)

0

OPINION OF THE COURT: Waite

FACTS:

In 1867 the post–Civil War provisional state legislature chartered the Mississippi Agricultural, Educational, and Manufacturing Aid Society. In spite of its name, the society’s only purpose was to operate a lottery. The charter gave the society authority to run a lottery in Mississippi for twenty-five years, and in return the society paid an initial sum of cash to the state, an additional annual payment for each year of operation, plus a percentage of the lottery receipts. In 1868, however, a state convention drafted a new constitution, which the people ratified the next year. This constitution contained provisions explicitly outlawing lotteries. It also stated, “Nor shall any lottery heretofore authorized be permitted to be drawn, or tickets therein to be sold.” On July 16, 1870, the legislature passed a statute providing for enforcement of the antilottery provisions, and four years later, on March 17, 1874, the state attorney general filed charges against John B. Stone and others associated with the Mississippi Agricultural, Educational, and Manufacturing Aid Society for being in violation of state law. The state admitted that the company was operating within the provisions of its 1867 charter but contended that the new constitution and subsequent enforcement legislation effectively repealed that grant. Stone countered that the federal contract clause explicitly prohibited the state from negating the provisions of the charter.

ARGUMENTS:

For the plaintiffs in error, John B. Stone et al.:

The Mississippi Agricultural, Educational, and Manufacturing Aid Society had a valid contract to issue and sell lottery tickets in Mississippi for twenty-five years.

The society complied fully with all the provisions of the contract.

The Mississippi law is an unconstitutional impairment of the obligation of contracts.

For the defendant in error, State of Mississippi:

The state legislature cannot by contract bind the will of the people.

The state legislature cannot contract away the state’s police powers.

One legislature cannot by contract bind future legislatures with respect to matters of public health or morals.

MR. CHIEF JUSTICE WAITE DELIVERED THE OPINION OF THE COURT.

It is now too late to contend that any contract which a State actually enters into when granting a charter to a private corporation is not within the protection of the clause in the Constitution of the United States that prohibits States from passing laws impairing the obligation of contracts. Art. 1, sect. 10. The doctrines of Trustees of Dartmouth College v. Woodward [1819], announced by this court more than sixty years ago, have become so imbedded in the jurisprudence of the United States as to make them to all intents and purposes a part of the Constitution itself. In this connection, however, it is to be kept in mind that it is not the charter which is protected, but only any contract the charter may contain. If there is no contract, there is nothing in the grant on which the Constitution can act. Consequently, the first inquiry in this class of cases always is, whether a contract has in fact been entered into, and if so, what its obligations are.

In the present case the question is whether the State of Mississippi, in its sovereign capacity, did by the charter now under consideration bind itself irrevocably by a contract to permit “the Mississippi Agricultural, Educational, and Manufacturing Aid Society,” for twenty-five years, “to receive subscriptions, and sell and dispose of certificates of subscription which shall entitle the holders thereof to” “any lands, books, paintings, antiques, scientific instruments or apparatus, or any other property or thing that may be ornamental, valuable, or useful,” “awarded to them” “by casting of lots, or by lot, chance, or otherwise.” There can be no dispute but that under this form of words the legislature of the State chartered a lottery company, having all the powers incident to such a corporation, for twenty-five years, and that in consideration thereof the company paid into the State treasury $5,000 for the use of a university, and agreed to pay, and until the commencement of this suit did pay, an annual tax of $1,000 and “one-half of one per cent on the amount of receipts derived from the sale of certificates or tickets.” If the legislature that granted this charter had the power to bind the people of the State and all succeeding legislatures to allow the corporation to continue its corporate business during the whole term of its authorized existence, there is no doubt about the sufficiency of the language employed to effect that object, although there was an evident purpose to conceal the vice of the transaction by the phrases that were used. Whether the alleged contract exists, therefore, or not, depends on the authority of the legislature to bind the State and the people of the State in that way.

All agree that the legislature cannot bargain away the police power of a State. “Irrevocable grants of property and franchises may be made if they do not impair the supreme authority to make laws for the right government of the State; but no legislature can curtail the power of its successors to make such laws as they may deem proper in matters of police.” Many attempts have been made in this court and elsewhere to define the police power, but never with entire success. It is always easier to determine whether a particular case comes within the general scope of the power, than to give an abstract definition of the power itself which will be in all respects accurate. No one denies, however, that it extends to all matters affecting the public health or the public morals. Neither can it be denied that lotteries are proper subjects for the exercise of this power. We are aware that formerly, when the sources of public revenue were fewer than now, they were used in some or all of the States, and even in the District of Columbia, to raise money for the erection of public buildings, making public improvements, and not infrequently for educational and religious purposes; but this court said, more than thirty years ago, speaking through Mr. Justice Grier, that “experience has shown that the common forms of gambling are comparatively innocuous when placed in contrast with the wide-spread pestilence of lotteries. The former are confined to a few persons and places, but the latter infests the whole community; it enters every dwelling; it reaches every class; it preys upon the hard earnings of the poor; and it plunders the ignorant and simple.” Happily, under the influence of restrictive legislation, the evils are not so apparent now; but we very much fear that with the same opportunities of indulgence the same results would be manifested.

If lotteries are to be tolerated at all, it is no doubt better that they should be regulated by law, so that the people may be protected as far as possible against the inherent vices of the system; but that they are demoralizing in their effects, no matter how carefully regulated, cannot admit of a doubt. When the government is untrammelled by any claim of vested rights or chartered privileges, no one has ever supposed that lotteries could not lawfully be suppressed, and those who manage them punished severely as violators of the rules of social morality. From 1822 to 1867, without any constitutional requirement, they were prohibited by law in Mississippi, and those who conducted them punished as a kind of gambler. During the provisional government of that State, in 1867, at the close of the late civil war, the present act of incorporation, with more of like character, was passed. The next year, 1868, the people, in adopting a new constitution with a view to the resumption of their political rights as one of the United States, provided that “the legislature shall never authorize any lottery, nor shall the sale of lottery-tickets be allowed, nor shall any lottery heretofore authorized be permitted to be drawn, or tickets therein to be sold.”...

The question is therefore directly presented, whether, in view of these facts, the legislature of a State can, by the charter of a lottery company, defeat the will of the people, authoritatively expressed, in relation to the further continuance of such business in their midst. We think it cannot. No legislature can bargain away the public health or the public morals. The people themselves cannot do it, much less their servants. The supervision of both these subjects of governmental power is continuing in its nature, and they are to be dealt with as the special exigencies of the moment may require. Government is organized with a view to their preservation, and cannot divest itself of the power to provide for them. For this purpose the largest legislative discretion is allowed, and the discretion cannot be parted with any more than the power itself....

... [T]he power of governing is a trust committed by the people to the government, no part of which can be granted away. The people, in their sovereign capacity, have established their agencies for the preservation of the public health and the public morals, and the protection of public and private rights. These several agencies can govern according to their discretion, if within the scope of their general authority, while in power; but they cannot give away nor sell the discretion of those that are to come after them, in respect to matters the government of which, from the very nature of things, must “vary with varying circumstances.” They may create corporations, and give them, so to speak, a limited citizenship; but as citizens, limited in their privileges, or otherwise, these creatures of the government creation are subject to such rules and regulations as may from time to time be ordained and established for the preservation of health and morality.

The contracts which the Constitution protects are those that relate to property rights, not governmental. It is not always easy to tell on which side of the line which separates governmental from property rights a particular case is to be put; but in respect to lotteries there can be no difficulties. They are not, in the legal acceptation of the term, mala in se [wrong by its very nature], but, as we have just seen, may properly be made mala prohibita [wrong by government declaration]. They are a species of gambling, and wrong in their influences. They disturb the checks and balances of a well-ordered community. Society built on such a foundation would almost of necessity bring forth a population of speculators and gamblers, living on the expectation of what, “by the casting of lots, or by lot, chance, or otherwise,” might be “awarded” to them from the accumulations of others. Certainly the right to suppress them is governmental, to be exercised at all times by those in power, at their discretion. Any one, therefore, who accepts a lottery charter does so with the implied understanding that the people, in their sovereign capacity, and through their properly constituted agencies, may resume it at any time when the public good shall require, whether it be paid for or not. All that one can get by such a charter is a suspension of certain governmental rights in his favor, subject to withdrawal at will. He has in legal effect nothing more than a license to enjoy the privilege on the terms named for the specified time, unless it be sooner abrogated by the sovereign power of the State. It is a permit, good as against existing laws, but subject to future legislative and constitutional control or withdrawal.

On the whole, we find no error in the record.

Judgment affirmed.

National Emergencies

The status of the contract clause reached its low point during the Great Depression of the 1930s. With the stock market crash of 1929, the nation entered the worst economic crisis it had ever seen; most Americans were placed in serious financial jeopardy. The 1932 election of Franklin Roosevelt to the presidency ushered in the New Deal, and the federal government began to implement innovative economic programs to combat the Depression. At the same time, various states were developing their own programs to protect their citizens against the economic ravages the country was experiencing.

What people feared the most during the Depression was losing the family home. Homeowners did what they could to meet their mortgage obligations, but many were out of work and unable to make their payments. Financial institutions had little choice but to foreclose on these properties as stipulated in the mortgage contracts. To provide relief, several states passed statutes aimed at increasing homeowners’ chances of saving their houses. Banks and other creditors opposed these assistance measures. They asserted that intervention by the state was a direct violation of the constitutional ban against impairment of contracts.

The showdown between the contract clause and a state government’s authority to cope with economic crisis occurred in Home Building & Loan Assn. v. Blaisdell (1934). As you read Chief Justice Charles Evans Hughes’s opinion for the Court, think about the Constitutional Convention and the concerns that led the framers to adopt the contract clause. Would they agree with the Court that the Constitution should bend in the face of national crises, or would they side with Justice George Sutherland’s position that the provisions of the Constitution should be interpreted the same way regardless of the conditions of the times?

The Court upheld the Minnesota Mortgage Moratorium Act because the majority concluded that the economic emergency justified the state’s use of extensive police powers. Does the contract clause retain any vitality under such an interpretation? Or did the decision in Home Building & Loan Assn. render it virtually meaningless? After all, there would be little reason to pass such a statute in good economic times.

The conditions that prompted passage of the Minnesota law were repeated when a severe economic recession and its aftermath gripped the United States from 2008 to 2012. Again the subject of mortgages and foreclosures attracted the nation’s attention. Although this downturn did not match the catastrophic proportions of the Great Depression, the nation at one point suffered unemployment rates in excess of 10 percent, a freeze in the credit markets, and the collapse of hundreds of banks. Even after the worst had passed, economic recovery was exceedingly slow. Once again the loss of the family home became one of the greatest fears of Americans as joblessness sapped many of the ability to meet their mortgage obligations. Foreclosures skyrocketed, and the people once again turned to the government for relief. The federal government responded by expanding the monetary supply, bailing out failing financial institutions, and pressuring banks to restructure mortgage contracts to turn back the tide of foreclosures. Because housing market relief came primarily from the federal government, contract clause objections did not become a significant issue. This situation reminds us that the Constitution bars the states from impairing the obligation of contracts, but it does not impose the same restraint on the federal government.

Home Building & Loan Assn. v. Blaisdell

290 U.S. 398 (1934)

http://laws.findlaw.com/us/290/398.html

Vote: 5 (Brandeis, Cardozo, Hughes, Roberts, Stone)

4 (Butler, McReynolds, Sutherland, Van Devanter)

OPINION OF THE COURT: Hughes

DISSENTING OPINION: Sutherland

FACTS:

During the Great Depression, the nation experienced high unemployment, low prices for agricultural and manufactured products, a stagnation of business, and a scarcity of credit. In response to these conditions, the Minnesota legislature declared that a state of economic emergency existed that demanded the use of extraordinary police powers for the protection of the people. One of the legislature’s actions was passage of the Minnesota Mortgage Moratorium Act of 1933, which was designed to prevent homeowners from losing their houses when they could not make their mortgage payments. The act allowed homeowners who were behind in their payments to petition a state court for an extension of time to meet their mortgage obligations. During the period of the extension, the homeowners would not make normal mortgage payments but instead would pay a reasonable rental amount to the mortgage holder. The maximum extension was two years. The act was to be in effect only as long as the economic emergency continued. Its provisions applied to all mortgages, including those signed prior to the passage of the statute.

John and Rosella Blaisdell owned a house in Minneapolis that was mortgaged by Home Building & Loan Association. They lived in one part of the house and rented out the other part. When the Blaisdells were unable to keep their payments current or to obtain additional credit, they requested an extension in accordance with the moratorium law. The trial court denied the request, but the state supreme court reversed the decision. In response, the trial court granted the Blaisdells a two-year moratorium on mortgage payments. During this period the Blaisdells were ordered to pay $40 a month, which would be applied to taxes, insurance, interest, and mortgage principal.

Home Building & Loan Association appealed the granting of the extension, claiming that the law was an impairment of contracts in violation of the contract clause of the federal Constitution. The Minnesota high court conceded that the law impaired the obligation of contracts but concluded that the statute was within the police powers of the state because of the severe economic emergency. Home Building & Loan Association appealed to the U.S. Supreme Court.

ARGUMENTS:

For the appellant, Home Building & Loan Association:

The Minnesota Mortgage Moratorium Act impairs the obligation of contracts in violation of the U.S. Constitution’s contract clause.

The law changes the terms of the mortgage contract and deprives the appellant of the remedies (e.g., foreclosure) included in the mortgage agreement.

The law deprives the appellant of property without due process of law.

The current economic conditions do not constitute a sufficient emergency to suspend the Constitution.

For the appellees, John H. and Rosella Blaisdell:

Although in normal times the Minnesota law would be unconstitutional, it does not violate the Constitution because it is an emergency measure justified by the police powers of the state to respond to the economic depression.

Every contract is subject to the implied limitation that its terms may be varied in a reasonable manner in times of emergency under the exercise of the state’s police powers.

Home Building & Loan Association is not deprived of property without due process of law because it has an opportunity to participate in judicial hearings to consider possible temporary alterations in the terms of the mortgage.

The Minnesota law is fair, just, and reasonable. It assists both debtors and lenders. The law goes no further than necessary to cope with the economic emergency.

MR. CHIEF JUSTICE HUGHES DELIVERED THE OPINION OF THE COURT.

In determining whether the provision for this temporary and conditional relief exceeds the power of the State by reason of the clause in the Federal Constitution prohibiting impairment of the obligations of contracts, we must consider the relation of emergency to constitutional power, the historical setting of the contract clause, the development of the jurisprudence of this Court in the construction of that clause, and the principles of construction which we may consider to be established.

Emergency does not create power. Emergency does not increase granted power or remove or diminish the restrictions imposed upon power granted or reserved. The Constitution was adopted in a period of grave emergency. Its grants of power to the Federal Government and its limitations of the power of the States were determined in the light of emergency and they are not altered by emergency. What power was thus granted and what limitations were thus imposed are questions which have always been, and always will be, the subject of close examination under our constitutional system.

While emergency does not create power, emergency may furnish the occasion for the exercise of power. “Although an emergency may not call into life a power which has never lived, nevertheless emergency may afford a reason for the exertion of a living power already enjoyed.” Wilson v. New [1917]. The constitutional question presented in the light of an emergency is whether the power possessed embraces the particular exercise of it in response to particular conditions. Thus, the war power of the Federal Government is not created by the emergency of war, but it is a power given to meet that emergency. It is a power to wage war successfully, and thus it permits the harnessing of the entire energies of the people in a supreme cooperative effort to preserve the nation. But even the war power does not remove constitutional limitations safeguarding essential liberties. When the provisions of the Constitution, in grant or restriction, are specific, so particularized as not to admit of construction, no question is presented. Thus, emergency would not permit a State to have more than two Senators in the Congress, or permit the election of President by a general popular vote without regard to the number of electors to which the States are respectively entitled, or permit the States to “coin money” or to “make anything but gold and silver coin a tender in payment of debts.” But where constitutional grants and limitations of power are set forth in general clauses, which afford a broad outline, the process of construction is essential to fill in the details. That is true of the contract clause. The necessity of construction is not obviated by the fact that the contract clause is associated in the same section with other and more specific prohibitions. Even the grouping of subjects in the same clause may not require the same application to each of the subjects, regardless of differences in their nature.

In the construction of the contract clause, the debates in the Constitutional Convention are of little aid. But the reasons which led to the adoption of that clause, and of the other prohibitions of Section 10 of Article I, are not left in doubt and have frequently been described with eloquent emphasis. The widespread distress following the revolutionary period, and the plight of debtors, had called forth in the States an ignoble array of legislative schemes for the defeat of creditors and the invasion of contractual obligations. Legislative interferences had been so numerous and extreme that the confidence essential to prosperous trade had been undermined and the utter destruction of credit was threatened. “The sober people of America” were convinced that some “thorough reform” was needed which would “inspire a general prudence and industry, and give a regular course to the business of society.” The Federalist, No. 44. It was necessary to impose the restraining power of a central authority in order to secure the foundations even of “private faith.”...

But full recognition of the occasion and general purpose of the clause does not suffice to fix its precise scope. Nor does an examination of the details of prior legislation in the States yield criteria which can be considered controlling. To ascertain the scope of the constitutional prohibition we examine the course of judicial decisions in its application. These put it beyond question that the prohibition is not an absolute one and is not to be read with literal exactness like a mathematical formula....

... Not only are existing laws read into contracts in order to fix obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worth while,—a government which retains adequate authority to secure the peace and good order of society. This principle of harmonizing the constitutional prohibition with the necessary residuum of state power has had progressive recognition in the decisions of this Court....

The Legislature cannot “bargain away the public health or the public morals.” Thus, the constitutional provision against the impairment of contracts was held not to be violated by an amendment of the state Constitution which put an end to a lottery theretofore authorized by the Legislature. Stone v. Mississippi [1880]. The lottery was a valid enterprise when established under express state authority, but the Legislature in the public interest could put a stop to it. A similar rule has been applied to the control by the State of the sale of intoxicating liquors. Boston Beer Company v. Massachusetts [1877]. The States retain adequate power to protect the public health against the maintenance of nuisances despite insistence upon existing contracts. Northwestern Fertilizing Company v. Hyde Park [1878]. Legislation to protect the public safety comes within the same category of reserved power. This principle has had recent and noteworthy application to the regulation of the use of public highways by common carriers and “contract carriers,” where the assertion of interference with existing contract rights has been without avail, Sproles v. Binford [1932]....

It is manifest from this review of our decisions that there has been a growing appreciation of public needs and of the necessity of finding ground for a rational compromise between individual rights and public welfare. The settlement and consequent contraction of the public domain, the pressure of a constantly increasing density of population, the interrelation of the activities of our people and the complexity of our economic interests, have inevitably led to an increased use of the organization of society in order to protect the very bases of individual opportunity. Where, in earlier days, it was thought that only the concerns of individuals or of classes were involved, and that those of the State itself were touched only remotely, it has later been found that the fundamental interests of the State are directly affected; and that the question is no longer merely that of one party to a contract as against another, but of the use of reasonable means to safeguard the economic structure upon which the good of all depends.

It is no answer to say that this public need was not apprehended a century ago, or to insist that what the provision of the Constitution meant to the vision of that day it must mean to the vision of our time. If by the statement that what the Constitution meant at the time of its adoption it means today, it is intended to say that the great clauses of the Constitution must be confined to the interpretation which the framers, with the conditions and outlook of their time, would have placed upon them, the statement carries its own refutation. It was to guard against such a narrow conception that Chief Justice Marshall uttered the memorable warning: “We must never forget that it is a constitution we are expounding” (McCulloch v. Maryland); “a constitution intended to endure for ages to come, and consequently, to be adapted to the various crises of human affairs.” When we are dealing with the words of the Constitution, said this Court in Missouri v. Holland [1920], “we must realize that they have called into life a being the development of which could not have been foreseen completely by the most gifted of its begetters. . . . The case before us must be considered in the light of our whole experience and not merely in that of what was said a hundred years ago.”

Nor is it helpful to attempt to draw a fine distinction between the intended meaning of the words of the Constitution and their intended application. When we consider the contract clause and the decisions which have expounded it in harmony with the essential reserved power of the States to protect the security of their peoples, we find no warrant for the conclusion that the clause has been warped by these decisions from its proper significance or that the founders of our Government would have interpreted the clause differently had they had occasion to assume that responsibility in the conditions of the later day. The vast body of law which has been developed was unknown to the fathers, but it is believed to have preserved the essential content and the spirit of the Constitution. With a growing recognition of public needs and the relation of individual right to public security, the court has sought to prevent the perversion of the clause through its use as an instrument to throttle the capacity of the States to protect their fundamental interests. This development is a growth from the seeds which the fathers planted. . . . The principle of this development is . . . that the reservation of the reasonable exercise of the protective power of the State is read into all contracts and there is no greater reason for refusing to apply this principle to Minnesota mortgages than to New York leases.

Applying the criteria established by our decisions we conclude:

An emergency existed in Minnesota which furnished a proper occasion for the exercise of the reserved power of the State to protect the vital interests of the community....

The legislation was addressed to a legitimate end, that is, the legislation was not for the mere advantage of particular individuals but for the protection of a basic interest of society.

In view of the nature of the contracts in question—mortgages of unquestionable validity—the relief afforded and justified by the emergency, in order not to contravene the constitutional provision, could only be of a character appropriate to that emergency and could be granted only upon reasonable conditions.

The conditions upon which the period of redemption is extended do not appear to be unreasonable....

The legislation is temporary in operation. It is limited to the exigency which called it forth....

We are of the opinion that the Minnesota statute as here applied does not violate the contract clause of the Federal Constitution. Whether the legislation is wise or unwise as a matter of policy is a question with which we are not concerned....

The judgment of the Supreme Court of Minnesota is affirmed.

MR. JUSTICE SUTHERLAND, dissenting.

Few questions of greater moment than that just decided have been submitted for judicial inquiry during this generation. He simply closes his eyes to the necessary implications of the decision who fails to see in it the potentiality of future gradual but ever-advancing encroachments upon the sanctity of private and public contracts. The effect of the Minnesota legislation, though serious enough in itself, is of trivial significance compared with the far more serious and dangerous inroads upon the limitations of the Constitution which are almost certain to ensue as a consequence naturally following any step beyond the boundaries fixed by that instrument. And those of us who are thus apprehensive of the effect of this decision would, in a matter so important, be neglectful of our duty should we fail to spread upon the permanent records of the court the reasons which move us to the opposite view.

A provision of the Constitution, it is hardly necessary to say, does not admit of two distinctly opposite interpretations. It does not mean one thing at one time and an entirely different thing at another time. If the contract impairment clause, when framed and adopted, meant that the terms of a contract for the payment of money could not be altered . . . by a state statute enacted for the relief of hardly pressed debtors to the end and with the effect of postponing payment or enforcement during and because of an economic or financial emergency, it is but to state the obvious to say that it means the same now. This view, at once so rational in its application to the written word, and so necessary to the stability of constitutional principles, though from time to time challenged, has never, unless recently, been put within the realm of doubt by the decisions of this court....

The provisions of the Federal Constitution, undoubtedly, are pliable in the sense that in appropriate cases they have the capacity of bringing within their grasp every new condition which falls within their meaning. But, their meaning is changeless; it is only their application which is extensible....

A statute which materially delays enforcement of the mortgagee’s contractual right of ownership and possession does not modify the remedy merely; it destroys, for the period of delay, all remedy so far as the enforcement of that right is concerned. The phrase, “obligation of a contract,” in the constitutional sense imports a legal duty to perform the specified obligation of that contract, not to substitute and perform, against the will of one of the parties, a different, albeit equally valuable, obligation. And a state, under the contract impairment clause, has no more power to accomplish such a substitution than has one of the parties to the contract against the will of the other. It cannot do so either by acting directly upon the contract, or by bringing about the result under the guise of a statute in form acting only upon the remedy. If it could, the efficacy of the constitutional restriction would, in large measure, be made to disappear....

I quite agree with the opinion of the court that whether the legislation under review is wise or unwise is a matter with which we have nothing to do. Whether it is likely to work well or work ill presents a question entirely irrelevant to the issue. The only legitimate inquiry we can make is whether it is constitutional. If it is not, its virtues, if it have any, cannot save it; if it is, its faults cannot be invoked to accomplish its destruction. If the provisions of the Constitution be not upheld when they pinch as well as when they comfort, they may as well be abandoned. Being unable to reach any other conclusion than that the Minnesota statute infringes the constitutional restriction under review, I have no choice but to say so.

MODERN APPLICATIONS OF THE CONTRACT CLAUSE

For four decades after the decision in Home Building & Loan Assn., parties challenging state laws rarely rested their arguments on the contract clause. It made little practical sense to do so when the justices were reluctant to use the provision to strike down state legislation designed to promote the economic welfare of citizens. Litigants who attempted to invoke the clause usually were unsuccessful. For example, in El Paso v. Simmons (1965) the contract clause was used to attack a Texas statute governing defaults on land sales agreements with the state. Consistent with the trend that had begun with Charles River Bridge more than a century earlier, the justices turned a deaf ear to the contract clause claims and upheld the challenged legislation. The justices made it quite clear that they were not eager to interfere with the sovereign right of the state to protect the general welfare of the people and would give the state legislatures wide discretion in determining proper public policy over economic matters. The contract clause, once one of the most litigated constitutional provisions, had lost much of its relevance.

To conclude that the contract clause had been effectively and forever erased from the Constitution would be incorrect, however. In the decades following the New Deal, the Court was dominated by justices who took generally liberal positions on economic matters. They were philosophically opposed to allowing business interests to use the contract clause as a weapon to strike down legislation benefiting the people at large. But the Court’s liberal majority began to unravel with the retirement of Chief Justice Earl Warren and President Richard Nixon’s appointment of Warren Burger to replace him in 1969. As succeeding appointments brought more conservatives to the Court, prospects brightened for a revitalized contract clause. This fact was not lost on enterprising lawyers, who began raising contract clause issues once again.

In 1977 and 1978 the Court handed down two contract clause decisions: United States Trust Co. v. New Jersey and Allied Structural Steel Co. v. Spannaus. In both cases the justices struck down state legislation intended to promote the general welfare because they found that the statutes impaired the obligation of contracts. Each time the Court’s liberal justices voiced strong objections. As you read the opinions in these cases, try to determine if they represent a sharp break from the position the Court had taken over the preceding century or if they could be reconciled with decisions such as Home Building & Loan Assn. v. Blaisdell.

The legislation challenged in United States Trust was passed for the general welfare of the people of New York and New Jersey and in large measure was a response to a national energy crisis. These factors seemed similar to the conditions that prompted the Court to approve the Minnesota Mortgage Moratorium Act. Therefore, many were surprised by the Court’s resurrection of the contract clause, which sparked considerable interest in what the opinion meant for the future. Although the decision used the contract clause to invalidate state laws, the opinion was a moderate one, without the absolutist tones of the Marshall era. Did the Court’s decision signal a change in policy or was it an aberration?

An argument can be made that United States Trust breathed new life into the contract clause—at least with respect to a limited class of contractual agreements. The Court drew a distinction between a state’s passing legislation that affects private contracts and a state’s taking action to abrogate contracts to which the state itself was a party. In the latter case, Blackmun’s opinion called for a higher standard of judicial scrutiny: the Court will uphold laws that impair state contractual obligations only “if that impairment was both reasonable and necessary to serve the admittedly important purposes claimed by the State.” The justices made it more difficult for states to defend the abrogation of contracts they had made, reducing the level of deference the Court had shown to state legislatures since Home Building & Loan Assn. v. Blaisdell.

How solid was this newly expressed support for the contract clause? After all, only seven justices participated in United States Trust, and the majority consisted of just four. Would the outcome have been different had the full Court voted? The justices provided some answers to these questions the very next year in Allied Structural Steel Co. v. Spannaus.

Justice Potter Stewart’s opinion provides insight into the meaning of the contract clause in the modern era. First, although the Court invalidated the charges assessed against Allied Steel, the Court did not restore the contract clause to the prominence it had during the Marshall era. Second, the contract clause places some limits on the exercise of the state’s police powers, but it does not obliterate those powers. Third, the clause applies to laws that either increase or decrease the duties of a party to a contract. Fourth, the clause is not limited to creditor–debtor contracts. Fifth, in applying the clause, the Court will first necessarily examine the extent of the impairment of contractual obligations, and “the severity of the impairment measures the height of the hurdle the state legislation must clear.” If there has been substantial impairment of a contractual relationship, the Court will consider with care the nature and purpose of the legislation. In short, the majority assumed a position that balanced the importance of contractual relationships against the need of the state to exercise its police powers for the public welfare. Such a position neither returns the contract clause to the preferred position it once enjoyed nor substantially strips it of its meaning.

In the years following Allied Structural Steel the Court has continued to take a moderate approach. In Stewart’s terms, it has not interpreted the contract clause as a “dead letter,” but it has also not applied the clause in an absolute, “Draconian,” fashion. The justices have generally expressed a sensitivity to the need of the states to use their police powers to combat social problems. In Energy Reserves Group, Inc. v. Kansas Power and Light Company (1983) the justices unanimously upheld a Kansas act that dictated an energy pricing system in conflict with existing contracts. The Court held that the contract clause prohibits only state actions that “substantially impair the contractual arrangement.” And even such a substantial impairment can be justified if there is a significant and legitimate public purpose behind the regulation, such as remedying a broad and general social or economic problem.5 In 1987 the justices upheld a Pennsylvania law that required coal mine operators to leave 50 percent of the coal in the ground beneath certain structures to provide surface support.6 This provision was at odds with contracts between the mining companies and the landowners that allowed the companies to extract a much higher proportion of the coal. The justices, however, upheld the right of the state, pursuant to its police powers, to impose such a regulation, explaining that the contract clause “is not to be read literally.”

Decisions such as these have signaled potential litigants that a successful challenge of a state law on contract clause grounds, although more likely today than in the years immediately following the New Deal, remains a difficult task. As a consequence, parties wishing to defend private property rights against state regulation have turned to other constitutional provisions for possible relief. Frequently, the Fourteenth Amendment’s due process clause and the Fifth Amendment’s takings clause have served as vehicles for such challenges. These subjects are addressed in chapters 10 and 11.

United States Trust Co. v. New Jersey

431 U.S. 1 (1977)

http://laws.findlaw.com/us/431/1.html

Oral arguments are available at https://www.oyez.org.

Vote: 4 (Blackmun, Burger, Rehnquist, Stevens)

3 (Brennan, Marshall, White)

OPINION OF THE COURT: Blackmun

CONCURRING OPINION: Burger

DISSENTING OPINION: Brennan

NOT PARTICIPATING: Powell, Stewart

FACTS:

In 1921 the states of New York and New Jersey entered into a compact to establish the Port Authority of New York, a body responsible for developing and coordinating transportation and commerce. The Port Authority was financially independent, with funds derived primarily from private investors. It had the power to mortgage its facilities and to pledge its revenues as payment for bonds issued to its investors. In 1962, in response to increased interest in mass transit, the Port Authority took control of the financially ailing Hudson & Manhattan Railroad. As part of the acquisition, the states agreed that none of the authority’s revenues pledged as security for existing bonds would be used for any additional railroad expenditures.

From 1972 to 1974, with the nation in the midst of an energy crisis and under intense pressure to develop mass transit, New York and New Jersey moved to expand their system. Because money was difficult to raise, the states decided to use revenues previously pledged as security for existing bonds. To make the funds accessible, both state legislatures passed statutes in 1974 retroactively repealing their pledge not to use these moneys for increased mass transit expenditures. United States Trust Company, a holder of the affected bonds, sued to invalidate the repeal as an unconstitutional impairment of the obligation of contracts. The New Jersey courts ruled against the company on the ground that the repeal was a proper exercise of state police powers. The company sought U.S. Supreme Court review.

ARGUMENTS:

For the appellants, United States Trust et al.:

The 1962 agreement constitutes a contract as that term is used in the Constitution. The state has totally abrogated that contract.

The states’ unilateral and retroactive cancellation of their pledge impaired the obligation of contracts to the detriment of the bondholders.

The states’ actions were not taken out of need, but out of a desire to alter the Port Authority’s functions without assuming responsibility for the costs.

Even if seen as an exercise of the police powers, the states’ actions violate the contract clause.

For the appellee, state of New Jersey:

All contracts, especially contracts made by the state, are subject to the state’s police powers.

Repeal of the agreement allows the states to respond to the growing need to combat pollution and to provide mass transportation.

The appellants knew the agreement was subject to the states’ police powers. They had no reason to assume that the agreement was immune from reasonable state regulations.

MR. JUSTICE BLACKMUN DELIVERED THE OPINION OF THE COURT.

At the time the Constitution was adopted, and for nearly a century thereafter, the Contract Clause was one of the few express limitations on state power. The many decisions of this Court involving the Contract Clause are evidence of its important place in our constitutional jurisprudence. Over the last century, however, the Fourteenth Amendment has assumed a far larger place in constitutional adjudication concerning the States. We feel that the present role of the Contract Clause is largely illuminated by two of this Court’s decisions. In each, legislation was sustained despite a claim that it had impaired the obligations of contracts.

Home Building & Loan Assn. v. Blaisdell (1934) is regarded as the leading case in the modern era of Contract Clause interpretation. At issue was the Minnesota Mortgage Moratorium Law, enacted in 1933, during the depth of the Depression and when that State was under severe economic stress, and appeared to have no effective alternative. . . . A closely divided Court, in an opinion by Mr. Chief Justice Hughes, observed that “emergency may furnish the occasion for the exercise of power” and that the “constitutional question presented in the light of an emergency is whether the power possessed embraces the particular exercise of it in response to particular conditions.”...

This Court’s most recent Contract Clause decision is El Paso v. Simmons (1965). That case concerned a 1941 Texas statute that limited to a 5-year period the reinstatement rights of an interest-defaulting purchaser of land from the State. . . . This Court held that “it is not every modification of a contractual promise that impairs the obligation of contract under federal law.” It observed that the State “has the ‘sovereign right . . . to protect the . . . general welfare of the people’” and “‘we must respect the “wide discretion on the part of the legislature in determining what is and what is not necessary.”’”...

Both of these cases eschewed a rigid application of the Contract Clause to invalidate state legislation. Yet neither indicated that the Contract Clause was without meaning in modern constitutional jurisprudence, or that its limitation on state power was illusory. Whether or not the protection of contract rights comports with current views of wise public policy, the Contract Clause remains a part of our written Constitution. We therefore must attempt to apply that constitutional provision to the instant case with due respect for its purpose and the prior decisions of the Court....

Although the Contract Clause appears literally to proscribe “any” impairment, this Court observed in Blaisdell that “the prohibition is not an absolute one and is not to be read with literal exactness like a mathematical formula.” Thus, a finding that there has been a technical impairment is merely a preliminary step in resolving the more difficult question whether that impairment is permitted under the Constitution. In the instant case, as in Blaisdell, we must attempt to reconcile the strictures of the Contract Clause with the “essential attributes of sovereign power” necessarily reserved by the States to safeguard the welfare of their citizens.

The trial court concluded that repeal of the 1962 covenant was a valid exercise of New Jersey’s police power because repeal served important public interests in mass transportation, energy conservation, and environmental protection. Yet the Contract Clause limits otherwise legitimate exercises of state legislative authority, and the existence of an important public interest is not always sufficient to overcome that limitation. “Undoubtedly, whatever is reserved of state power must be consistent with the fair intent of the constitutional limitation of that power.” Moreover, the scope of the State’s reserved power depends on the nature of the contractual relationship with which the challenged law conflicts.

The States must possess broad power to adopt general regulatory measures without being concerned that private contracts will be impaired, or even destroyed, as a result. Otherwise, one would be able to obtain immunity from state regulation by making private contractual arrangements. This principle is summarized in Mr. Justice Holmes’ well-known dictum: “One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract about them.” Hudson Water Co. v. McCarter (1908).

Yet private contracts are not subject to unlimited modification under the police power. The Court in Blaisdell recognized that laws intended to regulate existing contractual relationships must serve a legitimate public purpose. A State could not “adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them.” Legislation adjusting the rights and responsibilities of contracting parties must be upon reasonable conditions and of a character appropriate to the public purpose justifying its adoption. As is customary in reviewing economic and social regulation, however, courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure.

When a State impairs the obligation of its own contract, the reserved-powers doctrine has a different basis. The initial inquiry concerns the ability of the State to enter into an agreement that limits its power to act in the future. As early as Fletcher v. Peck [1810], the Court considered the argument that “one legislature cannot abridge the powers of a succeeding legislature.” It is often stated that “the legislature cannot bargain away the police power of a State.” Stone v. Mississippi (1880). This doctrine requires a determination of the State’s power to create irrevocable contract rights in the first place, rather than an inquiry into the purpose or reasonableness of the subsequent impairment. In short, the Contract Clause does not require a State to adhere to a contract that surrenders an essential attribute of its sovereignty....

In applying this standard, however, complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake. A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all....

Mass transportation, energy conservation, and environmental protection are goals that are important and of legitimate public concern. Appellees contend that these goals are so important that any harm to bondholders from repeal of the 1962 covenant is greatly outweighed by the public benefit. We do not accept this invitation to engage in a utilitarian comparison of public benefit and private loss. . . . [A] State cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money to promote the public good rather than the private welfare of its creditors. We can only sustain the repeal of the 1962 covenant if that impairment was both reasonable and necessary to serve the admittedly important purposes claimed by the State.

The more specific justification offered for the repeal of the 1962 covenant was the States’ plan for encouraging users of private automobiles to shift to public transportation. The States intended to discourage private automobile use by raising bridge and tunnel tolls and to use the extra revenue from those tolls to subsidize improved commuter railroad service. Appellees contend that repeal of the 1962 covenant was necessary to implement this plan because the new mass transit facilities could not possibly be self-supporting and the covenant’s “permitted deficits” level had already been exceeded. We reject this justification because the repeal was neither necessary to achievement of the plan nor reasonable in light of the circumstances.

The determination of necessity can be considered on two levels. First, it cannot be said that total repeal of the covenant was essential; a less drastic modification would have permitted the contemplated plan without entirely removing the covenant’s limitations on the use of Port Authority revenues and reserves to subsidize commuter railroads. Second, without modifying the covenant at all, the States could have adopted alternative means of achieving their twin goals of discouraging automobile use and improving mass transit. Appellees contend, however, that choosing among these alternatives is a matter for legislative discretion. But a State is not completely free to consider impairing the obligations of its own contract on a par with other policy alternatives. Similarly, a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well. . . .

... [T]he need for mass transportation in the New York metropolitan area was not a new development, and the likelihood that publicly owned commuter railroads would produce substantial deficits was well known. As early as 1922, over a half century ago, there were pressures to involve the Port Authority in mass transit. It was with full knowledge of these concerns that the 1962 covenant was adopted. Indeed, the covenant was specifically intended to protect the pledged revenues and reserves against the possibility that such concerns would lead the Port Authority into greater involvement in deficit mass transit.

During the 12-year period between adoption of the covenant and its repeal, public perception of the importance of mass transit undoubtedly grew because of increased general concern with environmental protection and energy conservation. But these concerns were not unknown in 1962, and the subsequent changes were of degree and not of kind. We cannot say that these changes caused the covenant to have a substantially different impact in 1974 than when it was adopted in 1962. And we cannot conclude that the repeal was reasonable in the light of changed circumstances.

We therefore hold that the Contract Clause of the United States Constitution prohibits the retroactive repeal of the 1962 covenant. The judgment of the Supreme Court of New Jersey is reversed.

MR. JUSTICE BRENNAN, with whom MR. JUSTICE WHITE and MR. JUSTICE MARSHALL join, dissenting.

Decisions of this Court for at least a century have construed the Contract Clause largely to be powerless in binding a State to contracts limiting the authority of successor legislatures to enact laws in furtherance of the health, safety, and similar collective interests of the polity. In short, those decisions established the principle that lawful exercises of a State’s police powers stand paramount to private rights held under contract. Today’s decision, in invalidating the New Jersey Legislature’s 1974 repeal of its predecessor’s 1962 covenant, rejects this previous understanding and remolds the Contract Clause into a potent instrument for overseeing important policy determinations of the state legislature. At the same time, by creating a constitutional safe haven for property rights embodied in a contract, the decision substantially distorts modern constitutional jurisprudence governing regulation of private economic interests. I might understand, though I do not accept, this revival of the Contract Clause were it in accordance with some coherent and constructive view of public policy. But elevation of the Clause to the status of regulator of the municipal bond market at the heavy price of frustration of sound legislative policymaking is as demonstrably unwise as it is unnecessary. The justification for today’s decision, therefore, remains a mystery to me, and I respectfully dissent.

Allied Structural Steel Co. v. Spannaus

438 U.S. 234 (1978)

http://laws.findlaw.com/us/438/234.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Burger, Powell, Rehnquist, Stevens, Stewart)

3 (Brennan, Marshall, White)

OPINION OF THE COURT: Stewart

DISSENTING OPINION: Brennan

NOT PARTICIPATING: Blackmun

FACTS:

Although its principal place of business was Illinois, Allied Structural Steel Company maintained an office with thirty employees in Minnesota. In 1963 the company adopted a general pension plan in which employees became vested after working the required number of years and reaching the specified age. Employees who quit or were terminated before meeting these requirements did not acquire any pension rights. The company, which made annual payments to a pension trust fund, was the sole contributor to the plan. The company retained a virtually unrestricted right to modify the plan or to terminate it at any time.

On April 9, 1974, Minnesota enacted the Private Pension Benefits Protection Act. Under the provisions of that law, a company that terminated a pension plan or closed down its Minnesota operations would be subject to a charge to the extent that its retirement funds did not ensure full pensions to all workers who worked for the company for ten or more years. During the summer of 1974, Allied began closing its Minnesota office and discharged a number of its employees. Nine of the terminated workers had been with the company longer than ten years, but they did not qualify for pensions under Allied’s plan. The state invoked its benefits protection law and assessed Allied $185,000 for the employees’ pensions. Claiming that the Minnesota law impaired the obligation of its pension contract with its employees, Allied filed suit in federal district court against Warren Spannaus, the state attorney general. The court ruled in favor of the state, and Allied continued its attack on the statute in the U.S. Supreme Court.

ARGUMENTS:

For the appellant, Allied Structural Steel Co.:

The Minnesota law violates the contract clause because it changes the provisions of Allied’s contracts that control the vesting and funding of its pension plans.

The impairment here is much greater than in Home Building & Loan Assn. v. Blaisdell. The law upheld in that case merely delayed the contractual obligations. Here the law imposes vast retroactive liabilities on the employer and confers on employees benefits far beyond those they had a right to expect under their contracts.

Unlike Blaisdell, here the state has entirely rewritten the pension contracts.

The Minnesota pension law is not a reasonable and necessary response to an economic crisis as was the case in Blaisdell.

For the appellees, Warren Spannaus, Minnesota attorney general, et al.:

Consistent with modern interpretations of the contract clause, the pension law is directed to legitimate public purposes and is aimed at achieving those purposes in a necessary and reasonable manner.

Unlike the law invalidated in United States Trust v. New Jersey, the pension law is a broad measure regulating a wide range of private agreements.

The retroactive effect of the pension law is permissible under modern contract clause jurisprudence.

MR. JUSTICE STEWART DELIVERED THE OPINION OF THE COURT.

There can be no question of the impact of the Minnesota Private Pension Benefits Protection Act upon the company’s contractual relationships with its employees. The Act substantially altered those relationships by superimposing pension obligations upon the company conspicuously beyond those that it had voluntarily agreed to undertake. But it does not inexorably follow that the Act, as applied to the company, violates the Contract Clause of the Constitution.

The language of the Contract Clause appears unambiguously absolute: “No State shall . . . pass any . . . Law impairing the Obligation of Contracts.” U.S. Const., Art. I, §10. The Clause is not, however, the Draconian provision that its words might seem to imply. As the Court has recognized, “literalism in the construction of the contract clause . . . would make it destructive of the public interest by depriving the State of its prerogative of self-protection.”

Although it was perhaps the strongest single constitutional check on state legislation during our early years as a Nation, the Contract Clause receded into comparative desuetude with the adoption of the Fourteenth Amendment, and particularly with the development of the large body of jurisprudence under the Due Process Clause of that Amendment in modern constitutional history. Nonetheless, the Contract Clause remains part of the Constitution. It is not a dead letter....

If the Contract Clause is to retain any meaning at all . . . it must be understood to impose some limits upon the power of a State to abridge existing contractual relationships, even in the exercise of its otherwise legitimate police power. The existence and nature of those limits were clearly indicated in a series of cases in this Court arising from the efforts of the States to deal with the unprecedented emergencies brought on by the severe economic depression of the early 1930’s.

In Home Building & Loan Assn. v. Blaisdell [1934] the Court upheld against a Contract Clause attack a mortgage moratorium law that Minnesota had enacted to provide relief for homeowners threatened with foreclosure. Although the legislation conflicted directly with lenders’ contractual foreclosure rights, the Court there acknowledged that, despite the Contract Clause, the States retain residual authority to enact laws “to safeguard the vital interests of [their] people.” In upholding the state mortgage moratorium law, the Court found five factors significant. First, the state legislature had declared in the Act itself that an emergency need for the protection of homeowners existed. Second, the state law was enacted to protect a basic societal interest, not a favored group. Third, the relief was appropriately tailored to the emergency that it was designed to meet. Fourth, the imposed conditions were reasonable. And, finally, the legislation was limited to the duration of the emergency.

The Blaisdell opinion thus clearly implied that if the Minnesota moratorium legislation had not possessed the characteristics attributed to it by the Court, it would have been invalid under the Contract Clause of the Constitution....

In applying these principles to the present case, the first inquiry must be whether the state law has, in fact, operated as a substantial impairment of a contractual relationship. The severity of the impairment measures the height of the hurdle the state legislation must clear. Minimal alteration of contractual obligations may end the inquiry at its first stage. Severe impairment, on the other hand, will push the inquiry to a careful examination of the nature and purpose of the state legislation.

The severity of an impairment of contractual obligations can be measured by the factors that reflect the high value the Framers placed on the protection of private contracts. Contracts enable individuals to order their personal and business affairs according to their particular needs and interests. Once arranged, those rights and obligations are binding under the law, and the parties are entitled to rely on them.

Here, the company’s contracts of employment with its employees included as a fringe benefit or additional form of compensation, the pension plan. The company’s maximum obligation was to set aside each year an amount based on the plan’s requirements for vesting. The plan satisfied the current federal income tax code and was subject to no other legislative requirements. And, of course, the company was free to amend or terminate the pension plan at any time. The company thus had no reason to anticipate that its employees’ pension rights could become vested except in accordance with the terms of the plan. It relied heavily, and reasonably, on this legitimate contractual expectation in calculating its annual contributions to the pension fund.

The effect of Minnesota’s Private Pension Benefits Protection Act on this contractual obligation was severe. The company was required in 1974 to have made its contributions throughout the pre-1974 life of its plan as if employees’ pension rights had vested after 10 years, instead of vesting in accord with the terms of the plan. Thus a basic term of the pension contract—one on which the company had relied for 10 years—was substantially modified. The result was that, although the company’s past contributions were adequate when made, they were not adequate when computed under the 10-year statutory vesting requirement. The Act thus forced a current recalculation of the past 10 years’ contributions based on the new, unanticipated 10-year vesting requirement.

Not only did the state law thus retroactively modify the compensation that the company had agreed to pay its employees from 1963 to 1974, but also it did so by changing the company’s obligations in an area where the element of reliance was vital—the funding of a pension plan....

Moreover, the retroactive state-imposed vesting requirement was applied only to those employers who terminated their pension plans or who, like the company, closed their Minnesota offices. The company was thus forced to make all the retroactive changes in its contractual obligations at one time. By simply proceeding to close its office in Minnesota, a move that had been planned before the passage of the Act, the company was assessed an immediate pension funding charge of approximately $185,000.

Thus, the statute in question here nullifies express terms of the company’s contractual obligations and imposes a completely unexpected liability in potentially disabling amounts. . . . Yet there is no showing in the record before us that this severe disruption of contractual expectations was necessary to meet an important general social problem. The presumption favoring “legislative judgment as to the necessity and reasonableness of a particular measure” simply cannot stand in this case....

Moreover, in at least one other important respect the Act does not resemble the mortgage moratorium legislation whose constitutionality was upheld in the Blaisdell case. This legislation, imposing a sudden, totally unanticipated, and substantial retroactive obligation upon the company to its employees, was not enacted to deal with a situation remotely approaching the broad and desperate emergency economic conditions of the early 1930’s—conditions of which the Court in Blaisdell took judicial notice.

Entering a field it had never before sought to regulate, the Minnesota Legislature grossly distorted the company’s existing contractual relationships with its employees by superimposing retroactive obligations upon the company substantially beyond the terms of its employment contracts. And that burden was imposed upon the company only because it closed its office in the State.

This Minnesota law simply does not possess the attributes of those state laws that in the past have survived challenge under the Contract Clause of the Constitution. The law was not even purportedly enacted to deal with a broad, generalized economic or social problem. It did not operate in an area already subject to state regulation at the time the company’s contractual obligations were originally undertaken, but invaded an area never before subject to regulation by the State. It did not effect simply a temporary alteration of the contractual relationships of those within its coverage, but worked a severe, permanent, and immediate change in those relationships—irrevocably and retroactively. And its narrow aim was leveled, not at every Minnesota employer, not even at every Minnesota employer who left the State, but only at those who had in the past been sufficiently enlightened as voluntarily to agree to establish pension plans for their employees.

... [I]f the Contract Clause means anything at all, it means that Minnesota could not constitutionally do what it tried to do to the company in this case.

The judgment of the District Court is reversed.

MR. JUSTICE BRENNAN, with whom MR. JUSTICE WHITE and MR. JUSTICE MARSHALL join, dissenting.

In cases involving state legislation affecting private contracts, this Court’s decisions over the past half century, consistently with both the constitutional text and its original understanding, have interpreted the Contract Clause as prohibiting state legislative Acts which, “[w]ith studied indifference to the interests of the [contracting party] or to his appropriate protection,” effectively diminished or nullified the obligation due him under the terms of a contract. But the Contract Clause has not, during this period, been applied to state legislation that, while creating new duties, in nowise diminished the efficacy of any contractual obligation owed the constitutional claimant....

Today’s decision greatly expands the reach of the Clause. The Minnesota Private Pension Benefits Protection Act (Act) does not abrogate or dilute any obligation due a party to a private contract; rather, like all positive social legislation, the Act imposes new, additional obligations on a particular class of persons....

The Act does not relieve either the employer or his employees of any existing contract obligation. Rather, the Act simply creates an additional, supplemental duty of the employer, no different in kind from myriad duties created by a wide variety of legislative measures which defeat settled expectations but which have nonetheless been sustained by this Court. For this reason, the Minnesota Act, in my view, does not implicate the Contract Clause in any way. The basic fallacy of today’s decision is its mistaken view that the Contract Clause protects all contract-based expectations, including that of an employer that his obligations to his employees will not be legislatively enlarged beyond those explicitly provided in his pension plan....

... [I]n my view, the Contract Clause has no applicability whatsoever to the Act. . . . I would affirm the judgment of the District Court.

ANNOTATED READINGS

A number of important works have examined the historical evolution of the contract clause and how it contributes to the general protection of property rights. Among such volumes is Bruce Ackerman, Private Property and the Constitution (New Haven, CT: Yale University Press, 1977); James W. Ely, Property Rights in American History (New York: Garland, 1997); Kermit L. Hall, ed., Law, Economy, and the Power of Contract: Major Historical Interpretations (New York: Garland, 1987); Morton J. Horowitz, The Transformation of American Law, 1780–1860 (Cambridge, MA: Harvard University Press, 1977); Warren B. Hunting, The Obligation of Contracts Clause of the United States Constitution (Baltimore: Johns Hopkins University Press, 1919); Harry N. Scheiber, ed., The State and Freedom of Contract (Stanford, CA: Stanford University Press, 1999); and Benjamin F. Wright, The Contract Clause of the Constitution (Cambridge, MA: Harvard University Press, 1938).

Other works have focused on specific landmark rulings by the U.S. Supreme Court or the contributions to the Court’s contract clause jurisprudence by specific justices. Examples are Morgan D. Dowd, “Justice Story, the Supreme Court, and the Obligation of Contract,” Case Western Reserve Law Review 19 (1968): 493–527; John A. Fliter and Derek S. Hoff, Fighting Foreclosure: The Blaisdell Case, the Contract Clause, and the Great Depression (Lawrence: University Press of Kansas, 2012); Horace H. Hagin, “Fletcher vs. Peck,” Georgetown Law Journal 16 (November 1927): 1–40; Nathan Isaacs, “John Marshall on Contracts: A Study in Early American Juristic Theory,” Virginia Law Review 7 (March 1921): 413–428; Stanley I. Kutler, Privilege and Creative Destruction: The Charles River Bridge Case (Philadelphia: J. B. Lippincott, 1971); C. Peter Magrath, Yazoo: Law and Politics in the New Republic (Providence, RI: Brown University Press, 1966); and Francis N. Stites, Private Interest and Public Gain: The Dartmouth College Case, 1819 (Amherst: University of Massachusetts Press, 1972).

1. Walter F. Murphy, James E. Fleming, and William Harris II, American Constitutional Interpretation, 2nd ed. (Mineola, NY: Foundation Press, 1995), 1073.

2. See Richard Pacelle Jr., The Transformation of the Supreme Court’s Agenda (Boulder, CO: Westview Press, 1991); and Pacelle, “The Dynamics and Determinants of Agenda Change in the Rehnquist Court,” in Contemplating Courts, ed. Lee Epstein (Washington, DC: CQ Press, 1995).

1. Benjamin F. Wright, The Contract Clause of the Constitution (Cambridge, MA: Harvard University Press, 1938).

2. Eight years later, however, the Court held in Ogden v. Saunders (1827) that state bankruptcy laws did not violate the contract clause if the contract was entered into after the enactment of the bankruptcy statute.

3. This account of the facts in the Dartmouth College case is based in part on Richard N. Current, “The Dartmouth College Case,” in Garraty, Quarrels That Have Shaped the Constitution.

4. This number includes Associate Justice John Catron, who was nominated on Jackson’s last day in office and whose appointment is often credited to Jackson’s successor, Martin Van Buren.

5. See also Exxon Corporation v. Eagerton (1983).

6. Keystone Bituminous Coal Association v. DeBenedictis (1987).

10 Economic Substantive Due Process

SUPPOSE that federal and state agents receive a tip that the owners of a factory are violating the federal law that prohibits the employment of children younger than fourteen. Without stopping to obtain a search warrant, the agents enter the factory and observe that underage employees are indeed working there. The agents arrest the factory owners. Based on evidence collected by the investigators, a court convicts the owners of violating child labor laws and imposes a heavy fine. But the owners challenge their conviction on two similarly named, but distinct, grounds—procedural due process and substantive due process.

Citing the first ground, the factory owners allege that the procedure the agents used to obtain evidence against them—entering the factory without a warrant—violated guarantees in the Constitution, including sections of the Fifth and Fourteenth Amendments that prohibit government from depriving persons of “life, liberty, or property, without due process of law.”1 For many, the term due process is synonymous with procedural fairness. The American system of justice is based on the idea that even people guilty of violating the law deserve fair treatment. This particular characterization of due process, known as procedural due process, is the most traditional and widely accepted use of the term. The government must proceed in fair ways if it is to convict an individual of a crime or otherwise deprive that person of life, liberty, or property. Evidence must be gathered according to prescribed procedures, and trials must take place following established rules of procedural fairness. If the government had proceeded fairly against the factory owners, their conviction would have been justified.

What is the second ground on which the factory owners base their appeal? None other than due process of law. Under this approach, due process means more than just adhering to fair procedures. Instead, the due process clauses are seen as guaranteeing certain substantive rights. This theory, known as substantive due process, holds that the Constitution is violated when government unreasonably or arbitrarily denies rights that are inherent in the freedom of the individual. In our example, the factory owners might argue that the law prohibiting child labor violates due process guarantees by unreasonably infringing on their freedom to do business and arbitrarily abridging their right to enter into employment agreements with willing workers. In their view, the federal law cannot stand because it is inherently not just and not fair, and the Constitution requires that the substance of the law must be just and must not unfairly deprive persons of their life, liberty, or property.

In this chapter we examine the development and decline of the substantive due process doctrine. We shall see that in the modern era the Supreme Court has made it exceedingly difficult to challenge laws governing economic relationships on substantive due process grounds. But for approximately forty years, from the 1890s through the 1930s, the Court read due process in substantive terms and used the principle to strike down many laws that allegedly infringed on economic rights.

If economic substantive due process is now a generally discredited doctrine, why do we devote an entire chapter to it? There are several reasons. First, its rise and fall from the Court’s grace constitutes an intriguing part of legal history. The adoption of substantive due process came about gradually and resulted from the push and pull of the legal and political environment of the day.

Second, looking at substantive due process provides us with an opportunity to revisit the concept of judicial activism. During the latter half of the twentieth century, that term was most often associated with liberalism, with Courts that overturned restrictive government laws and practices, such as those requiring racial segregation of public facilities or prohibiting seditious speech. But the justices from the 1890s to the 1930s actively used the substantive due process doctrine to impose their conservative ideology on American society. The Court overturned many laws that legislatures passed to regulate businesses for the common good. As a consequence, substantive due process became associated with the Court’s strong support of business interests.

Third, the topic of substantive due process offers a way to reexamine the cycles of history we have already discussed. As depicted in table 10–1, substantive due process was an additional weapon in the Court’s laissez-faire arsenal. While it was using delegation of power doctrines (Chapter 5), the Tenth Amendment (chapter 6), the commerce clause (chapter 7), and taxing and spending provisions (chapter 8) to strike down federal regulations of business, the Court also invoked substantive due process to rule against similar legislation passed by the states. This use was particularly ironic because at the time the Court was espousing notions of dual federalism, striking down federal regulations on the grounds they encroached on powers reserved to the states. In other words, the Court found ways to strike down all sorts of economic regulation, even though, in so doing, it often took contradictory stances. Therefore, substantive due process provides a way to tie together much of what we have already covered in this book.

Finally, the doctrine of substantive due process retains some relevance today. We continue to observe decisions in which the Court finds specific rights to be protected even though the Constitution makes no explicit reference to those rights. Instead, the justices conclude that certain personal liberties are embedded in the concept of due process of law. One such right is the constitutionally guaranteed right to privacy, although the document makes no explicit mention of that right. Rather, the justices have concluded that when government arbitrarily violates a person’s privacy it deprives that person of liberty without due process of law. Contemporary justices also have extended the reach of due process to protect against excessive jury awards and to preserve the integrity of the courts by prohibiting judges from ruling on cases in which they may have a conflict of interest.

We consider the contemporary uses of substantive due process in more detail at the end of this chapter, but first we review the doctrine’s development chronologically—how it came to be, why the Court embraced it, and what led to its decline.

DEVELOPMENT OF SUBSTANTIVE DUE PROCESS

In general terms, prior to the adoption of the Fourteenth Amendment, judges interpreted due process guarantees contained in the Fifth Amendment and in state constitutions as procedural in intent and nature. As historian Kermit L. Hall observed, “Before the Civil War [due process] had essentially one meaning”—that people were “entitled” to fair and orderly proceedings, particularly in criminal proceedings.2

There were some exceptions. Writing in Scott v. Sandford (see chapter 6), Chief Justice Roger Taney invoked the specter of due process to strike government interference in “property rights”:

An act of Congress which deprives a citizen of the United States of his liberty or property [a slave], merely because he came himself or brought his property into a particular Territory . . . could hardly be dignified with the name of due process of law.

Around the same time, a New York court in Wynehamer v. People (1856) invoked a substantive interpretation of the state’s due process requirement in striking down an alcohol prohibition law. It asserted that due process guarantees “prohibit, regardless of the matter of procedure, a certain kind or degree of exertion of legislative power altogether” and that the “substantive content of legislation” is covered, not simply the protection of the “mode of procedure.”

But decisions such as Wynehamer represented the exception, not the rule. Neither state court judges interpreting their due process clauses nor their federal court counterparts treating the Fifth Amendment read them to possess a substantive right and, therefore, a bar on interventionist government legislation. Rather, they viewed them through a procedural lens, and for good reason: it was simply unclear whether the due process clauses were meant to have substance.

The Fourteenth Amendment’s Due Process Clause: Initial Interpretation

The social ills that flowed from the nation’s post–Civil War transition from an agrarian to an industrial economy prompted state legislatures to consider new regulations on commerce, but business interests feared that increased regulation would inevitably lead to a reduction in corporate profits. With the decline of the contract clause as a defense against state interference with business, it is not surprising that corporate interests looked to other parts of the Constitution for protection. They saw the due process clause of the Fourteenth Amendment as particularly promising.

The Slaughterhouse Cases (1873) reveal that the Supreme Court initially did not agree with this probusiness interpretation of the Fourteenth Amendment. The majority gave rather short shrift to the due process argument, devoting most of its opinion to other issues. However, some of the dissenters found considerable merit in what the business community proposed. As you read this decision, pay careful attention to Justice Bradley’s dissent, as it sets the tone for many majority opinions that follow.

The Slaughterhouse opinions are noteworthy for several reasons. First, it was ironic that the first major case asking the Court to interpret the Fourteenth Amendment was brought by whites, not African Americans. This irony did not escape Justice Samuel Miller, who relied on history to stress the true purpose of the amendment—to protect the former slaves and to refute Campbell’s basic position. Next, he methodically refuted the constitutional arguments offered by the butchers. Miller spent most of his energy on the primary claim of privileges and immunities (truly emasculating the clause), but he also flatly rejected the due process clause claim.3 “Under no construction of that provision that we have ever seen, or any that we deem admissible,” Miller wrote, “can the restraint imposed by the state of Louisiana upon the exercise of their trade by the butchers of New Orleans be held to be a deprivation of property within the meaning of that provision.” Why did Miller take such a hard-line position? In large measure, he did so because he did not want to see the Court become a “superlegislature,” a censor on what states could and could not do.

The Slaughterhouse Cases (Butchers’ Benevolent Association v. Crescent City Livestock Landing & Slaughter House Company)

83 U.S. (16 Wall.) 36 (1873)

http://laws.findlaw.com/us/83/36.html

Vote: 5 (Clifford, Davis, Hunt, Miller, Strong)

4 (Bradley, Chase, Field, Swayne)

OPINION OF THE COURT: Miller

DISSENTING OPINIONS: Bradley, Field, Swayne

Facts:

After the Civil War, the United States experienced a great increase in industrialization accompanied by economic diversification that touched the entire country. Along with the benefits of economic and industrial expansion came some negative side effects. In Louisiana the state legislature claimed that the Mississippi River had become polluted because New Orleans butchers dumped discarded animal parts and other garbage into it. To remedy this problem (or, as some have suggested, to use it as an excuse to create a monopolistic enterprise), the legislature created the Crescent City Livestock Landing & Slaughter House Company to receive and slaughter all city livestock for twenty-five years.

Because butchers were forced to use the company facilities and to pay top dollar for the privilege, they formed their own organization, the Butchers’ Benevolent Association, and hired an attorney, former U.S. Supreme Court justice John A. Campbell, to sue the corporation and the state. In his arguments, Campbell sought to apply the Thirteenth and Fourteenth Amendments to the butchers’ cause.

Arguments:

For the plaintiffs in error, the Butchers’ Benevolent Association:

The rights included in the Thirteenth and Fourteenth Amendments apply to all Americans.

Americans have the freedom to engage in any useful business or occupation and a right to the income that flows from their efforts.

By forcing the butchers to use the state-created slaughterhouse monopoly, Louisiana violates the Thirteenth Amendment’s prohibition against involuntary servitude.

The state’s actions regulate the butchers well beyond what is customary for that occupation, denying them the right to pursue a traditional and beneficial trade. This, contrary to the Fourteenth Amendment, deprives the butchers of their privileges and immunities as U.S. citizens, denies them their property without due process of law, and fails to accord them equal protection of the law.

No condition of public health necessitated the creation of the monopoly.

For the defendant in error, state of Louisiana:

The law does not deny butchers the right to practice their profession. It only requires them to have their livestock slaughtered at the Crescent City slaughterhouse facilities.

The first section of the Fourteenth Amendment has no meaning except for persons of African descent. The privileges and immunities clause applies only to political privileges, such as the right to vote or hold office.

The police power extends to all subjects within the state’s territorial boundaries. That power has never been conceded to the federal government.

The police power clearly applies to the elimination of unhealthy or infectious articles or activities.

MR. JUSTICE MILLER, NOW, APRIL 14TH, 1873, DELIVERED THE OPINION OF THE COURT.

This court is . . . called upon for the first time to give construction to [the Thirteenth, Fourteenth, and Fifteenth Amendments]. . . .

We do not conceal from ourselves the great responsibility which this duty devolves upon us. No questions so far reaching and pervading in their consequences, so profoundly interesting to the people of this country, and so important in their bearing upon the relations of the United States and of the several states to each other, and to the citizens of the states, and of the United States, have been before this court during the official life of any of its present members. . . .

The most cursory glance at these articles discloses a unity of purpose, when taken in connection with the history of the times, which cannot fail to have an important bearing on any question of doubt concerning their true meaning. . . . Nor can such doubts, when any reasonably exist, be safely and rationally solved without a reference to that history; for in it is found the occasion and the necessity for recurring again to the great source of power in this country, the people of the states, for additional guaranties of human rights; additional powers to the Federal government; additional restraints upon those of the states. Fortunately that history is fresh within the memory of us all, and its leading features, as they bear upon the matter before us, free from doubt.

The institution of African slavery, as it existed in about half the states of the Union, and the contests pervading the public mind for many years, between those who desired its curtailment and ultimate extinction and those who desired additional safeguards for its security and perpetuation, culminated in the effort, on the part of most of the states in which slavery existed, to separate from the Federal government, and to resist its authority. This constituted the War of the Rebellion, and whatever auxiliary causes may have contributed to bring about this war, undoubtedly the overshadowing and efficient cause was African slavery. . . .

... [I]n the light of this recapitulation of events, almost too recent to be called history, but which are familiar to us all, and on the most casual examination of the language of these amendments, no one can fail to be impressed with the one pervading purpose found in them all, lying at the foundation of each, and without which none of them would have been even suggested; we mean the freedom of the slave race, the security and firm establishment of that freedom, and the protection of the newly made freeman and citizen from the oppressions of those who had formerly exercised unlimited dominion over him. It is true that only the fifteenth amendment, in terms, mentions the negro by speaking of his color and his slavery. But it is just as true that each of the other articles was addressed to the grievances of that race, and designed to remedy them as the fifteenth.

We do not say that no one else but the negro can share in this protection. Both the language and spirit of these articles are to have their fair and just weight in any question of construction. Undoubtedly while negro slavery alone was in the mind of the Congress which proposed the thirteenth article, it forbids any other kind of slavery, now or hereafter. . . . But what we do say, and what we wish to be understood, is that, in any fair and just construction of any section or phrase of these amendments, it is necessary to look to the purpose which we have said was the pervading spirit of them all, the evil which they were designed to remedy, and the process of continued addition to the Constitution, until that purpose was supposed to be accomplished as far as constitutional law can accomplish it. . . .

[The Fourteenth Amendment], which is the one mainly relied on by the plaintiffs in error, speaks only of privileges and immunities of citizens of the United States, and does not speak to those of citizens of the several States. The argument, however, in favor of the plaintiffs rests wholly on the assumption that the citizenship is the same, and the privileges and immunities guaranteed by the clause are the same.

The language is: “No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” . . .

Fortunately, we are not without judicial construction of this clause of the Constitution. The first and the leading case on the subject is that of Corfield v. Coryell, decided by Mr. Justice Washington in the Circuit Court for the District of Pennsylvania in 1823.

“The inquiry,” he says, “is, what are the privileges and immunities of citizens of the several states? We feel no hesitation in confining these expressions to those privileges and immunities which are fundamental; which belong of right to the citizens of all free governments, and which have at all times been enjoyed by citizens of the several states which compose this Union, from the time of their becoming free, independent, and sovereign. What these fundamental principles are, it would be more tedious than difficult to enumerate. They may all, however, be comprehended under the following general heads: protection by the government, with the right to acquire and possess property of every kind, and to pursue and obtain happiness and safety, subject, nevertheless, to such restraints as the government may prescribe for the general good of the whole.” . . .

In the case of Paul v. Virginia [1869], the court, in expounding this clause of the Constitution, says that the privileges and immunities secured to citizens of each State in the several States by the provision in question are those privileges and immunities which are common to the citizens in the latter States under the constitution and laws by virtue of their being citizens. . . .

... [W]e may hold ourselves excused from defining the privileges and immunities of citizens of the United States which no State can abridge until some case involving those privileges may make it necessary to do so.

But lest it should be said that no such privileges and immunities are to be found if those we have been considering are excluded, we venture to suggest some which owe their existence to the Federal government, its national character, its Constitution, or its laws.

One of these is well described in the case of Crandall v. Nevada [1868]. It is said to be the right of the citizen of this great country, protected by implied guarantees of its Constitution, to come to the seat of government to assert any claim he may have upon that government, to transact any business he may have with it, to seek its protection, to share its offices, to engage in administering its functions. He has the right of free access to its seaports, through which operations of foreign commerce are conducted, to the sub-treasuries, land offices, and courts of justice in the several States. . . .

Another privilege of a citizen of the United States is to demand the care and protection of the Federal government over his life, liberty, and property when on the high seas or within the jurisdiction of a foreign government. Of this there can be no doubt, nor that the right depends upon his character as a citizen of the United States. The right to peaceably assemble and petition for redress of grievances, the privilege of the writ of habeas corpus, are rights of the citizen guaranteed by the Federal Constitution. The right to use the navigable waters of the United States, however they may penetrate the territory of the several States, all rights secured to our citizens by treaties with foreign nations, are dependent upon citizenship of the United States, and not citizenship of a State. One of these privileges is conferred by the very article under consideration. It is that a citizen of the United States can, of his own volition, become a citizen of any State of the Union by a bona fide residence therein, with the same rights as other citizens of that State. To these may be added the rights secured by the thirteenth and fifteenth articles of amendment, and by the other clause of the fourteenth, next to be considered.

But it is useless to pursue this branch of the inquiry, since we are of opinion that the rights claimed by these plaintiffs in error, if they have any existence, are not privileges and immunities of citizens of the United States within the meaning of the clause of the fourteenth amendment under consideration.

“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state, wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States, nor shall any state deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.”

The argument has not been much pressed in these cases that the defendant’s charter deprives the plaintiffs of their property without due process of law, or that it denies to them the equal protection of the law. The first of these paragraphs has been in the Constitution since the adoption of the 5th Amendment, as a restraint upon the Federal power. It is also to be found in some form of expression in the constitutions of nearly all the states, as a restraint upon the power of the states. This law, then, has practically been the same as it now is during the existence of the government, except so far as the present Amendment may place the restraining power over the states in this matter in the hands of the Federal government.

We are not without judicial interpretation, therefore, both state and national, of the meaning of this clause. And it is sufficient to say that under no construction of that provision that we have ever seen, or any that we deem admissible, can the restraint imposed by the state of Louisiana upon the exercise of their trade by the butchers of New Orleans be held to be a deprivation of property within the meaning of that provision.

“Nor shall any state deny to any person within its jurisdiction the equal protection of the laws.”

In the light of the history of these amendments, and the pervading purpose of them, . . . it is not difficult to give a meaning to this clause. The existence of laws in the states where the newly emancipated negroes resided, which discriminated with gross injustice and hardship against them as a class, was the evil to be remedied by this clause, and by it such laws are forbidden.

If, however, the states did not conform their laws to its requirements, then by the 5th section of the article of amendment Congress was authorized to enforce it by suitable legislation. We doubt very much whether any action of a state not directed by way of discrimination against the negroes as a class, or on account of their race, will ever be held to come within the purview of this provision. It is so clearly a provision for that race and that emergency, that a strong case would be necessary for its application to any other. But as it is a state that is to be dealt with, and not alone the validity of its laws, we may safely leave that matter until Congress shall have exercised its power, or some case of state oppression, by denial of equal justice in its courts, shall have claimed a decision at our hands. We find no such case in the one before us, and we do not deem it necessary to go over the argument again, as it may have relation to this particular clause of the Amendment.

In the early history of the organization of the government, its statesmen seem to have divided on the line which should separate the powers of the national government from those of the state governments, and though this line has never been very well defined in public opinion, such a division has continued from that day to this.

The adoption of the first eleven amendments to the Constitution so soon after the original instrument was accepted shows a prevailing sense of danger at that time from the Federal power and it cannot be denied that such a jealousy continued to exist with many patriotic men until the breaking out of the late Civil War. It was then discovered that the true danger to the perpetuity of the Union was in the capacity of the state organizations to combine and concentrate all the powers of the state, and of contiguous states, for a determined resistance to the general government.

Unquestionably this has given great force to the argument, and added largely to the number of those who believe in the necessity of a strong national government.

But, however pervading this sentiment, and however it may have contributed to the adoption of the Amendments we have been considering, we do not see in those Amendments any purpose to destroy the main features of the general system. Under the pressure of all the excited feeling growing out of the war, our statesmen have still believed that the existence of the states with powers for domestic and local government, including the regulation of civil rights, the rights of person and of property, was essential to the perfect working of our complex form of government, though they have thought proper to impose additional limitations on the states, and to confer additional power on that of the nation.

But whatever fluctuations may be seen in the history of public opinion on this subject during the period of our national existence, we think it will be found that this court, so far as its functions required, has always held, with a steady and an even hand, the balance between state and Federal power, and we trust that such may continue to be the history of its relation to that subject so long as it shall have duties to perform which demand of it a construction of the Constitution, or of any of its parts.

The judgments of the Supreme Court of Louisiana in these cases are affirmed.

MR. JUSTICE FIELD, dissenting.

The question presented is . . . one of the gravest importance, not merely to the parties here, but to the whole country. It is nothing less than the question whether the recent Amendments to the Federal Constitution protect the citizens of the United States against the deprivation of their common rights by state legislation. In my judgment the 14th Amendment does afford such protection, and was so intended by the Congress which framed and the states which adopted it. . . .

The provisions of the Fourteenth Amendment, which is properly a supplement to the thirteenth, cover, in my judgment, the case before us, and inhibit any legislation which confers special and exclusive privileges like these under consideration. The Amendment was adopted to obviate objections which had been raised and pressed with great force to the validity of the civil rights act, and to place the common rights of the American citizens under the protection of the National government. It first declares that “all persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside.” It then declares that “No state shall make or enforce any law which shall abridge the privileges or immunity of citizens of the United States, nor shall any state deprive any person of life, liberty or property, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.” . . .

The first clause of the fourteenth Amendment . . . removes it from the region of discussion and doubt. It recognizes in express terms, if it does not create, citizens of the United States, and it makes their citizenship dependent upon the place of their birth, or the fact of their adoption, and not upon the Constitution or laws of any state or the condition of their ancestry. A citizen of a state is now only a citizen of the United States residing in that state. The fundamental rights, privileges, and immunities which belong to him as a free man and a free citizen, now belong to him as a citizen of the United States, and are not dependent upon his citizenship of any state. The exercise of these rights and privileges, and the degree of enjoyment received from such exercise, are always more or less affected by the condition and the local institutions of the state, or city, or town where he resides. They are thus affected in a state by the wisdom of its laws, the ability of its officers, the efficiency of its magistrates, the education and morals of its people, and by many other considerations. This is a result which follows from the constitution of society, and can never be avoided, but in no other way can they be affected by the action of the state, or by the residence of the citizen therein. They do not derive their existence from its legislation, and cannot be destroyed by its power. . . .

... [G]rants of exclusive privileges, such as is made by the act in question, are opposed to the whole theory of free government, and it requires no aid from any bill of rights to render them void. That only is a free government, in the American sense of the term, under which the inalienable right of every citizen to pursue his happiness is unrestrained, except by just, equal, and impartial laws.

MR. JUSTICE BRADLEY, dissenting.

The [Fourteenth] Amendment . . . prohibits any state from depriving any person (citizen or otherwise) of life, liberty or property, without due process of law.

In my view, a law which prohibits a large class of citizens from adopting a lawful employment, or from following a lawful employment previously adopted, does deprive them of liberty as well as property, without due process of law. Their right of choice is a portion of their liberty; their occupation is their property. Such a law also deprives those citizens of the equal protection of the laws, contrary to the last clause of the section.

The constitutional question is distinctly raised in these cases; the constitutional right is expressly claimed; it was violated by state law, which was sustained by the state court, and we are called upon in a legitimate and proper way to afford redress. Our jurisdiction and our duty are plain and imperative.

It is futile to argue that none but persons of the African race are intended to be benefited by this Amendment. They may have been the primary cause of the Amendment, but its language is general, embracing all citizens, and I think it was purposely so expressed.

The mischief to be remedied was not merely slavery and its incidents and consequences; but that spirit of insubordination and disloyalty to the national government which had troubled the country for so many years in some of the states, and that intolerance of free speech and free discussion which often rendered life and property insecure, and led to much unequal legislation. The Amendment was an attempt to give voice to the strong national yearning for that time and that condition of things, in which American citizenship should be a sure guaranty of safety, and in which every citizen of the United States might stand erect in every portion of its soil, in the full enjoyment of every right and privilege belonging to a freeman, without fear of violence or molestation.

But great fears are expressed that this construction of the Amendment will lead to enactments by Congress interfering with the internal affairs of the states, and establishing therein civil and criminal codes of law for the government of the citizens, and thus abolishing the state governments in everything but name; or else, that it will lead the Federal courts to draw to their cognizance the supervision of state tribunals on every subject of judicial inquiry, on the plea of ascertaining whether the privileges and immunities of citizens have not been abridged.

In my judgment no such practical inconveniences would arise. Very little, if any, legislation on the part of Congress would be required to carry the Amendment into effect. Like the prohibition against passing a law impairing the obligation of a contract, it would execute itself. The point would be regularly raised in a suit at law, and settled by final reference to the Federal Court. As the privileges and immunities protected are only those fundamental ones which belong to every citizen, they would soon become so far defined as to cause but a slight accumulation of business in the Federal Courts. Besides, the recognized existence of the law would prevent its frequent violation. But even if the business of the national courts should be increased, Congress could easily supply the remedy by increasing their number and efficiency. The great question is: what is the true construction of the Amendment? When once we find that, we shall find the means of giving it effect. The argument from inconvenience ought not to have a very controlling influence in questions of this sort. The national will and national interest are of far greater importance.

In my opinion the judgment of the Supreme Court of Louisiana ought to be reversed.

The Beginning of Substantive Due Process: The Court Opens a Window

Miller’s opinion in Slaughterhouse and Bradley’s and Field’s dissents are clear statements of the justices’ initial positions on the substantive due process question. Indeed, the Miller and Bradley-Field opinions are considered to represent the epitome of opposing views on the subject. It was Miller’s view, however, that, for the moment, carried the day—there was no substance in due process. Given the terse language of his opinion, we might suspect that it closed the book on the subject forever. But that was not the case. Miller observed just five years later,

It is not a little remarkable, that while [due process] has been in the Constitution . . . as a restraint upon the authority of the Federal government, for nearly a century . . . its powers ha[d] rarely been invoked in the judicial forum or the more enlarged theatre of public discussion. But while it has been a part of the Constitution, as a restraint upon the power of the States, only a very few years, the docket of this court is crowded with cases in which we are asked to hold that State courts and State legislatures have deprived their own citizens of life, liberty, or property without due process of law. There is here abundant evidence that there exists some strange misconception of the scope of this provision as found in the fourteenth amendment.4

Why was it necessary for Miller to write this? Had not Slaughterhouse eradicated the notion of the Fourteenth Amendment’s due process clause as a prohibition of state economic regulation?

It had, but that did not prevent attorneys, representing desperate business interests, from continuing to make substantive due process arguments. From the lawyers’ perspective, the current environment held promise for the eventual adoption of such arguments, and they advanced several theories that echoed Bradley’s dissenting position in Slaughterhouse. One was expressed in Thomas M. Cooley’s influential Constitutional Limitations, first published in 1868, which singled out the word liberty within the due process clause as an important constitutional right. The protection of this right, in Cooley’s eyes, required a substantive reading of the Fourteenth Amendment, which, in turn, would serve as a mechanism for protecting property rights and for restricting government regulation. Cooley’s theory was specific, but Herbert Spencer offered a more general view. Called social Darwinism, it treated social evolution in the same terms that Charles Darwin used to explain biological evolution: if government simply maintained order and protected property rights and otherwise left people alone, the “fittest” would survive and succeed; if government attempted to intrude in other ways, then those other than the “fittest” also would survive, which would have a detrimental effect on society in the long term. This proposition had a natural compatibility with laissez-faire economic theories: if government leaves business alone, the best will prosper. Interpreting the Fifth and Fourteenth Amendments in substantive due process terms would prohibit a great deal of government interference with business activity.

But perhaps the most important factor contributing to the vitality of substantive due process was the Court itself. Social Darwinism may have influenced some scholars, the social elite, and business, but most Americans did not buy its tenets. If they had, states would not have kept on trying to regulate businesses, as the public would have demanded policies of noninterference. But they did continue. To a large extent, the crowded docket to which Miller referred was the Court’s own doing.

An important, and certainly vivid, example of how the Court encouraged substantive due process arguments came in Munn v. Illinois. This decision cut both ways: the Court upheld the state’s regulation but provided enough of a loophole for clever attorneys to exploit later. What was that loophole? One way to answer this question is to reconsider Miller’s opinion in Slaughterhouse as you read Munn. Do you spot any differences?

To return to our question, what was the loophole in Chief Justice Morrison Waite’s opinion? Like Justice Miller in The Slaughterhouse Cases, Waite seemed to reject substantive due process completely, asserting that most regulatory legislation should be presumed valid. The ruling provoked strong reaction. The American Bar Association, which was then a newly formed organization and full of business-oriented attorneys, pronounced it “barbarous” and vowed to see it overturned.6 Also consider the statement in Justice Field’s acrimonious dissent, which largely reflected Bradley’s in Slaughterhouse: the law was “nothing less than a bold assertion of absolute power by the State to control at its discretion the property and business of the citizen.” So it is not surprising that Waite’s majority opinion “has generally been regarded as a great victory for liberalism and a judicial refusal to recognize due process as a limit on the substance of legislative regulatory power.”7

But is that description precise? Not exactly. Although Waite could have taken the same approach as Miller in Slaughterhouse—the complete rejection of the due process claim—he did not. Instead, Waite qualified his opinion, asserting first that state regulations of private property were “not supposed” to deprive owners of their right to due process, but that “under some circumstances they may.” What differentiated “some circumstances” from others? In Waite’s opinion, the answer lay in the nature of the subject of the regulation: “We find that when private property is ‘affected with a public interest it ceases to be [of private right] only.’” Waite used this doctrine, often called the business-affected-with-a-public-interest (BAPI) doctrine, to find against Munn’s claim. The grain elevator business played a crucial role in the distribution of foodstuffs to the nation; as such, it was an industry that was affected with the public interest and consequently subject to regulation.

In dissent, Justice Field charged that the BAPI test provided businesses inadequate protection against government regulation: “There is hardly an enterprise or business engaging the attention and labor of any considerable portion of the community, in which the public has not an interest in the sense in which that term is used by the court.” Yet Waite’s opinion, perhaps unwittingly, provided a loophole for lawyers representing business clients who were unhappy with state regulation. The opinion implied that businesses not affected with the public interest could raise a due process defense against unreasonable state regulation. By avoiding a hard-line stance of the sort taken by Miller in Slaughterhouse, Waite’s “maybe yes, maybe no” approach ultimately provided some elbow room for the concept of substantive due process.

In two cases coming a decade or so after Munn, the Court moved closer to the concession only implied by Waite. In the first, Mugler v. Kansas (1887), the Court considered a state law that prohibited the manufacture and sale of liquor. Although the majority upheld the regulation against a substantive due process challenge, the Court’s opinion represented something of a break from Munn. First, it articulated the view that not “every statute enacted ostensibly for the promotion of [the public interest] is to be accepted as a legitimate exertion of police powers of the state.” This opinion was far more explicit than Waite’s: there were clear limits to state regulatory power. Second, and more important, it took precisely the opposite position from the majority in Slaughterhouse. Recall that Justice Miller wanted to avoid the Court’s being placed in the position of a “superlegislature,” scrutinizing and perhaps censoring state action. But in Mugler, that is precisely what the Court said it would do:

There are . . . limits beyond which legislation cannot rightfully go. . . . If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety, has no real or substantial relation to those objects, or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge [our italics], and thereby give effect to the Constitution.

In Mugler the Court did not fully adopt the doctrine of substantive due process; it even upheld the state regulation on liquor. It also established its intent to review legislation to determine whether it was a “reasonable” exercise of state power. In essence, the Court would balance the interests of the state against those of individual due process guarantees.

The legislation tested in Mugler was deemed reasonable, but in Chicago, Milwaukee & St. Paul Railway v. Minnesota (1890), decided three years after Mugler, the Court went the other way: the justices struck down a state regulation on the ground that it interfered with due process guarantees. At first glance, Chicago, Milwaukee & St. Paul Railway bears a distinct resemblance to Munn v. Illinois. Strong lobbying efforts by farm groups led Minnesota in 1887 to establish a commission to set “equal and reasonable” rates for railroad transportation of goods and for warehouse storage. The commission received a complaint that the Chicago, Milwaukee & St. Paul Railway Company was charging dairy farmers unreasonable rates to ship their milk. It held hearings to investigate the claim and ruled against the railroad. When the company refused to abide by the ruling and reduce its rates, the commission went to the state supreme court. In the opinion of that tribunal, the commission’s enabling legislation intended that the rates it “recommended and published” were to be “not simply advisory . . . but final and conclusive as to what are equal and reasonable charges.” The railroad took its case to the U.S. Supreme Court, where it argued that the commission had interfered with “its property” without providing it with due process of law.

Writing for the majority, Justice Samuel Blatchford held for the railroad on two grounds, both centering on the Fourteenth Amendment’s due process clause. Procedurally, he found the law—at least as construed by the state supreme court—defective. Because courts could not review the rates the commission set, the law deprived the railroad of a certain degree of fairness. On this point, the Court took a “traditional” approach to due process, asserting that “procedural safeguards” must be “attached to public expropriations of private property.”8 But Blatchford did not stop there; instead, he examined the law in terms of the reasonableness standard promulgated in Mugler: “The question of the reasonableness of a rate of charge for transportation by a railroad company . . . is eminently a question for judicial investigation, requiring due process of law for its determination.”

Blatchford found the law deprived the company of its property in an unfair way:

If the company is deprived of the power of charging reasonable rates . . . and such deprivation takes place in the absence of an investigation by judicial machinery, it is deprived of the lawful use of its property, and thus, in substance and effect, of the property itself, without due process of law.

The Chicago, Milwaukee & St. Paul Railway case was not all that extraordinary: it merely applied the standard articulated in Mugler, a standard that obviously cut both ways. Sometimes the Court, in its attempt to inquire (balance interests), would find a law a “reasonable” use of state power (Mugler), and sometimes it would find it violative of substantive due process guarantees, as it did here. But this case and, to a lesser extent, Mugler were remarkable if we consider how different they were from Slaughterhouse. Over a fourteen-year period, the Court had moved from a refusal to inject substance into due process to a near affirmation of the doctrine of substantive due process; it had moved from the assertion that it would not become a censor to the argument that judicial inquiry was necessary, if not mandated, by the Constitution. And although, as we shall see, it did not fully endorse Thomas Cooley’s position defining due process “liberty” in economic terms until seven years later, Blatchford’s ruling laid the groundwork for exactly that.

This change in position prompts us to ask why the Court did such a turnabout over two decades. The most obvious answer is personnel changes. By the time the Court decided Mugler, only one member of the Slaughterhouse majority, Miller, remained, but the primary dissenters, Bradley and Field, also remained. By 1890 Miller also was gone, as was Chief Justice Waite, who, despite the loophole in the Munn opinion, generally favored state regulatory power. Their replacements were quite different. Some had been corporate attorneys schooled in the philosophies of Cooley and Spencer and quite willing to borrow from the briefs of their former colleagues who argued against state regulation. Justice David J. Brewer, who replaced Stanley Matthews, a moderate-conservative states’ rights advocate, had refused to follow Munn as a court of appeals judge. It is not surprising that many eagerly awaited the Chicago, Milwaukee & St. Paul Railway decision to see how the Court’s membership changes might affect the direction of this area of the law.9 Given the backgrounds of the new appointees, it also is not surprising that the views of the Slaughterhouse dissenters—especially Field and Bradley—ruled the day.

But there may have been more to it. By asserting the standard it did, the Court was engaging in extreme judicial activism. As Peter Woll noted,

By substituting its judgment for that of state legislators in determining the fairness of regulations of property and liberty under the due process clause of the Fourteenth Amendment, the Court was acting contrary to the public opinion that spurred state regulation. Political pressures upon state legislatures throughout the country had resulted in laws regulating business which courts were unwilling to sustain.10

It seems fair to say that the justices did not see it this way. Rather, they viewed these “political pressures” as just that—as particularized, radical, “socialistic” elements that did not reflect majority interests. If that was their perception, it had a solid foundation. Some legislation had resulted from the lobbying efforts of farm and labor movements and later, as we shall see, of the Progressives and New Dealers. In the minds of many conservatives of the day, including some of the justices, such pressures were illegitimate because they sought to subvert the free enterprise system. In short, while the Populists, Progressives, and New Dealers—in the opinion of conservatives—tried to put the brakes on businesses and inculcate the government with socialistic legislation, the conservatives strongly believed that the best interests of the country lay with “an utterly free market, unfettered by governmental regulation.” This, not the plans of radicals, would be more advantageous to society in the long run because in the end all would benefit financially.

A fundamental change was in the wind, and many point to the Court’s decision in Allgeyer v. Louisiana (1897) as the turning point. What did the Court say here that it had not fully articulated in Mugler and Chicago, Milwaukee & St. Paul Railway?

Justice Rufus Peckham’s opinion is not so different from the majority’s opinion in Chicago, Milwaukee & St. Paul Railway. It struck down the state law in part on the ground that the law was not reasonable. But Peckham went much farther. By merging substantive due process with freedom of contract, by reading the term liberty to mean economic liberty, encompassing the right to “enter into all contracts,” he issued a strong opinion. He adopted the position that businesses had been pressing since the demise of the contract clause as a source of protection. Now their right to do business—to set their own rates and enter into contracts with other businesses and perhaps even with employees—had the highest level of legal protection. In just under twenty-five years, business interests had pushed the Court from Slaughterhouse, in which it refused to review state legislation for its compatibility with due process guarantees, to Munn, in which legislation was presumed valid generally but was open to judicial inquiry into its “reasonableness.” The Court then moved from balancing state interests with individual interests (Chicago, Milwaukee & St. Paul Railway) to placing state regulations in a less exalted position than the fundamental liberty of contract (Allgeyer).

Munn v. Illinois

94 U.S. 113 (1877)

http://laws.findlaw.com/us/94/113.html

Vote: 7 (Bradley, Clifford, Davis, Hunt, Miller, Swayne, Waite)

2 (Field, Strong)

OPINION OF THE COURT: Waite

DISSENTING OPINION: Field

In the late nineteenth century, grain elevators, used to store grain until it was sold, were a common sight on the Chicago River. Ira Munn and George Scott’s grain elevators (at right) were among the most successful, until Munn’s corrupt business practices brought the industry under government scrutiny.

Library of Congress

Facts:

The rise of industrialization affected much of the nation, but its impact on the city of Chicago was monumental. Because of its status as an important trading post, particularly for the grain market, Chicago was becoming the “New York of the West.”5 Grain produced by farmers in the Midwest flowed into Chicago to be shipped to merchants throughout the United States. As a result, grain storage developed as a lucrative industry in Chicago. Typically, until grain was sold and shipped, companies stored it in warehouses that looked like huge skyscrapers. These warehouses were called grain elevators because of the way the grain was mechanically loaded into them by systems of dump baskets fastened to conveyor belts.

A dozen or more grain storage companies sprang up in Chicago. Among the most successful was Munn & Scott, co-owned by Ira Munn and George Scott. They started with one warehouse with a capacity of 8,000 bushels of grain, and within a few short years they were overseeing an enterprise with four elevators and a storage capacity of 2,700,000 bushels. They were, in short, very successful entrepreneurs.

Despite their success, Munn and Scott (along with many others) engaged in fraudulent business practices. They charged exorbitantly high fees, mixed inferior grain with superior grain, and engaged in price-fixing with other companies. As these abuses became more obvious, farmers and merchants pleaded with city officials to regulate the industry. After several ineffective attempts by a local board to do so, the state—under continued pressure from farmers’ organizations, known as the Granger movement—in 1871 enacted a law that included provisions establishing boards to regulate the maximum rates grain elevators could charge, among other aspects of the business. The state justified the law as compatible with its constitution, which specified that public warehouses were subject to regulation. The state of Illinois charged Munn and Scott with violating the law shortly after it went into effect. They were found guilty and fined $100. On appeal they challenged the constitutionality of the regulations. Munn & Scott later went into bankruptcy amid allegations of ethical and professional violations.

Arguments:

For the plaintiffs in error, Ira Y. Munn and George L. Scott:

The grain storage business is part of interstate and foreign commerce. Therefore, states lack constitutional authority to regulate it.

The law encroaches on the liberty of private property in violation of the due process clause of the Fourteenth Amendment.

Valid uses of the police power include regulations to keep the peace, to improve public morality, and to remove the causes of crime, disease, and pauperism—not to control wages and prices.

The law unreasonably and arbitrarily deprives the company of its freedom to carry on its business activities. The company is not a public utility over which regulation traditionally has been allowed.

For the defendant in error, state of Illinois:

These state regulations apply to local businesses, not interstate or foreign commerce.

As part of its authority over internal commerce, the state has the power to regulate and inspect grain stored in public warehouses.

The law does not deprive property rights without due process of law. The owner may still use his property as he sees fit.

The importance of food to the community is so great that the grain elevator business becomes similar to a public utility or a public employer. Therefore, these businesses may be more extensively regulated than other private businesses.

MR. CHIEF JUSTICE WAITE DELIVERED THE OPINION OF THE COURT.

The question to be determined in this case is whether the General Assembly of Illinois can, under the limitations upon the legislative power of the States imposed by the Constitution of the United States, fix by law the maximum of charges for the storage of grain in warehouses at Chicago and other places in the State having not less than one hundred thousand inhabitants, “in which grain is stored in bulk, and in which the grain of different owners is mixed together, or in which grain is stored in such a manner that the identity of different lots or parcels cannot be accurately preserved.”

It is claimed that such a law is repugnant—...

To that part of amendment 14 which ordains that no State shall “Deprive any person of life, liberty or property, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.” . . .

The Constitution contains no definition of the word “deprive,” as used in the Fourteenth Amendment. To determine its signification, therefore, it is necessary to ascertain the effect which usage has given it, when employed in the same or a like connection.

While this provision of the Amendment is new in the Constitution of the United States as a limitation upon the powers of the States, it is old as a principle of civilized government. It is found in Magna Charta, and, in substance if not in form, in nearly or quite all the constitutions that have been from time to time adopted by the several States of the Union. By the 5th Amendment, it was introduced into the Constitution of the United States as a limitation upon the powers of the National Government, and by the Fourteenth, as a guaranty against any encroachment upon an acknowledged right of citizenship by the Legislatures of the States. . . .

When one becomes a member of society, he necessarily parts with some rights or privileges which, as an individual not affected by his relations to others, he might retain. “A body politic,” as aptly defined in the preamble of the Constitution of Massachusetts, is a social compact by which the whole people covenants with each citizen, and each citizen with the whole people, that all shall be governed by certain laws for the common good. This does not confer power upon the whole people to control rights which are purely and exclusively private; but it does authorize the establishment of laws requiring each citizen to so conduct himself, and so use his own property, as not unnecessarily to injure another. This is the very essence of government. . . . From this source come the police powers, which, as was said by Mr. Chief Justice Taney in the License Cases, are nothing more or less than the powers of government inherent in every sovereignty, . . . that is to say, . . . the power to govern men and things. Under these powers, the government regulates the conduct of its citizens one towards another, and the manner in which each shall use his own property, when such regulation becomes necessary for the public good. In their exercise, it has been customary in England from time immemorial, and in this country from its first colonization, to regulate ferries, common carriers, hackmen, bakers, millers, wharfingers, innkeepers, &c., and, in so doing, to fix a maximum of charge to be made for services rendered, accommodations furnished, and articles sold. To this day, statutes are to be found in many of the States upon some or all these subjects; and we think it has never yet been successfully contended that such legislation came within any of the constitutional prohibitions against interference with private property. . . .

From this it is apparent that, down to the time of the adoption of the Fourteenth Amendment, it was not supposed that statutes regulating the use, or even the price of the use, of private property necessarily deprived an owner of his property without due process of law. Under some circumstances they may, but not under all. The Amendment does not change the law in this particular; it simply prevents the States from doing that which will operate as such a deprivation.

This brings us to inquire as to the principles upon which this power of regulation rests, in order that we may determine what is within and what without its operative effect. Looking, then, to the common law, from whence came the right which the Constitution protects, we find that when private property is “affected with a public interest, it ceases to be juris privati only.” . . . Property does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use; but, so long as he maintains the use, he must submit to the control. . . .

... [W]hen private property is devoted to a public use, it is subject to public regulation. It remains only to ascertain whether the warehouses of these plaintiffs in error, and the business which is carried on there, come within the operation of this principle.

For this purpose, we accept as true the statements of fact contained in the elaborate brief of one of the counsel of the plaintiffs in error. From this it appears that “ . . . the trade in grain is carried on by the inhabitants of seven or eight of the great States of the West with four or five of the States lying on the seashore, and forms the largest part of interstate commerce in these States. The grain warehouses or elevators in Chicago are immense structures, holding from 300,000 to 1,000,000 bushels at one time, according to size. They are divided into bins of large capacity and great strength. . . . They are located with the river harbor on one side and the railway tracks on the other; and the grain is run through them from car to vessel, or boat to car, as may be demanded in the course of business. It has been found impossible to preserve each owner’s grain separate, and this has given rise to a system of inspection and grading, by which the grain of different owners is mixed, and receipts issued for the number of bushels which are negotiable, and redeemable in like kind, upon demand. This mode of conducting the business was inaugurated more than twenty years ago, and has grown to immense proportions. The railways have found it impracticable to own such elevators, and public policy forbids the transaction of such business by the carrier; the ownership has, therefore, been by private individuals, who have embarked their capital and devoted their industry to such business as a private pursuit.” . . .

Under such circumstances it is difficult to see why, if the common carrier, or the miller, or the ferryman, or the innkeeper, or the wharfinger, or the baker, or the cartman, or the hackney-coachman, pursues a public employment and exercises “a sort of public office,” these plaintiffs in error do not. They stand, to use again the language of their counsel, in the very “gateway of commerce,” and take toll from all who pass. Their business most certainly “tends to a common charge, and is become a thing of public interest and use.” Every bushel of grain for its passage “pays a toll, which is a common charge,” and, therefore . . . every such warehouseman “ought to be under public regulation, viz.: that he . . . take but reasonable toll.” Certainly, if any business can be clothed “with a public interest, and cease to be juris privati only,” this has been. It may not be made so by the operation of the Constitution of Illinois or this statute, but it is by the facts. . . .

We conclude, therefore, that the statute in question is not repugnant to the Constitution of the United States, and that there is no error in the judgment. In passing upon this case we have not been unmindful of the vast importance of the questions involved. This and cases of a kindred character were argued before us more than a year ago by the most eminent counsel, and in a manner worthy of their well earned reputations. We have kept the cases long under advisement, in order that their decision might be the result of our mature deliberations.

The judgment is affirmed.

MR. JUSTICE FIELD . . . dissented.

I am compelled to dissent from the decision of the court in this case, and from the reasons upon which that decision is founded. The principle upon which the opinion of the majority proceeds is, in my judgment, subversive of the rights of private property, heretofore believed to be protected by constitutional guaranties against legislative interference, and is in conflict with the authorities cited in its support. . . .

By the term “liberty,” as used in the [Fourteenth Amendment to the Constitution], something more is meant than mere freedom from physical restraint or the bounds of a prison. It means freedom to go where one may choose, and to act in such manner, not inconsistent with the equal rights of others, as his judgment may dictate for the promotion of his happiness; that is, to pursue such callings and avocations as may be most suitable to develop his capacities, and give to them their highest enjoyment.

The same liberal construction which is required for the protection of . . . liberty . . . should be applied to the protection of private property. If the legislature of a State, under pretense of providing for the public good, or for any other reason, can determine, against the consent of the owner, the uses to which private property shall be devoted, or the prices which the owner shall receive for its uses, it can deprive him of the property as completely as by a special act for its confiscation or destruction. If, for instance, the owner is prohibited from using his building for the purposes for which it was designed, it is of little consequence that he is permitted to retain the title and possession; or, if he is compelled to take as compensation for its use less than the expenses to which he is subjected by its ownership, he is, for all practical purposes, deprived of the property, as effectually as if the legislature had ordered his forcible dispossession. If it be admitted that the legislature has any control over the compensation, the extent of that compensation becomes a mere matter of legislative discretion. The amount fixed will operate as a partial destruction of the value of the property, if it fall below the amount which the owner would obtain by contract, and, practically, as a complete destruction, if it be less than the cost of retaining its possession. There is, indeed, no protection of any value under the constitutional provision, which does not extend to the use and income of the property, as well as to its title and possession. . . .

There is nothing in the character of the business of the defendants as warehousemen which called for the interference complained of in this case. Their buildings are not nuisances; their occupation of receiving and storing grain infringes upon no rights of others, disturbs no neighborhood, infects not the air, and in no respect prevents others from using and enjoying their property as to them may seem best. The legislation in question is nothing less than a bold assertion of absolute power by the State to control at its discretion the property and business of the citizen, and fix the compensation he shall receive. The will of the legislature is made the condition upon which the owner shall receive the fruits of his property and the just reward of his labor, industry, and enterprise. “That government,” says Story, “can scarcely be deemed to be free where the rights of property are left solely dependent upon the will of a legislative body without any restraint. The fundamental maxims of a free government seem to require that the rights of personal liberty and private property should be held sacred.” The decision of the court in this case gives unrestrained license to legislative will.

Allgeyer v. Louisiana

165 U.S. 578 (1897)

http://laws.findlaw.com/us/165/578.html

Vote: 9 (Brewer, Brown, Field, Fuller, Gray, Harlan, Peckham, Shiras, White)

0

OPINION OF THE COURT: Peckham

Facts:

With the alleged purpose of preventing fraud, Louisiana enacted a law that barred its citizens and corporations from doing business with out-of-state insurance companies unless the companies complied with a specified set of requirements. Among those requirements were that any out-of-state company doing business in Louisiana must establish a place of business in the state and must have an authorized agent inside the state. Defying the law, E. Allgeyer & Company entered into an agreement with Atlantic Mutual Insurance Company of New York to purchase marine insurance covering one hundred bales of cotton being shipped from New Orleans to European ports. During the transactions, no employee of Atlantic Mutual entered Louisiana. The negotiations between the insurance company and Allgeyer took place by mail and telegraph. Atlantic Mutual was not registered to do business in Louisiana. State prosecutors pursued fines against Allgeyer for violating the law. Rather than deny what it had done, Allgeyer defended itself by challenging the constitutionality of the Louisiana law.

Arguments:

For the plaintiff in error, E. Allgeyer & Company:

This regulation is a naked, unauthorized, and unreasonable invasion of liberty.

The law violates the due process clause of the Fourteenth Amendment by denying liberty and property arbitrarily. The terms liberty and property protect the right to conduct any lawful vocation or business, including the freedom to make contractual agreements with whatever insurer a company wishes.

With respect to this insurance policy, no business was conducted in Louisiana except for the use of the mail and telegraph. Louisiana therefore has no regulatory authority over this transaction.

By prohibiting Allgeyer’s use of the mail to do business, the state infringes on the constitutional authority of the federal government to create a postal system. By similarly prohibiting the use of the telegraph, the state infringes on the federal government’s authority over interstate commerce.

For the defendant in error, state of Louisiana:

The final contractual provisions for the amount of insurance coverage and the insurance premium were not determined until the cotton was loaded onto the ship in New Orleans. Therefore, contractual activity did take place in Louisiana.

Under its police powers a state may enforce requirements for out-of-state corporations to conduct business inside the state.

The state’s police powers rest on its sovereignty. This principle is unquestioned.

The Fourteenth Amendment has no bearing on the exercise of state police powers to protect the state’s citizens against fraudulent practices by out-of-state companies.

MR. JUSTICE PECKHAM, AFTER STATING THE CASE, DELIVERED THE OPINION OF THE COURT.

The question presented is the simple proposition whether under the act a party while in the state can insure property in Louisiana in a foreign insurance company, which has not complied with the laws of the state, under an open policy, the special contract or insurance and the open policy being contracts made and entered into beyond the limits of the state. . . .

It is natural that the state court should have remarked that there is in this “statute an apparent interference with the liberty of defendants in restricting their rights to place insurance on property of their own whenever and in what company they desired.” Such interference is not only apparent, but it is real, and we do not think that it is justified for the purpose of upholding what the state says is its policy with regard to foreign insurance companies which had not complied with the laws of the state for doing business within its limits. In this case the company did no business within the state, and the contracts were not therein made.

The supreme court of Louisiana says that the act of writing, within that state, the letter of notification, was an act therein done to effect an insurance on property then in the state, in a marine insurance company which had not complied with its laws, and such act was therefore prohibited by the statute. As so construed we think the statute is a violation of the 14th Amendment of the Federal Constitution, in that it deprives the defendants of their liberty without due process of law. The statute which forbids such act does not become due process of law, because it is inconsistent with the provisions of the Constitution of the Union. The liberty mentioned in that amendment means, not only the right of the citizen to be free from the mere physical restraint of his person, as by incarceration, but the term is deemed to embrace the right of the citizen to be free in the enjoyment of all his faculties; to be free to use them in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; to pursue any livelihood or avocation, and for that purpose to enter into all contracts which may be proper, necessary, and essential to his carrying out to a successful conclusion the purposes above mentioned.

It was said by Mr. Justice Bradley in Butchers’ Union S. H. & L. S. L. Co. v. Crescent City L. S. L. & S. H. Co. [Slaughterhouse Cases], in the course of his concurring opinion in that case, that “the right to follow any of the common occupations of life is an inalienable right. It was formulated as such under the phrase ‘pursuit of happiness’ in the Declaration of Independence, which commenced with the fundamental proposition that ‘all men are created equal, that they are endowed by their Creator with certain inalienable rights; and among these are life, liberty, and the pursuit of happiness.’ This right is a large ingredient in the civil liberty of the citizen.” Again, the learned justice said: “I hold that the liberty of pursuit—the right to follow any of the ordinary callings of life—is one of the privileges of a citizen of the United States.” And again, “But if it does not abridge the privileges and immunities of a citizen of the United States to prohibit him from pursuing his chosen calling, and giving to others the exclusive right of pursuing it, it certainly does deprive him, to a certain extent, of his liberty; for it takes from him the freedom of adopting and following the pursuit which he prefers; which, as already intimated, is a material part of the liberty of the citizen.” It is true that these remarks were made in regard to questions of monopoly, but they well describe the rights which are covered by the word “liberty” as contained in the 14th Amendment. . . .

The foregoing extracts have been made for the purpose of showing what general definitions have been given in regard to the meaning of the word “liberty” as used in the amendment, but we do not intend to hold that in no such case can the state exercise its police power. When and how far such power may be legitimately exercised with regard to these subjects may be left for determination to each case as it arises.

Has not a citizen of a state, under the provisions of the Federal Constitution above mentioned, a right to contract outside of the state for insurance on his property—a right of which state legislation cannot deprive him? We are not alluding to acts done within the state by an insurance company or its agents doing business therein, which are in violation of the state statutes . . . and would be controlled by it. When we speak of the liberty to contract for insurance or to do an act to effectuate such a contract already existing, we refer to and have in mind the facts of this case, where the contract was made outside the state, and as such was a valid and proper contract. The act done within the limits of the state under the circumstances of this case and for the purpose therein mentioned, we hold a proper act, one which the defendants were at liberty to perform and which the state legislature had no right to prevent, at least with reference to the Federal Constitution. To deprive the citizen of such a right as herein described without due process of law is illegal. Such a statute as this in question is not due process of law, because it prohibits an act which under the Federal Constitution the defendants had a right to perform. This does not interfere in any way with the acknowledged right of the state to enact such legislation in the legitimate exercise of its police or other powers as to it may seem proper. In the exercise of such right, however, care must be taken not to infringe upon those other rights of the citizen which are protected by the Federal Constitution.

In the privilege of pursuing an ordinary calling or trade and of acquiring, holding, and selling property must be embraced the right to make all proper contracts in relation thereto, and although it may be conceded that this right to contract in relation to persons or property or to do business within the jurisdiction of the state may be regulated and sometimes prohibited when the contracts or business conflict with the policy of the state as contained in the statutes, yet the power does not and cannot extend to prohibiting the citizen from making contracts of the nature involved in this case outside of the limits and jurisdiction of the state, and which are also to be performed outside of such jurisdiction; nor can the state legally prohibit its citizens from doing such an act as writing this letter of notification, even though the property which is the subject of the insurance may at the time when such insurance attaches be within the limits of the state. The mere fact that a citizen may be within the limits of a particular state does not prevent his making a contract outside its limits while he himself remains within it. The contract in this case was thus made. It was a valid contract, made outside of the state, to be performed outside of the state, although the subject was property temporarily within the state. As the contract was valid in the place where made and where it was to be performed, the party to the contract upon whom is devolved the right or duty to send the notification in order that the insurance provided for by the contract may attach to the property specified in the shipment mentioned in the notice, must have the liberty to do that act and to give that notification within the limits of the state, any prohibition of the state statute to the contrary notwithstanding.

THE ROLLER-COASTER RIDE OF SUBSTANTIVE DUE PROCESS: 1898–1923

However explicit Allgeyer was, the true test of its importance would come in its application. Some read it to mean that the Court would not uphold legislation that infringed on economic “liberty,” but Holden v. Hardy, decided the very next year, dispelled this notion. In Holden the Court examined a Utah law prohibiting companies engaged in the excavation of mines from working their employees more than eight hours a day, except in emergency situations. Attorneys challenging the law claimed,

It is . . . not within the power of the legislature to prevent persons who are . . . perfectly competent to contract, from entering into employment and voluntarily making contracts in relation thereto merely because the employment . . . may be considered by the legislature to be dangerous or injurious to the health of the employee; and if such right to contract cannot be prevented, it certainly cannot be restricted by the legislature to suit its own ideas of the ability of the employee to stand the physical and mental strain incident to the work.

The state asserted that the challenged statute was a “health regulation” and within the state’s power because it was aimed at “preserving to a citizen his ability to work and support himself.”

In Holden the Court reiterated its Mugler position: “The question in each case is whether the legislature has adopted the statute in exercise of a reasonable discretion or whether its actions be a mere excuse for an unjust discrimination.” The Supreme Court, now acting as the nation’s “superlegislature,” deemed the legislation “reasonable”; that is, it did not impinge on the liberty of contract because the state had well justified its interest in protecting miners from their jobs’ unique health problems and dangerous conditions.

Holden was a victory for the still-forming Progressive movement and emerging labor groups, which were vigorously lobbying state legislatures to pass laws to protect workers. With the nation’s increasing industrialization, they argued, the need for such laws was becoming critical because corporations were ever more profit oriented and, as a result, more likely to exploit employees. Although they succeeded in convincing many state legislatures to enact laws like Utah’s, the possibility that courts would strike them down remained a threat.

After Joseph Lochner, the owner of a bakery located in Utica, New York, was convicted of failing to comply with a state maximum hours-work law, he asked the U.S. Supreme Court to strike down the law as violative of his constitutional rights. In Lochner v. New York (1905) the justices agreed. The majority found that the law impermissibly interfered with the right of employers to enter into contracts with their employees.

Collection of Joseph Lochner Jr. by Dante Tranquille

Collection of Joseph Lochner Jr. by Dante Tranquille

The Holden ruling, however, took on a different gloss once the Court decided Lochner v. New York (1905). Although the law at issue varied only slightly from Utah’s, the justices reached a wholly different conclusion. Why? Does the case fit compatibly with the logic of Holden, as Justice Peckham implies, or does it reveal the true reach of his ruling in Allgeyer?

Many scholars have called Lochner the Court’s strongest expression of economic substantive due process. Although the Court said the question to be asked in this case is the same one it had been addressing since Mugler—Is the law a fair, reasonable, and appropriate exercise of police power?—its answer is quite different. By distinguishing Holden to the point of nonexistence and by narrowing the definition of what constitutes reasonable state regulations, the Court moved away from a strict “reasonableness” approach to one that reflected Allgeyer: an employer’s right “to make a contract” with employees is virtually sacrosanct.

That the Court, although divided 5–4, accomplished this feat not by changing the legal question but by changing the answer creates something of a puzzle, particularly with regard to the immediate subject of the dispute—maximum work hours. Think about it this way: the Court upheld the Utah law at issue in Holden on the ground that the “kind of employment . . . and the character of the employees . . . were such as to make [the state law] reasonable and proper”; it struck the Lochner law because bakers can “care for themselves” (despite evidence to the contrary) and the production of “clean and wholesome bread” is not affected. Was this distinction significant? Or was it merely a way to mask what the Court wanted to do: narrow the grounds on which states could reasonably regulate and, thereby, strike protective legislation as a violation of the right to contract? Justice Oliver Wendell Holmes’s dissent certainly implies the latter. He goes so far as to accuse the Court of using the Fourteenth Amendment to “enact Mr. Herbert Spencer’s Social Statics.” Many scholars agree with Holmes’s assessment and argue that the justices in the Lochner majority were “motivated by their own policy preferences favoring laissez faire economics and Social Darwinism.”11 Other analysts present a somewhat different picture.12 They suggest that the Court was seeking to remain faithful to “a long-standing constitutional ideology that distinguished between valid economic regulation and invalid ‘class,’ or factional legislation.”13 In other words, Lochner represented a “principled effort” on the part of the justices to keep this area of the law consistent and coherent, and not merely a statement of their ideological predilections.

Curt Muller (with arms folded) made constitutional history when he asked the U.S. Supreme Court to strike down as violative of his rights an Oregon law regulating the number of hours his laundresses could work at his cleaning establishment. In Muller v. Oregon (1908), however, the Court held that states may constitutionally enact maximum hours work laws for women.

Courtesy of Ms. Neil Whisnant

Regardless of who is right, these issues moved to the fore in Muller v. Oregon (1908). As you read this most interesting case, think about the following: Some scholars argue that the Court’s decision in Muller merely echoed the logic of Holden and Lochner; that is, the Court followed the “reasonableness” approach. Others suggest that there were extralegal factors at work that had a great influence on the Court. With which view do you agree?

Why did the justices affirm the Oregon law? One answer is that the Court did not depart from Lochner—it merely found that Oregon’s regulations, unlike New York’s, were a reasonable use of the state’s power. But the Court applied the reasonableness approach in both Lochner and Holden and came to completely different conclusions. So, despite the Court’s attempt to distinguish Lochner, how much can the application of that standard possibly explain about Muller’s outcome? Another possibility is that Brandeis forced the Court to see the reasonableness of the Oregon regulation. By presenting such a mass of statistical data, he kept the justices riveted on the law and diverted their attention from a substantive due process approach. The strategy worked. The Court even commended Brandeis’s brief.

Winning Muller gave a big boost to the Progressive movement. Some worried, however, that the decision depended on the fact that the law covered only women and that when the Court had an opportunity to review a law covering all workers, it would apply Lochner. This fear increased when the Court agreed to review Bunting v. Oregon (1917), which involved another Oregon law providing that “no person shall be employed in any mill, factory, or manufacturing establishment in this state more than ten hours in any one day.” Compounding the NCL’s concern was that Brandeis now sat on the Supreme Court and would almost certainly recuse himself because he had been involved in the early stages of the dispute.

In 1917, however, the Supreme Court dispelled the NCL’s concerns. In a 5–3 decision, with Brandeis not participating, the majority upheld the Oregon law. Writing for the Court, Justice Joseph McKenna explained: although Franklin O. Bunting contended that “the law . . . is not either necessary or useful ‘for the preservation of the health of employees,’” no evidence was provided to support that contention. Moreover, the judgment of the Oregon legislature and supreme court was that “it cannot be held, as a matter of law, that the legislative requirement is unreasonable or arbitrary.” McKenna concluded, therefore, that no further discussion was “necessary” and upheld the law.

The Court failed even to mention Lochner. But given the Court’s holding, many predicted the death of that decision; after all, it was wholly incompatible with Bunting. Perhaps the demise of substantive due process would follow. Indeed, throughout the period between Mugler (1887) and up to about Bunting, it appeared that Lochner was more the exception than the rule. Between 1887 and 1910 the Court decided 558 cases involving due process claims challenging state regulations and upheld 83 percent of the laws. It now seemed that Lochner, not Muller, was the unusual case.16

Lochner v. New York

198 U.S. 45 (1905)

http://laws.findlaw.com/us/198/45.html

Vote: 5 (Brewer, Brown, Fuller, McKenna, Peckham)

4 (Day, Harlan, Holmes, White)

OPINION OF THE COURT: Peckham

DISSENTING OPINIONS: Harlan, Holmes

Facts:

In 1897 the state of New York, for purposes of promoting safe and healthy working conditions, passed the Bakeshop Act, a law that prohibited employees of bakeries from working more than ten hours per day and sixty hours per week. Joseph Lochner owned Lochner’s Home Bakery in Utica, New York. In 1899 he was convicted of violating the Bakeshop Act by requiring an employee to work more than sixty hours a week. He was fined $25. Two years later Lochner was charged with his second offense of overworking his employees. Once again found guilty, he was sentenced to a fine of $50 or fifty days in jail if he failed to pay the fine. This time Lochner decided to fight the charges and appealed. After he lost in the state’s highest court, he asked the Supreme Court to reverse his conviction on the ground that the Bakeshop Act violated the due process clause of the Fourteenth Amendment.

Arguments:

For the plaintiff in error, Joseph Lochner:

The law violates the equal protection clause of the Fourteenth Amendment because it does not apply to all bakers, but singles out biscuit, bread, and cake bakers and those working in the confection business. It fails to cover bakery owners or those who bake in hotels, boardinghouses, and private homes. If the law truly were a health measure, there would be no such exceptions.

Unlike mining (Holden v. Hardy), baking is not a dangerous occupation. Consequently, the law is not a reasonable exercise of the police power. It is a labor law, not a health law.

Employers and employees have the right to agree upon hours and wages, and the use of the police power by New York to interfere with such agreements is so paternalistic as to violate the Fourteenth Amendment.

The freedoms of contract and private property are among America’s most cherished rights, and the Court should scrutinize any encroachment on them.

For the defendant in error, state of New York:

The police powers are elastic, capable of meeting changing conditions and evolving community standards. These powers are exercised by elected state legislators who best understand unique local conditions.

The state has an interest in the vitality of its people. Those engaged in food production must follow the highest standards of health and safety. The law advances this interest.

Bakers often work at night, engage in monotonous and repetitive tasks, and frequently suffer poor ventilation and other unsafe conditions. The law reduces a worker’s exposure to these unhealthy environments.

MR. JUSTICE PECKHAM . . . DELIVERED THE OPINION OF THE COURT.

The mandate of the statute, that “no employee shall be required or permitted to work,” is the substantial equivalent of an enactment that “no employee shall contract or agree to work,” more than ten hours per day; and, as there is no provision for special emergencies, the statute is mandatory in all cases. It is not an act merely fixing the number of hours which shall constitute a legal day’s work, but an absolute prohibition upon the employer permitting, under any circumstances, more than ten hours’ work to be done in his establishment. The employee may desire to earn the extra money which would arise from his working more than the prescribed time, but this statute forbids the employer from permitting the employee to earn it.

The statute necessarily interferes with the right of contract between the employer and employees, concerning the number of hours in which the latter may labor in the bakery of the employer. The general right to make a contract in relation to his business is part of the liberty of the individual protected by the 14th Amendment of the Federal Constitution. Allgeyer v. Louisiana. Under that provision no state can deprive any person of life, liberty, or property without due process of law. The right to purchase or to sell labor is part of the liberty protected by this amendment, unless there are circumstances which exclude the right. There are, however, certain powers, existing in the sovereignty of each state in the Union, somewhat vaguely termed police powers, the exact description and limitation of which have not been attempted by the courts. Those powers, broadly stated, and without, at present, any attempt at a more specific limitation, relate to the safety, health, morals, and general welfare of the public. Both property and liberty are held on such reasonable conditions as may be imposed by the governing power of the state in the exercise of those powers, and with such conditions the 14th Amendment was not designed to interfere.

This court has recognized the existence and upheld the exercise of the police powers of the states in many cases which might fairly be considered as border ones, and it has, in the course of its determination of questions regarding the asserted invalidity of such statutes, on the ground of their violation of the rights secured by the Federal Constitution, been guided by rules of a very liberal nature, the application of which has resulted, in numerous instances, in upholding the validity of state statutes thus assailed. Among the later cases where the state law has been upheld by this court is that of Holden v. Hardy. A provision in the act of the legislature of Utah was there under consideration, the act limiting the employment of workmen in all underground mines or workings, to eight hours per day, “except in cases of emergency, where life or property is in imminent danger.” It also limited the hours of labor in smelting and other institutions for the reduction or refining of ores or metals to eight hours per day, except in like cases of emergency. The act was held to be a valid exercise of the police powers of the state . . . [because the] law applies only to the classes subjected by their employment to the peculiar conditions and effects attending underground mining and work in smelters, and other works for the reduction and refining of ores. . . .

There is nothing in Holden v. Hardy which covers the case now before us.

It must, of course, be conceded that there is a limit to the valid exercise of the police power by the state. There is no dispute concerning this general proposition. Otherwise the 14th Amendment would have no efficacy and the legislatures of the states would have unbounded power, and it would be enough to say that any piece of legislation was enacted to conserve the morals, the health, or the safety of the people; such legislation would be valid, no matter how absolutely without foundation the claim might be. The claim of the police power would be a mere pretext,—become another and delusive name for the supreme sovereignty of the state to be exercised free from constitutional restraint. This is not contended for. In every case that comes before this court, therefore, where legislation of this character is concerned, and where the protection of the Federal Constitution is sought, the question necessarily arises: Is this a fair, reasonable, and appropriate exercise of the police power of the state, or is it an unreasonable, unnecessary, and arbitrary interference with the right of the individual to his personal liberty, or to enter into those contracts in relation to labor which may seem to him appropriate or necessary for the support of himself and his family? Of course the liberty of contract relating to labor includes both parties to it. The one has as much right to purchase as the other to sell labor.

This is not a question of substituting the judgment of the court for that of the legislature. If the act be within the power of the state it is valid, although the judgment of the court might be totally opposed to the enactment of such a law. But the question would still remain: Is it within the police power of the state? and that question must be answered by the court.

The question whether this act is valid as a labor law, pure and simple, may be dismissed in a few words. There is no reasonable ground for interfering with the liberty of person or the right of free contract, by determining the hours of labor, in the occupation of a baker. There is no contention that bakers as a class are not equal in intelligence and capacity to men in other trades or manual occupations, or that they are not able to assert their rights and care for themselves without the protecting arm of the state, interfering with their independence of judgment and of action. They are in no sense wards of the state. Viewed in the light of a purely labor law, with no reference whatever to the question of health, we think that a law like the one before us involves neither the safety, the morals, nor the welfare, of the public, and that the interest of the public is not in the slightest degree affected by such an act. The law must be upheld, if at all, as a law pertaining to the health of the individual engaged in the occupation of a baker. It does not affect any other portion of the public than those who are engaged in that occupation. Clean and wholesome bread does not depend upon whether the baker works but ten hours per day or only sixty hours a week. The limitation of the hours of labor does not come within the police power on that ground.

It is a question of which of two powers or rights shall prevail—the power of the state to legislate or the right of the individual to liberty of person and freedom of contract. The mere assertion that the subject relates, though but in a remote degree, to the public health, does not necessarily render the enactment valid. The act must have a more direct relation, as a means to an end, and the end itself must be appropriate and legitimate, before an act can be held to be valid which interferes with the general right of an individual to be free in his person and in his power to contract in relation to his own labor. . . .

We think the limit of the police power has been reached and passed in this case. There is, in our judgment, no reasonable foundation for holding this to be necessary or appropriate as a health law to safeguard the public health, or the health of the individuals who are following the trade of a baker. If this statute be valid, and if, therefore, a proper case is made out in which to deny the right of an individual . . . as employer or employee, to make contracts for the labor of the latter under the protection of the provisions of the Federal Constitution, there would seem to be no length to which legislation of this nature might not go. . . .

We think that there can be no fair doubt that the trade of a baker, in and of itself, is not an unhealthy one to that degree which would authorize the legislature to interfere with the right to labor, and with the right of free contract on the part of the individual, either as employer or employee. In looking through statistics regarding all trades and occupations, it may be true that the trade of a baker does not appear to be as healthy as some other trades, and is also vastly more healthy than still others. To the common understanding the trade of a baker has never been regarded as an unhealthy one. . . . It might be safely affirmed that almost all occupations more or less affect the health. There must be more than the mere fact of the possible existence of some small amount of unhealthiness to warrant legislative interference with liberty. It is unfortunately true that labor, even in any department, may possibly carry with it the seeds of unhealthiness. But are we all, on that account, at the mercy of legislative majorities? A printer, a tinsmith, a locksmith, a carpenter, a cabinetmaker, a dry goods clerk, a bank’s, a lawyer’s, or a physician’s clerk, or a clerk in almost any kind of business, would all come under the power of the legislature, on this assumption. No trade, no occupation, no mode of earning one’s living, could escape this all-pervading power, and the acts of the legislature in limiting the hours of labor in all employments would be valid, although such limitation might seriously cripple the ability of the laborer to support himself and his family. . . . It might be said that it is unhealthy to work more than that number of hours in an apartment lighted by artificial light during the working hours of the day; that the occupation of the bank clerk, the lawyer’s clerk, the real-estate clerk, or the broker’s clerk, in such offices is therefore unhealthy, and the legislature, in its paternal wisdom, must, therefore, have the right to legislate on the subject of, and to limit, the hours for such labor; and, if it exercises that power, and its validity be questioned, it is sufficient to say, it has reference to the public health; it has reference to the health of the employees condemned to labor day after day in buildings where the sun never shines; it is a health law, and therefore it is valid, and cannot be questioned by the courts.

It is also urged, pursuing the same line of argument, that it is to the interest of the state that its population should be strong and robust, and therefore any legislation which may be said to tend to make people healthy must be valid as health laws, enacted under the police power. If this be a valid argument and a justification for this kind of legislation, it follows that the protection of the Federal Constitution from undue interference with liberty of person and freedom of contract is visionary, wherever the law is sought to be justified as a valid exercise of the police power. Scarcely any law but might find shelter under such assumptions, and conduct, properly so called, as well as contract, would come under the restrictive sway of the legislature. Not only the hours of employees, but the hours of employers, could be regulated, and doctors, lawyers, scientists, all professional men, as well as athletes and artisans, could be forbidden to fatigue their brains and bodies by prolonged hours of exercise, lest the fighting strength of the state be impaired. We mention these extreme cases because the contention is extreme. We do not believe in the soundness of the views which uphold this law. On the contrary, we think that such a law as this, although passed in the assumed exercise of the police power, and as relating to the public health, or the health of the employees named, is not within that power, and is invalid. The act is not, within any fair meaning of the term, a health law, but is an illegal interference with the rights of individuals, both employers and employees, to make contracts regarding labor upon such terms as they may think best, or which they may agree upon with the other parties to such contracts. Statutes of the nature of that under review, limiting the hours in which grown and intelligent men may labor to earn their living, are mere meddlesome interferences with the rights of the individual and they are not saved from condemnation by the claim that they are passed in the exercise of the police power and upon the subject of the health of the individual whose rights are interfered with, unless there be some fair ground, reasonable in and of itself, to say that there is material danger to the public health, or to the health of the employees, if the hours of labor are not curtailed. All that [New York] could properly do has been done by it with regard to the conduct of bakeries, as provided for in the other sections of the act. . . . These several sections provide for the inspection of the premises where the bakery is carried on, with regard to furnishing proper wash rooms and waterclosets, apart from the bake room, also with regard to providing proper drainage, plumbing, and painting; . . . and for other things of that nature. . . . These various sections may be wise and valid regulations, and they certainly go to the full extent of providing for the cleanliness and the healthiness, so far as possible, of the quarters in which bakeries are to be conducted. Adding to all these requirements a prohibition to enter into any contract of labor in a bakery for more than a certain number of hours a week is, in our judgment, so wholly beside the matter of a proper, reasonable, and fair provision as to run counter to that liberty of person and of free contract provided for in the Federal Constitution.

It was further urged on the argument that restricting the hours of labor in the case of bakers was valid because it tended to cleanliness on the part of the workers, as a man was more apt to be cleanly when not overworked, and if cleanly then his “output” was also more likely to be so. What has already been said applies with equal force to this contention. We do not admit the reasoning to be sufficient to justify the claimed right of such interference. The state in that case would assume the position of a supervisor, or pater familias, over every act of the individual, and its right of governmental interference with his hours of labor, his hours of exercise, the character thereof, and the extent to which it shall be carried would be recognized and upheld. In our judgment it is not possible in fact to discover the connection between the number of hours a baker may work in the bakery and the healthful quality of the bread made by the workman. The connection, if any exist, is too shadowy and thin to build any argument for the interference of the legislature. If the man works ten hours a day it is all right, but if ten and a half or eleven his health is in danger and his bread may be unhealthy, and, therefore, he shall not be permitted to do it. This, we think, is unreasonable and entirely arbitrary. When assertions such as we have adverted to become necessary in order to give, if possible, a plausible foundation for the contention that the law is a “health law,” it gives rise to at least a suspicion that there was some other motive dominating the legislature than the purpose to subserve the public health or welfare.

This interference on the part of the legislatures of the several states with the ordinary trades and occupations of the people seems to be on the increase. . . .

It is impossible for us to shut our eyes to the fact that many of the laws of this character, while passed under what is claimed to be the police power for the purpose of protecting the public health or welfare, are, in reality, passed from other motives. We are justified in saying so when, from the character of the law and the subject upon which it legislates, it is apparent that the public health or welfare bears but the most remote relation to the law. The purpose of a statute must be determined from the natural and legal effect of the language employed; and whether it is or is not repugnant to the Constitution of the United States must be determined from the natural effect of such statutes when put into operation, and not from their proclaimed purpose.

It is manifest to us that the limitation of the hours of labor provided for in this section of the statute under which the indictment was found, and the plaintiff in error convicted, has no such direct relation to, and no such substantial effect upon, the health of the employee, as to justify us in regarding the section as really a health law. It seems to us that the real object and purpose were simply to regulate the hours of labor between the master and his employees (all being men, sui juris), in a private business, not dangerous in any degree to morals, or in any real and substantial degree to the health of the employees. Under such circumstances the freedom of master and employee to contract with each other in relation to their employment, and in defining the same, cannot be prohibited or interfered with, without violating the Federal Constitution.

The judgment of the Court of Appeals of New York, as well as that of the Supreme Court and the County Court of Oneida County, must be reversed and the case remanded to the County Court for further proceedings not inconsistent with this opinion.

Reversed.

MR. JUSTICE HOLMES, dissenting.

This case is decided upon an economic theory which a large part of the country does not entertain. If it were a question whether I agreed with that theory I should desire to study it further and long before making up my mind. But I do not conceive that to be my duty, because I strongly believe that my agreement or disagreement has nothing to do with the right of a majority to embody their opinions in law. It is settled by various decisions of this court that state constitutions and state laws may regulate life in many ways which we as legislators might think as injudicious or if you like as tyrannical as this, and which equally with this interfere with the liberty to contract. Sunday laws and usury laws are ancient examples. A more modern one is the prohibition of lotteries. The liberty of the citizen to do as he likes so long as he does not interfere with the liberty of others to do the same, which has been a shibboleth for some well-known writers, is interfered with by school laws, by the Post Office, by every state or municipal institution which takes his money for purposes thought desirable, whether he likes it or not. The Fourteenth Amendment does not enact Mr. Herbert Spencer’s Social Statics. . . . United States and state statutes and decisions cutting down the liberty to contract by way of combination are familiar to this court. Two years ago we upheld the prohibition of sales of stock on margins or for future delivery in the constitution of California. Otis v. Parker. The decision sustaining an eight hour law for miners is still recent. Holden v. Hardy. Some of these laws embody convictions or prejudices which judges are likely to share. Some may not. But a constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the State or of laissez faire. It is made for people of fundamentally differing views, and the accident of our finding certain opinions natural and familiar or novel and even shocking ought not to conclude our judgment upon the question whether statutes embodying them conflict with the Constitution of the United States.

General propositions do not decide concrete cases. The decision will depend on a judgment or intuition more subtle than any articulate major premise. But I think that the proposition just stated, if it is accepted, will carry us far toward the end. Every opinion tends to become a law. I think that the word liberty in the Fourteenth Amendment is perverted when it is held to prevent the natural outcome of a dominant opinion, unless it can be said that a rational and fair man necessarily would admit that the statute proposed would infringe fundamental principles as they have been understood by the traditions of our people and our law. It does not need research to show that no such sweeping condemnation can be passed upon the statute before us. A reasonable man might think it a proper measure on the score of health. Men whom I certainly could not pronounce unreasonable would uphold it as a first installment of a general regulation of the hours of work. Whether in the latter aspect it would be open to the charge of inequality I think it unnecessary to discuss.

Muller v. Oregon

208 U.S. 412 (1908)

http://laws.findlaw.com/us/208/412.html

Vote: 9 (Brewer, Day, Fuller, Harlan, Holmes, McKenna, Moody, Peckham, White)

0

OPINION OF THE COURT: Brewer

Facts:

At the forefront of the Progressive movement was an organization called the National Consumers’ League (NCL). Through the efforts of the NCL and others, the drive for maximum work hours legislation had succeeded in many states, which, by the early 1900s, had imposed some types of restrictions. After Lochner, however, all of their efforts were threatened by employers who sought to use that ruling to challenge state regulations.

Curt Muller, a German immigrant, settled in Oregon and entered the laundry business. In 1905 he bought the Grand Laundry in north Portland; a year later he purchased the Lace House Laundry. His legal problems began in late 1905 when Oregon authorities charged him with violating state law by requiring Emma Gotcher, an employee of the Grand Laundry, to work more than ten hours on September 4, 1905 (ironically, Labor Day), in violation of the state law establishing maximum working hours for women employed by factories and laundries. Muller was convicted and sentenced to a fine of $10 or five days in jail. He decided to challenge his conviction. In the view of his attorneys, Oregon’s regulation, which prohibited women, but not men, from working in laundries for shifts of more than ten hours, violated his right to enter into a contract with his employees.

Recognizing that, in light of Lochner, Muller’s argument rested on strong grounds, the NCL grew concerned. It was reluctant to see the Supreme Court nullify the league’s hard work to attain passage of the Oregon law. To defend the law, the NCL contacted Louis Brandeis, a well-known attorney of the day and a future U.S. Supreme Court justice. His philosophical position was very much akin to the NCL’s, and he agreed to help the organization with the Muller case, but only if the NCL could persuade Oregon’s attorneys to give him complete control over its course.

When NCL leaders managed to accomplish this, Brandeis got down to work. Because of the decision in Lochner and the stability of the Court’s membership, Brandeis decided that bold action was necessary. Instead of filling his brief with legal arguments, he would provide the Court with “facts, published by anyone with expert knowledge of industry in its relation to women’s hours of labor,” that indicated the evils of Muller’s actions. In particular, the brief pointed out that forcing women to work long hours affected their health and their reproductive systems.14 It was full of statements such as the following:

Report of the Massachusetts State Board of Health, 1873.

The State thus has an interest not only in the prosperity, but also in the health and strength and effective power of each one of its members.

The first and largest interest of the State lies in the great agency of human power—the health of the people.

Report of the New York Bureau of Labor Statistics, 1900.

The family furnishes the really fundamental education of the growing generation—the education of character. . . . [T]he importance of a good family life in the training of character needs repeated emphasis, for it is the fundamental argument for a shorter working day.

Report of the United States Industrial Commission, 1901.

The entire tendency of industry is in the direction of an increased exertion. . . . This being true, there is but one alternative if the working population is to be protected in its health and trade longevity, namely, a reduction in the hours of labor.

Report of the Massachusetts Bureau of Labor Statistics, 1871.

It is claimed that legislation on this subject is an interference between labor and capital. But legislation has interfered with capital and labor both, in the demand for public safety and the public good. Now public safety and public good, the wealth of the commonwealth, centered, as such wealth is, in the well-being of its common people, demands that the State should interfere by special act in favor of working-women, and working children, by enacting a ten-hour law, to be enforced by a system of efficient inspection.15

In the end, with the help of the NCL, Brandeis produced an incredible document. Known in legal history as the Brandeis Brief, it contained more than one hundred pages of sociological data culled from various secondary sources and only two pages of legal argument (see box 10-1 on pages 650–651).

Arguments:

For the plaintiff in error, Curt Muller:

This law discriminates against women with respect to certain employment rights.

The law denies women and employers the right to enter into contracts to do the same work for which men and employers may contract. This violates the Fourteenth Amendment’s due process clause.

There are no grounds to treat women who work in laundries differently from women working in other occupations. Laundry work is not unusually dangerous or unhealthy.

>This law, purportedly intended to protect women’s health, is not based on the dangers or hazards of the job; rather, it only limits how long a woman may agree to work.

For the defendant in error, state of Oregon:

The right to buy or sell labor is part of the liberty protected by the Fourteenth Amendment, but that right is subject to reasonable restraint through the exercise of the state’s police power for the protection of the health, safety, morals, and general welfare of the citizens.

Laws restricting liberty must have a substantial relation to the protection of public health and safety. This law meets that qualification and therefore should be maintained.

Laws such as the one challenged here have been enacted in many foreign nations and in several states.

As demonstrated in many research studies, long work hours have a detrimental effect on women’s health and well-being. Shorter work hours have a beneficial effect on women’s lives, on their families’ lives, and on worker productivity.

MR. JUSTICE BREWER DELIVERED THE OPINION OF THE COURT.

We held in Lochner v. New York that a law providing that no laborer shall be required or permitted to work in bakeries more than sixty hours in a week or ten hours in a day was not, as to men, a legitimate exercise of the police power of the state, but an unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract in relation to his labor, and as such was in conflict with, and void under, the Federal Constitution. That decision is invoked by plaintiff in error as decisive of the question before us. But this assumes that the difference between the sexes does not justify a different rule respecting a restriction of the hours of labor.

In patent cases counsel are apt to open the argument with a discussion of the state of the art. It may not be amiss, in the present case, before examining the constitutional question, to notice the course of legislation, as well as expressions of opinion from other than judicial sources. In the brief filed by Mr. Louis D. Brandeis for the defendant in error is a very copious collection of all these matters, an epitome of which is found in the margin.

The legislation and opinions referred to in the margin may not be, technically speaking, authorities, and in them is little or no discussion of the constitutional question presented to us for determination, yet they are significant of a widespread belief that woman’s physical structure, and the functions she performs in consequence thereof, justify special legislation restricting or qualifying the conditions under which she should be permitted to toil. Constitutional questions, it is true, are not settled by even a consensus of present public opinion, for it is the peculiar value of a written constitution that it places in unchanging form limitations upon legislative action, and thus gives a permanence and stability to popular government which otherwise would be lacking. At the same time, when a question of fact is debated and debatable, and the extent to which a special constitutional limitation goes is affected by the truth in respect to that fact, a widespread and long-continued belief concerning it is worthy of consideration. We take judicial cognizance of all matters of general knowledge.

It is undoubtedly true, as more than once declared by this court, that the general right to contract in relation to one’s business is part of the liberty of the individual, protected by the 14th Amendment to the Federal Constitution; yet it is equally well settled that this liberty is not absolute and extending to all contracts, and that a state may, without conflicting with the provisions of the 14th Amendment, restrict in many respects the individual’s power of contract. Without stopping to discuss at length the extent to which a state may act in this respect, we refer to the following cases in which the question has been considered: Allgeyer v. Louisiana; Holden v. Hardy; Lochner v. New York.

That woman’s physical structure and the performance of maternal functions place her at a disadvantage in the struggle for subsistence is obvious. This is especially true when the burdens of motherhood are upon her. Even when they are not, by abundant testimony of the medical fraternity, continuance for a long time on her feet at work, repeating this from day to day, tends to injurious effects upon the body, and, as healthy mothers are essential to vigorous offspring, the physical well-being of woman becomes an object of public interest and care in order to preserve the strength and vigor of the race.

Still again, history discloses the fact that woman has always been dependent upon man. He established his control at the outset by superior physical strength, and this control in various forms, with diminishing intensity, has continued to the present. As minors, though not to the same extent, she has been looked upon in the courts as needing especial care that her rights may be preserved. Education was long denied her, and while now the doors of the schoolroom are opened and her opportunities for acquiring knowledge are great, yet even with that and the consequent increase of capacity for business affairs, it is still true that in the struggle for subsistence she is not an equal competitor with her brother. Though limitations upon personal and contractual rights may be removed by legislation, there is that in her disposition and habits of life which will operate against a full assertion of those rights. She will still be where some legislation to protect her seems necessary to secure a real equality of right. Doubtless there are individual exceptions, and there are many respects in which she has an advantage over him; but looking at it from the viewpoint of the effort to maintain an independent position in life, she is not upon an equality. Differentiated by these matters from the other sex, she is properly placed in a class by herself, and legislation designed for her protection may be sustained, even when like legislation is not necessary for men, and could not be sustained. It is impossible to close one’s eyes to the fact that she still looks to her brother and depends upon him. Even though all restrictions on political, personal, and contractual rights were taken away, and she stood, so far as statutes are concerned, upon an absolutely equal plane with him, it would still be true that she is so constituted that she will rest upon and look to him for protection; that her physical structure and a proper discharge of her maternal functions—having in view not merely her own health, but the well-being of the race—justify legislation to protect her from the greed as well as the passion of man. The limitations which this statute places upon her contractual powers, upon her right to agree with her employer as to the time she shall labor, are not imposed solely for her benefit, but also largely for the benefit of all. Many words cannot make this plainer. The two sexes differ in structure of body, in the functions to be performed by each, in the amount of physical strength, in the capacity for long-continued labor, particularly when done standing, the influence of vigorous health upon the future well-being of the race, the self-reliance which enables one to assert full rights, and in the capacity to maintain the struggle for subsistence. This difference justifies a difference in legislation, and upholds that which is designed to compensate for some of the burdens which rest upon her.

We have not referred in this discussion to the denial of the elective franchise in the state of Oregon, for while that may disclose a lack of political equality in all things with her brother, that is not of itself decisive. The reason runs deeper, and rests in the inherent difference between the two sexes, and in the different functions in life which they perform.

For these reasons, and without questioning in any respect the decision in Lochner v. New York, we are of the opinion that it cannot be adjudged that the act in question is in conflict with the Federal Constitution, so far as it respects the work of a female in a laundry, and the judgment of the Supreme Court of Oregon is affirmed.

BOX 10-1 THE BRANDEIS BRIEF

AT THE TURN of the century the function of interpreting the law was largely regarded as a matter of logic. The Court had accepted the theories of laissez faire economics, and the doctrine of evolution expounded by Herbert Spencer, to such an extent that any kind of regulation of private business was considered a violation of “liberty.” Only exceptional circumstances which forced the attention of the members of the Court on matters other than the logic of the law would suffice to cause them to alter this view.

When it was recognized that political, economic and social considerations ought to be included in the process of determining the law, the legal tradition offered little means of placing such factual data before the judges. Thus decisions regarding matters of contract, in regard to labor or business regulation, were shaped by the personal philosophies of Court members and the rigid pattern of law unleavened by knowledge of its relationship to society. Consequently, the use of logic alone “resulted in proscribing any realistic test of legislative-judicial conclusions.” The questions which needed to be asked, and answered, dealt with the social consequences of the law at issue and the consequences which could be expected to follow the judicial decision.

In reference to the first question regarding social consequences of the law, by what means were the judges to obtain the background of facts which led to its enactment? Many Justices felt this was the responsibility of the legislature, that law should be passed after legislative inquiry as to its needs had been made. Suppose, however, the Court would not accept the legislative decisions that the law was needed, how could the Court obtain sufficient data to discuss the law? In a sense this was the dilemma in Lochner v. New York, for the use of logic produced the rule that the restriction of employer-employee rights to contract over hours of labor violated due process. Justice Peckham refused to acknowledge that the health and welfare of employees provided any basis whatever for restricting business. It was clear that the Court would not uphold such legislation, unless it could be convinced that there was a reasonable relationship between such regulation and the public welfare.

It is at this crucial point in the history of constitutional development that Brandeis introduced his brief as “authoritative extra-legal data” to provide the Court with information as to the reasonable relation of the law to the object to be regulated. He differed from the other liberals of the day in the method he used. Rather than deal in invective and generalities, he examined the social ills in detail and offered concrete plans for social legislation. In effect, Brandeis was doing no more than taking cognizance of the facts of modern industrial life.

THE TECHNIQUE OF THE BRIEF:

Muller v. Oregon, 1908

... [T]he key to the Brandeis Brief was the factual data he submitted to show the reasonableness of the specific law at issue and the relationship of the regulation to the needs of society. In the briefs he presented, as a lawyer defending social legislation in four states, there is a definite pattern that he followed to prove his point. An analysis of these briefs and that data they include can be compiled into a single “brief” outline to illustrate Brandeis’ methodology. The following construct represents the general pattern, omitting details and using the hours of labor for women as the subject.

Part First

Legal Argument

(Varying from two to forty pages, citing rules from supporting cases.)

Part Second

Legislation Restricting Hours of Work for Women

American Legislation

1. List of States having such legislation

Foreign Legislation

1. List of countries having such legislation

Summary of Combined Experience of Above Legislation

The World’s Experience upon which the Legislation Limiting the Hours of Work for Women Is Based

The Dangers of Long Hours

Causes

physical difference between men and women

nature of industrial work

Bad Effect of Long Hours on Health

General injuries

Problem of fatigue

Specific evil effects on childbirth

Bad Effect of Long Hours on Safety

Bad Effect of Long Hours on Morals

Bad Effect of Long Hours on General Welfare

Shorter Hours the Only Possible Protection

Benefits of Shorter Hours

Good Effect on Individual

Health

Morals

Home Life

Good Effect on General Welfare

Economic Aspects of Short Hours

Effect on Output

Increases efficiency

Improves product

Aids Regularity of Employment

Widens Job Opportunities for Women

Uniformity of Restriction Necessary

Overtime Dangerous to Health

Essential to Enforcement

Necessary for Just Application

Reasonableness of Short Hours

Opinions of Physicians

Opinions of Employers

Opinions of Employees

Conclusion

The outline of the brief indicates the wealth of the material Brandeis presented to the Court to support his very brief legal argument. The evidence he produced relied, as Jerome Frank described it, on facts that “do not involve witnesses’ credibility.” It reveals a concern for why legislation was passed, what it is intended to do, and the benefits, including a dollars and cents consideration, that will accrue to business and labor alike. Thus it was an intellectual inquiry whose ends were social justice. It is so persuasive in content that the burden of proof placed on the opposing party in the suit is almost impossible to overcome. The simplicity and clarity of the organized evidence is an invitation to apply a pragmatic test to the reasonableness of the law, and in the final analysis it becomes an irresistible force. . . .

The first successful use of the brief before the Supreme Court of the United States came in 1908, when Brandeis argued in Muller v. Oregon to sustain an Oregon law establishing a ten hour day for women employed in “any mechanical establishment, or factory or laundry.” The argument consisted of two pages of the legal rules applicable to the case, and was followed by 102 pages of evidence. . . .

The most interesting aspect of the case is that Brandeis relied on the rule of Lochner v. New York to prove his point. He began by agreeing that “the right to purchase or sell labor is a part of the ‘liberty’ protected by the fourteenth amendment” but, he pointed out, “such ‘liberty’ is subject to reasonable restraint by the police power of the state if there is a relationship to public ‘health, safety or welfare.’” Brandeis concluded that the statute was “obviously enacted for the purpose of protecting the public health, safety and welfare” and submitted “the facts of common knowledge of which the Court may take judicial notice” as proof of his argument.

The supporting evidence which followed the argument deeply impressed the Court, and Justice Brewer, who delivered the opinion, quoted extensively from it. . . . Thus, for the first time in the history of the Court, due process was determined, not just by consideration of abstract legal concepts, but also on the basis of the social and economic implications of the law at issue.

SOURCE: Excerpted from Marion E. Doro, “The Brandeis Brief,” Vanderbilt Law Review 11 (1958): 784; as reprinted in Social Research in the Judicial Process, ed. Wallace D. Loh (New York: Russell Sage, 1984), 88–90.

THE HEYDAY OF SUBSTANTIVE DUE PROCESS: 1923–1936

The Bunting funeral for Lochner proved to be premature. Within six years, not only did the Court virtually overrule Bunting, but also the justices seemed to be more committed to the Lochner version of due process than ever before. Adkins v. Children’s Hospital (1923) provides an excellent illustration of the magnitude of this resurgence. As you read the Court’s ruling, compare it with Muller. Is there any way, legally speaking, to distinguish the two decisions? Or do you suspect that other, extralegal factors came into play?

Adkins represented the return of substantive due process; indeed, it made clear that Muller and Bunting had not nullified that doctrine. If anything, as Justice Holmes’s dissent noted, it had come back stronger than ever with the term due process of law evolving into the “dogma, Liberty of Contract.”

Why the change? In large measure the change can be traced back to the political climate of the day. Following World War I, the U.S. economy boomed, and voters elected one president after another who was committed to a free market economy. These presidents, in turn, appointed justices, at least some of whom shared those beliefs. As table 10-2 indicates, one president, Warren Harding, made the first four of these new Supreme Court appointments. Clement E. Vose notes, “[T]he most important single fact about the Harding appointments was that he named two ardent conservatives of the old school—Sutherland and Butler—to serve along with two justices similarly committed who were already sitting—Van Devanter and McReynolds.”19 By 1922 all Four Horsemen were in place.

The entrenchment of substantive due process, as we mentioned at the beginning of this chapter, was but one manifestation of the impact of Republican appointments to the Court during that era. With their strong commitment to an unfettered market, these conservative justices also invoked creative theories of the limits of national power, especially dual federalism, to strike down federal regulatory efforts. Collectively, the doctrines of dual federalism and substantive due process became effective weapons in nullifying meaningful social legislation.

Adkins v. Children’s Hospital

261 U.S. 525 (1923)

http://laws.findlaw.com/us/261/525.html

Vote: 5 (Butler, McKenna, McReynolds, Sutherland, Van Devanter)

3 (Holmes, Sanford, Taft)

OPINION OF THE COURT: Sutherland

DISSENTING OPINIONS: Holmes, Taft

NOT PARTICIPATING: Brandeis

Facts:

In 1918 Congress, with the support of progressive-oriented president Woodrow Wilson, enacted a law that established the Minimum Wage Board of the District of Columbia and gave it authority to set minimum wages for women and children in Washington, D.C.17 The board, staffed by progressives, ordered that restaurants and hospitals pay women workers a minimum wage of 34.5 cents per hour, $16.50 per week, or $71.50 per month. According to the board, these rates would “supply the necessary cost of living to . . . women workers to maintain them in good health and morals.”

Children’s Hospital of the District of Columbia, which employed many women, refused to comply and sued the members of the Wage Board to enjoin enforcement of the regulations. In the hospital’s opinion, the law violated the due process clause of the Fifth Amendment encompassing the liberty to enter into salary contracts with employees.18 Along with the Children’s Hospital appeal, the Court heard the case of a female elevator operator who sued the Wage Board for loss of employment and income because she was laid off when her employer could not afford to pay her the minimum wage.

In Adkins v. Children’s Hospital the Supreme Court struck down a federal minimum wage law on substantive due process grounds. The legal action to enjoin enforcement of the law was filed by the corporation that managed Children’s Hospital of the District of Columbia (left).

Library of Congress

Because of delay at the lower court level, the case did not reach the Supreme Court until 1923. An attorney for the Wage Board, assisted by NCL attorney (and future Supreme Court justice) Felix Frankfurter and other NCL staffers, sought to defend the 1918 law on grounds similar to Brandeis’s in Muller. They offered the Court “impressive documentation on the cost of living and the desirability of good wages.”

Arguments:

For the appellants, Jesse C. Adkins et al. of the Minimum Wage Board of the District of Columbia:

The Court should focus on the reasonableness of the law. This legislation is rational. Congress relied on its experience and the experiences of several states. It conducted ample hearings and investigations. The law is not arbitrary.

Safeguarding women and children from conditions that would endanger their health and morals is a government responsibility and a legitimate end.

The means adopted by Congress are appropriate and plainly designed to accomplish the legislative end.

For the appellee, Children’s Hospital of the District of Columbia:

This is a price-fixing law, pure and simple. It does not regulate working conditions or health factors. Fixing prices is beyond appropriate legislative authority.

The law violates the due process clause of the Fifth Amendment because it restricts a woman’s right to contract for her labor.

The constitutional problems associated with restricting freedom of contract are not eliminated by the exclusion of male workers from the law.

The law is not temporary, nor is it a response to a temporary emergency.

MR. JUSTICE SUTHERLAND DELIVERED THE OPINION OF THE COURT.

The statute now under consideration is attacked upon the ground that it authorizes an unconstitutional interference with the freedom of contract included within the guaranties of the due process clause of the 5th Amendment. That the right to contract about one’s affairs is a part of the liberty of the individual protected by this clause is settled by the decisions of this court, and is no longer open to question. . . .

There is, of course, no such thing as absolute freedom of contract. It is subject to a great variety of restraints. But freedom of contract is, nevertheless, the general rule and restraint the exception; and the exercise of legislative authority to abridge it can be justified only by the existence of exceptional circumstances. . . .

[The statute under consideration] is simply and exclusively a price-fixing law, confined to adult women . . . who are legally as capable of contracting for themselves as men. It forbids two parties having lawful capacity—under penalties as to the employer—to freely contract with one another in respect of the price for which one shall render service to the other in a purely private employment. . . .

The feature of this statute which, perhaps more than any other, puts upon it the stamp of invalidity is that it exacts from the employer an arbitrary payment for a purpose and upon a basis having no causal connection with his business, or the contract, or the work the employee engages to do. The declared basis . . . is not the value of the service rendered, but the extraneous circumstance that the employee needs to get a prescribed sum of money to insure her subsistence, health, and morals. . . . The moral requirement, implicit in every contract of employment, viz., that the amount to be paid and the service to be rendered shall bear to each other some relation of just equivalence, is completely ignored. The necessities of the employee are alone considered, and these arise outside of the employment, are the same when there is no employment, and as great in one occupation as in another. Certainly the employer, by paying a fair equivalent for the service rendered, though not sufficient to support the employee, has neither caused nor contributed to her poverty. . . . A statute requiring an employer to pay in money, to pay at prescribed and regular intervals, to pay the value of the services rendered, even to pay with fair relation to the extent of the benefit obtained from the service, would be understandable. But a statute which prescribes payment without regard to any of these things, and solely with relation to circumstances apart from the contract of employment, the business affected by it, and the work done under it, is so clearly the product of a naked, arbitrary exercise of power, that it cannot be allowed to stand under the Constitution of the United States. . . .

It has been said that legislation of the kind now under review is required in the interest of social justice, for whose ends freedom of contract may lawfully be subjected to restraint. The liberty of the individual to do as he pleases, even in innocent matters, is not absolute. It must frequently yield to the common good, and the line beyond which the power of interference may not be pressed is neither definite nor unalterable, but may be made to move, within limits not well defined, with changing need and circumstance. Any attempt to fix a rigid boundary would be unwise as well as futile. But, nevertheless, there are limits to the power, and when these have been passed, it becomes the plain duty of the courts, in the proper exercise of their authority, to so declare. To sustain the individual freedom of action contemplated by the Constitution is not to strike down the common good, but to exalt it; for surely the good of society as a whole cannot be better served than by the preservation against arbitrary restraint of the liberties of its constituent members.

It follows from what has been said that the act in question passes the limit prescribed by the Constitution, and, accordingly, the decrees of the court below are affirmed.

MR. CHIEF JUSTICE TAFT, dissenting.

I regret much to differ from the court in these cases.

The boundary of the police power beyond which its exercise becomes an invasion of the guaranty of liberty under the Fifth and Fourteenth Amendments to the Constitutions is not easy to mark. Our court has been laboriously engaged in pricking out a line in successive cases. We must be careful, it seems to me, to follow that line as well as we can, and not to depart from it by suggesting a distinction that is formal rather than real.

Legislatures in limiting freedom of contract between employee and employer by a minimum wage proceed on the assumption that employees, in the class receiving least pay, are not upon a full level of equality of choice with their employer and in their necessitous circumstances are prone to accept pretty much anything that is offered. They are peculiarly subject to the overreaching of the harsh and greedy employer. The evils of the sweating system and of the long hours and low wages which are characteristic of it are well known. Now, I agree that it is a disputable question in the field of political economy how far a statutory requirement of maximum hours or minimum wages may be a useful remedy for these evils, and whether it may not make the case of the oppressed employee worse than it was before. But it is not the function of this court to hold congressional acts invalid simply because they are passed to carry out economic views which the court believes to be unwise or unsound. . . .

The right of the Legislature under the Fifth and Fourteenth Amendments to limit the hours of employment on the score of the health of the employee, it seems to me, has been firmly established. As to that, one would think, the line had been pricked out so that it has become a well formulated rule. In Holden v. Hardy it was applied to miners and rested on the unfavorable environment of employment in mining and smelting. In Lochner v. New York it was held that restricting those employed in bakeries to 10 hours a day was an arbitrary and invalid interference with the liberty of contract secured by the Fourteenth Amendment. Then followed a number of cases beginning with Muller v. Oregon, sustaining the validity of a limit on maximum hours of labor for women to which I shall hereafter allude, and following these cases came Bunting v. Oregon. In that case, this court sustained a law limiting the hours of labor of any person, whether man or woman, working in any mill, factory, or manufacturing establishment to 10 hours a day with a proviso as to further hours to which I shall hereafter advert. The law covered the whole field of industrial employment and certainly covered the case of persons employed in bakeries. Yet the opinion in the Bunting Case does not mention the Lochner Case. No one can suggest any constitutional distinction between employment in a bakery and one in any other kind of a manufacturing establishment which should make a limit of hours in the one invalid, and the same limit in the other permissible. It is impossible for me to reconcile the Bunting Case and the Lochner Case, and I have always supposed that the Lochner Case was thus overruled sub silentio. . . .

I am authorized to say that MR. JUSTICE SANFORD concurs in this opinion.

MR. JUSTICE HOLMES, dissenting.

The question in this case is the broad one, whether Congress can establish minimum rates of wages for women in the District of Columbia, with due provision for special circumstances, or whether we must say that Congress has no power to meddle with the matter at all. To me, notwithstanding the deference due to the prevailing judgment of the court, the power of Congress seems absolutely free from doubt. The end—to remove conditions leading to ill health, immorality, and the deterioration of the race—no one would deny to be within the scope of constitutional legislation. The means are means that have the approval of Congress, of many states, and of those governments from which we have learned our greatest lessons. When so many intelligent persons, who have studied the matter more than any of us can, have thought that the means are effective and are worth the price, it seems to me impossible to deny that the belief reasonably may be held by reasonable men. . . . [T]he only objection that can be urged is found within the vague contours of the 5th Amendment, prohibiting the depriving any person of liberty or property without due process of law. To that I turn.

The earlier decisions upon the same words in the 14th Amendment began within our memory, and went no farther than an unpretentious assertion of the liberty to follow the ordinary callings. Later that innocuous generality was expanded into the dogma, Liberty of Contract. Contract is not specially mentioned in the text that we have to construe. It is merely an example of doing what you want to do, embodied in the word “liberty.” But pretty much all law consists in forbidding men to do some things that they want to do, and contract is no more exempt from law than other acts. . . .

I confess that I do not understand the principle on which the power to fix a minimum for the wages of women can be denied by those who admit the power to fix a maximum for their hours of work. I fully assent to the proposition that here, as elsewhere, the distinctions of the law are distinctions of degree; but I perceive no difference in the kind or degree of interference with liberty, the only matter with which we have any concern, between the one case and the other. The bargain is equally affected whichever half you regulate. . . .

I am of opinion that the statute is valid.

THE DEPRESSION, THE NEW DEAL, AND THE DECLINE OF ECONOMIC SUBSTANTIVE DUE PROCESS

The laissez-faire approach of the Court through the 1920s was in keeping with the times. The nation continued to boom and to elect politicians—President Herbert Hoover, for example—who were committed to a private sector–based economy that they believed would remain successful if left free from regulation. The Great Depression, triggered by the stock market crash of 1929, and the subsequent election of Franklin Roosevelt demonstrate just how quickly that perception changed. The Depression undermined the faith of many who thought an unregulated economy could successfully adjust itself to changing economic conditions. Roosevelt’s election indicated the public’s desire for government action to get the nation back on its feet.

At first it appeared that the Court, although dominated by conservative justices, might repudiate substantive due process and go along with federal and state efforts to ameliorate the effects of the Depression. How could government exercise any control over matters affecting the economy if the Court continued to strike down the legislatures’ efforts on substantive due process grounds? This was a central question confronting the Court in Nebbia v. New York.

Although Nebbia, in retrospect, was a sign that the heyday of substantive due process was drawing to a close, that was hardly the case in the context of the day. As you will recall from the chapters on federalism (6) and the commerce clause (7), for the next two years the Court generally continued along its laissez-faire path of the 1920s—seemingly ignorant of the political, economic, and social events transpiring around it. In particular, it refused to let go of the doctrine of substantive due process.

Just two years after Nebbia, it decided another New York case, but in a quite different way. At issue in Morehead v. New York ex rel. Tipaldo (1936) was a 1933 minimum wage law that “declared it to be against public policy for any employer to employ any woman at an oppressive and unreasonable wage.” It defined as unreasonable a wage that was “both less than the fair and reasonable value of the services rendered and less than sufficient to meet the minimum cost of living necessary for health.” If a woman thought that her employer was paying her inadequate wages, she could file a complaint with a state board. Women employees of a laundry invoked this procedure against Joseph Tipaldo, the manager of the operation. In 1934 Tipaldo was found guilty: he paid his employees only $7.00 to $10.00 per week, although the board had set $12.40 as a minimum wage.

When the case reached the Supreme Court, Tipaldo received some support from an unexpected source: the feminist National Woman’s Party (NWP). Although it did not agree with his substantive due process claim, the NWP argued that the New York law violated the Constitution on the ground that it treated the sexes differently and fostered inequality. As NWP leaders explained,

The Woman’s Party stands for equality between men and women in all laws. This includes laws affecting the position of women in industry as well as all other laws. The Woman’s Party does not take any position with regard to the merits of minimum wage legislation, but it does demand that such legislation, if passed, shall be for both sexes. It is opposed to all legislation having a sex basis and applying to one sex alone.20

Attorneys defending the state’s action, including NCL representatives, therefore, faced a difficult challenge. The constituency benefiting from the law—women—was divided over the issue, but more important, the attorneys had to deal with the Adkins precedent. In part, they did so by trying to distinguish this law from the one at issue in Adkins; they also tried to demonstrate that economic conditions had changed considerably since 1923 and required this kind of regulation. Moreover, they had the Nebbia ruling in hand. It was just possible that the Court might go along with the state. But it was not to be. In keeping with their rulings on federal New Deal legislation and as a result of Justice Owen Roberts’s defection from the Nebbia majority, the Court struck the New York law. Writing for a majority of five, Justice Pierce Butler was just as emphatic on the subject of substantive due process as the Adkins Court had been: “Freedom of contract is the general rule and restraint the exception.”

The End of Economic Substantive Due Process: West Coast Hotel v. Parrish

The Court’s refusal to uphold federal New Deal legislation, as you recall from chapter 7, angered President Roosevelt. Its ruling in Morehead cut even deeper. As Peter Irons notes, “More than any other decision by the Court during the New Deal period, Morehead unleashed a barrage of criticism from conservatives as well as from liberals,” who sympathized with the plight of women and children in the workforce.21 Even the Republican Party’s 1936 platform included a plank supporting the adoption of minimum wage and maximum hours laws of the sort struck down in Morehead.

Amid all this pressure, including Roosevelt’s Court-packing scheme, the Court did a major about-face on the constitutionality of New Deal programs (see chapter 7). Prominent among the decisions ushering in the Court’s new jurisprudence was West Coast Hotel v. Parrish, a ruling that would mean the demise of economic substantive due process.

Nebbia v. New York

291 U.S. 502 (1934)

http://laws.findlaw.com/us/291/502.html

Vote: 5 (Brandeis, Cardozo, Hughes, Roberts, Stone)

4 (Butler, McReynolds, Sutherland, Van Devanter)

OPINION OF THE COURT: Roberts

DISSENTING OPINION: McReynolds

Facts:

In 1933 the New York State legislature created the Milk Control Board, in which it vested the power to fix minimum and maximum prices that stores could charge consumers for milk. The board set the price of a quart of milk at nine cents, but Leo Nebbia, the owner of a grocery store in Rochester, New York, sold two quarts of milk and a five-cent loaf of bread to Jedo Del Signori for eighteen cents. He was convicted of violating the board’s order and fined $5. He paid the fine under protest and appealed his conviction on the ground that the milk regulations were unconstitutional.

To help stabilize the market, the New York Milk Control Board fixed the price of a quart of milk at nine cents. When grocery store owner Leo Nebbia, pictured above, sold two quarts of milk and a loaf of bread for eighteen cents, the state convicted him of violating the board’s order. In 1934 the Supreme Court rejected Nebbia’s claim that the order violated his constitutional rights, ruling that it was a valid exercise of state power.

Democrat & Chronicle

Democrat & Chronicle

In arguing against the law, Nebbia invoked the Fourteenth Amendment’s due process clause: the establishment of fixed milk prices interfered with his ability to conduct his business. Attorneys for the state countered that the law authorizing the board to set prices was a valid exercise of state police power. New York had reached this position, the attorneys claimed, after conducting an “exhaustive investigation of conditions in the milk industry in the States.” Among the findings of the investigation were these:

Milk is an essential item of the diet. It cannot long be stored. It is an excellent medium for growth of bacteria. These facts necessitate safeguards in its production and handling for human consumption that greatly increase the cost of the business. Failure of producers to receive a reasonable return for their labor and investment over an extended period threaten a relaxation of vigilance against contamination.

The production and distribution of milk is a paramount industry of the state, and largely affects the health and prosperity of its people. Dairying yields fully one-half of the total income from all farm products. Dairy farm investment amounts to approximately $1 billion. Curtailment or destruction of the dairy industry would cause a serious economic loss to the people of the state.

In addition to the general price decline, other causes for the low price of milk include a periodic increase in the number of cows and in milk production; the prevalence of unfair and destructive trade practices in the distribution of milk, leading to a drop in prices in the metropolitan area and other markets; and the failure of transportation and distribution charges to be reduced in proportion to the reduction in retail prices for milk and cream.

Arguments:

For the appellant, Leo Nebbia:

Laws in other states to fix prices of common commodities have been struck down by the lower courts for being in conflict with the due process clause of the Fourteenth Amendment.

The milk control law discriminates against Nebbia because its provisions are more restrictive on shopkeepers than on those who sell milk in other ways, such as home delivery.

The nation’s economic emergency does not suspend the Constitution.

The milk control law violates the liberties of buyer and seller freely to reach an agreement over a sales price for a wholesome product.

For the appellee, state of New York:

The necessity for any exercise of the state’s police power is first to be determined by the legislature. Here, the New York legislature has found a need to impose controls on the buying and selling of milk.

Because of the importance of milk, it may be regulated in much the same manner as a public utility.

Fixing prices is a common form of utility regulation.

There is a clear relationship between the control of milk prices and the public interest. Therefore the law should be sustained.

MR. JUSTICE ROBERTS DELIVERED THE OPINION OF THE COURT.

The . . . question is whether . . . the enforcement of [New York’s law] denied the appellant the due process secured to him by the Fourteenth Amendment. . . .

Under our form of government the use of property and the making of contracts are normally matters of private and not of public concern. The general rule is that both shall be free of governmental interference. But neither property rights nor contract rights are absolute; for government cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of contract to work them harm. Equally fundamental with the private right is that of the public to regulate it in the common interest. As Chief Justice Marshall said, speaking specifically of inspection laws, such laws form “a portion of that immense mass of legislation, which embraces every thing within the territory of a State . . . all which can be most advantageously exercised by the States themselves. Inspection laws, quarantine laws, health laws of every description, as well as laws for regulating the internal commerce of a State, . . . are component parts of this mass.” . . .

Thus has this court from the early days affirmed that the power to promote the general welfare is inherent in government. Touching the matters committed to it by the Constitution, the United States possesses the power, as do the states in their sovereign capacity touching all subjects jurisdiction of which is not surrendered to the federal government. . . . These correlative rights, that of the citizen to exercise exclusive dominion over property and freely to contract about his affairs, and that of the state to regulate the use of property and the conduct of business, are always in collision. No exercise of the private right can be imagined which will not in some respect, however slight, affect the public; no exercise of the legislative prerogative to regulate the conduct of the citizen which will not to some extent abridge his liberty or affect his property. But subject only to constitutional restraint the private right must yield to the public need. . . .

The milk industry in New York has been the subject of long-standing and drastic regulation in the public interest. The legislative investigation of 1932 was persuasive of the fact that for this and other reasons unrestricted competition aggravated existing evils, and the normal law of supply and demand was insufficient to correct maladjustments detrimental to the community. The inquiry disclosed destructive and demoralizing competitive conditions and unfair trade practices which resulted in retail price-cutting and reduced the income of the farmer below the cost of production. We do not understand the appellant to deny that in these circumstances the legislature might reasonably consider further regulation and control desirable for protection of the industry and the consuming public. That body believed conditions could be improved by preventing destructive price-cutting by stores which, due to the flood of surplus milk, were able to buy at much lower prices than the larger distributors and to sell without incurring the delivery costs of the latter. In the order of which complaint is made the Milk Control Board fixed a price of ten cents per quart for sales by a distributor to a consumer, and nine cents by a store to a consumer, thus recognizing the lower costs of the store, and endeavoring to establish a differential which would be just to both. In the light of the facts the order appears not to be unreasonable or arbitrary, or without relation to the purpose to prevent ruthless competition from destroying the wholesale price structure on which the farmer depends for his livelihood, and the community for an assured supply of milk.

But we are told that because the law essays to control prices it denies due process. Notwithstanding the admitted power to correct existing economic ills by appropriate regulation of business, even though an indirect result may be a restriction of the freedom of contract or a modification of charges for services or the price of commodities, the appellant urges that direct fixation of prices is a type of regulation absolutely forbidden. His position is that the Fourteenth Amendment requires us to hold the challenged statute void for this reason alone. The argument runs that the public control of rates or prices is per se unreasonable and unconstitutional, save as applied to businesses affected with a public interest; that a business so affected is one in which property is devoted to an enterprise of a sort which the public itself might appropriately undertake, or one whose owner relies on a public grant or franchise for the right to conduct the business, or in which he is bound to serve all who apply; in short, such as is commonly called a public utility; or a business in its nature a monopoly. The milk industry, it is said, possesses none of these characteristics, and, therefore, not being affected with a public interest, its charges may not be controlled by the state. Upon the soundness of this contention the appellant’s case against the statute depends.

We may as well say at once that the dairy industry is not, in the accepted sense of the phrase, a public utility. . . . But if, as must be conceded, the industry is subject to regulation in the public interest, what constitutional principle bars the state from correcting existing maladjustments by legislation touching prices? We think there is no such principle. The due process clause makes no mention of sales or of prices any more than it speaks of business or contracts or buildings or other incidents of property. The thought seems nevertheless to have persisted that there is something peculiarly sacrosanct about the price one may charge for what he makes or sells, and that, however able to regulate other elements of manufacture or trade, with incidental effect upon price, the state is incapable of directly controlling the price itself. This view was negatived many years ago. Munn v. Illinois. . . .

It is clear that there is no closed class or category of businesses affected with a public interest, and the function of courts in the application of the Fifth and Fourteenth Amendments is to determine in each case whether circumstances vindicate the challenged regulation as a reasonable exertion of governmental authority or condemn it as arbitrary or discriminatory. The phrase “affected with a public interest” can, in the nature of things, mean no more than that an industry, for adequate reason, is subject to control for the public good. In several of the decisions of this court wherein the expressions “affected with a public interest,” and “clothed with a public use,” have been brought forward as the criteria of the validity of price control, it has been admitted that they are not susceptible of definition and form an unsatisfactory test of the constitutionality of legislation directed at business practices or prices. These decisions must rest, finally, upon the basis that the requirements of due process were not met because the laws were found arbitrary in their operation and effect. But there can be no doubt that upon proper occasion and by appropriate measures the state may regulate a business in any of its aspects, including the prices to be charged for the products or commodities it sells.

So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio [i.e., the court has completed its task and lacks the authority to do more]. . . . And it is equally clear that if the legislative policy be to curb unrestrained and harmful competition by measures which are not arbitrary or discriminatory it does not lie with the courts to determine that the rule is unwise. With the wisdom of the policy adopted, the adequacy or practicability of the law enacted to forward it, the courts are both incompetent and unauthorized to deal. The course of decision in this court exhibits a firm adherence to these principles. Times without number we have said that the legislature is primarily the judge of the necessity of such an enactment, that every possible presumption is in favor of its validity, and that though the court may hold views inconsistent with the wisdom of the law, it may not be annulled unless palpably in excess of legislative power. . . .

Tested by these considerations we find no basis in the due process clause of the Fourteenth Amendment for condemning the provisions of the . . . Law here drawn into question.

The judgment is affirmed.

Separate opinion of MR. JUSTICE MCREYNOLDS.

Regulation to prevent recognized evils in business has long been upheld as permissible legislative action. But fixation of the price at which A, engaged in an ordinary business, may sell, in order to enable B, a producer, to improve his condition, has not been regarded as within legislative power. This is not regulation, but management, control, dictation—it amounts to the deprivation of the fundamental right which one has to conduct his own affairs honestly and along customary lines. The argument advanced here would support general prescription of prices for farm products, groceries, shoes, clothing, all the necessities of modern civilization, as well as labor, when some Legislature finds and declares such action advisable and for the public good. This Court has declared that a state may not by legislative fiat convert a private business into a public utility. And if it be now ruled that one dedicates his property to public use whenever he embarks on an enterprise which the Legislature may think it desirable to bring under control, this is but to declare that rights guaranteed by the Constitution exist only so long as supposed public interest does not require their extinction. To adopt such a view, of course, would put an end to liberty under the Constitution. . . .

Not only does the statute interfere arbitrarily with the rights of the little grocer to conduct his business according to standards long accepted—complete destruction may follow; but it takes away the liberty of 12,000,000 consumers to buy a necessity of life in an open market. It imposes direct and arbitrary burdens upon those already seriously impoverished with the alleged immediate design of affording special benefits to others. To him with less than 9 cents it says: You cannot procure a quart of milk from the grocer although he is anxious to accept what you can pay and the demands of your household are urgent! A superabundance; but no child can purchase from a willing storekeeper below the figure appointed by three men at headquarters! And this is true although the storekeeper himself may have bought from a willing producer at half that rate and must sell quickly or lose his stock through deterioration. The fanciful scheme is to protect the farmer against undue exactions by prescribing the price at which milk disposed of by him at will may be resold! . . .

The judgment of the court below should be reversed.

Mr. Justice VAN DEVANTER, Mr. Justice SUTHERLAND, and Mr. Justice BUTLER authorize me to say that they concur in this opinion.

West Coast Hotel v. Parrish

300 U.S. 379 (1937)

http://laws.findlaw.com/us/300/379.html

Vote: 5 (Brandeis, Cardozo, Hughes, Roberts, Stone)

4 (Butler, McReynolds, Sutherland, Van Devanter)

OPINION OF THE COURT: Hughes

DISSENTING OPINION: Sutherland

Facts:

Elsie Parrish worked intermittently as a chambermaid in a Washington State hotel for a wage of twenty-two cents to twenty-five cents per hour.22 When she was discharged in 1935, she asked the management for back pay of $216.19, “the difference between what she had received and what she would have gotten” if the hotel had abided by the Washington Wage Board’s minimum wage rate of $14.30 per week.

The hotel offered her $17.00, but Parrish refused to settle. Because of the community property laws in the state, she and her husband jointly brought suit against the hotel. Parrish found an attorney willing to represent her, but the attorney could not generate much interest in her case among outside organizations. Even the NCL declined to participate, viewing such efforts as a waste of time in light of Morehead. The Washington Supreme Court ruled in favor of Parrish, and the hotel sought Supreme Court review.

Arguments:

For the appellant, West Coast Hotel Company:

In Adkins v. Children’s Hospital the Court struck down a similar regulation of wages for women as a violation of the due process clause of the Fifth Amendment.

Although Adkins involved a regulation imposed by the federal government, the due process language of the Fifth Amendment is identical to that of the Fourteenth. Therefore, there is no reason to conclude that the Adkins precedent is not applicable to similar state regulations.

In Morehead v. New York ex rel. Tipaldo the Court declared unconstitutional a state law that prohibited employers from paying women an oppressive and unreasonable wage.

Adkins and Morehead should control this case.

For the appellees, Ernest and Elsie Parrish:

It is the legislature that first decides when the public welfare necessitates regulation under the state’s police powers.

The Washington legislature determined that the state’s general welfare required this minimum wage law. Unless the law is entirely beyond the state’s legislative power or operates in an unreasonable manner, it should be sustained.

The Adkins precedent does not apply. The states’ police powers are much broader than the powers of the federal government. That the federal government exceeded its powers does not necessarily mean that a state abuses its authority when it passes a similar law.

The state legislature determined that an evil existed and that the minimum wage law was an appropriate remedy. The law was upheld by the state’s highest court. The presumption of constitutionality should apply, and the Supreme Court should also uphold the law.

MR. CHIEF JUSTICE HUGHES DELIVERED THE OPINION OF THE COURT.

This case presents the question of the constitutional validity of the minimum wage law of the State of Washington. . . .

The appellant relies upon the decision of this Court in Adkins v. Children’s Hospital, which held invalid the District of Columbia Minimum Wage Act which was attacked under the due process clause of the Fifth Amendment. On the argument at bar, counsel for the appellees attempted to distinguish the Adkins Case upon the ground that the appellee was employed in a hotel and that the business of an innkeeper was affected with a public interest. That effort at distinction is obviously futile, as it appears that in one of the cases ruled by the Adkins opinion the employee was a woman employed as an elevator operator in a hotel.

The recent case of Morehead v. New York came here on certiorari to the New York court which had held the New York minimum wage act for women to be invalid. A minority of this Court thought that the New York statute was distinguishable in a material feature from that involved in the Adkins Case and that for that and other reasons the New York statute should be sustained. But the Court of Appeals of New York had said that it found no material difference between the two statutes and this Court held that the “meaning of the statute” as fixed by the decisions of the state court “must be accepted here as if the meaning had been specifically expressed in the enactment.” That view led to the affirmance by this Court of the judgment in the Morehead Case, as the Court considered that the only question before it was whether the Adkins Case was distinguishable and that reconsideration of that decision had not been sought. Upon that point the Court said: “The petition for the writ sought review upon the ground that this case [Morehead] is distinguishable from that one [Adkins]. No application has been made for reconsideration of the constitutional question there decided. The validity of the principles upon which that decision rests is not challenged. This court confines itself to the ground upon which the writ was asked or granted. . . . Here the review granted was no broader than that sought by the petitioner. . . . He is not entitled and does not ask to be heard upon the question whether the Adkins Case should be overruled. He maintains that it may be distinguished on the ground that the statutes are vitally dissimilar.”

We think that the question which was not deemed to be open in the Morehead Case is open and is necessarily presented here. The Supreme Court of Washington has upheld the minimum wage statute of that State. It has decided that the statute is a reasonable exercise of the police power of the State. In reaching that conclusion the state court has invoked principles long established by this Court in the application of the Fourteenth Amendment. The state court has refused to regard the decision in the Adkins Case as determinative and has pointed to our decisions both before and since that case as justifying its position. We are of the opinion that this ruling of the state court demands on our part a reexamination of the Adkins Case. The importance of the question, in which many States having similar laws are concerned, the close division by which the decision in the Adkins Case was reached, and the economic conditions which have supervened, and in the light of which the reasonableness of the exercise of the protective power of the State must be considered, make it not only appropriate, but we think imperative, that in deciding the present case the subject should receive fresh consideration. . . .

The principle which must control our decision is not in doubt. The constitutional provision invoked is the due process clause of the Fourteenth Amendment governing the States, as the due process clause invoked in the Adkins Case governed Congress. In each case the violation alleged by those attacking minimum wage regulation for women is deprivation of freedom of contract. What is this freedom? The Constitution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without due process of law. In prohibiting that deprivation the Constitution does not recognize an absolute and uncontrollable liberty. Liberty in each of its phases has its history and connotation. But the liberty safeguarded is liberty in a social organization which requires the protection of law against the evils which menace the health, safety, morals and welfare of the people. Liberty under the Constitution is thus necessarily subject to the restraints of due process, and regulation which is reasonable in relation to its subject and is adopted in the interests of the community is due process.

This essential limitation of liberty in general governs freedom of contract in particular. More than twenty-five years ago we set forth the applicable principle in these words after referring to the cases where the liberty guaranteed by the Fourteenth Amendment had been broadly described:

“But it was recognized in the cases cited, as in many others, that freedom of contract is a qualified and not an absolute right. There is no absolute freedom to do as one wills or to contract as one chooses. The guaranty of liberty does not withdraw from legislative supervision that wide department of activity which consists of the making of contracts, or deny to government the power to provide restrictive safeguards. Liberty implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions imposed in the interests of the community.” Chicago, Burlington & Quincy R. Co. v. McGuire [1911].

This power under the Constitution to restrict freedom of contract has had many illustrations. That it may be exercised in the public interest with respect to contracts between employer and employee is undeniable. . . . In dealing with the relation of employer and employed, the legislature has necessarily a wide field of discretion in order that there may be suitable protection of health and safety, and that peace and good order may be promoted through regulations designed to insure wholesome conditions of work and freedom from oppression.

The point that has been strongly stressed that adult employees should be deemed competent to make their own contracts was decisively met nearly forty years ago in Holden v. Hardy, where we pointed out the inequality in the footing of the parties. . . .

It is manifest that this established principle is peculiarly applicable in relation to the employment of women in whose protection the State has a special interest. That phase of the subject received elaborate consideration in Muller v. Oregon (1908). . . . In later rulings this Court sustained the regulation of hours of work of women employees.

This array of precedents and the principles they applied were thought by the dissenting Justices in the Adkins Case to demand that the minimum wage statute be sustained. The validity of the distinction made by the Court between a minimum wage and a maximum of hours in limiting liberty of contract was especially challenged. That challenge persists and is without any satisfactory answer. . . .

One of the points which was pressed by the Court in supporting its ruling in the Adkins Case was that the standard set up by the District of Columbia Act did not take appropriate account of the value of the services rendered. In the Morehead Case, the minority thought that the New York statute had met that point in its definition of a “fair wage” and that it accordingly presented a distinguishable feature which the Court could recognize within the limits which the Morehead petition for certiorari was deemed to present. The Court, however, did not take that view and the New York Act was held to be essentially the same as that for the District of Columbia. The statute now before us is like the latter, but we are unable to conclude that in its minimum wage requirement the State has passed beyond the boundary of its broad protective power.

The minimum wage to be paid under the Washington statute is fixed after full consideration by representatives of employers, employees and the public. It may be assumed that the minimum wage is fixed in consideration of the services that are performed in the particular occupations under normal conditions. Provision is made for special licenses at less wages in the case of women who are incapable of full service. The statement of Mr. Justice Holmes in the Adkins Case is pertinent: “This statute does not compel anybody to pay anything. It simply forbids employment at rates below those fixed as the minimum requirement of health and right living. It is safe to assume that women will not be employed at even the lowest wages allowed unless they earn them, or unless the employer’s business can sustain the burden. In short the law in its character and operation is like hundreds of so-called police laws that have been upheld.” . . .

We think that the views thus expressed are sound and that the decision in the Adkins Case was a departure from the true application of the principles governing the regulation by the State of the relation of employer and employed. Those principles have been reenforced by our subsequent decisions. . . .

With full recognition of the earnestness and vigor which characterize the prevailing opinion in the Adkins Case, we find it impossible to reconcile that ruling with these well-considered declarations. What can be closer to the public interest than the health of women and their protection from unscrupulous and overreaching employers? And if the protection of women is a legitimate end of the exercise of state power, how can it be said that the requirement of the payment of a minimum wage fairly fixed in order to meet the very necessities of existence is not an admissible means to that end? The legislature of the State was clearly entitled to consider the situation of women in employment, the fact that they are in the class receiving the least pay, that their bargaining power is relatively weak, and that they are the ready victims of those who would take advantage of their necessitous circumstances. The legislature was entitled to adopt measures to reduce the evils of the “sweating system,” the exploiting of workers at wages so low as to be insufficient to meet the bare cost of living, thus making their very helplessness the occasion of a most injurious competition. The legislature had the right to consider that its minimum wage requirements would be an important aid in carrying out its policy of protection. The adoption of similar requirements by many States evidences a deep-seated conviction both as to the presence of the evil and as to the means adapted to check it. Legislative response to the conviction cannot be regarded as arbitrary or capricious and that is all we have to decide. Even if the wisdom of the policy be regarded as debatable and its effects uncertain, still the legislature is entitled to its judgment.

There is an additional and compelling consideration which recent economic experience has brought into a strong light. The exploitation of a class of workers who are in an unequal position with respect to bargaining power and are thus relatively defenceless against the denial of a living wage is not only detrimental to their health and well-being but casts a direct burden for their support upon the community. What these workers lose in wages the taxpayers are called upon to pay. The bare cost of living must be met. We may take judicial notice of the unparalleled demands for relief which arose during the recent period of depression and still continue to an alarming extent despite the degree of economic recovery which has been achieved. It is unnecessary to cite official statistics to establish what is of common knowledge through the length and breadth of the land. While in the instant case no factual brief has been presented, there is no reason to doubt that the State of Washington has encountered the same social problem that is present elsewhere. The community is not bound to provide what is in effect a subsidy for unconscionable employers. The community may direct its law-making power to correct the abuse which springs from their selfish disregard of the public interest. The argument that the legislation in question constitutes an arbitrary discrimination, because it does not extend to men, is unavailing. This Court has frequently held that the legislative authority, acting within its proper field, is not bound to extend its regulation to all cases which it might possibly reach. The legislature “is free to recognize degrees of harm and it may confine its restrictions to those classes of cases where the need is deemed to be clearest.” . . .

Our conclusion is that the case of Adkins v. Children’s Hospital should be, and it is, overruled. The judgment of the Supreme Court of the State of Washington is affirmed.

MR. JUSTICE SUTHERLAND, dissenting.

The principles and authorities relied upon to sustain the judgment, were considered in Adkins v. Children’s Hospital and Morehead v. New York ex rel. Tipaldo, and their lack of application to cases like the one in hand was pointed out. A sufficient answer to all that is now said will be found in the opinions of the court in those cases. Nevertheless, in the circumstances, it seems well to restate our reasons and conclusions.

Under our form of government, where the written Constitution, by its own terms, is the supreme law, some agency, of necessity, must have the power to say the final word as to the validity of a statute assailed as unconstitutional. The Constitution makes it clear that the power has been intrusted to this court when the question arises in a controversy within its jurisdiction; and so long as the power remains there, its exercise cannot be avoided without betrayal of the trust.

It has been pointed out many times, as in the Adkins case, that this judicial duty is one of gravity and delicacy, and that rational doubts must be resolved in favor of the constitutionality of the statute. But whose doubts, and by whom resolved? Undoubtedly it is the duty of a member of the court, in the process of reaching a right conclusion, to give due weight to the opposing views of his associates; but in the end, the question which he must answer is not whether such views seem sound to those who entertain them, but whether they convince him that the statute is constitutional or engender in his mind a rational doubt upon that issue. The oath which he takes as a judge is not a composite oath, but an individual one. And in passing upon the validity of a statute, he discharges a duty imposed upon him, which cannot be consummated justly by an automatic acceptance of the views of others which have neither convinced, nor created a reasonable doubt in, his mind. If upon a question so important he thus surrender his deliberate judgment, he stands forsworn. He cannot subordinate his convictions to that extent and keep faith with his oath or retain his judicial and moral independence.

The suggestion that the only check upon the exercise of the judicial power, when properly invoked, to declare a constitutional right superior to an unconstitutional statute is the judge’s own faculty of self-restraint, is both ill considered and mischievous. Self-restraint belongs in the domain of will and not of judgment. The check upon the judge is that imposed by his oath of office, by the Constitution and by his own conscientious and informed convictions; and since he has the duty to make up his own mind and adjudge accordingly, it is hard to see how there could be any other restraint. This court acts as a unit. It cannot act in any other way; and the majority (whether a bare majority or a majority of all but one of its members), therefore, establishes the controlling rule as the decision of the court, binding, so long as it remains unchanged, equally upon those who disagree and upon those who subscribe to it. Otherwise, orderly administration of justice would cease. But it is the right of those in the minority to disagree, and sometimes, in matters of grave importance, their imperative duty to voice their disagreement at such length as the occasion demands—always, of course, in terms which, however forceful, do not offend the proprieties or impugn the good faith of those who think otherwise.

It is urged that the question involved should now receive fresh consideration, among other reasons, because of “the economic conditions which have supervened”; but the meaning of the Constitution does not change with the ebb and flow of economic events. We frequently are told in more general words that the Constitution must be construed in the light of the present. If by that it is meant that the Constitution is made up of living words that apply to every new condition which they include, the statement is quite true. But to say, if that be intended, that the words of the Constitution mean today what they did not mean when written—that is, that they do not apply to a situation now to which they would have applied then—is to rob that instrument of the essential element which continues it in force as the people have made it until they, and not their official agents, have made it otherwise. . . .

The judicial function is that of interpretation; it does not include the power of amendment under the guise of interpretation. To miss the point of difference between the two is to miss all that the phrase “supreme law of the land” stands for and to convert what was intended as inescapable and enduring mandates into mere moral reflections.

If the Constitution, intelligently and reasonably construed in the light of these principles, stands in the way of desirable legislation, the blame must rest upon that instrument, and not upon the court for enforcing it according to its terms. The remedy in that situation—and the only true remedy—is to amend the Constitution.

The Legacy of West Coast Hotel

West Coast Hotel was an explicit repudiation of economic substantive due process. In one fell swoop, the justices overruled Adkins and changed the way the Court viewed state regulatory efforts. But the period stretching from 1890 through 1936 continues to have an impact on Supreme Court rulings.

In place of substantive due process the Court adopted a rational basis test that presumes the constitutionality of economic legislation and assigns responsibility to the law’s challengers to show that no rational relationship exists between the law and a legitimate government function.23 As such, it is similar to the position expressed by Chief Justice Waite in Munn v. Illinois. The difference between Waite’s standard in Munn and that of the contemporary Court generally lies in application. The Waite Court and its successors allowed incursions into their standard, and we should remember that the standard was amenable to exceptions; modern Courts do not. Indeed, in the post–New Deal period, the Court has generally rejected challenges to state economic regulatory efforts. One reason for these decisions is the nature of the prevailing legal test: it is extremely difficult for attorneys to demonstrate that there is no conceivable rational relationship between any given legislation and a legitimate government interest. In addition, the modern Court has been averse to conducting its own inquiry into what is and is not in the public interest or what is rational and what is not. Instead, the Court tends to defer to the judgments of the legislature.

Williamson v. Lee Optical Company provides a good example of how the mid-twentieth-century Court treated Fourteenth Amendment economic claims. This case can be compared with the classic statements for and against a substantive interpretation of the due process clause: Miller’s in Slaughterhouse, Waite’s in Munn, Peckham’s in Lochner, and so forth.

Williamson v. Lee Optical Company

348 U.S. 483 (1955)

http://laws.findlaw.com/us/348/483.html

Vote: 8 (Black, Burton, Clark, Douglas, Frankfurter, Minton, Reed, Warren)

0

OPINION OF THE COURT: Douglas

NOT PARTICIPATING: Harlan

Facts:

In 1953 Oklahoma passed a law that made it “unlawful for any person . . . to fit, adjust, adapt, or to apply . . . lenses, frames . . . or any other optical appliances to the face” unless that person was a licensed ophthalmologist, “a physician who specializes in the care of eyes,” or an optometrist, “one who examines eyes for refractory error . . . and fills prescriptions.” An optician, an “artisan qualified to grind lenses to fill prescriptions,” could do so only with a written prescription from an ophthalmologist or optometrist.

Lee Optical Company challenged the law, arguing that it bore no reasonable relation to a public health and welfare interest and unconstitutionally deprived opticians of their right to perform their craft. The state argued that the statute was a constitutional exercise of state police power.

Arguments:

For the appellant, Mac Q. Williamson, Oklahoma attorney general, et al.:

The furnishing of eyeglasses to the public is a matter of public health and welfare and therefore subject to the police powers of the state.

The aim of the law is to provide citizens of Oklahoma with the best possible visual care.

The Court should defer to the state legislature in determining appropriate public policy. There should be a presumption of constitutionality with the burden on the challenger to prove the invalidity of the law beyond a reasonable doubt. As long as the law is a reasonable measure in pursuit of a legitimate interest, the Court should not interfere.

For the respondent, Lee Optical of Oklahoma:

The optician is a skilled craftsman whose training makes him at least as qualified as an ophthalmologist or an optometrist to fit and adjust eyeglasses. By treating opticians differently the state is denying equal protection of the laws.

Opticians have been engaged in these now-prohibited activities for hundreds of years. Unreasonably denying opticians the right to pursue their traditional occupation violates principles of due process of law.

This law is not a reasonable public health measure. Even if an optician should make a mistake in the duplicating of lenses or the fitting and adjusting of glasses, no harm to the health of the patient would result.

MR. JUSTICE DOUGLAS DELIVERED THE OPINION OF THE COURT.

The effect of [the act] is to forbid the optician from fitting or duplicating lenses without a prescription from an ophthalmologist or optometrist. In practical effect, it means that no optician can fit old glasses into new frames or supply a lens, whether it be a new lens or one to duplicate a lost or broken lens, without a prescription. The District Court conceded that it was in the competence of the police power of a State to regulate the examination of the eyes. But it rebelled at the notion that a State could require a prescription from an optometrist or ophthalmologist “to take old lenses and place them in new frames and then fit the completed spectacles to the face of the eyeglass wearer.” . . . It was, accordingly, the opinion of the court that this provision of the law violated the Due Process Clause by arbitrarily interfering with the optician’s right to do business. . . .

The Oklahoma law may exact a needless, wasteful requirement in many cases. But it is for the legislature, not the courts, to balance the advantages and disadvantages of the new requirement. It appears that in many cases the optician can easily supply the new frames or new lenses without reference to the old written prescription. It also appears that many written prescriptions contain no directive data in regard to fitting spectacles to the face. But in some cases the directions contained in the prescription are essential, if the glasses are to be fitted so as to correct the particular defects of vision or alleviate the eye condition. The legislature might have concluded that the frequency of occasions when a prescription is necessary was sufficient to justify this regulation of the fitting of eyeglasses. Likewise, when it is necessary to duplicate a lens, a written prescription may or may not be necessary. But the legislature might have concluded that one was needed often enough to require one in every case. Or the legislature may have concluded that eye examinations were so critical, not only for correction of vision but also for detection of latent ailments or diseases, that every change in frames and every duplication of a lens should be accompanied by a prescription from a medical expert. To be sure, the present law does not require a new examination of the eyes every time the frames are changed or the lenses duplicated. For if the old prescription is on file with the optician, he can go ahead and make the new fitting or duplicate the lenses. But the law need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it.

The day is gone when this Court uses the Due Process Clause of the Fourteenth Amendment to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought. . . . We emphasize again what Chief Justice Waite said in Munn v. Illinois, . . .”For protection against abuses by legislatures the people must resort to the polls, not to the courts.”

SUBSTANTIVE DUE PROCESS: CONTEMPORARY RELEVANCE

Over the six decades since Williamson v. Lee Optical, the Court has continued to reject substantive due process attacks on state and local economic regulatory policies, giving wide latitude to the legislative branch in determining what is reasonable economic policy.24 But the doctrine has not totally disappeared. In fact, the use of the due process clauses to find and protect rights has seen somewhat of a resurgence, which has occurred in two areas quite different from the commercial regulation cases that were so important in earlier eras. First, the Court has used substantive due process to address questions of personal privacy. Second, it has applied the due process clauses to improve the essential fairness of the judicial system. In what directly follows we take a close look at the issues of excessive monetary damages awarded by juries and problems associated with judicial conflicts of interest. We take up personal privacy toward the end of the chapter

Substantive Due Process Applied to Juries and Judges

The subject of excessive monetary damages awarded by juries not only has been at the center of the long-standing political controversy over tort reform, but it also raises an important legal question. It asks whether jury awards for litigants who have been unlawfully harmed can become so large as to constitute an unreasonable denial of essential fairness and a deprivation of property without due process of law. The leading Supreme Court decision in this area is BMW of North America v. Gore (1996), which began when an Alabama doctor became dissatisfied with the condition of the paint on his newly acquired luxury automobile.

In BMW v. Gore the justices directly applied concepts of substantive due process to jury awards and concluded that grossly excessive awards violate the essential fairness guarantees of the Fourteenth Amendment. The Court has continued to apply the substantive due process reasoning in subsequent challenges to large punitive damage awards. In Cooper Industries v. Leatherman Tool Group (2001), a dispute between two companies over a false advertising claim, the justices required lower courts to reconsider a $4.5 million punitive damage award when only $50,000 was awarded in compensatory damages. Similarly, in State Farm Mutual Automobile Insurance Co. v. Campbell (2003) the Court considered awards of $1 million in compensatory damages and $145 million in punitive damages against an insurance company charged with improperly dealing with a policyholder following a fatal auto accident. The justices concluded that the 145-to-1 ratio of punitive to compensatory damages was grossly excessive and in conflict with due process guarantees. The Court once again rejected any firm mathematical criteria but suggested that award ratios in excess of 10 to 1 begin to lose their presumption of validity.

The other issue involving due process rights and the fairness of the judicial process concerns judges with conflicts of interest. At bottom, due process requires essential fairness, and for the judiciary one of the elements of essential fairness is to have cases decided by objective judges. An individual whose case is heard by a biased judge is at risk of being denied liberty or property without due process of law. Traditionally, the Supreme Court has taken the position that the Constitution’s due process clauses are violated if a judge decides a case in which he or she has a direct financial interest. Aside from monetary conflicts of interest and some rare situations that develop in contempt of court actions, the justices have left the regulation of judicial bias to the legislatures and state judicial ethics commissions.

In 2009, however, a new issue regarding judicial objectivity reached the Court. It concerned the influence that campaign contributions might have on judges who serve in the thirty-one states that use partisan or nonpartisan elections to staff their courts. Can significant campaign contributions lead to the selection of judges who are beholden to the interests of contributors? If so, are particular litigants in danger of being denied a fair hearing when they appear before such judges? Are the resulting conflicts of interest so serious as to constitute a violation of due process of law? Caperton v. A. T. Massey Coal Co. (2009) addresses this question.

Don Blankenship’s fortunes did not improve following Massey Coal’s defeat at the hands of the Supreme Court. Plagued by regulatory conflicts and mine safety issues, Blankenship eventually lost control of Massey Coal, and his company subsequently was acquired by one of its competitors (see box 10-2).

What of the broader effects of Caperton? It remains to be seen whether Justice Kennedy is correct in asserting it was an extreme case of enormous campaign contributions that may not be repeated, or whether Chief Justice Roberts is more clairvoyant with his prediction that unclear guidelines established in Caperton will lead to an avalanche of appeals filed by losing parties claiming judicial bias. What is certain is that judicial election campaigns, which traditionally have been low-visibility affairs, have become increasingly costly and contentious. This provides a potential opportunity for wealthy campaign donors to have an expanding influence in determining who staffs our courts.

Even Chief Justice Roberts, who dissented in Caperton, seems to take the point. In the 2015 case of Williams-Yulee v. Florida Bar, the Court considered the constitutionality of a code of judicial conduct adopted by the Florida Supreme Court, which prohibits judges and judicial candidates from personally soliciting funds for their campaigns. After the Florida Bar disciplined her for violating the new code, Lanell Williams-Yulee challenged it as intruding on her First Amendment to free speech.

The Court ruled in favor of the Florida Bar, with Chief Justice Roberts writing for the majority. Interestingly, the Chief pegged much of his opinion on ideas compatible with Caperton. He wrote that Florida had a compelling interest in restricting Williams-Yulee’s speech: preserving public confidence in the integrity of the judiciary. Equally interesting, Justice Kennedy, Caperton’s author, dissented: “Whether an election is the best way to choose a judge is itself the subject of fair debate. But once the people of a State choose to have elections, the First Amendment protects the candidate’s right to speak and the public’s ensuing right to open and robust debate.”

BMW of North America v. Gore

517 U.S. 559 (1996)

http://laws.findlaw.com/us/517/559.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Breyer, Kennedy, O’Connor, Souter, Stevens)

4 (Ginsburg, Rehnquist, Scalia, Thomas)

OPINION OF THE COURT: Stevens

CONCURRING OPINION: Breyer

DISSENTING OPINIONS: Ginsburg, Scalia

Facts:

In January 1990 Dr. Ira Gore Jr. purchased a black BMW sports sedan for $40,750.88 from an authorized dealer in Birmingham, Alabama. Nine months later he took the car to an independent detailer for some appearance enhancements. The detailer informed Gore that he believed the car had been repainted. Gore, convinced that he had been wronged, filed suit against BMW of North America for failure to disclose that his new car had undergone repainting prior to purchase. He asked the court to award him compensatory and punitive damages.25

At trial, BMW acknowledged a policy, adopted in 1983, concerning automobiles damaged in manufacture or transport. If repairing the damage cost more than 3 percent of the vehicle’s retail value, the car was placed in company service and later sold as used. If the damage amounted to less than 3 percent of the car’s value, the vehicle was fixed and sold as new, with no disclosure of the repair history to either the dealer or the purchaser. Because the cost to refinish the automobile purchased by Gore amounted to only 1.5 percent of the car’s value, it was sold as new.

In support of his claim for compensatory damages, Gore presented evidence that a refinished BMW would fetch $4,000 less on the open market than an identical model that had not been repainted. To justify his claim for punitive damages, Gore presented documentation that during the previous decade BMW of North America sold approximately one thousand refinished automobiles as new. BMW replied that the new paint on Gore’s automobile was every bit as good as the original factory finish, and therefore the company was under no obligation to disclose the refinishing.

The jury found in favor of Gore, awarding him $4,000 in compensatory damages and $4 million in punitive damages. The justification for the punitive damage award was the jury’s conclusion that BMW’s nondisclosure policy amounted to “gross, oppressive, or malicious” fraud. BMW asked that the award be set aside or reduced because it was excessive. The trial court denied the request. The state supreme court reduced the punitive damage award to $2 million—not because the original award was excessive, but because it found fault with the jury’s method of arriving at that figure. The jury erred, according to the state supreme court, by considering BMW’s wrongdoing in other states when it should have focused only on the company’s behavior in Alabama. BMW, still maintaining that the revised award was excessive, requested review by the U.S. Supreme Court.

Arguments:

For the petitioner, BMW of North America, Inc.:

The Alabama Supreme Court correctly found that the jury’s $4 million punitive damages award was excessive because it was based in part on transactions that took place out of state. Alabama has no authority to punish extraterritorial transactions, and doing so is a violation of due process of law.

The revised $2 million punitive damage is grossly excessive and violates the substantive component of the due process clause. The punishment is five hundred times the actual and potential harm allegedly suffered by Dr. Gore. In addition, the punitive damages are one thousand times the civil penalty for violating Alabama’s repair disclosure statute.

The punitive damage award far exceeds what is reasonably necessary to accomplish Alabama’s interests in punishment and deterrence.

The award also far exceeds the degree to which BMW’s conduct could be considered reprehensible.

For the respondent, Ira Gore Jr.:

The Constitution does not prohibit consideration of out-of-state conduct in determining the amount of punitive damages needed to prevent a defendant from continuing a nationwide policy of misbehavior.

The revised $2 million award was reasonably calculated to prevent further harm to Alabama consumers by forcing BMW to change its nondisclosure policy.

BMW’s conduct was reprehensible.

The Court should refrain from setting a particular ratio of punitive to actual damages as a guide for determining excessive punitive damages.

JUSTICE STEVENS DELIVERED THE OPINION OF THE COURT.

Punitive damages may properly be imposed to further a State’s legitimate interests in punishing unlawful conduct and deterring its repetition. Gertz v. Robert Welch, Inc. (1974); Newport v. Fact Concerts, Inc. (1981); [Pacific Mutual Life Ins. Co. v.] Haslip (1991). In our federal system, States necessarily have considerable flexibility in determining the level of punitive damages that they will allow in different classes of cases and in any particular case. Most States that authorize exemplary damages afford the jury similar latitude, requiring only that the damages awarded be reasonably necessary to vindicate the State’s legitimate interests in punishment and deterrence. See TXO [Production Corp. v. Alliance Resources Corp., 1993]; Haslip. Only when an award can fairly be categorized as “grossly excessive” in relation to these interests does it enter the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment. . . .

No one doubts that a State may protect its citizens by prohibiting deceptive trade practices and by requiring automobile distributors to disclose presale repairs that affect the value of a new car. But the States need not, and in fact do not, provide such protection in a uniform manner. Some States rely on the judicial process to formulate and enforce an appropriate disclosure requirement by applying principles of contract and tort law. Other States have enacted various forms of legislation that define the disclosure obligations of automobile manufacturers, distributors, and dealers. The result is a patchwork of rules representing the diverse policy judgments of lawmakers in 50 States.

That diversity demonstrates that reasonable people may disagree about the value of a full disclosure requirement. . . .

We think it follows from these principles of state sovereignty and comity that a State may not impose economic sanctions on violators of its laws with the intent of changing the tortfeasors’ [wrongdoers’] lawful conduct in other States. Before this Court Dr. Gore argued that the large punitive damages award was necessary to induce BMW to change the nationwide policy that it adopted in 1983. But by attempting to alter BMW’s nationwide policy, Alabama would be infringing on the policy choices of other States. To avoid such encroachment, the economic penalties that a State such as Alabama inflicts on those who transgress its laws, whether the penalties take the form of legislatively authorized fines or judicially imposed punitive damages, must be supported by the State’s interest in protecting its own consumers and its own economy. Alabama may insist that BMW adhere to a particular disclosure policy in that State. Alabama does not have the power, however, to punish BMW for conduct that was lawful where it occurred and that had no impact on Alabama or its residents. Nor may Alabama impose sanctions on BMW in order to deter conduct that is lawful in other jurisdictions.

... [This] award must be analyzed . . . with consideration given only to the interests of Alabama consumers, rather than those of the entire Nation. When the scope of the interest in punishment and deterrence that an Alabama court may appropriately consider is properly limited, it is apparent—for reasons that we shall now address—that this award is grossly excessive.

Elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose. Three guideposts, each of which indicates that BMW did not receive adequate notice of the magnitude of the sanction that Alabama might impose for adhering to the nondisclosure policy adopted in 1983, lead us to the conclusion that the $2 million award against BMW is grossly excessive: the degree of reprehensibility of the nondisclosure; the disparity between the harm or potential harm suffered by Dr. Gore and his punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases. We discuss these considerations in turn.

Degree of Reprehensibility

Perhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct. . . . This principle reflects the accepted view that some wrongs are more blameworthy than others. . . . In TXO, both the West Virginia Supreme Court and the Justices of this Court placed special emphasis on the principle that punitive damages may not be “grossly out of proportion to the severity of the offense.” . . .

In this case, none of the aggravating factors associated with particularly reprehensible conduct is present. The harm BMW inflicted on Dr. Gore was purely economic in nature. The presale refinishing of the car had no effect on its performance or safety features, or even its appearance for at least nine months after his purchase. BMW’s conduct evinced no indifference to or reckless disregard for the health and safety of others. To be sure, infliction of economic injury, especially when done intentionally through affirmative acts of misconduct, or when the target is financially vulnerable, can warrant a substantial penalty. But this observation does not convert all acts that cause economic harm into torts that are sufficiently reprehensible to justify a significant sanction in addition to compensatory damages. . . .

Finally, the record in this case discloses no deliberate false statements, acts of affirmative misconduct, or concealment of evidence of improper motive, such as were present in Haslip and TXO. We accept, of course, the jury’s finding that BMW suppressed a material fact which Alabama law obligated it to communicate to prospective purchasers of repainted cars in that State. But the omission of a material fact may be less reprehensible than a deliberate false statement, particularly when there is a good-faith basis for believing that no duty to disclose exists.

... Because this case exhibits none of the circumstances ordinarily associated with egregiously improper conduct, we are persuaded that BMW’s conduct was not sufficiently reprehensible to warrant imposition of a $2 million exemplary damages award.

Ratio

The second and perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff. The principle that exemplary damages must bear a “reasonable relationship” to compensatory damages has a long pedigree. . . . Our decisions in both Haslip and TXO endorsed the proposition that a comparison between the compensatory award and the punitive award is significant.

In Haslip we concluded that even though a punitive damages award of “more than 4 times the amount of compensatory damages,” might be “close to the line,” it did not “cross the line into the area of constitutional impropriety.” TXO, following dicta in Haslip, refined this analysis by confirming that the proper inquiry is “‘whether there is a reasonable relationship between the punitive damage award and the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred.’” Thus, in upholding the $10 million award in TXO, we relied on the difference between that figure and the harm to the victim that would have ensued if the tortious plan had succeeded. That difference suggested that the relevant ratio was not more than 10 to 1.

The $2 million in punitive damages awarded to Dr. Gore by the Alabama Supreme Court is 500 times the amount of his actual harm as determined by the jury. . . .

Of course, we have consistently rejected the notion that the constitutional line is marked by a simple mathematical formula, even one that compares actual and potential damages to the punitive award. . . . When the ratio is a breathtaking 500 to 1, however, the award must surely “raise a suspicious judicial eyebrow.” TXO (O’CONNOR, J., dissenting).

Sanctions for Comparable Misconduct

Comparing the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct provides a third indicium of excessiveness. . . . In this case the $2 million economic sanction imposed on BMW is substantially greater than the statutory fines available in Alabama and elsewhere for similar malfeasance.

The maximum civil penalty authorized by the Alabama Legislature for a violation of its Deceptive Trade Practices Act is $2,000; other States authorize more severe sanctions, with the maxima ranging from $5,000 to $10,000. . . .

The sanction imposed in this case cannot be justified on the ground that it was necessary to deter future misconduct without considering whether less drastic remedies could be expected to achieve that goal. . . .

We assume, as the [jury] in this case . . . found, that the undisclosed damage to the new BMW’s affected their actual value. Notwithstanding the evidence adduced by BMW in an effort to prove that the repainted cars conformed to the same quality standards as its other cars, we also assume that it knew, or should have known, that as time passed the repainted cars would lose their attractive appearance more rapidly than other BMW’s. Moreover, we of course accept the Alabama courts’ view that the state interest in protecting its citizens from deceptive trade practices justifies a sanction in addition to the recovery of compensatory damages. We cannot, however, accept the conclusion of the Alabama Supreme Court that BMW’s conduct was sufficiently egregious to justify a punitive sanction that is tantamount to a severe criminal penalty. . . .

... [W]e are fully convinced that the grossly excessive award imposed in this case transcends the constitutional limit. . . .

The judgment is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

JUSTICE BREYER, with whom JUSTICE O’CONNOR and JUSTICE SOUTER join, concurring.

The Alabama state courts have assessed the defendant $2 million in “punitive damages” for having knowingly failed to tell a BMW automobile buyer that, at a cost of $600, it had repainted portions of his new $40,000 car, thereby lowering its potential resale value by about 10%. The Court’s opinion, which I join, explains why we have concluded that this award, in this case, was “grossly excessive” in relation to legitimate punitive damages objectives, and hence an arbitrary deprivation of life, liberty, or property in violation of the Due Process Clause. . . .

The . . . severe disproportionality between the award and the legitimate punitive damages objectives . . . reflects a judgment about a matter of degree. I recognize that it is often difficult to determine just when a punitive award exceeds an amount reasonably related to a State’s legitimate interests, or when that excess is so great as to amount to a matter of constitutional concern. Yet whatever the difficulties of drawing a precise line, once we examine the award in this case, it is not difficult to say that this award lies on the line’s far side. The severe lack of proportionality between the size of the award and the underlying punitive damages objectives shows that the award falls into the category of “gross excessiveness” set forth in this Court’s prior cases.

... I conclude that the award in this unusual case violates the basic guarantee of nonarbitrary governmental behavior that the Due Process Clause provides.

JUSTICE SCALIA, with whom JUSTICE THOMAS joins, dissenting.

Today we see the latest manifestation of this Court’s recent and increasingly insistent “concern about punitive damages that ‘run wild.’” Pacific Mut. Life Ins. Co. v. Haslip (1991). Since the Constitution does not make that concern any of our business, the Court’s activities in this area are an unjustified incursion into the province of state governments.

In earlier cases that were the prelude to this decision, I set forth my view that a state trial procedure that commits the decision whether to impose punitive damages, and the amount, to the discretion of the jury, subject to some judicial review for “reasonableness,” furnishes a defendant with all the process that is “due.” I do not regard the Fourteenth Amendment’s Due Process Clause as a secret repository of substantive guarantees against “unfairness”—neither the unfairness of an excessive civil compensatory award, nor the unfairness of an “unreasonable” punitive award. What the Fourteenth Amendment’s procedural guarantee assures is an opportunity to contest the reasonableness of a damages judgment in state court; but there is no federal guarantee a damages award actually be reasonable. . . .

The most significant aspects of today’s decision—the identification of a “substantive due process” right against a “grossly excessive” award, and the concomitant assumption of ultimate authority to decide anew a matter of “reasonableness” resolved in lower court proceedings—are of course not new. Haslip and TXO revived the notion, moribund since its appearance in the first years of this century, that the measure of civil punishment poses a question of constitutional dimension to be answered by this Court. Neither of those cases, however, nor any of the precedents upon which they relied, actually took the step of declaring a punitive award unconstitutional simply because it was “too big.” At the time of adoption of the Fourteenth Amendment, it was well understood that punitive damages represent the assessment by the jury, as the voice of the community, of the measure of punishment the defendant deserved. Today’s decision, though dressed up as a legal opinion, is really no more than a disagreement with the community’s sense of indignation or outrage expressed in the punitive award of the Alabama jury, as reduced by the State Supreme Court. It reflects not merely, as the concurrence candidly acknowledges, “a judgment about a matter of degree”; but a judgment about the appropriate degree of indignation or outrage, which is hardly an analytical determination.

There is no precedential warrant for giving our judgment priority over the judgment of state courts and juries on this matter. The only support for the Court’s position is to be found in a handful of errant federal cases, bunched within a few years of one other, which invented the notion that an unfairly severe civil sanction amounts to a violation of constitutional liberties. These were the decisions upon which the TXO plurality relied in pronouncing that the Due Process Clause “imposes substantive limits ‘beyond which penalties may not go.’” Although they are our precedents, they are themselves too shallowly rooted to justify the Court’s recent undertaking. . . .

More importantly, this latter group of cases—which again are the sole precedential foundation put forward for the rule of constitutional law espoused by today’s Court—simply fabricated the “substantive due process” right at issue. . . .

... [T]he Court identifies “[t]hree guideposts” that lead it to the conclusion that the award in this case is excessive: degree of reprehensibility, ratio between punitive award and plaintiff’s actual harm, and legislative sanctions provided for comparable misconduct. The legal significance of these “guideposts” is nowhere explored, but their necessary effect is to establish federal standards governing the hitherto exclusively state law of damages. . . .

Of course it will not be easy for the States to comply with this new federal law of damages, no matter how willing they are to do so. In truth, the “guideposts” mark a road to nowhere; they provide no real guidance at all. As to “degree of reprehensibility” of the defendant’s conduct, we learn that “‘nonviolent crimes are less serious than crimes marked by violence or the threat of violence,’” and that “‘trickery and deceit’” are “more reprehensible than negligence.” As to the ratio of punitive to compensatory damages, we are told that a “‘general concer[n] of reasonableness . . . enter[s] into the constitutional calculus,’”—though even “a breathtaking 500 to 1” will not necessarily do anything more than “‘raise a suspicious judicial eyebrow.’” And as to legislative sanctions provided for comparable misconduct, they should be accorded “‘substantial deference.’” One expects the Court to conclude: “To thine own self be true.”

These criss-crossing platitudes yield no real answers in no real cases. . . .

For the foregoing reasons, I respectfully dissent.

JUSTICE GINSBURG, with whom THE CHIEF JUSTICE joins, dissenting.

The Court, I am convinced, unnecessarily and unwisely ventures into territory traditionally within the States’ domain, and does so in the face of reform measures recently adopted or currently under consideration in legislative arenas. . . .

... [T]he Alabama Supreme Court left standing the jury’s decision that the facts warranted an award of punitive damages—a determination not contested in this Court—and the state court concluded that, considering only acts in Alabama, $2 million was “a constitutionally reasonable punitive damages award.”

The Court finds Alabama’s $2 million award not simply excessive, but grossly so, and therefore unconstitutional. The decision leads us further into territory traditionally within the States’ domain, and commits the Court, now and again, to correct “misapplication of a properly stated rule of law.” The Court is not well equipped for this mission. Tellingly, the Court repeats that it brings to the task no “mathematical formula,” no “categorical approach,” no “bright line.” It has only a vague concept of substantive due process, a “raised eyebrow” test, as its ultimate guide. . . .

For the reasons stated, I dissent from this Court’s disturbance of the judgment the Alabama Supreme Court has made.

Caperton v. A. T. Massey Coal Co

556 U.S. 868 (2009)

http://laws.findlaw.com/us/000/08–22.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Breyer, Ginsburg, Kennedy, Souter, Stevens)

4 (Alito, Roberts, Scalia, Thomas)

OPINION OF THE COURT: Kennedy

DISSENTING OPINIONS: Roberts, Scalia

Facts:

In August 2002 a West Virginia jury returned a verdict that found respondents A. T. Massey Coal Co. and its affiliates liable for fraudulent misrepresentation, concealment, and interference with existing contractual relations. The jury awarded petitioners Hugh Caperton, Harman Development Corporation, and several other companies $50 million in compensatory and punitive damages. In June 2004 the trial court denied Massey’s posttrial motions challenging the verdict and the damage award. Massey served notice of appeal.

After the verdict, but before the appeal, West Virginia held its 2004 judicial elections. Knowing that the Supreme Court of Appeals of West Virginia would consider the appeal, Don Blankenship—Massey Coal’s chairman, chief executive officer, and president—decided to support the campaign of Brent Benjamin, an attorney who was challenging Warren R. McGraw, a sitting justice, for his seat on the West Virginia court.

In addition to contributing the $1,000 statutory maximum to Benjamin’s campaign committee, Blankenship donated almost $2.5 million to a political organization called And for the Sake of the Kids, which opposed McGraw and supported Benjamin. Blankenship’s contributions accounted for more than two-thirds of the total funds the organization raised. In addition, Blankenship spent just over $500,000 on independent expenditures for direct mailings and letters soliciting donations and on television and newspaper advertisements to support Benjamin. All in all, with his $3 million in contributions, Blankenship spent more than the total amount contributed by all other Benjamin supporters combined, and three times the amount spent by Benjamin’s own committee. Caperton contended that Blankenship spent $1 million more than the total spent by the campaign committees of both candidates combined. Benjamin won the election, receiving 53.3 percent of the vote.

In October 2005, before Massey Coal filed its petition for appeal in the West Virginia Supreme Court, Caperton moved to disqualify Justice Benjamin from hearing the case under the due process clause and the West Virginia Code of Judicial Conduct. Caperton cited the conflict of interest caused by Blankenship’s campaign involvement. Under procedures used in West Virginia and elsewhere, a challenged judge alone decides whether his or her disqualification (recusal) is required. Benjamin denied the motion in April 2006, finding no objective evidence that he was biased against any litigant or that he could not be fair and impartial.

In November 2007, by a 3–2 vote, the West Virginia Supreme Court reversed the $50 million verdict against Massey, with Benjamin voting with the majority.

The refusal of West Virginia Supreme Court justice Brent Benjamin (left) to disqualify himself from participating in an appeal brought by A. T. Massey Coal Company resulted in the U.S. Supreme Court’s 2009 ruling in Caperton v. A. T. Massey Coal Co. Anticipating an appeal to the state supreme court from a $50 million judgment against his company, Don Blankenship, Massey’s chairman and principal officer (right), made massive campaign contributions and direct expenditures in support of Benjamin’s election to the court.

AP Photo/Bob Bird

AP Photo/Jeff Gentner, File

Caperton sought a rehearing, and both parties moved to disqualify justices. Caperton again asked Benjamin to recuse himself and also challenged Justice Elliott Maynard. Maynard had been photographed with Blankenship in the French Riviera while the case was pending. Maynard granted Caperton’s recusal motion. Massey countered by challenging Justice Larry Starcher, who had publicly criticized Blankenship’s role in the 2004 election. Starcher also agreed to step aside, but in doing so he issued a memorandum urging Benjamin to recuse himself as well. Starcher also noted that “Blankenship’s bestowal of his personal wealth, political tactics, and ‘friendship’ have created a cancer in the affairs of this Court.” Benjamin declined Starcher’s suggestion and denied Caperton’s recusal motion.

The state supreme court granted rehearing. Benjamin, now in the capacity of acting chief justice, selected two circuit court judges to replace the two recused justices. Caperton moved a third time to disqualify Benjamin, but Benjamin once against refused to step aside.

In April 2008 a divided court again reversed the jury verdict, and again it was a 3–2 decision with Justice Benjamin voting with the majority in favor of Massey Coal. The two dissenters noted “genuine due process implications arising under federal law” with respect to Benjamin’s failure to recuse himself.

Arguments:

For the petitioners, Hugh Caperton et al.:

Due process requires recusal not only where there is proof that a judge is actually biased but also where an objective inquiry establishes a probability of bias.

The Constitution does not require recusal whenever a judge receives a campaign contribution from an attorney or litigant, but here staggering amounts of money were spent by a litigant who was preparing a multimillion-dollar appeal to the state supreme court.

Blankenship’s expenditures were directly responsible for hundreds of pro-Benjamin and anti-McGraw campaign advertisements that unquestionably helped Benjamin—a previously unknown and underfunded candidate—prevail in the election. It would be only natural for Benjamin to feel indebted to Blankenship for these extraordinary efforts on his behalf.

Due process guarantees that no person will be deprived of his interests in the absence of a proceeding in which he may present his case with assurance that the arbiter is not predisposed to find against him. Benjamin’s participation in this appeal deprived the petitioners of a fair hearing (and ultimately their property) without due process of law.

For the respondent, A. T. Massey Coal Co. et al.:

There is no basis in history or precedent for the notion that a “probability of bias” mandates disqualification under the due process clause.

Consistent with the common-law rule, this Court’s due process decisions have required disqualification based on a monetary interest in the outcome. Outside the context of contempt, where special rules apply, the Court has never held that disqualification is constitutionally required for any other reason.

Even if “probability of bias” were the constitutional standard, it could not be satisfied by the supposition that a judge might feel a debt of gratitude to a campaign supporter.

U.S. Supreme Court justices hear cases in which their religious views, prior political affiliations, or friendships with counsel make it as reasonable as it is here to infer a “probability of bias,” yet they are generally deemed capable of putting aside those influences. Sitting in those cases would become constitutionally problematic under the petitioners’ theory of due process.

JUSTICE KENNEDY DELIVERED THE OPINION OF THE COURT.

It is axiomatic that “[a] fair trial in a fair tribunal is a basic requirement of due process.” As the Court has recognized, however, “most matters relating to judicial disqualification [do] not rise to a constitutional level.” The early and leading case on the subject is Tumey v. Ohio (1927). . . .

The Tumey Court concluded that the Due Process Clause incorporated the common-law rule that a judge must recuse himself when he has “a direct, personal, substantial, pecuniary interest” in a case. . . . Under this rule, “disqualification for bias or prejudice was not” [constitutionally required]; those matters were left to statutes and judicial codes. Personal bias or prejudice “alone would not be sufficient for imposing a constitutional requirement under the Due Process Clause.”

As new problems have emerged that were not discussed at common law, however, the Court has identified additional instances which, as an objective matter, require recusal. These are circumstances “in which experience teaches that the probability of actual bias on the part of the judge . . . is too high to be constitutionally tolerable.” To place the present case in proper context, two instances where the Court has required recusal merit further discussion.

The first involved the emergence of local tribunals where a judge had a financial interest in the outcome of a case, although the interest was less than what would have been considered personal or direct at common law.

This was the problem addressed in Tumey. There, the mayor of a village had the authority to sit as a judge (with no jury) to try those accused of violating a state law prohibiting the possession of alcoholic beverages. Inherent in this structure were two potential conflicts. First, the mayor received a salary supplement for performing judicial duties, and the funds for that compensation derived from the fines assessed in a case. . . . The mayor-judge thus received a salary supplement only if he convicted the defendant. Second, sums from the criminal fines were deposited to the village’s general treasury fund for village improvements and repairs.

The Court held that the Due Process Clause required disqualification “both because of [the mayor-judge’s] direct pecuniary interest in the outcome, and because of his official motive to convict and to graduate the fine to help the financial needs of the village.” . . .

[In later cases] the Court stressed that it was “not required to decide whether in fact [the justice] was influenced.” The proper constitutional inquiry is “whether sitting on the case . . . ‘would offer a possible temptation to the average . . . judge to . . . lead him not to hold the balance nice, clear and true.’” . . .

The second instance requiring recusal that was not discussed at common law emerged in the criminal contempt context, where a judge had no pecuniary interest in the case but was challenged because of a conflict arising from his participation in an earlier proceeding. . . .

In that . . . proceeding, and as provided by state law, a judge examined witnesses to determine whether criminal charges should be brought. The judge called the two petitioners before him. One petitioner answered questions, but the judge found him untruthful and charged him with perjury. The second declined to answer on the ground that he did not have counsel with him, as state law seemed to permit. The judge charged him with contempt. The judge proceeded to try and convict both petitioners.

This Court set aside the convictions on grounds that the judge had a conflict of interest at the trial stage because of his earlier participation followed by his decision to charge them. The Due Process Clause required disqualification. [The Court] noted that the disqualifying criteria “cannot be defined with precision. Circumstances and relationships must be considered.” . . .

Based on the principles described in these cases we turn to the issue before us. This problem arises in the context of judicial elections, a framework not presented in the precedents we have reviewed and discussed. . . .

[Due to] the difficulties of inquiring into actual bias . . . the Due Process Clause has been implemented by objective standards that do not require proof of actual bias. In defining these standards the Court has asked whether, “under a realistic appraisal of psychological tendencies and human weakness,” the interest “poses such a risk of actual bias or prejudgment that the practice must be forbidden if the guarantee of due process is to be adequately implemented.”

We turn to the influence at issue in this case. Not every campaign contribution by a litigant or attorney creates a probability of bias that requires a judge’s recusal, but this is an exceptional case. We conclude that there is a serious risk of actual bias—based on objective and reasonable perceptions—when a person with a personal stake in a particular case had a significant and disproportionate influence in placing the judge on the case by raising funds or directing the judge’s election campaign when the case was pending or imminent. The inquiry centers on the contribution’s relative size in comparison to the total amount of money contributed to the campaign, the total amount spent in the election, and the apparent effect such contribution had on the outcome of the election.

Applying this principle, we conclude that Blankenship’s campaign efforts had a significant and disproportionate influence in placing Justice Benjamin on the case. Blankenship contributed some $3 million to unseat the incumbent and replace him with Benjamin. His contributions eclipsed the total amount spent by all other Benjamin supporters and exceeded by 300% the amount spent by Benjamin’s campaign committee. . . .

Whether Blankenship’s campaign contributions were a necessary and sufficient cause of Benjamin’s victory is not the proper inquiry. Much like determining whether a judge is actually biased, proving what ultimately drives the electorate to choose a particular candidate is a difficult endeavor, not likely to lend itself to a certain conclusion. Due process requires an objective inquiry into whether the contributor’s influence on the election under all the circumstances “would offer a possible temptation to the average . . . judge to . . . lead him not to hold the balance nice, clear and true.” . . . [T]he risk that Blankenship’s influence engendered actual bias is sufficiently substantial that it “must be forbidden if the guarantee of due process is to be adequately implemented.”

The temporal relationship between the campaign contributions, the justice’s election, and the pendency of the case is also critical. It was reasonably foreseeable, when the campaign contributions were made, that the pending case would be before the newly elected justice. . . . So it became at once apparent that, absent recusal, Justice Benjamin would review a judgment that cost his biggest donor’s company $50 million. Although there is no allegation of a quid pro quo agreement, the fact remains that Blankenship’s extraordinary contributions were made at a time when he had a vested stake in the outcome. Just as no man is allowed to be a judge in his own cause, similar fears of bias can arise when—without the consent of the other parties—a man chooses the judge in his own cause. And applying this principle to the judicial election process, there was here a serious, objective risk of actual bias that required Justice Benjamin’s recusal. . . .

Our decision today addresses an extraordinary situation where the Constitution requires recusal. Massey and its amici predict that various adverse consequences will follow from recognizing a constitutional violation here—ranging from a flood of recusal motions to unnecessary interference with judicial elections. We disagree. The facts now before us are extreme by any measure. The parties point to no other instance involving judicial campaign contributions that presents a potential for bias comparable to the circumstances in this case. . . .

“The Due Process Clause demarks only the outer boundaries of judicial disqualifications. Congress and the states, of course, remain free to impose more rigorous standards for judicial disqualifications than those we find mandated here today.” . . .

The judgment of the Supreme Court of Appeals of West Virginia is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

CHIEF JUSTICE ROBERTS, with whom JUSTICE SCALIA, JUSTICE THOMAS, and JUSTICE ALITO join, dissenting.

I, of course, share the majority’s sincere concerns about the need to maintain a fair, independent, and impartial judiciary—and one that appears to be such. But I fear that the Court’s decision will undermine rather than promote these values. . . .

Today . . . the Court enlists the Due Process Clause to overturn a judge’s failure to recuse because of a “probability of bias.” Unlike the established grounds for disqualification, a “probability of bias” cannot be defined in any limited way. The Court’s new “rule” provides no guidance to judges and litigants about when recusal will be constitutionally required. This will inevitably lead to an increase in allegations that judges are biased, however groundless those charges may be. The end result will do far more to erode public confidence in judicial impartiality than an isolated failure to recuse in a particular case. . . .

... [T]he standard the majority articulates—“probability of bias”—fails to provide clear, workable guidance for future cases. At the most basic level, it is unclear whether the new probability of bias standard is somehow limited to financial support in judicial elections, or applies to judicial recusal questions more generally. But there are other fundamental questions as well. With little help from the majority, courts will now have to determine:

How much money is too much money? What level of contribution or expenditure gives rise to a “probability of bias”?

How do we determine whether a given expenditure is “disproportionate”? Disproportionate to what?

Are independent, non-coordinated expenditures treated the same as direct contributions to a candidate’s campaign? What about contributions to independent outside groups supporting a candidate?

Does it matter whether the litigant has contributed to other candidates or made large expenditures in connection with other elections?

Does the amount at issue in the case matter? What if this case were an employment dispute with only $10,000 at stake? What if the plaintiffs only sought non-monetary relief such as an injunction or declaratory judgment?

Does the analysis change depending on whether the judge whose disqualification is sought sits on a trial court, appeals court, or state supreme court? . . . [Chief Justice Roberts went on to list thirty-four additional questions that he believed the judiciary ultimately would have to address in subsequent cases.]

Today, the majority . . . departs from a clear, longstanding constitutional rule to accommodate an “extreme” case involving “grossly disproportionate” amounts of money. I believe we will come to regret this decision, when courts are forced to deal with a wide variety of Caperton motions, each claiming the title of “most extreme” or “most disproportionate.” . . .

... I believe that opening the door to recusal claims under the Due Process Clause, for an amorphous “probability of bias,” will itself bring our judicial system into undeserved disrepute, and diminish the confidence of the American people in the fairness and integrity of their courts. I hope I am wrong.

I respectfully dissent.

JUSTICE SCALIA, dissenting.

A Talmudic maxim instructs with respect to the Scripture: “Turn it over, and turn it over, for all is therein.” Divinely inspired text may contain answers to all earthly questions, but the Due Process Clause most assuredly does not. The Court today continues its quixotic quest to right all wrongs and repair all imperfections through the Constitution. Alas, the quest cannot succeed—which is why some wrongs and imperfections have been called nonjusticiable. In the best of all possible worlds, should judges sometimes recuse even where the clear commands of our prior due process law do not require it? Undoubtedly. The relevant question, however, is whether we do more good than harm by seeking to correct this imperfection through expansion of our constitutional mandate in a manner ungoverned by any discernable rule. The answer is obvious.

box 10-2 AFTERMATH . . . DON BLANKENSHIP AND MASSEY COAL

THE JUNE 2009 Supreme Court decision against A. T. Massey Coal was only the start of troubles for parent company Massey Energy and its leader Don Blankenship. The company was the largest coal mining enterprise in the Appalachian region, with coal extraction activities in West Virginia, Kentucky, and Virginia. Blankenship became chairman and CEO of the company in 2000. By 2009 his salary had reached $17.8 million, with a deferred-compensation package of $27.2 million, but during his tenure Massey was constantly the subject of complaints concerning environmental damages and safety problems. The U.S. Department of Labor’s Mine Safety and Health Administration frequently cited Massey for safety violations and for the company’s failure to address them. Grist, an online environmental advocacy magazine, labeled Blankenship the “scariest polluter in the U.S.”

On April 5, 2010, a massive explosion occurred in the Upper Big Branch Coal Mine in West Virginia, an operation owned by a Massey Energy subsidiary. Twenty-nine miners were killed, making it the deadliest mining disaster in the United States in forty years. A subsequent independent investigation found fault with Massey for failure to meet basic safety standards. According to the report, the inadequate state of the company’s ventilation system allowed explosive gases to accumulate inside the mine, ultimately causing the accident and resulting fatalities. The report added, “A company that was a towering presence in the Appalachian coal fields operated its mines in a profoundly reckless manner, and 29 coal miners paid with their lives for the corporate risk taking.”

In response to the incident, the Mine Safety and Health Administration issued Massey 369 citations and orders, including 21 for flagrant violations, and assessed fines totaling $10,825,368. The agency cited Massey’s corporate culture as the root cause of the tragedy.

As a result of this disaster, groups of shareholders began demanding that Massey’s CEO be removed, with one investment group blaming the accident on Blankenship’s “confrontational approach to regulatory compliance.” In the face of this pressure Blankenship took retirement at the end of 2010. Just six months later Massey Energy was sold to one of its competitors, Alpha Natural Resources.

Brent Benjamin, the little-known attorney whose 2004 election campaign was the recipient of Blankenship’s unprecedented financial contributions, remains a justice on the West Virginia Supreme Court of Appeals. His twelve-year term ends in 2017.

Events surrounding the Caperton case became an inspiration for John Grisham’s 2008 best-selling legal thriller The Appeal.

SOURCES: Howard Berkes, “Massey CEO’s Pay Soared as Mine Concerns Grew,” National Public Radio, April 10, 2010; Steve James, “Massey Faces Shareholder Anger over Mine Disaster,” Reuters, April 13, 2010; David Roberts, “Massey Energy CEO Is a Really Bad Dude,” Grist, October 25, 2006, http://grist.org/article/don-blankenship-seventh-scariest-person-in-america; Mine Safety and Health Administration news release, December 6, 2011.

Personal Privacy and Dignity

At the start of this section, we noted that substantive due process has played a role in the Court’s interpretation of privacy and personal dignity rights.26 And, in fact, this may be the area where substantive due process is most potent today.

The Court’s initial foray into this area came during the Lochner era—for example, in Meyer v. Nebraska (1923) the justices noted that the word liberty in the due process covered the right to marry and raise children, among other liberties. But today we tend to mark its onset with the case of Griswold v. Connecticut (1965). In Griswold the Court was asked to strike down a state law that banned the distribution of contraceptives on the ground that the statute violated the right to privacy. It was clear to the majority that government interference in such an intimate area was an unacceptable intrusion into a person’s private life, but was the law unconstitutional? After all, no provision of the Constitution explicitly guarantees a right of privacy. The Court struck down the Connecticut law and declared that the Constitution did indeed protect privacy rights, but the justices did not agree about which section of the Constitution required that conclusion. Some argued that privacy rights are embedded in the due process clause of the Fourteenth Amendment. Justice John Marshall Harlan asserted this substantive due process approach to privacy in his concurring opinion:

In my view, the proper constitutional inquiry in this case is whether this Connecticut statute infringes the Due Process Clause of the Fourteenth Amendment because the enactment violates basic values “implicit in the concept of ordered liberty.” . . . The Due Process Clause of the Fourteenth Amendment stands, in my opinion, on its own bottom.

Not all of the justices agreed with this approach. Was finding a right to privacy inside the due process clause any different from the long-since rejected notion of finding a liberty of contract in that same provision? Justice Hugo Black argued that the Court had gone too far in creating a constitutional right out of vague Fourteenth Amendment language. He wrote in dissent, “I like my privacy as well as the next one, but I am nevertheless compelled to admit that government has a right to invade it unless prohibited by some specific constitutional provision.” In subsequent decisions, the justices agreed that privacy rights are found in the due process clauses of the Fifth and Fourteenth Amendments. Unreasonable or arbitrary intrusions by the government into an individual’s private life constitute a denial of liberty without due process of law.

In the years following Griswold, the Court used the due process approach to privacy to expand a number of liberties. Most notable was the 1973 decision in Roe v. Wade, which established the right to abortion. Speaking for the Court, Justice Harry Blackmun invoked the due process clause when he wrote,

[The] right of privacy, whether it be founded in the Fourteenth Amendment’s concept of personal liberty and restrictions upon state action, as we feel it is, or [another clause], . . . is broad enough to encompass a woman’s decision whether or not to terminate her pregnancy.

The Court has reached similar conclusions in other areas of privacy and personal dignity. In Lawrence v. Texas (2003) the Court concluded that laws criminalizing homosexual acts by consenting adults are barred by the right to privacy. More recently, the justices held, in Obergefell v. Hodges (2015), that because the liberties protected under the due process clause “extend to certain personal choices central to individual dignity and autonomy,” states must license a marriage between two people of the same sex. Obergefell had the effect of invalidating all existing state bans on same-sex marriage.

The privacy rights rulings such as Obergefell and decisions such as BMW of North America and Caperton are a far cry from the pro-business application of the due process clauses in Lochner and Adkins. No one expects a return to the days when primacy was given to the liberty of contract. Yet the underlying philosophical debate over the use of substantive due process continues.

As we have seen, the Court on occasion has relied on the due process clauses to protect rights not explicitly mentioned elsewhere in the Constitution. Opposition to this practice has been advanced by those who believe that fashioning new rights in this manner is inappropriate. Legal scholar John Hart Ely accused Justice Blackmun of “Lochnering” in Roe v. Wade. And recall Justice Scalia’s declaration in the BMW case: “I do not regard the Fourteenth Amendment’s Due Process Clause as a secret repository of substantive guarantees against ‘unfairness.’” Consider also his criticism of the Caperton ruling that charged the Court with using the due process clause in “its quixotic quest to right all wrongs and repair all imperfections.” In this same vein, dissenters have criticized these decisions for imprecise guidelines that allow the justices to impose their own views of what constitutes a denial of due process. Such criticisms closely resemble those of an earlier era that charged the Court with setting itself up as a “superlegislature” to decide on its own what laws are so unreasonable as to violate due process.

In response, those who support the expansion of the Constitution’s protection of individual rights have defended the use of the substantive due process approach. As Justice Anthony Kennedy explained in Lawrence v. Texas,

Had those who drew and ratified the Due Process Clauses of the Fifth Amendment or the Fourteenth Amendment known the components of liberty in its manifold possibilities, they might have been more specific. They did not presume to have this insight. They knew times can blind us to certain truths and later generations can see that laws once thought necessary and proper in fact serve only to oppress. As the Constitution endures, persons in every generation can invoke its principles in their own search for greater freedom.

Either way, it is true that the doctrine—so exalted at the beginning of the twentieth century and so discredited following the New Deal—has had a significant effect on the course of the law. What could have simply faded out of existence with Miller’s Slaughterhouse opinion became the source of one of the most interesting episodes in constitutional law.

ANNOTATED READINGS

A number of good works discuss and critique substantive due process and related phenomena. These include Randy E. Barnett, Restoring the Lost Constitution: The Presumption of Liberty (Princeton, NJ: Princeton University Press, 2003); Raoul Berger, Government by Judiciary (Cambridge, MA: Harvard University Press, 1977); Michael Conant, The Constitution and Economic Regulation (New Brunswick, NJ: Transaction, 2008); Markus Dirk Dubber, The Police Power: Patriarchy and the Foundations of American Government (New York: Columbia University Press, 2005); Edward Keynes, Liberty, Property, and Privacy: Toward a Jurisprudence of Substantive Due Process (University Park: Pennsylvania State University Press, 1996); John V. Orth, Due Process of Law (Lawrence: University Press of Kansas, 2003); and Frank R. Strong, Substantive Due Process of Law: A Dichotomy of Sense and Nonsense (Durham, NC: Carolina Academic Press, 1986).

Other books approach substantive due process from a more historical perspective: Richard C. Cortner, The Iron Horse and the Constitution: The Railroads and the Transformation of the Fourteenth Amendment (Westport, CT: Greenwood Press, 1993); Herbert Hovenkamp, Enterprise and American Law, 1836–1937 (Cambridge, MA: Harvard University Press, 1991); Morton Keller, Affairs of State (Cambridge, MA: Harvard University Press, 1977); Michael J. Phillips, The Lochner Court, Myth and Reality: Substantive Due Process from the 1890s to the 1930s (Westport, CT: Praeger, 2001); Timothy Sandefur, The Right to Earn a Living: Economic Freedom and the Law (Washington, DC.: Cato Institute, 2010); William F. Swindler, Court and Constitution in the Twentieth Century (Indianapolis: Bobbs-Merrill, 1970); Clement E. Vose, Constitutional Change (Lexington, MA: Lexington Books, 1972); and Christopher Wolfe, The Rise of Modern Judicial Review (New York: Basic Books, 1986).

Still other books provide in-depth analyses of specific cases that have been fundamental in the development and decline of substantive due process. Good examples are Howard Gillman, The Constitution Besieged: The Rise and Demise of Lochner Era Police Powers Jurisprudence (Durham, NC: Duke University Press, 1993); N. E. H. Hull, Roe v. Wade: The Abortion Controversy in American History (Lawrence: University Press of Kansas, 2001); John W. Johnson, Griswold v. Connecticut: Birth Control and the Constitutional Right of Privacy (Lawrence: University Press of Kansas, 2005); Paul Kens, Judicial Power and Reform Politics: The Anatomy of Lochner v. New York (Lawrence: University Press of Kansas, 1990); and David Richards, The Sodomy Cases: Bowers v. Hardwick and Lawrence v. Texas (Lawrence: University Press of Kansas, 2009).

1. The Fifth Amendment, ratified in 1791, prohibits the federal government from depriving anyone of life, liberty, or property without due process of law. The Fourteenth Amendment, adopted in 1868, extends the same prohibition to the states.

2. Kermit L. Hall, The Magic Mirror (New York: Oxford University Press, 1989), 232.

3. The Court’s complete rejection of the privileges and immunities argument in The Slaughterhouse Cases rendered it almost meaningless. Only of late have the courts begun to breathe new relevance into the clause. The Supreme Court relied on a privileges and immunities rationale to strike down the application of excessively long residency requirements before newcomers became eligible for state welfare benefits (see Saenz v. Roe, 1999). The Court viewed these requirements as unreasonable restrictions on the freedom of interstate travel, a right the justices found to be protected by the privileges and immunities clause.

4. Davidson v. New Orleans (1878).

5. We adapt this discussion largely from C. Peter Magrath’s “The Case of the Unscrupulous Warehouseman,” in Garraty, Quarrels That Have Shaped the Constitution.

6. Pritchett, The American Constitution, 558.

7. Ibid., 557.

8. Hall, The Magic Mirror, 236.

9. See Arnold M. Paul, Conservative Crisis and the Rule of Law (Ithaca, NY: Cornell University Press, 1960), 42.

10. Peter Woll, Constitutional Law (Englewood Cliffs, NJ: Prentice Hall, 1981), 486.

11. C. Ian Anderson, “Courts and the Constitution,” Michigan Law Review 92 (1994): 1438.

12. See, especially, Howard Gillman, The Constitution Besieged: The Rise and Demise of Lochner Era Police Powers Jurisprudence (Durham, NC: Duke University Press, 1993).

13. Anderson, “Courts and the Constitution,” 1439.

14. Clement E. Vose, Constitutional Change (Lexington, MA: Lexington Books, 1972), 172.

15. For more excerpts, see John Monahan and Laurens Walker, Social Science in Law (Westbury, NY: Foundation Press, 1998), 4–7.

16. Kelly, Harbison, and Belz, The American Constitution, 405.

17. We derive this account from Vose, Constitutional Change, 190–196.

18. Because the District of Columbia is not a state, the due process clause of the Fourteenth Amendment did not apply.

19. Vose, Constitutional Change, 194.

20. Quoted in Vose, Constitutional Change, 212.

21. Irons, The New Deal Lawyers, 278.

22. We derive this account from William E. Leuchtenburg, “The Case of the Wenatchee Chambermaid,” in Garraty, Quarrels That Have Shaped the Constitution.

23. This position is consistent with the Court’s rulings in related areas. Particularly important is the decision in United States v. Carolene Products (1938), in which the justices announced that they would henceforth generally defer to the legislature and give only minimal scrutiny to the reasonableness of economic regulations. In that same decision, the Court pledged to give more searching scrutiny to laws affecting civil liberties.

24. See, for example, Pennell v. City of San Jose (1988) and City of Cuyahoga Falls, Ohio v. Buckeye Community Hope Foundation (2003).

25. The purpose of compensatory damages is to reimburse wronged parties for actual damages suffered. The purpose of punitive damages is to punish wrongdoers for their unlawful acts.

26. For a full review of the development of the constitutional right to privacy, see chapter 10 in Epstein and Walker, Constitutional Law for a Changing America: Rights, Liberties, and Justice.

11 The Takings Clause

ONE DAY a certified letter arrives at your house you that the government has decided to construct a highway, and your property lies directly in its path. The letter further states that in return for your property the government will pay you $250,000, an amount it considers “fair market value” for your home. Finally, the letter instructs you to vacate the house within six months.

Does the government have the right to seize your property in this fashion? What if this house has been in your family for generations and you do not want to sell? What if this is your dream home, just completed after years of saving and sacrificing? And what if you consider the government’s offer to be less than the property is worth? Can you challenge the amount offered? What about your rights to private property? Don’t they mean anything?

The general answer to these questions is that the government indeed has the right to seize private property for a public purpose, such as a new road or the construction of a government building. This authority is referred to as the “power of eminent domain.” When federal, state, or local governments embark on new construction projects for roads, schools, military bases, or government offices, they usually must acquire private property. Sometimes the projects need only a parcel or two, but at other times the government requires large-scale property condemnation. Although property owners may feel mistreated when the government seizes their land, such government power is generally regarded as necessary. However, property owners have an important protection. The Constitution contains a provision, known as the “takings clause,” that checks the authority of the government against the individual’s right to property.

PROTECTING PRIVATE PROPERTY FROM GOVERNMENT SEIZURE

We normally associate the Bill of Rights with important civil liberties, such as the freedoms of speech, press, and religion. But when the members of the First Congress proposed a list of those rights considered important enough to merit constitutional protection, they included in the Fifth Amendment a private property guarantee—the takings clause—that states, “nor shall private property be taken for public use, without just compensation.”

That the framers would have protected private property in this way is not surprising: the men who fashioned the U.S. Constitution firmly believed in private property rights. They also supported a national government that would be stronger than it was under the Articles of Confederation. The takings clause acknowledges that government projects sometimes require the seizure of private property. Without the power of eminent domain, individuals could block government programs, such as the interstate highway system, by refusing to sell property to the government or by demanding unreasonable compensation, holding government projects for ransom. But James Madison, the primary author of the Bill of Rights, rejected the notion that government should have the absolute power to confiscate private property.1 The takings clause was intended to moderate that authority by ensuring that property owners would not be unduly disadvantaged when the government seized their land. It guarantees that property owners will be fairly compensated for their loss. As Justice Hugo Black explained, the takings clause “was designed to bar Government from forcing some people to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”2

Provisions similar to the takings clause were already in effect in several states at the time the Bill of Rights was drafted. Vermont’s Constitution of 1777 and the Massachusetts Constitution of 1780 were among the first to protect owners from absolute government seizures. Other states did not elevate the right to constitutional status but passed laws requiring just compensation for property seizures. States commonly imposed such protections when chartering companies to build roads, dams, and other projects. In 1785 Virginia required compensation to be paid for unimproved land seized for the building of roadways. South Carolina in the 1780s incorporated several companies to build canals, granting them the power of eminent domain on the condition that they compensate owners for their property losses. Similar provisions were incorporated into Virginia’s charter creating the Dismal Swamp Canal Company in 1787.3 With the states routinely adopting such provisions, it could be expected that the framers would see the need to restrain federal authority from seizing property in much the same way. In fact, the takings clause proposal was uncontroversial, spurring little debate in Congress or during the ratification process.

Because many states already protected private property against state government seizures, the takings clause was intended to apply only to federal government confiscations. The Supreme Court endorsed this interpretation in Barron v. Baltimore (1833).4 The dispute arose when the city of Baltimore initiated a series of street improvements that also necessitated the alteration of several small streams. As a result, large amounts of sand and dirt were swept downstream into Baltimore Harbor, causing serious problems for the owners of wharves operating in the harbor. John Barron and John Craig were particularly damaged. Their wharf had been very profitable because it was located in deep water and was capable of servicing large ships. The accumulation of silt and waste near their wharf was so great that the water became too shallow for large vessels, and Barron and Craig lost considerable business. They demanded compensation from the city for their loss. When the city refused, they sued, asking for $20,000 in damages. The local court awarded them $4,500, but a state appellate court reversed, and Barron and Craig appealed to the U.S. Supreme Court.

They claimed that the city’s construction caused their loss of profitability, which constituted a “taking” under the meaning of the Fifth Amendment and entitled them to “just compensation.” The justices, however, were not concerned with questions of whether a taking had occurred or what constituted just compensation. Instead, the Court focused on a more fundamental issue: Did the Fifth Amendment apply to state actions at all? The Court concluded that it did not. In the words of Chief Justice John Marshall,

We are of opinion that the provision in the fifth amendment to the constitution, declaring that private property shall not be taken for public use without just compensation, is intended solely as a limitation on the exercise of power by the government of the United States, and is not applicable to the legislation of the states.5

For the next half century this interpretation remained the law of the land. The takings clause applied only to the federal government. If states did not impose similar restraints on themselves, they were free to exercise the power of eminent domain without providing adequate compensation to landowners whose property had been seized.

In the late 1800s, prompted by the ratification of the Fourteenth Amendment, the Court began to reconsider this position. The Fourteenth Amendment contains a provision, known as the due process clause, that says, “nor shall any state deprive any person of life, liberty, or property, without due process of law.” Lawyers began arguing that when states confiscated private property without giving the owners adequate compensation, they were depriving the owners of property without due process of law, a violation of the Fourteenth Amendment. If adopted by the Court, this interpretation would make the takings clause binding on the states and nullify the immediate impact of Barron v. Baltimore.

The test case for this proposition was Chicago, Burlington & Quincy Railroad Company v. Chicago (1897). The controversy began in 1880 when Chicago’s city council passed an ordinance to open and widen certain city streets. The project required the condemnation of various parcels of land. Individuals owned some of this property, but other sections were part of a right-of-way belonging to the Chicago, Burlington & Quincy Railroad. A condemnation trial was held in the circuit court for Cook County. The court agreed to condemn the land, and the jury set the amounts of compensation to be paid to the landowners. The individuals whose property was confiscated received an average of about $5,000 for their losses, but the jury awarded the railroad only $1 for similar land seizures. The railroad company’s demand for a new trial was rejected, the Illinois Supreme Court offered no relief, and the company appealed to the U.S. Supreme Court.

The justices, by a 7–1 vote, ruled in favor of the railroad. The opinion of the Court, written by Justice John Marshall Harlan, held that,

The conclusion of this Court on the question is, that since the adoption of the 14th Amendment compensation for private property taken for public uses constitutes an essential element in “due process of law,” and that without such compensation the appropriation of private property to public uses, no matter under what form of procedure it is taken, would violate the provisions of the Federal Constitution.

The Court held that the takings clause of the U.S. Constitution was binding not only on the federal government, but also on state and local governments. It affirmed the government’s power of eminent domain but required the payment of adequate compensation whenever that power was exercised.6 With this ruling, the takings clause became the first provision of the Bill of Rights to be made binding on the states.

The authority of government to take private property when needed to carry out legitimate projects is now well established. The most common issue that flows from government takings cases is the question of what constitutes “just compensation.” In the normal course of events, the government attempts to buy the necessary land from the owners. If negotiations fail, the government may declare the power of eminent domain and take the property, giving the owners what it thinks is a fair price. Usually fair market value is the appropriate standard. It is not uncommon, however, for the owners to argue that the government’s offer is inadequate. In such situations the owners may challenge the amount in court. Questions of just compensation normally are settled through negotiation or trial court action; they rarely involve issues beyond the specific land under dispute.7 Although legal battles may be fought over whether the offered compensation is just, no one doubts the power of the government to seize the property.

Of greater importance to understanding the meaning of the Fifth Amendment takings clause are these two questions: What is a taking, and what constitutes a public use? Both questions have required authoritative answers by the Supreme Court.

WHAT IS A TAKING?

In many cases it is relatively easy to determine that a taking has occurred. If the federal government decides to build a new post office and must acquire a piece of privately owned property on which to build, a taking is necessary if a voluntary sale is not negotiated. Similarly, a taking occurs when, in designing a water control project, the government finds it necessary to dam certain streams and cause privately owned land to become permanently flooded. In these situations, the government takes private land, which is then used for a public purpose. There is no question that the individual has been deprived of ownership rights over the property and is entitled to compensation.

Courts are much more likely to conclude that a taking has occurred if the government has in some fashion physically invaded the owner’s property. The physical invasion does not have to be complete, as when a government-constructed dam permanently floods a piece of property, nor does it have to result in the owner’s total loss of the right to use the property. In Loretto v. Teleprompter Manhattan CATV Corp. (1982) the Court held that a New York law requiring landlords to allow a cable television company to install cable facilities on their property constituted a taking. The law required landlords to accept the direct physical attachment of plates, boxes, wires, cables, bolts, and screws on their properties. As a permanent physical occupation of the owners’ property, this installation amounted to a taking that constitutionally required just compensation.

Although a physical invasion meets the traditional definition of a taking, is such an intrusion a necessary requirement? What happens when a government activity so severely curtails the possible uses of a piece of property that its value almost disappears? United States v. Causby (1946), a case involving a North Carolina couple whose modest chicken farm was ruined by the U.S. military, answered these questions. Did a taking occur even though the Causbys retained title to their property? The majority held that it did. But pay attention to the dissent by Justice Black, which is interesting on two counts. First, it reflects Black’s generally sympathetic attitude toward federal government programs, and second, it demonstrates the importance he placed on applying the words as written. Here he attempts to apply the word taking as he believes the framers intended it to be used.

How far can the definition of a taking be legitimately extended? After all, every time the government passes a law regulating the use of property, the rights of owners are diminished. Does regulation constitute a taking? Justice Oliver Wendell Holmes addressed this question in Pennsylvania Coal Co. v. Mahon (1922). For Holmes, the answer depended on the extent of the regulation: “The general rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.” Holmes feared that, if given too much discretion, the government might regulate “until the last private property disappears.”8

Generally, government regulation that only incidentally infringes on the owner’s use of property is not considered a taking, nor is regulation that outlaws noxious or dangerous use of property. Obvious examples are zoning laws and other regulatory ordinances that make certain uses unlawful.9 Owners may be distressed that they can no longer use their property in particular ways, but the Supreme Court has held that such statutes do not constitute Fifth Amendment takings that deserve compensation. The justices ruled that takings did not occur when a state ordered property owners to cut down standing cedar trees because a disease they carried threatened nearby apple orchards, when a local government passed an ordinance removing an individual’s right to use his land as a brickyard seen as inconsistent with the surrounding neighborhood, or when for safety reasons a city prohibited a person from mining sand and gravel on his land.10

In each of these and numerous similar cases the government’s action significantly reduced the way the land could be used and decreased its commercial value, yet the Court held that a taking had not occurred. Instead, the government policy had been formulated in response to social, economic, or environmental problems that could be addressed through the use of the government’s police powers.

Penn Central Transportation Company v. City of New York (1978) addressed the questions of how far such regulation may go and for what reasons. These issues are important. If the government imposes regulations that seriously curtail the economic use of an individual’s property, has a taking occurred? Although Justice William Brennan’s opinion acknowledges that this area of the law has proved to be one of “considerable difficulty,” it presents a good review of the principles the Court has developed to answer that question.

Penn Central represents the high-water mark for the Court allowing state and local governments to impose regulation without triggering a takings clause violation. In the 1980s the Court began to reconsider its position on takings clause complaints. This shift had two causes. First, governments began exercising their land regulation powers more aggressively. Second, personnel changes created a Court that was more sympathetic to private property rights than before. The pivotal changes occurred in 1986, when William Rehnquist was elevated to the chief justiceship and Antonin Scalia joined the Court. Rehnquist had previously been on the losing side of important takings clause cases. His dissenting opinion in Penn Central clearly indicated that his views were at odds with the way the majority was handling takings clause appeals, an area of the law in which he had a special interest.

The signs of change began to appear in 1987, when the Court handed down three takings clause decisions. The first, decided in March, was Keystone Bituminous Coal Association v. DeBenedictis. The majority upheld a state regulation of coal mining operations against takings clause and contract clause attacks, but Chief Justice Rehnquist’s dissenting opinion attracted the support of three other justices, indicating that members of the Court who supported private property rights interests were poised to make a major assault on existing takings clause interpretations. The second case, First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, was decided in June. Although this case involved a relatively minor point regarding the recovery of damages in takings clause cases, the Court voted 6–3 to support the property owners who claimed compensation, and Rehnquist wrote the majority opinion. This decision was a clear signal that the Rehnquist Court was open to new takings clause appeals. Justice John Paul Stevens acknowledged this fact in a dissenting opinion, in which he said, “One thing is certain. The Court’s decision today will generate a great deal of litigation.”

The third 1987 case, Nollan v. California Coastal Commission, was the clearest indication that the Rehnquist Court was about to resurrect property rights under the takings clause. The decision also illustrates how states were using their authority to deny building permits in lieu of directly exercising the power of eminent domain. By doing so they hoped to accomplish their land-use policy goals without compensating landowners for their losses. In return for allowing James and Marilyn Nollan to build a house on their beachfront property, the state of California required the family to dedicate a portion of the property to public access. Was this requirement a taking? The five justices who were considered the Court’s conservative bloc thought it was. The four liberals said it was not. What do you think? Was the Nollans’ property partially taken from them by the public access requirement, and was California therefore bound by the Fifth Amendment to pay just compensation?

Justice Brennan’s hope that Nollan would be an aberration was not fulfilled. In the years following this opinion, the personnel on the Court continued to change. He and Justice Marshall, firm supporters of public interests over private property rights, retired. Joining the Court were two supporters of private property, Justices Anthony Kennedy and Clarence Thomas. These changes strengthened the chief justice’s efforts to breathe new life into the Constitution’s private property protections.

There is no invariable rule to assist courts in determining whether a challenged government regulation has gone too far and become a taking. Rather, in line with the Penn Central decision, courts engage in an ad hoc evaluation of the government’s actions weighing all relevant facts and circumstances, including the nature of the government’s actions, the economic impact of the regulation on the claimant, and the extent to which the regulation has interfered with distinct investment-backed expectations.

However, there are two conditions under which courts find no need to engage in such a searching analysis. If either of these two conditions exists, there is no question that the government action constitutes a taking that requires compensation. The first condition is when the government’s action completely deprives the owner of all economically beneficial use of the property. The second occurs when the government permanently occupies the property. Either situation categorically requires compensation. These are often referred to as “per se” takings.

The Court’s decision in Lucas v. South Carolina Coastal Council (1992) involves a litigant who claimed that the state government’s environmental regulations stripped his land of any economic value. Do you think the government’s action was a reasonable regulation to protect the coastal environment or do you agree with the Court’s majority that a taking occurred?

The Court’s decision meant that David Lucas was entitled to compensation in return for being denied the right to develop his land (see box 11-1). It also meant that the Court was continuing to broaden its definition of what constitutes a taking and to expand the range of situations in which government is required to provide compensation to private landowners.

The justices further clarified the meaning of per se takings in Horne v. Department of Agriculture (2015), a case involving the government’s permanent possession of the seized property. The decision also addressed the question of whether the takings clause applies only to real property or whether the government seizure of personal property also requires compensation.

United States v. Causby

328 U.S. 256 (1946)

http://laws.findlaw.com/us/328/256.html

Vote: 5 (Douglas, Frankfurter, Murphy, Reed, Rutledge)

2 (Black, Burton)

OPINION OF THE COURT: Douglas

DISSENTING OPINION: Black

NOT PARTICIPATING: Jackson

FACTS:

The Causbys owned 2.8 acres outside Greensboro, North Carolina. On this land were their house and the various outbuildings they needed for their chicken business. In 1942 the federal government leased a local airfield for use by army and navy aircraft. Bombers, fighters, and transport planes regularly flew in and out of this facility at all hours of the day and night. Planes often flew in close formation and in considerable numbers. The end of the airport runway was only 2,220 feet from the Causbys’ property. The authorized flight patterns allowed planes to fly at an altitude of 83 feet over the Causbys’ land, just 67 feet over their house, and within 18 feet of the highest tree on their property.

This activity caused the couple considerable discomfort as well as economic loss. The noise was described as startling, and the lights from approaching and departing planes lit up the night. The Causbys could not enjoy the day and found it difficult to sleep at night. No aircraft accidents had occurred on their property, but there had been several near the airport, which made the Causbys fearful and nervous. In addition, the productivity of their chickens decreased. About 150 of them died when they flew into the walls of their coops out of fear and panic when the planes flew particularly close. The property could no longer be used as a commercial chicken farm.

The Causbys filed suit in the federal court of claims arguing that the government had taken their land without just compensation in violation of the takings clause. The court agreed and ordered the government to pay them $2,000 for their loss. The federal government appealed to the Supreme Court, claiming that there was no taking because there was no physical violation of the landowners’ property.

ARGUMENTS:

For the petitioner, United States:

There is no taking without a physical invasion. Using airspace above the Causby land does not constitute a taking of property.

A landowner does not own the airspace above his land that he has not subjected to the erection of a structure.

The Air Commerce Act of 1926 and the Civil Aeronautics Act of 1938 give the federal government sovereign authority over the nation’s airspace. These laws also acknowledge that using navigable airspace is an exercise of the right to travel.

Any damages suffered by the Causbys are negligible.

For the respondents, Thomas Lee Causby and Tinie Causby:

The landowner has rights to the airspace above his property. The government’s use of that airspace constitutes a taking.

The taking of the airspace above the respondent’s land damaged the property and the productive use of that property.

The trespass by the government at all hours of the day and night destroyed the Causbys’ chicken business, for which they deserve full compensation.

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

It is ancient doctrine that at common law ownership of the land extended to the periphery of the universe. . . . But that doctrine has no place in the modern world. The air is a public highway, as Congress has declared. Were that not true, every transcontinental flight would subject the operator to countless trespass suits. Common sense revolts at the idea. To recognize such private claims to the airspace would clog these highways, seriously interfere with their control and development in the public interest, and transfer into private ownership that to which only the public has a just claim.

But that general principle does not control the present case. For the United States conceded on oral argument that if the flights over respondents’ property rendered it uninhabitable, there would be a taking compensable under the Fifth Amendment. It is the owner’s loss, not the taker’s gain, which is the measure of the value of the property taken. Market value fairly determined is the normal measure of the recovery. And that value may reflect the use to which the land could readily be converted, as well as the existing use. If, by reason of the frequency and altitude of the flights, respondents could not use this land for any purpose, their loss would be complete. It would be as complete as if the United States had entered upon the surface of the land and taken exclusive possession of it.

... The owner’s right to possess and exploit the land—that is to say, his beneficial ownership of it—would be destroyed. It would not be a case of incidental damages arising from a legalized nuisance. . . .

There is no material difference between the supposed case and the present one, except that here enjoyment and use of the land are not completely destroyed. But that does not seem to us to be controlling. The path of glide for airplanes might reduce a valuable factory site to grazing land, an orchard to a vegetable patch, a residential section to a wheat field. Some value would remain. But the use of the airspace immediately above the land would limit the utility of the land and cause a diminution in its value. . . .

We have said that the airspace is a public highway. Yet it is obvious that if the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping atmosphere. Otherwise buildings could not be erected, trees could not be planted, and even fences could not be run. The principle is recognized when the law gives a remedy in case overhanging structures are erected on adjoining land. The landowner owns at least as much of the space above the ground as he can occupy or use in connection with the land. The fact that he does not occupy it in a physical sense—by the erection of buildings and the like—is not material. As we have said, the flight of airplanes, which skim the surface but do not touch it, is as much an appropriation of the use of the land as a more conventional entry upon it. We would not doubt that, if the United States erected an elevated railway over respondents’ land at the precise altitude where its planes now fly, there would be a partial taking, even though none of the supports of the structure rested on the land. The reason is that there would be an intrusion so immediate and direct as to subtract from the owner’s full enjoyment of the property and to limit his exploitation of it. While the owner does not in any physical manner occupy that stratum of airspace or make use of it in the conventional sense, he does use it in somewhat the same sense that space left between buildings for the purpose of light and air is used. The superadjacent airspace at this low altitude is so close to the land that continuous invasions of it affect the use of the surface of the land itself. We think that the landowner, as an incident to his ownership, has a claim to it and that invasions of it are in the same category as invasions of the surface. . . .

The airplane is part of the modern environment of life, and the inconveniences which it causes are normally not compensable under the Fifth Amendment. The airspace, apart from the immediate reaches above the land, is part of the public domain. We need not determine at this time what those precise limits are. Flights over private land are not a taking, unless they are so low and so frequent as to be a direct and immediate interference with the enjoyment and use of the land. We need not speculate on that phase of the present case. For the findings of the Court of Claims plainly establish that there was a diminution in value of the property and that the frequent, low-level flights were the direct and immediate cause. We agree with the Court of Claims that a servitude has been imposed upon the land. . . .

... [T]he cause is remanded to the Court of Claims so that it may make the necessary findings in conformity with this opinion.

Reversed.

MR. JUSTICE BLACK, dissenting.

The Fifth Amendment provides that “private property” shall not “be taken for public use without just compensation.” The Court holds today that the Government has “taken” respondents’ property by repeatedly flying Army bombers directly above respondents’ land at a height of eighty-three feet where the light and noise from these planes caused respondents to lose sleep and their chickens to be killed. Since the effect of the Court’s decision is to limit, by the imposition of relatively absolute constitutional barriers, possible future adjustments through legislation and regulation which might become necessary with the growth of air transportation, and since in my view the Constitution does not contain such barriers, I dissent. . . .

The Court’s opinion seems to indicate that the mere flying of planes through the column of air directly above respondents’ land does not constitute a “taking.” Consequently, it appears to be noise and glare, to the extent and under the circumstances shown here, which make the Government a seizer of private property. . . . The concept of taking property as used in the Constitution has heretofore never been given so sweeping a meaning. The Court’s opinion presents no case where a man who makes noise or shines light onto his neighbor’s property has been ejected from that property for wrongfully taking possession of it. Nor would anyone take seriously a claim that noisy automobiles passing on a highway are taking wrongful possession of the homes located thereon, or that a city elevated train which greatly interferes with the sleep of those who live next to it wrongfully takes their property. . . . I am not willing, nor do I think the Constitution and the decisions authorize me, to extend that phrase so as to guarantee an absolute constitutional right to relief not subject to legislative change, which is based on averments that at best show mere torts committed by government agents while flying over land. The future adjustment of the rights and remedies of property owners, which might be found necessary because of the flight of planes at safe altitudes, should, especially in view of the imminent expansion of air navigation, be left where I think the Constitution left it, with Congress. . . .

No greater confusion could be brought about in the coming age of air transportation than that which would result were courts by constitutional interpretation to hamper Congress in its efforts to keep the air free. Old concepts of private ownership of land should not be introduced into the field of air regulation. I have no doubt that Congress will, if not handicapped by judicial interpretations of the Constitution, preserve the freedom of the air, and at the same time, satisfy the just claims of aggrieved persons. The noise of newer, larger, and more powerful planes may grow louder and louder and disturb people more and more. But the solution of the problems precipitated by these technological advances and new ways of living cannot come about through the application of rigid constitutional restraints formulated and enforced by the courts. What adjustments may have to be made, only the future can reveal. It seems certain, however, that courts do not possess the techniques or the personnel to consider and act upon the complex combinations of factors entering into the problems. . . . Today’s opinion is, I fear, an opening wedge for an unwarranted judicial interference with the power of Congress to develop solutions for new and vital national problems. In my opinion this case should be reversed on the ground that there has been no “taking” in the constitutional sense.

MR. JUSTICE BURTON joins in this dissent.

Penn Central Transportation Company v. City of New York

438 U.S. 104 (1978)

http://laws.findlaw.com/us/438/104.html

Oral arguments are available at https://www.oyez.org.

Vote: 6 (Blackmun, Brennan, Marshall, Powell, Stewart, White)

3 (Burger, Rehnquist, Stevens)

OPINION OF THE COURT: Brennan

DISSENTING OPINION: Rehnquist

FACTS:

New York City passed the Landmarks Preservation Law in 1965 as part of an effort to protect historic buildings and districts. Each of the fifty states and more than five hundred cities had similar statutes. In New York the Landmarks Preservation Commission administered the law. The commission’s task was to identify buildings and areas that held special historic or aesthetic value. These sites were then discussed in hearings to determine whether landmark status should be conferred. If a building or area was designated historic, certain restrictions applied. The owners of landmark buildings were required to keep the exteriors in good repair and not alter the buildings without securing prior approval from the commission. Owners of such buildings received no direct compensation, but they were accorded enhanced development rights for other properties.

This case involved the application of the preservation law to the Grand Central Terminal, owned by Penn Central Transportation Company. The station, which opened in 1913, is widely regarded as an example of ingenious engineering in response to problems presented by modern urban rail stations. It is also cited as a magnificent example of French beaux arts style. The terminal received historic landmark status in 1967, although Penn Central initially opposed the action.

In 1968, to increase revenues, Penn Central entered into an agreement with UGP Properties to build a multistory office building above the terminal. UGP and Penn Central presented two separate plans to the Landmarks Preservation Commission for its approval. One plan proposed a change in the existing facade of the building and construction of a fifty-three-story office tower above it. The other envisioned a fifty-five-story office building cantilevered above the existing facade and resting on the roof of the terminal. The commission rejected both proposals.

In response, Penn Central and UGP filed suit, claiming that the application of the Landmarks Preservation Law to the terminal constituted a taking of their property without just compensation. The New York courts denied their claims, with the state’s highest court rejecting the notion that the property had been “taken” under the meaning of the Fifth Amendment.

ARGUMENTS:

For the appellants, Penn Central Transportation Company et al.:

Penn Central has a valuable private property interest in the air space above Grand Central Terminal that is fully protected by the Constitution.

The Landmarks law operates as a taking of Penn Central’s property right to develop the airspace above the terminal. As a consequence the value of the terminal property is significantly diminished.

The city’s program to preserve buildings of historic or aesthetic importance is not exempt from the constitutional requirement of just compensation.

The law singles out landowners of certain properties, causing them to bear the burden of the city’s program. Granting these targeted owners enhanced development rights for other properties falls short of just compensation.

For the appellee, New York City:

The landmark law did not deprive Penn Central of its property without due process of law. The line between regulation and confiscation has not been breached.

Landmarks preservation is necessary to the general welfare of the people, particularly in New York City, where a densely populated area is affected by the quality of the physical environment.

Penn Central has not been singled out for discriminatory treatment.

Penn Central has failed to show that the property, as restricted, is not economically viable.

MR. JUSTICE BRENNAN delivered the opinion of the Court.

Before considering appellants’ specific contentions, it will be useful to review the factors that have shaped the jurisprudence of the Fifth Amendment injunction “nor shall private property be taken for public use, without just compensation.” The question of what constitutes a “taking” for purposes of the Fifth Amendment has proved to be a problem of considerable difficulty. . . . [T]his Court, quite simply, has been unable to develop any “set formula” for determining when “justice and fairness” require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons. Indeed, we have frequently observed that whether a particular restriction will be rendered invalid by the government’s failure to pay for any losses proximately caused by it depends largely “upon the particular circumstances [in that] case.”

Artist’s conception of a fifty-five-story office building to be “floated” over the waiting room of New York’s Grand Central Terminal, which had been designated a historic landmark. Plans for this building, and several others, were rejected by the Landmarks Preservation Commission, and the Supreme Court ruled that such a rejection did not constitute a taking.

© Bettmann/Corbis

In engaging in these essentially ad hoc, factual inquiries, the Court’s decisions have identified several factors that have particular significance. The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations are, of course, relevant considerations. So, too, is the character of the government action. A “taking” may more readily be found when the interference with property can be characterized as a physical invasion by the government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.

“Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law,” Pennsylvania Coal Co. v. Mahon (1922), and this Court has accordingly recognized, in a wide variety of contexts, that government may execute laws or programs that adversely affect recognized economic values. Exercises of the taxing power are one obvious example. A second are the decisions in which this Court has dismissed “taking” challenges on the ground that, while the challenged government action caused economic harm, it did not interfere with interests that were sufficiently bound up with the reasonable expectations of the claimant to constitute “property” for Fifth Amendment purposes.

More importantly for the present case, in instances in which a state tribunal reasonably concluded that “the health, safety, morals, or general welfare” would be promoted by prohibiting particular contemplated uses of land, this Court has upheld land-use regulations that destroyed or adversely affected recognized real property interests. Zoning laws are, of course, the classic example. . . .

Zoning laws generally do not affect existing uses of real property, but “taking” challenges have also been held to be without merit in a wide variety of situations when the challenged governmental actions prohibited a beneficial use to which individual parcels had previously been devoted and thus caused substantial individualized harm. . . .

Pennsylvania Coal Co. v. Mahon (1922) is the leading case for the proposition that a state statute that substantially furthers important public policies may so frustrate distinct investment-backed expectations as to amount to a “taking.” There the claimant had sold the surface rights to particular parcels of property, but expressly reserved the right to remove the coal thereunder. A Pennsylvania statute, enacted after the transactions, forbade any mining of coal that caused the subsidence of any house, unless the house was the property of the owner of the underlying coal and was more than 150 feet from the improved property of another. Because the statute made it commercially impracticable to mine the coal, and thus had nearly the same effect as the complete destruction of rights claimant had reserved from the owners of the surface land, the Court held that the statute was invalid as effecting a “taking” without just compensation. . . .

In contending that the New York City law has “taken” their property in violation of the Fifth and Fourteenth Amendments, appellants make a series of arguments, which, while tailored to the facts of this case, essentially urge that any substantial restriction imposed pursuant to a landmark law must be accompanied by just compensation if it is to be constitutional. Before considering these, we emphasize what is not in dispute. Because this Court has recognized in a number of settings, that States and cities may enact land-use restrictions or controls to enhance the quality of life by preserving the character and desirable aesthetic features of a city, appellants do not contest that New York City’s objective of preserving structures and areas with special historic, architectural, or cultural significance is an entirely permissible governmental goal. They also do not dispute that the restrictions imposed on its parcel are appropriate means of securing the purposes of the New York City law. Finally, appellants do not challenge any of the specific factual premises of the decision below. They accept for present purposes both that the parcel of land occupied by Grand Central Terminal must, in its present state, be regarded as capable of earning a reasonable return, and that the transferable development rights afforded the appellants by virtue of the Terminal’s designation as a landmark are valuable, even if not as valuable as the rights to construct above the Terminal. In appellants’ view none of these factors derogate from their claim that New York City’s law has effected a “taking.”

They first observe that the airspace above the Terminal is a valuable property interest, citing United States v. Causby. They urge that the Landmarks Law has deprived them of any gainful use of their “air rights” above the Terminal and that, irrespective of the value of the remainder of their parcel, the city has “taken” their right to this superadjacent airspace, thus entitling them to “just compensation” measured by the fair market value of these air rights.

Apart from our own disagreement with appellants’ characterization of the effect of the New York City law, the submission that appellants may establish a “taking” simply by showing that they have been denied the ability to exploit a property interest that they heretofore had believed was available for development is quite simply untenable. . . . “Taking” jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. In deciding whether a particular governmental action has effected a taking, this Court focuses rather both on the character of the action and on the nature and extent of the interference with rights in the parcel as a whole—here, the city tax block designated as the “landmark site.”

Secondly, appellants, focusing on the character and impact of the New York City law, argue that it effects a “taking” because its operation has significantly diminished the value of the Terminal site. Appellants concede that the decisions sustaining other land-use regulations, which, like the New York City law, are reasonably related to the promotion of the general welfare, uniformly reject the proposition that diminution in property value, standing alone, can establish a “taking.” . . . [B]ut appellants argue that New York City’s regulation of individual landmarks is fundamentally different from zoning or from historic-district legislation because the controls imposed by New York City’s law apply only to individuals who own selected properties.

Stated baldly, appellants’ position appears to be that the only means of ensuring that selected owners are not singled out to endure financial hardship for no reason is to hold that any restriction imposed on individual landmarks pursuant to the New York City scheme is a “taking” requiring the payment of “just compensation.” Agreement with this argument would, of course, invalidate not just New York City’s law, but all comparable landmark legislation in the Nation. We find no merit in it. . . .

Equally without merit is the related argument that the decision to designate a structure as a landmark “is inevitably arbitrary or at least subjective, because it is basically a matter of taste,” thus unavoidably singling out individual landowners for disparate and unfair treatment. The argument has a particularly hollow ring in this case. . . . [A] landmark owner has a right to judicial review of any Commission decision, and, quite simply, there is no basis whatsoever for a conclusion that courts will have any greater difficulty identifying arbitrary or discriminatory action in the context of landmark regulation than in the context of classic zoning or indeed in any other context. . . .

In any event, appellants’ repeated suggestions that they are solely burdened and unbenefited is factually inaccurate. This contention overlooks the fact that the New York City law applies to vast numbers of structures in the city in addition to the Terminal—all the structures contained in the 31 historic districts and over 400 individual landmarks, many of which are close to the Terminal. Unless we are to reject the judgment of the New York City Council that the preservation of landmarks benefits all New York citizens and all structures, both economically and by improving the quality of life in the city as a whole—which we are unwilling to do—we cannot conclude that the owners of the Terminal have in no sense been benefited by the Landmarks Law. . . .

... [T]he New York City law does not interfere in any way with the present uses of the Terminal. Its designation as a landmark not only permits but contemplates that appellants may continue to use the property precisely as it has been used for the past 65 years: as a railroad terminal containing office space and concessions. So the law does not interfere with what must be regarded as Penn Central’s primary expectation concerning the use of the parcel. More importantly, on this record, we must regard the New York City law as permitting Penn Central not only to profit from the Terminal but also to obtain a “reasonable” return on its investment. . . .

On this record, we conclude that the application of New York City’s Landmarks Law has not effected a “taking” of appellants’ property. The restrictions imposed are substantially related to the promotion of the general welfare and not only permit reasonable beneficial use of the landmark site but also afford appellants opportunities further to enhance not only the Terminal site proper but also other properties.

Affirmed.

MR. JUSTICE REHNQUIST, with whom THE CHIEF JUSTICE and MR. JUSTICE STEVENS join, dissenting.

Of the over one million buildings and structures in the city of New York, appellees have singled out 400 for designation as official landmarks. The owner of a building might initially be pleased that his property has been chosen by a distinguished committee of architects, historians, and city planners for such a singular distinction. But he may well discover, as appellant Penn Central Transportation Co. did here, that the landmark designation imposes upon him a substantial cost, with little or no offsetting benefit except for the honor of the designation. The question in this case is whether the cost associated with the city of New York’s desire to preserve a limited number of “landmarks” within its borders must be borne by all of its taxpayers or whether it can instead be imposed entirely on the owners of the individual properties. . . .

The Fifth Amendment provides in part: “nor shall private property be taken for public use, without just compensation.” In a very literal sense, the actions of appellees violated this constitutional prohibition. Before the city of New York declared Grand Central Terminal to be a landmark, Penn Central could have used its “air rights” over the Terminal to build a multistory office building, at an apparent value of several million dollars per year. Today, the Terminal cannot be modified in any form, including the erection of additional stories, without the permission of the Landmark Preservation Commission, a permission which appellants, despite good-faith attempts, have so far been unable to obtain. . . .

As Mr. Justice Holmes pointed out in Pennsylvania Coal Co. v. Mahon, “the question at bottom” in an eminent domain case “is upon whom the loss of the changes desired should fall.” The benefits that appellees believe will flow from preservation of the Grand Central Terminal will accrue to all the citizens of New York City. There is no reason to believe that appellants will enjoy a substantially greater share of these benefits. If the cost of preserving Grand Central Terminal were spread evenly across the entire population of the city of New York, the burden per person would be in cents per year—a minor cost appellees would surely concede for the benefit accrued. Instead, however, appellees would impose the entire cost of several million dollars per year on Penn Central. But it is precisely this sort of discrimination that the Fifth Amendment prohibits. . . .

Over 50 years ago, Mr. Justice Holmes, speaking for the Court, warned that the courts were “in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.” The Court’s opinion in this case demonstrates that the danger thus foreseen has not abated. The city of New York is in a precarious financial state, and some may believe that the costs of landmark preservation will be more easily borne by corporations such as Penn Central than the overburdened individual taxpayers of New York. But these concerns do not allow us to ignore past precedents construing the Eminent Domain Clause to the end that the desire to improve the public condition is, indeed, achieved by a shorter cut than the constitutional way of paying for the change.

Nollan v. California Coastal Commission

483 U.S. 825 (1987)

http://laws.findlaw.com/us/483/825.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (O’Connor, Powell, Rehnquist, Scalia, White)

4 (Blackmun, Brennan, Marshall, Stevens)

OPINION OF THE COURT: Scalia

DISSENTING OPINIONS: Blackmun, Brennan, Stevens

FACTS:

James and Marilyn Nollan owned a beachfront lot in Ventura County, California. One-quarter mile north of their property was Faria County Park, a public beach and recreation area. Another public beach, known as the Cove, was located 1,800 feet south of the Nollan lot. A concrete seawall, eight feet high, separated the beach part of the Nollan property from the rest of the land. Originally, a small bungalow that was rented to summer vacationers stood on the property. The house, however, had fallen into serious disrepair and could no longer be rented. The Nollans decided to replace the bungalow with a new structure, and to do so they needed a building permit from the California Coastal Commission.

The commission granted the Nollans permission to build their new house, but with one significant condition: a strip of their property was to be set aside for use by the public to move between the two public beaches. The Nollans protested. On rehearing, the commission reaffirmed the requirement, finding that the easement was necessary because the new house would reduce the view of the beach from the street and prevent the public “psychologically . . . from realizing a stretch of coastline exists nearby that they have every right to visit.” The Nollans then filed suit claiming that the public access condition constituted a taking under the Fifth Amendment. The California Supreme Court ruled in favor of the commission, and the Nollans took their case to the U.S. Supreme Court.

ARGUMENTS:

For the appellants, James P. Nollan and Marilyn H. Nollan:

The state’s requirement of a public right-of-way will allow repeated physical invasions of the appellants’ property by members of the public.

Such a permanent physical invasion of the property is clearly a taking for which the Nollans are constitutionally entitled to just compensation.

The Nollans have received no special benefit nor created any special public burden to justify imposing on them the full cost of expanding public beach access.

For the appellee, the California Coastal Commission:

In exercising its police powers, the state has properly taken into account the cumulative impacts of proposed developments.

The regulation in question serves an important public purpose of allowing public access to the publicly owned coastal tidelands.

The line between regulation and confiscation has not been breached.

The Nollans have not been deprived of all economic use or value of their property.

JUSTICE SCALIA delivered the opinion of the Court.

Had California simply required the Nollans to make an easement across their beachfront available to the public on a permanent basis in order to increase public access to the beach, rather than conditioning their permit to rebuild their house on their agreeing to do so, we have no doubt there would have been a taking. To say that the appropriation of a public easement across a landowner’s premises does not constitute the taking of a property interest but rather . . . “a mere restriction on its use” is to use words in a manner that deprives them of all their ordinary meaning. Indeed, one of the principal uses of the eminent domain power is to assure that the government be able to require conveyance of just such interests, so long as it pays for them. Perhaps because the point is so obvious, we have never been confronted with a controversy that required us to rule upon it, but our cases’ analysis of the effect of other governmental action leads to the same conclusion. We have repeatedly held that, as to property reserved by its owner for private use, “the right to exclude [others is] ‘one of the most essential sticks in the bundle of rights that are commonly characterized as property.’” In Loretto [v. Teleprompter Manhattan CATV, 1982] we observed that where governmental action results in “[a] permanent physical occupation” of the property, by the government or others, “our cases uniformly have found a taking to the extent of the occupation, without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner.” We think a “permanent physical occupation” has occurred, for purposes of that rule, where individuals are given a permanent and continuous right to pass to and fro, so that the real property may continuously be traversed, even though no particular individual is permitted to station himself permanently upon the premises. . . .

Given, then, that requiring uncompensated conveyance of the easement outright would violate the Fourteenth Amendment, the question becomes whether requiring it to be conveyed as a condition for issuing a land-use permit alters the outcome. We have long recognized that land-use regulation does not effect a taking if it “substantially advance[s] legitimate state interests” and does not “den[y] an owner economically viable use of his land.” . . . Our cases have not elaborated on the standards for determining what constitutes a “legitimate state interest” or what type of connection between the regulation and the state interest satisfies the requirement that the former “substantially advance” the latter. They have made clear, however, that a broad range of governmental purposes and regulations satisfies these requirements. The Commission argues that among these permissible purposes are protecting the public’s ability to see the beach, assisting the public in overcoming the “psychological barrier” to using the beach created by a developed shorefront, and preventing congestion on the public beaches. We assume, without deciding, that this is so—in which case the Commission unquestionably would be able to deny the Nollans their permit outright if their new house (alone, or by reason of the cumulative impact produced in conjunction with other construction) would substantially impede these purposes, unless the denial would interfere so drastically with the Nollans’ use of their property as to constitute a taking.

... Thus, if the Commission attached to the permit some condition that would have protected the public’s ability to see the beach notwithstanding construction of the new house—for example, a height limitation, a width restriction or a ban on fences—so long as the Commission could have exercised its police power (as we have assumed it could) to forbid construction of the house altogether, imposition of the condition would also be constitutional. Moreover (and here we come closer to the facts of the present case), the condition would be constitutional even if it consisted of the requirement that the Nollans provide a viewing spot on their property for passersby with whose sighting of the ocean their new house would interfere. Although such a requirement, constituting a permanent grant of continuous access to the property, would have to be considered a taking if it were not attached to a development permit, the Commission’s assumed power to forbid construction of the house in order to protect the public’s view of the beach must surely include the power to condition construction upon some concession by the owner, even a concession of property rights, that serves the same end. If a prohibition designed to accomplish that purpose would be a legitimate exercise of the police power rather than a taking, it would be strange to conclude that providing the owner an alternative to that prohibition which accomplishes the same purpose is not.

The evident constitutional propriety disappears, however, if the condition substituted for the prohibition utterly fails to further the end advanced as the justification for the prohibition. . . . The purpose then becomes, quite simply, the obtaining of an easement to serve some valid governmental purpose, but without payment of compensation. Whatever may be the outer limits of “legitimate state interests” in the takings and land-use context, this is not one of them. In short, unless the permit condition serves the same governmental purpose as the development ban, the building restriction is not a valid regulation of land use but “an out-and-out plan of extortion.” . . .

It is quite impossible to understand how a requirement that people already on the public beaches be able to walk across the Nollans’ property reduces any obstacles to viewing the beach created by the new house. It is also impossible to understand how it lowers any “psychological barrier” to using the public beaches, or how it helps to remedy any additional congestion on them caused by construction of the Nollans’ new house. We therefore find that the Commission’s imposition of the permit condition cannot be treated as an exercise of its land-use power for any of these purposes. Our conclusion on this point is consistent with the approach taken by every other court that has considered the question, with the exception of the California state courts. . . .

California is free to advance its “comprehensive program,” if it wishes, by using its power of eminent domain for this “public purpose,” but if it wants an easement across the Nollans’ property, it must pay for it.

Reversed.

JUSTICE BRENNAN, with whom JUSTICE MARSHALL joins, dissenting.

The Court’s conclusion that the permit condition imposed on appellants is unreasonable cannot withstand analysis. First, the Court demands a degree of exactitude that is inconsistent with our standard for reviewing the rationality of a State’s exercise of its police power for the welfare of its citizens. Second, even if the nature of the public-access condition imposed must be identical to the precise burden on access created by appellants, this requirement is plainly satisfied.

There can be no dispute that the police power of the States encompasses the authority to impose conditions on private development. It is also by now commonplace that this Court’s view of the rationality of a State’s exercise of its police power demands only that the State “could rationally have decided” that the measure adopted might achieve the State’s objective. In this case, California has employed its police power in order to condition development upon preservation of public access to the ocean and tidelands. The Coastal Commission, if it had so chosen, could have denied the Nollans’ request for a development permit, since the property would have remained economically viable without the requested new development. Instead, the State sought to accommodate the Nollans’ desire for new development, on the condition that the development not diminish the overall amount of public access to the coastline. Appellants’ proposed development would reduce public access by restricting visual access to the beach, by contributing to an increased need for community facilities, and by moving private development closer to public beach property. The Commission sought to offset this diminution in access, and thereby preserve the overall balance of access, by requesting a deed restriction that would ensure “lateral” access: the right of the public to pass and repass along the dry sand parallel to the shoreline in order to reach the tidelands and the ocean. In the expert opinion of the Coastal Commission, development conditioned on such a restriction would fairly attend to both public and private interests.

The Court finds fault with this measure because it regards the condition as insufficiently tailored to address the precise type of reduction in access produced by the new development. The Nollans’ development blocks visual access, the Court tells us, while the Commission seeks to preserve lateral access along the coastline. Thus, it concludes, the State acted irrationally. Such a narrow conception of rationality, however, has long since been discredited as a judicial arrogation of legislative authority. . . .

Imposition of the permit condition in this case represents the State’s reasonable exercise of its police power. The Coastal Commission has drawn on its expertise to preserve the balance between private development and public access, by requiring that any project that intensifies development on the increasingly crowded California coast must be offset by gains in public access. Under the normal standard for review of the police power, this provision is eminently reasonable. . . .

State agencies . . . require considerable flexibility in responding to private desires for development in a way that guarantees the preservation of public access to the coast. They should be encouraged to regulate development in the context of the overall balance of competing uses of the shoreline. The Court today does precisely the opposite, overruling an eminently reasonable exercise of an expert state agency’s judgment, substituting its own narrow view of how this balance should be struck. Its reasoning is hardly suited to the complex reality of natural resource protection in the 20th century. I can only hope that today’s decision is an aberration, and that the broader vision ultimately prevails.

I dissent.

Lucas v. South Carolina Coastal Council

505 U.S. 1003 (1992)

http://laws.findlaw.com/us/505/1003.html

Oral arguments are available at https://www.oyez.org.

Vote: 6 (Kennedy, O’Connor, Rehnquist, Scalia, Thomas, White)

3 (Blackmun, Souter, Stevens)

OPINION OF THE COURT: Scalia

OPINION CONCURRING IN THE JUDGMENT: Kennedy

DISSENTING OPINIONS: Blackmun, Stevens

SEPARATE STATEMENT: Souter

FACTS:

David Lucas owned two vacant oceanfront lots on the Isle of Palms, a barrier island near Charleston, South Carolina. He acquired the property with the intention of building single-family homes similar to those already built on adjacent lots. When Lucas bought the land there were no regulations prohibiting such use. Shortly thereafter, however, the state passed the Beachfront Management Act, an environmental law that increased the state coastal council’s authority to protect certain shoreline areas against erosion and other dangers. The council decided that the Lucas lots were in a “critical area” and prohibited any new construction there.

There is no doubt that under its police powers the state has the right to pass such legislation, but Lucas claimed that the new regulations amounted to a taking of his property for a public purpose. The Fifth Amendment, he argued, required the state to pay him for the loss of his property. A state trial judge agreed that the regulations had made the Lucas property essentially worthless and ordered the state to compensate him for his loss. On appeal, the South Carolina Supreme Court reversed, holding that the environmental legislation was not a taking under the meaning of the Constitution. Lucas appealed to the U.S. Supreme Court.

Many saw this case as presenting the Supreme Court with the opportunity to reset the constitutional balance between private property rights and the government’s authority to regulate for the common good. As a consequence, it is not surprising that a large number of governments and organizations submitted amicus curiae briefs. The administration of President George H. W. Bush, conservative legal organizations such as Pacific Legal Foundation, and a long list of groups whose economic interests were threatened by government land-use regulations filed in behalf of Lucas. Among these groups were the National Association of Home Builders, the American Mining Congress, and the American Farm Bureau Federation. Urging the Court to support South Carolina’s position were briefs from more than half the states, the U.S. Conference of Mayors and other local government groups, and organizations favoring government protection of the environment, such as the National Trust for Historic Preservation and the Sierra Club. The stakes were high.

ARGUMENTS:

For the petitioner, David H. Lucas:

The state law is a valid exercise of the police power, but it involves a taking for which Lucas is constitutionally entitled to just compensation.

The state cannot avoid the obligations of the takings clause by claiming that its policy is a regulation of a nuisance. The construction of a home is not a nuisance.

The state’s regulation has rendered the property economically worthless. When regulation is that extensive, it becomes a taking. Pennsylvania Coal Co. v. Mahon (1922).

The burden of confiscatory environmental regulation should fall on society, not on individual landowners.

One of two lots on the Isle of Palms that David Lucas purchased with the intention of building houses on them. Shortly after the sale was completed, the South Carolina Coastal Council determined that building on the lots would be detrimental to the environment and prohibited future development there. In 1992 the Supreme Court agreed with Lucas that the state’s action violated the takings clause.

Photograph by William A. Fischel

For the respondent, state of South Carolina:

Whether a compensable taking has occurred is not determined exclusively by the reduction in the property’s value, but also by the character of the government’s actions, the government’s interference with realistic investment expectations, and the economic impact of the regulations.

The beachfront environment was suffering from ill-planned development creating a serious harm to public health and safety as well as damage to other property. Regulation was required to prevent continued harm.

Lucas was well aware that regulation was necessary. He could not reasonably expect to be free from future government restrictions that would limit how he used his land and reduce the property’s value. Such regulation is not a taking.

Although Lucas has lost what he deems the “highest and best” use of his land, the property has not been rendered economically worthless.

JUSTICE SCALIA delivered the opinion of the Court.

Prior to Justice Holmes’ exposition in Pennsylvania Coal Co. v. Mahon (1922), it was generally thought that the Takings Clause reached only a “direct appropriation” of property or the functional equivalent of a “practical ouster of [the owner’s] possession.” Justice Holmes recognized in Mahon, however, that if the protection against appropriations of private property was to be meaningfully enforced, the government’s power to redefine the range of interests included in the ownership of property was necessarily constrained by constitutional limits. If, instead, the uses of private property were subject to unbridled, uncompensated qualification under the police power, “the natural tendency of human nature [would be] to extend the qualification more and more until at last private property disappear[ed].” These considerations gave birth in that case to the oft-cited maxim that, “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”

Nevertheless, our decision in Mahon offered little insight into when, and under what circumstances, a given regulation would be seen as going “too far” for purposes of the Fifth Amendment. . . . We have, however, described at least two discrete categories of regulatory action as compensable without case-specific inquiry into the public interest advanced in support of the restraint. The first encompasses regulations that compel the property owner to suffer a physical “invasion” of his property. In general (at least with regard to permanent invasions), no matter how minute the intrusion, and no matter how weighty the public purpose behind it, we have required compensation. . . .

The second situation in which we have found categorical treatment appropriate is where regulation denies all economically beneficial or productive use of land. As we have said on numerous occasions, the Fifth Amendment is violated when land-use regulation “does not substantially advance legitimate state interests or denies an owner economically viable use of his land.” . . .

We think . . . that there are good reasons for our frequently expressed belief that when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking.

The trial court found Lucas’s two beachfront lots to have been rendered valueless by respondent’s enforcement of the coastal-zone construction ban. Under Lucas’s theory of the case, which rested upon our “no economically viable use” statements, that finding entitled him to compensation. . . . The South Carolina Supreme Court, however, thought otherwise. In its view, the Beachfront Management Act was no ordinary enactment, but involved an exercise of South Carolina’s “police powers” to mitigate the harm to the public interest that petitioner’s use of his land might occasion. . . .

It is correct that many of our prior opinions have suggested that “harmful or noxious uses” of property may be proscribed by government regulation without the requirement of compensation. For a number of reasons, however, we think the South Carolina Supreme Court was too quick to conclude that that principle decides the present case. The “harmful or noxious uses” principle was the Court’s early attempt to describe in theoretical terms why government may, consistent with the Takings Clause, affect property values by regulation without incurring an obligation to compensate—a reality we nowadays acknowledge explicitly with respect to the full scope of the State’s police power. . . .

“Harmful or noxious use” analysis was, in other words, simply the progenitor of our more contemporary statements that “land-use regulation does not effect a taking if it ‘substantially advance[s] legitimate state interests.’ . . .”

The transition from our early focus on control of “noxious” uses to our contemporary understanding of the broad realm within which government may regulate without compensation was an easy one, since the distinction between “harm-preventing” and “benefit-conferring” regulation is often in the eye of the beholder. It is quite possible, for example, to describe in either fashion the ecological, economic, and aesthetic concerns that inspired the South Carolina legislature in the present case. One could say that imposing a servitude on Lucas’s land is necessary in order to prevent his use of it from “harming” South Carolina’s ecological resources; or, instead, in order to achieve the “benefits” of an ecological preserve. . . . Whether Lucas’s construction of single-family residences on his parcels should be described as bringing “harm” to South Carolina’s adjacent ecological resources thus depends principally upon whether the describer believes that the State’s use interest in nurturing those resources is so important that any competing adjacent use must yield.

When it is understood that “prevention of harmful use” was merely our early formulation of the police power justification necessary to sustain (without compensation) any regulatory diminution in value; and that the distinction between regulation that “prevents harmful use” and that which “confers benefits” is difficult, if not impossible, to discern on an objective, value-free basis; it becomes self-evident that noxious-use logic cannot serve as a touchstone to distinguish regulatory “takings”—which require compensation—from regulatory deprivations that do not require compensation. A fortiori the legislature’s recitation of a noxious-use justification cannot be the basis for departing from our categorical rule that total regulatory takings must be compensated. If it were, departure would virtually always be allowed. . . .

Where the State seeks to sustain regulation that deprives land of all economically beneficial use, we think it may resist compensation only if the logically antecedent inquiry into the nature of the owner’s estate shows that the proscribed use interests were not part of his title to begin with. This accords, we think, with our “takings” jurisprudence, which has traditionally been guided by the understandings of our citizens regarding the content of, and the State’s power over, the “bundle of rights” that they acquire when they obtain title to property. It seems to us that the property owner necessarily expects the uses of his property to be restricted, from time to time, by various measures newly enacted by the State in legitimate exercise of its police powers; “[a]s long recognized, some values are enjoyed under an implied limitation and must yield to the police power.” And in the case of personal property, by reason of the State’s traditionally high degree of control over commercial dealings, he ought to be aware of the possibility that new regulation might even render his property economically worthless (at least if the property’s only economically productive use is sale or manufacture for sale). In the case of land, however, we think the notion pressed by the Council that title is somehow held subject to the “implied limitation” that the State may subsequently eliminate all economically valuable use is inconsistent with the historical compact recorded in the Takings Clause that has become part of our constitutional culture.

Where “permanent physical occupation” of land is concerned, we have refused to allow the government to decree it anew (without compensation), no matter how weighty the asserted “public interests” involved. . . . We believe similar treatment must be accorded confiscatory regulations, i.e., regulations that prohibit all economically beneficial use of land: Any limitation so severe cannot be newly legislated or decreed (without compensation), but must inhere in the title itself, in the restrictions that background principles of the State’s law of property and nuisance already place upon land ownership. A law or decree with such an effect must, in other words, do no more than duplicate the result that could have been achieved in the courts—by adjacent landowners (or other uniquely affected persons) under the State’s law of private nuisance, or by the State under its complementary power to abate nuisances that affect the public generally, or otherwise.

On this analysis, the owner of a lake bed, for example, would not be entitled to compensation when he is denied the requisite permit to engage in a landfilling operation that would have the effect of flooding others’ land. Nor the corporate owner of a nuclear generating plant, when it is directed to remove all improvements from its land upon discovery that the plant sits astride an earthquake fault. Such regulatory action may well have the effect of eliminating the land’s only economically productive use, but it does not proscribe a productive use that was previously permissible under relevant property and nuisance principles. The use of these properties for what are now expressly prohibited purposes was always unlawful, and (subject to other constitutional limitations) it was open to the State at any point to make the implication of those background principles of nuisance and property law explicit. . . . When, however, a regulation that declares “off-limits” all economically productive or beneficial uses of land goes beyond what the relevant background principles would dictate, compensation must be paid to sustain it.

The “total taking” inquiry we require today will ordinarily entail (as the application of state nuisance law ordinarily entails) analysis of, among other things, the degree of harm to public lands and resources, or adjacent private property, posed by the claimant’s proposed activities, the social value of the claimant’s activities and their suitability to the locality in question, and the relative ease with which the alleged harm can be avoided through measures taken by the claimant and the government (or adjacent private landowners) alike. The fact that a particular use has long been engaged in by similarly situated owners ordinarily imports a lack of any common-law prohibition (though changed circumstances or new knowledge may make what was previously permissible no longer so). So also does the fact that other landowners, similarly situated, are permitted to continue the use denied to the claimant.

It seems unlikely that common-law principles would have prevented the erection of any habitable or productive improvements on petitioner’s land; they rarely support prohibition of the “essential use” of land. The question, however, is one of state law to be dealt with on remand. We emphasize that to win its case South Carolina must do more than proffer the legislature’s declaration that the uses Lucas desires are inconsistent with the public interest, or the conclusory assertion that they violate a common-law maxim. . . . As we have said, a “State, by ipse dixit, may not transform private property into public property without compensation. . . .” Instead, as it would be required to do if it sought to restrain Lucas in a common-law action for public nuisance, South Carolina must identify background principles of nuisance and property law that prohibit the uses he now intends in the circumstances in which the property is presently found. Only on this showing can the State fairly claim that, in proscribing all such beneficial uses, the Beachfront Management Act is taking nothing.

The judgment is reversed and the cause remanded for proceedings not inconsistent with this opinion.

So ordered.

JUSTICE BLACKMUN, dissenting.

Today the Court launches a missile to kill a mouse.

The state of South Carolina prohibited petitioner Lucas from building a permanent structure on his property from 1988 to 1990. Relying on an unreviewed (and implausible) state trial court finding that this restriction left Lucas’ property valueless, this Court granted review to determine whether compensation must be paid in cases where the State prohibits all economic use of real estate. According to the Court, such an occasion never has arisen in any of our prior cases, and the Court imagines that it will arise “relatively rarely” or only in “extraordinary circumstances.” Almost certainly it did not happen in this case.

Nonetheless, the Court presses on to decide the issue, and as it does, it ignores its jurisdictional limits, remakes its traditional rules of review, and creates simultaneously a new categorical rule and an exception (neither of which is rooted in our prior case law, common law, or common sense). I protest not only the Court’s decision, but each step taken to reach it. More fundamentally, I question the Court’s wisdom in issuing sweeping new rules to decide such a narrow case. Surely, . . . the Court could have reached the result it wanted without inflicting this damage upon our Takings Clause jurisprudence. . . .

The Court makes sweeping and, in my view, misguided and unsupported changes in our takings doctrine. While it limits these changes to the most narrow subset of government regulation—those that eliminate all economic value from land—these changes go far beyond what is necessary to secure petitioner Lucas’ private benefit. One hopes they do not go beyond the narrow confines the Court assigns them to today.

I dissent.

box 11-1 AFTERMATH . . . LUCAS v. SOUTH CAROLINA COASTAL COUNCIL

IN 1986 David Lucas, a developer of residential properties, purchased two lots on the Isle of Palms in South Carolina for $975,000. He intended to build two houses on the land, keeping one for himself and selling the other. Because of environmental concerns, however, the state coastal council denied Lucas permission to build. In response, Lucas took legal action, demanding compensation for his economic loss. He won a $1.23 million judgment in the state trial court, but the state supreme court reversed that ruling. In 1992 the U.S. Supreme Court found that Lucas had been deprived of property for a public purpose and was entitled to be compensated. The justices remanded the case back to the South Carolina courts for further proceedings.

No additional court action was required, however. The state had lost the essential issue presented in the case, and only the determination of adequate compensation remained to be decided. South Carolina was understandably eager to settle the dispute rather than prolong the legal battle. Lucas and the state came to a quick out-of-court settlement in which the state agreed to pay Lucas $1.5 million in return for the property.

To recoup the funds lost in the Lucas settlement and related litigation costs, the state decided to sell the properties. Ironically, to increase the lots’ value prior to sale, the state announced that the new owners would be allowed to build houses on them. A new home of about 5,000 square feet now sits on one of the lots formerly owned by Lucas.

SOURCES: Arizona Republic, November 2, 1994; Chicago Sun-Times, July 28, 1995; Christian Science Monitor, September 27, 1993; San Diego Union-Tribune, July 21, 1993; William A. Fischel, “A Photographic Update on Lucas v. South Carolina Coastal Council: A Photographic Essay,” March 30, 2000 (original posting February 1995), http://www.dartmouth.edu/~wfischel/lucasupdate.html.

Horne v. Department of Agriculture

576 U.S. ____ (2015)

http://laws.findlaw.com/us/000/14–275.html

Oral arguments are available at https://www.oyez.org

Vote: 8 (Alito, Breyer, Ginsburg, Kagan, Kennedy, Roberts, Scalia, Thomas)

1 (Sotomayor)

OPINION OF THE COURT: ROBERTS

CONCURRING OPINION: THOMAS

OPINION CONCURRING IN PART AND DISSENTING IN PART: BREYER

DISSENTING OPINION: SOTOMAYOR

FACTS:

The Agricultural Marketing Agreement Act of 1937 authorizes the secretary of agriculture to develop marketing orders to help maintain stable markets for various agricultural products. The secretary’s marketing orders for raisins created a Raisin Administrative Committee that imposed a reserve requirement obliging growers to set aside a certain percentage of their crop for the government’s use free of charge. The government makes use of those reserved raisins by selling them in noncompetitive markets, donating them, or disposing of them by other means consistent with establishing an orderly market. Any profits left over from this operation, less administrative costs, are returned to the growers. In 2002–2003, the reserve requirement was 47 percent of the raisin crop. In 2003–2004, it was 30 percent. Raisins retained by the growers after the reserved raisins are set aside (known as “free tonnage raisins”) may be used or sold by the growers at their discretion.

Raisin farmer Marvin Horne, who successfully challenged the federal government’s reserve raisin program as a violation of the Fifth Amendment’s Takings Clause.

AP Photo/Gary Kazanjian

For several decades Californians Marvin and Laura Horne have produced raisins from the Thompson seedless grapes they grow on their Fresno area farm. Because of their growing dissatisfaction with the government’s raisin marketing program, the Hornes in 2002 and 2003 refused to set aside any raisins. When government trucks arrived at their Raisin Valley Farm, the Hornes refused entry. In response, the government assessed a fine equal to the market value of the missing grapes ($480,000) and a civil penalty just over $200,000 for failure to comply with the government policy. The Hornes took legal action against the Department of Agriculture, claiming that the reserve requirement violates the takings clause. After several years of litigation, court of appeals finally upheld the government program finding that the reserve requirement was a reasonable response to the government’s interest in ensuring an orderly raisin market and not a taking.

ARGUMENTS:

For the petitioners, Marvin D. and Laura A. Horne:

The core protection of the takings clause is the requirement that the government must pay just compensation whenever it physically takes possession of property—that is, a per se taking.

The raisin marketing order works a physical taking for which just compensation is categorically required.

The Fifth Amendment duty to compensate for physical takings applies to personal property as much as it does to real property.

For the respondent, the U.S. Department of Agriculture:

The marketing order preserves the producer’s ownership in the net proceeds from the sale of the reserved raisins. Thus, producers are not absolutely dispossessed of their property.

Producers voluntarily choose to participate in the commercial raisin market. They could instead grow other crops or grow grapes for purposes other than raisin production.

The producers receive economic benefits from the creation and maintenance of an orderly market that increases the value of their free tonnage raisins, thus compensating them for the loss of their reserve raisins.

CHIEF JUSTICE ROBERTS delivered the opinion of the Court.

The petition for certiorari poses three questions, which we answer in turn.

The first question presented asks “Whether the government’s ‘categorical duty’ under the Fifth Amendment to pay just compensation when it ‘physically takes possession of an interest in property,’ Arkansas Game & Fish Comm’n v. United States (2012), applies only to real property and not to personal property.” The answer is no.

There is no dispute that the “classic taking [is one] in which the government directly appropriates private property for its own use.” Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency (2002). Nor is there any dispute that, in the case of real property, such an appropriation is a per se taking that requires just compensation. See Loretto v. Teleprompter Manhattan CATV Corp. (1982).

Nothing in the text or history of the Takings Clause, or our precedents, suggests that the rule is any different when it comes to appropriation of personal property. The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home.

The Takings Clause provides: “[N]or shall private property be taken for public use, without just compensation.” It protects “private property” without any distinction between different types. The principle reflected in the Clause goes back at least 800 years to Magna Carta, which specifically protected agricultural crops from uncompensated takings. . . .

The colonists brought the principles of Magna Carta with them to the New World, including that charter’s protection against uncompensated takings of personal property. . . .

Nothing in this history suggests that personal property was any less protected against physical appropriation than real property. . . .

Prior to this Court’s decision in Pennsylvania Coal Co. v. Mahon (1922), the Takings Clause was understood to provide protection only against a direct appropriation of property—personal or real. Pennsylvania Coal expanded the protection of the Takings Clause, holding that compensation was also required for a “regulatory taking”—a restriction on the use of property that went “too far.” And in Penn Central Transp. Co. v. New York City (1978), the Court clarified that the test for how far was “too far” required an “ad hoc” factual inquiry. That inquiry required considering factors such as the economic impact of the regulation, its interference with reasonable investment-backed expectations, and the character of the government action.

Four years after Penn Central, however, the Court reaffirmed the rule that a physical appropriation of property gave rise to a per se taking, without regard to other factors. In Loretto, the Court held that requiring an owner of an apartment building to allow installation of a cable box on her rooftop was a physical taking of real property, for which compensation was required. That was true without regard to the claimed public benefit or the economic impact on the owner. The Court explained that such protection was justified not only by history, but also because “[s]uch an appropriation is perhaps the most serious form of invasion of an owner’s property interests,” depriving the owner of the “the rights to possess, use and dispose of” the property. That reasoning—both with respect to history and logic—is equally applicable to a physical appropriation of personal property. . . .

The reserve requirement imposed by the Raisin Committee is a clear physical taking. Actual raisins are transferred from the growers to the Government. Title to the raisins passes to the Raisin Committee. The Committee’s raisins must be physically segregated from free-tonnage raisins. . . . The Committee disposes of what become its raisins as it wishes, to promote the purposes of the raisin marketing order.

Raisin growers subject to the reserve requirement thus lose the entire “bundle” of property rights in the appropriated raisins—“the rights to possess, use and dispose of” them, Loretto,—with the exception of the speculative hope that some residual proceeds may be left when the Government is done with the raisins and has deducted the expenses of implementing all aspects of the marketing order. The Government’s “actual taking of possession and control” of the reserve raisins gives rise to a taking as clearly “as if the Government held full title and ownership,” as it essentially does. The Government’s formal demand that the Hornes turn over a percentage of their raisin crop without charge, for the Government’s control and use, is “of such a unique character that it is a taking without regard to other factors that a court might ordinarily examine.”

The Government thinks it “strange” and the dissent “baffling” that the Hornes object to the reserve requirement, when they nonetheless concede that “the government may prohibit the sale of raisins without effecting a per se taking.” But that distinction flows naturally from the settled difference in our takings jurisprudence between appropriation and regulation. A physical taking of raisins and a regulatory limit on production may have the same economic impact on a grower. The Constitution, however, is concerned with means as well as ends. The Government has broad powers, but the means it uses to achieve its ends must be “consist[ent] with the letter and spirit of the constitution.” McCulloch v. Maryland (1819). As Justice Holmes noted, “a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way.” Pennsylvania Coal.

The second question presented asks “Whether the government may avoid the categorical duty to pay just compensation for a physical taking of property by reserving to the property owner a contingent interest in a portion of the value of the property, set at the government’s discretion.” The answer is no.

The Government and dissent argue that raisins are fungible goods whose only value is in the revenue from their sale. According to the Government, the raisin marketing order leaves that interest with the raisin growers: After selling reserve raisins and deducting expenses and subsidies for exporters, the Raisin Committee returns any net proceeds to the growers. The Government contends that because growers are entitled to these net proceeds, they retain the most important property interest in the reserve raisins, so there is no taking in the first place. . . .

But when there has been a physical appropriation, “we do not ask . . . whether it deprives the owner of all economically valuable use” of the item taken. Tahoe-Sierra Preservation Council (“When the government physically takes possession of an interest in property for some public purpose, it has a categorical duty to compensate the former owner, regardless of whether the interest that is taken constitutes an entire parcel or merely a part thereof.”). . . . The fact that the growers retain a contingent interest of indeterminate value does not mean there has been no physical taking, particularly since the value of the interest depends on the discretion of the taker, and may be worthless, as it was for one of the two years at issue here. . . .

The third question presented asks “Whether a governmental mandate to relinquish specific, identifiable property as a ‘condition’ on permission to engage in commerce effects a per se taking.” The answer, at least in this case, is yes.

The Government contends that the reserve requirement is not a taking because raisin growers voluntarily choose to participate in the raisin market. According to the Government, if raisin growers don’t like it, they can “plant different crops,” or “sell their raisin-variety grapes as table grapes or for use in juice or wine.”

“Let them sell wine” is probably not much more comforting to the raisin growers than similar retorts have been to others throughout history. In any event, the Government is wrong as a matter of law. In Loretto, we rejected the argument that the New York law was not a taking because a landlord could avoid the requirement by ceasing to be a landlord. We held instead that “a landlord’s ability to rent his property may not be conditioned on his forfeiting the right to compensation for a physical occupation.” . . .

The Government . . . [relies] heavily on Ruckelshaus v. Monsanto Co. (1984). There we held that the Environmental Protection Agency could require companies manufacturing pesticides, fungicides, and rodenticides to disclose health, safety, and environmental information about their products as a condition to receiving a permit to sell those products. While such information included trade secrets in which pesticide manufacturers had a property interest, those manufacturers were not subjected to a taking because they received a “valuable Government benefit” in exchange—a license to sell dangerous chemicals.

The taking here cannot reasonably be characterized as part of a similar voluntary exchange. In one of the years at issue here, the Government insisted that the Hornes turn over 47 percent of their raisin crop, in exchange for the “benefit” of being allowed to sell the remaining 53 percent. The next year, the toll was 30 percent . . . Selling produce in interstate commerce, although certainly subject to reasonable government regulation, is similarly not a special governmental benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection. Raisins are not dangerous pesticides; they are a healthy snack. A case about conditioning the sale of hazardous substances on disclosure of health, safety, and environmental information related to those hazards is hardly on point. . . .

Finally, the Government briefly argues that if we conclude that the reserve requirement effects a taking, we should remand for the Court of Appeals to calculate “what compensation would have been due if petitioners had complied with the reserve requirement.” The Government contends that the calculation must consider what the value of the reserve raisins would have been without the price support program, as well as “other benefits . . . from the regulatory program, such as higher consumer demand for raisins spurred by enforcement of quality standards and promotional activities.” Indeed, according to the Government, the Hornes would “likely” have a net gain under this theory. . . .

The Government has already calculated the amount of just compensation in this case, when it fined the Hornes the fair market value of the raisins: $483,843.53. The Government cannot now disavow that valuation. . . . There is accordingly no need for a remand; the Hornes should simply be relieved of the obligation to pay the fine and associated civil penalty they were assessed when they resisted the Government’s effort to take their raisins. This case, in litigation for more than a decade, has gone on long enough.

The judgment of the United States Court of Appeals for the Ninth Circuit is reversed.

It is so ordered.

JUSTICE BREYER, with whom JUSTICE GINSBURG and JUSTICE KAGAN join, [concurs with the conclusion that a taking occurred, but dissents from the Court’s decision not to remand the case to the court of appeals to determine the amount of compensation due].

JUSTICE SOTOMAYOR, dissenting.

The Hornes claim, and the Court agrees, that the Raisin Marketing Order effects a per se taking under our decision in Loretto v. Teleprompter Manhattan CATV Corp. (1982). But Loretto sets a high bar for such claims: It requires that each and every property right be destroyed by governmental action before that action can be said to have effected a per se taking. Because the Order does not deprive the Hornes of all of their property rights, it does not effect a per se taking. I respectfully dissent from the Court’s contrary holding. . . .

WHAT CONSTITUTES A PUBLIC USE?

Although the Fifth Amendment recognizes the government’s power to take private property, it does not allow all such seizures. The takings clause explicitly stipulates that the government may take private property only for a “public use.” Even if the government provides adequate compensation, it may not take property against the owner’s will for the sole benefit of a private individual or organization. When the government plans to build a new courthouse, road, or park, the public use is clear, but it would be of doubtful constitutionality if a state seized a piece of private property under the power of eminent domain and gave it to a private fraternal organization to construct a new lodge.

Throughout most of the nation’s history, the justices were relatively insistent about the public use requirement. The Court commented on this subject as early as 1884 in Cole v. LaGrange. In this dispute the city of LaGrange, Missouri, had issued twenty-five bonds to LaGrange Iron and Steel Company to help finance the operation of a mill. This act was attacked on the ground that the bonds were being used for a private, not public, use. For the Court, Justice Horace Gray agreed:

The general grant of legislative power in the Constitution of a state does not enable the legislature, in the exercise either of the right of eminent domain, or the right of taxation, to take private property, without the owner’s consent, for any but a public object.

A few years later, in Missouri Pacific Railway Company v. Nebraska (1896), the Court ruled that the taking of private property, without the owner’s consent, for the private use of another violates due process of law.

Even in the early twentieth century the Court remained wedded to the strict enforcement of this requirement. Cincinnati v. Vester (1930) illustrates this point. The city of Cincinnati had confiscated private property to carry out a road-widening project. The amount of property seized, however, was in excess of what was needed. The surplus property was later sold at a profit or otherwise transferred to another private party. The Court ruled this taking to be unlawful for its failure to meet the public use requirement.

After the New Deal, however, the Court’s position began to change. In United States ex rel. Tennessee Valley Authority [TVA] v. Welch (1946) the justices upheld the authority of the federal government to condemn private land that would be flooded as a consequence of the TVA’s flood-control programs. In doing so, the Court deferred to Congress’s authority to determine what constitutes a public use. That same position was articulated in the Court’s unanimous decision in Berman v. Parker (1954), in which the Court failed to provide relief to a landowner whose property was taken from him as part of an urban renewal project but later was transferred to another private party. Is this decision consistent with the letter and spirit of the takings clause?

The Court’s deference to the legislature on questions of what constitutes a public purpose was extended to the state level in Hawaii Housing Authority v. Midkiff (1984). Challenged here was Hawaii’s plan to redistribute land using the power of eminent domain to force large landowners to sell their properties to the people who leased them. The transfer of land was clearly from one private owner to another. Was this program a benefit to the public generally, or did it serve only the private interests of those who now were able to become landowners?

Decisions such as Berman and Midkiff made important changes in the way the Court dealt with takings clause appeals. No longer did the justices independently examine the nature of the public purpose of the taking. Instead, the Court gave wide latitude to legislatures to determine what constitutes public use. To this extent private property rights became political as well as legal questions, increasing the power of the legislature at the expense of traditional property considerations. These decisions also reduced the extent to which landowners could use “public use” objections to thwart the legislative redistribution of wealth and property for the public good.

The Supreme Court’s announced policy of deferring to the elected branches on the question of public use encouraged expanded government use of the power of eminent domain. Many local governments aggressively exercised their authority to seize private property as part of a strategy to improve their fiscal standing. Assume that a town with a sagging economy and shrinking revenues is presented with an opportunity to lure a company to build a new shopping mall in the community. The company is willing to consider such an investment only if it can secure a prime piece of property for the mall site. When the owner of that land refuses to sell, the city seizes the property under the power of eminent domain and sells it to the company for the price of the compensation the city was required to pay the landowner. The company is happy with the parcel of land, and the city is happy because the new stores will create employment and increased tax revenues. But is this a proper exercise of the power of eminent domain? Does it meet the Fifth Amendment’s public use requirement? Or is it simply a government-engineered forced transfer of property from one private party to another?

Such scenarios have not been uncommon, especially in some of the nation’s older cities, where cash-starved local governments have used the power of eminent domain to attempt to improve the declining economic conditions of their communities. To do so, a city might have to condemn relatively large residential tracts—not because they are blighted, but because the land could be redeveloped with more valuable properties that would add to the tax base. Private property owners and groups devoted to their interests began to organize against such government actions. It was clear that a major legal confrontation was inevitable. The Supreme Court tackled the issue in Kelo v. City of New London (2005), a decision that resulted in widespread controversy.

In its takings clause decisions the Court has consistently favored neither private property interests nor the government’s power of eminent domain. With respect to defining a “taking,” the justices have tended to favor property owners by expanding the range of government actions that come under the authority of the Fifth Amendment.11 On the other hand, the Court has given broad latitude to the government to define what constitutes a “public use.” The Court’s decisions reveal deep internal divisions between those justices who place primary value on the rights of individual property owners and those who accord greater value to the interests of the larger community.

Decisions such as Kelo have turned a once-obscure constitutional provision into a subject of intense political controversy (see box 11-2). Local governments have increasingly turned to the power of eminent domain as a method of spurring economic development and raising tax revenues. With each such action, groups dedicated to private property rights have become more organized and politically active. This political conflict ensures that takings clause disputes will continue to find their way to the Supreme Court’s docket for some time to come.

Berman v. Parker

348 U.S. 26 (1954)

http://laws.findlaw.com/us/348/26.html

Vote: 8 (Black, Burton, Clark, Douglas, Frankfurter, Minton, Reed, Warren)

0

OPINION OF THE COURT: Douglas

FACTS:

Concerned about growing slums and urban blight in Washington, D.C., Congress passed the District of Columbia Redevelopment Act of 1945. This law authorized the National Capital Planning Commission to develop comprehensive land-use plans to improve the District’s “housing, business, industry, recreation, education, public buildings, public reservations, and other general categories of public and private uses of the land” for the public health, safety, morals, and welfare of its citizens. The law required public hearings on any proposals, and the plans were subject to the approval of the District’s commissioners. Once the urban renewal plans were approved, the District of Columbia Redevelopment Land Agency was empowered to acquire, through eminent domain if necessary, the land needed to improve the blighted conditions. After acquisition, the agency would transfer title to government agencies as necessary for public purposes such as streets, utilities, recreational facilities, and schools. The remainder would be leased or sold to private concerns for redevelopment consistent with the land-use plan.

Berman v. Parker arose over a comprehensive plan for a section known as Project Area B in Southwest Washington. The Planning Commission reported the following facts about the area: 64.3 percent of the dwellings were beyond repair, and 18.4 percent needed major repairs; only 17.3 percent were satisfactory. In addition, 57.8 percent of the dwellings had outside toilets, 60.3 percent had no baths, 29.3 percent lacked electricity, 82.2 percent had no wash basins or laundry tubs, and 83.8 percent lacked central heating. About five thousand people lived in Area B, of whom 97.5 percent were African American. The commission concluded that the area required redevelopment in the interests of public health.

Max R. Morris owned a piece of property in Area B, on which was located a department store. He objected to the government’s acquisition of his property on the ground that it was not slum housing. Under the comprehensive plan, Morris’s property would be sold or leased to other private owners for redevelopment. After Morris died, his executors, Samuel Berman and Solomon Feldman, pursued legal action. Although it expressed reservations, the federal district court upheld the constitutionality of the government’s actions. Berman and Feldman appealed.

ARGUMENTS:

For the appellants, Samuel Berman and Solomon Feldman, executors of the Morris estate:

The taking of private property for city redevelopment and subsequent ownership by other private parties is not a public use.

The law unconstitutionally seizes one man’s land to be sold to another man merely to create a community that better meets the government’s idea of what is appropriate and well planned.

The District may have the power to clear slums, but the appellant’s property is not blighted.

The government is seizing the property without affording the appellant the opportunity to remodel or redevelop his property to meet the specifications of the redevelopment legislation.

For the appellees, Andrew Parker, John A. Remon, and James E. Colliflower, commissioners of the District of Columbia, et al.:

Congress and the District of Columbia have the constitutional authority to eliminate slums and prevent slum-breeding conditions in the nation’s capital city. This is a public purpose.

The law of eminent domain does not require the government to occupy the seized property. The future private ownership of the condemned properties does not negate the public purpose of the legislation.

Congress concluded that the public good could not be achieved on a piecemeal basis but required redeveloping large areas of the District.

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

The power of Congress over the District of Columbia includes all the legislative powers which a state may exercise over its affairs. We deal, in other words, with what traditionally has been known as the police power. An attempt to define its reach or trace its outer limits is fruitless, for each case must turn on its own facts. The definition is essentially the product of legislative determinations addressed to the purposes of government, purposes neither abstractly nor historically capable of complete definition. Subject to specific constitutional limitations, when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive. In such cases, the legislature, not the judiciary, is the main guardian of the public needs to be served by social legislation, whether it be Congress legislating concerning the District of Columbia or the States legislating concerning local affairs. This principle admits of no exception merely because the power of eminent domain is involved. The role of the judiciary in determining whether that power is being exercised for a public purpose is an extremely narrow one.

Public safety, public health, morality, peace and quiet, law and order—these are some of the more conspicuous examples of the traditional application of the police power to municipal affairs. Yet they merely illustrate the scope of the power and do not delimit it. Miserable and disreputable housing conditions may do more than spread disease and crime and immorality. They may also suffocate the spirit by reducing the people who live there to the status of cattle. They may indeed make living an almost insufferable burden. They may also be an ugly sore, a blight on the community which robs it of charm, which makes it a place from which men turn. The misery of housing may despoil a community as an open sewer may ruin a river.

We do not sit to determine whether a particular housing project is or is not desirable. The concept of public welfare is broad and inclusive. The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled. In the present case, the Congress and its authorized agencies have made determinations that take into account a wide variety of values. It is not for us to reappraise them. If those who govern the District of Columbia decide that the Nation’s Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in its way.

Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to an end. Once the object is within the authority of Congress, the means by which it will be attained is also for Congress to determine. Here one of the means chosen is the use of private enterprise for redevelopment of the area. Appellants argue that this makes the project a taking from one businessman for the benefit of another businessman. But the means of executing the project are for Congress and Congress alone to determine, once the public purpose has been established. The public end may be as well or better served through an agency of private enterprise than through a department of government—or so the Congress might conclude. We cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects. What we have said also disposes of any contention concerning the fact that certain property owners in the area may be permitted to repurchase their properties for redevelopment in harmony with the over-all plan. That, too, is a legitimate means which Congress and its agencies may adopt, if they choose.

In the present case, Congress and its authorized agencies attack the problem of the blighted parts of the community on an area rather than on a structure-by-structure basis. That, too, is opposed by the appellants. They maintain that since their building does not imperil health or safety nor contribute to the making of a slum or a blighted area, it cannot be swept into a redevelopment plan by the mere dictum of the Planning Commission or the Commissioners. The particular uses to be made of the land in the project were determined with regard to the needs of the particular community. The experts concluded that if the community were to be healthy, if it were not to revert again to a blighted or slum area, as though possessed of a congenital disease, the area must be planned as a whole. It was not enough, they believed, to remove existing buildings that were insanitary or unsightly. It was important to redesign the whole area so as to eliminate the conditions that cause slums—the overcrowding of dwellings, the lack of parks, the lack of adequate streets and alleys, the absence of recreational areas, the lack of light and air, the presence of outmoded street patterns. It was believed that the piecemeal approach, the removal of individual structures that were offensive, would only be a palliative. The entire area needed redesigning so that a balanced, integrated plan could be developed for the region, including not only new homes but also schools, churches, parks, streets, and shopping centers. In this way it was hoped that the cycle of decay of the area could be controlled and the birth of future slums prevented. Such diversification in future use is plainly relevant to the maintenance of the desired housing standards and therefore within congressional power.

The District Court below suggested that, if such a broad scope were intended for the statute, the standards contained in the Act would not be sufficiently definite to sustain the delegation of authority. We do not agree. We think the standards prescribed were adequate for executing the plan to eliminate not only slums as narrowly defined by the District Court but also the blighted areas that tend to produce slums. Property may of course be taken for this redevelopment which, standing by itself, is innocuous and unoffending. But we have said enough to indicate that it is the need of the area as a whole which Congress and its agencies are evaluating. If owner after owner were permitted to resist these redevelopment programs on the ground that his particular property was not being used against the public interest, integrated plans for redevelopment would suffer greatly. The argument pressed on us is, indeed, a plea to substitute the landowner’s standard of the public need for the standard prescribed by Congress. But as we have already stated, community redevelopment programs need not, by force of the Constitution, be on a piecemeal basis—lot by lot, building by building.

It is not for the courts to oversee the choice of the boundary line nor to sit in review on the size of a particular project area. Once the question of the public purpose has been decided, the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch.

The District Court indicated grave doubts concerning the Agency’s right to take full title to the land as distinguished from the objectionable buildings located on it. We do not share those doubts. If the Agency considers it necessary in carrying out the redevelopment project to take full title to the real property involved, it may do so. It is not for the courts to determine whether it is necessary for successful consummation of the project that unsafe, unsightly, or insanitary buildings alone be taken or whether title to the land be included, any more than it is the function of the courts to sort and choose among the various parcels selected for condemnation.

The rights of these property owners are satisfied when they receive that just compensation which the Fifth Amendment exacts as the price of the taking.

The judgment of the District Court, as modified by this opinion, is

Affirmed.

Hawaii Housing Authority v. Midkiff

467 U.S. 229 (1984)

http://laws.findlaw.com/us/467/229.html

Oral arguments are available at https://www.oyez.org.

Vote: 8 (Blackmun, Brennan, Burger, O’Connor, Powell, Rehnquist, Stevens, White)

0

OPINION OF THE COURT: O’Connor

NOT PARTICIPATING: Marshall

FACTS:

The Hawaiian Islands were settled by Polynesians who developed a political and economic system based on principles of monarchy and feudalism. Ownership and control of the land rested with the islands’ high chief, who distributed parcels to various lower-ranking chiefs. At the end of the chain, tenant farmers and their families lived on the land and worked it. Private ownership of real property was not permitted. Ultimate ownership of all lands rested with the family of the islands’ high chief.

The monarchy was overthrown in 1893, and, after a brief period as a republic, the islands were annexed by the United States in 1898. When Hawaii became the fiftieth state in 1959, the land still remained in the hands of a few. In the mid-1960s the federal government owned 49 percent of the land in Hawaii, and just seventy-two private landowners held another 47 percent. On Oahu, the most commercially developed island, twenty-two landowners controlled more than 72 percent of the private real estate. The Hawaiian legislature determined that this land concentration condition was detrimental to the state’s economy and general welfare. The legislative goal was to expand significantly the number of individuals who owned real estate and create a competitive housing market.

The legislature first decided to compel landowners to sell large portions of their holdings to those individuals who leased the land from them. The landowners opposed this plan because it would result in exceedingly high capital gains that would increase their federal taxes. The legislature then revised its plans and enacted the Land Reform Act of 1967. This legislation allowed the state to condemn tracts of residential real estate. The Hawaii Housing Authority (HHA) would then seize the condemned property and help arrange the sale of individual parcels to the private parties who had been leasing the land. Compensation for land seized by the government enjoyed a more favorable tax status than did profits from outright sales, making the legislation more acceptable to the landowners.

Frank Midkiff and others owned a large tract of land that was condemned under the land reform program, but Midkiff, the HHA, and residents currently leasing lots could not agree on a fair price. Midkiff and his co-owners filed suit in federal district court to have the Land Reform Act declared unconstitutional as a violation of the takings clause. Among the arguments presented was the claim that redistributing land ownership was not an appropriate “public use” under the meaning of the Fifth Amendment. The district court rejected this argument, but the U.S. Court of Appeals for the Ninth Circuit reversed. The housing authority appealed to the Supreme Court.

ARGUMENTS:

For the appellant, Hawaii Housing Authority:

Berman v. Parker’s treatment of the public use requirement should control. The fact that seized private property is ultimately transferred to another private party does not mean that the public use requirement has not been met.

Deference should be given to the legislature’s determination of what constitutes public use.

Breaking up the land oligopoly and creating a competitive housing market is undoubtedly a public use.

Given the unique conditions in Hawaii, the creation of a competitive housing market could not occur without legislation such as the Land Reform Act.

For the appellees, Frank E. Midkiff et al.:

That the state legislature declared there to be a public use does not make it so. The Court should not surrender that question to the legislature.

This is an unprecedented state transfer of property from one set of private owners to other private owners.

The government is not purchasing the land, but only acting as a conduit to facilitate the purchase of individual parcels by private parties.

Unlike in Berman v. Parker and other eminent domain actions, no change in the usage of the land is contemplated. Residential housing lots will remain residential housing lots, and the current resident will continue to be the resident. The only change is in the ownership of the property, a change that benefits a private party and not the public.

JUSTICE O’CONNOR delivered the opinion of the Court.

The Fifth Amendment of the United States Constitution provides, in pertinent part, that “private property [shall not] be taken for public use, without just compensation.” These cases present the question whether the Public Use Clause of that Amendment, made applicable to the States through the Fourteenth Amendment, prohibits the State of Hawaii from taking, with just compensation, title in real property from lessors and transferring it to lessees in order to reduce the concentration of ownership of fees simple in the State. We conclude that it does not. . . .

The majority of the Court of Appeals . . . determined that the Act violates the “public use” requirement of the Fifth and Fourteenth Amendments. On this argument, however, we find ourselves in agreement with the dissenting judge in the Court of Appeals.

The starting point for our analysis of the Act’s constitutionality is the Court’s decision in Berman v. Parker (1954). In Berman, the Court held constitutional the District of Columbia Redevelopment Act of 1945. That Act provided both for the comprehensive use of the eminent domain power to redevelop slum areas and for the possible sale or lease of the condemned lands to private interests. In discussing whether the takings authorized by that Act were for a “public use,” the Court stated:

“We deal . . . with what traditionally has been known as the police power. An attempt to define its reach or trace its outer limits is fruitless, for each case must turn on its own facts. The definition is essentially the product of legislative determinations addressed to the purposes of government, purposes neither abstractly nor historically capable of complete definition. Subject to specific constitutional limitations, when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive. In such cases the legislature, not the judiciary, is the main guardian of the public needs to be served by social legislation, whether it be Congress legislating concerning the District of Columbia . . . or the States legislating concerning local affairs. . . . This principle admits of no exception merely because the power of eminent domain is involved. . . .”

The Court explicitly recognized the breadth of the principle it was announcing, noting:

“Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end. . . . Once the object is within the authority of Congress, the means by which it will be attained is also for Congress to determine. Here one of the means chosen is the use of private enterprise for redevelopment of the area. Appellants argue that this makes the project a taking from one businessman for the benefit of another businessman. But the means of executing the project are for Congress and Congress alone to determine, once the public purpose has been established.”

The “public use” requirement is thus coterminous with the scope of a sovereign’s police powers.

There is, of course, a role for courts to play in reviewing a legislature’s judgment of what constitutes a public use, even when the eminent domain power is equated with the police power. But the Court in Berman made clear that it is “an extremely narrow” one. The Court in Berman cited with approval the Court’s decision in Old Dominion Co. v. United States (1925), which held that deference to the legislature’s “public use” determination is required “until it is shown to involve an impossibility.” The Berman Court also cited to United States ex rel. TVA v. Welch (1946), which emphasized that “[a]ny departure from this judicial restraint would result in courts deciding on what is and is not a governmental function and in their invalidating legislation on the basis of their view on that question at the moment of decision, a practice which has proved impracticable in other fields.” In short, the Court has made clear that it will not substitute its judgment for a legislature’s judgment as to what constitutes a public use “unless the use be palpably without reasonable foundation.”

To be sure, the Court’s cases have repeatedly stated that “one person’s property may not be taken for the benefit of another private person without a justifying public purpose, even though compensation be paid.” Thus, in Missouri Pacific R. Co. v. Nebraska (1896), where the “order in question was not, and was not claimed to be, . . . a taking of private property for a public use under the right of eminent domain,” the Court invalidated a compensated taking of property for lack of a justifying public purpose. But where the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court has never held a compensated taking to be proscribed by the Public Use Clause.

On this basis, we have no trouble concluding that the Hawaii Act is constitutional. The people of Hawaii have attempted, much as the settlers of the original 13 Colonies did, to reduce the perceived social and economic evils of a land oligopoly traceable to their monarchs. The land oligopoly has, according to the Hawaii Legislature, created artificial deterrents to the normal functioning of the State’s residential land market and forced thousands of individual homeowners to lease, rather than buy, the land underneath their homes. Regulating oligopoly and the evils associated with it is a classic exercise of a State’s police powers. We cannot disapprove of Hawaii’s exercise of this power.

Nor can we condemn as irrational the Act’s approach to correcting the land oligopoly problem. The Act presumes that when a sufficiently large number of persons declare that they are willing but unable to buy lots at fair prices the land market is malfunctioning. When such a malfunction is signaled, the Act authorizes HHA to condemn lots in the relevant tract. The Act limits the number of lots any one tenant can purchase and authorizes HHA to use public funds to ensure that the market dilution goals will be achieved. This is a comprehensive and rational approach to identifying and correcting market failure.

Of course, this Act, like any other, may not be successful in achieving its intended goals. But “whether in fact the provision will accomplish its objectives is not the question: the [constitutional requirement] is satisfied if . . . the . . . [state] Legislature rationally could have believed that the [Act] would promote its objective.” When the legislature’s purpose is legitimate and its means are not irrational, our cases make clear that empirical debates over the wisdom of takings—no less than debates over the wisdom of other kinds of socioeconomic legislation—are not to be carried out in the federal courts. Redistribution of fees simple to correct deficiencies in the market determined by the state legislature to be attributable to land oligopoly is a rational exercise of the eminent domain power. Therefore, the Hawaii statute must pass the scrutiny of the Public Use Clause. . . .

The mere fact that property taken outright by eminent domain is transferred in the first instance to private beneficiaries does not condemn that taking as having only a private purpose. The Court long ago rejected any literal requirement that condemned property be put into use for the general public. “It is not essential that the entire community, nor even any considerable portion, . . . directly enjoy or participate in any improvement in order [for it] to constitute a public use.” As the unique way titles were held in Hawaii skewed the land market, exercise of the power of eminent domain was justified. The Act advances its purposes without the State’s taking actual possession of the land. In such cases, government does not itself have to use property to legitimate the taking, it is only the taking’s purpose, and not its mechanics, that must pass scrutiny under the Public Use Clause. . . .

The State of Hawaii has never denied that the Constitution forbids even a compensated taking of property when executed for no reason other than to confer a private benefit on a particular private party. A purely private taking could not withstand the scrutiny of the public use requirement; it would serve no legitimate purpose of government and would thus be void. But no purely private taking is involved in these cases. The Hawaii Legislature enacted its Land Reform Act not to benefit a particular class of identifiable individuals but to attack certain perceived evils of concentrated property ownership in Hawaii—a legitimate public purpose. Use of the condemnation power to achieve this purpose is not irrational. Since we assume for purposes of these appeals that the weighty demand of just compensation has been met, the requirements of the Fifth and Fourteenth Amendments have been satisfied. Accordingly, we reverse the judgment of the Court of Appeals, and remand these cases for further proceedings in conformity with this opinion.

It is so ordered.

Kelo v. City of New London

545 U.S. 469 (2005)

http://laws.findlaw.com/us/545/469.html

Oral arguments are available at https://www.oyez.org.

Vote: 5 (Breyer, Ginsburg, Kennedy, Souter, Stevens)

4 (O’Connor, Rehnquist, Scalia, Thomas)

OPINION OF THE COURT: Stevens

CONCURRING OPINION: Kennedy

DISSENTING OPINIONS: O’Connor, Thomas

FACTS:

For decades the city of New London, Connecticut, had suffered serious economic decline. By 1998 the city’s unemployment rate was double that of the state, and the population had declined to 24,000, the same number of residents as in 1920. In response, state and local officials created the New London Development Corporation (NLDC) to devise strategies to stimulate the city’s economy. Efforts to revitalize the city resulted in a tentative commitment by a drug company, Pfizer, Inc., to build a $300 million research facility in the city’s Fort Trumbull area. Officials believed this new development not only would bring jobs and tax revenues to the city, but also would spur additional economic revitalization efforts.

The NLDC developed a master plan for the area surrounding the proposed Pfizer operation. This plan, which the city adopted in 2000, called for a hotel, conference center, museum, restaurants, shops, office space, marina, river walk, and new residential housing. To begin the development, the city had to acquire approximately 115 privately owned parcels of land. The city successfully negotiated the purchase of most of the parcels, but some landowners refused to sell. The city responded by condemning their properties through the use of eminent domain.

Nine landowners who were unwilling to sell their homes filed suit, claiming the city’s actions violated the Fifth Amendment’s takings clause. Among them were Susette Kelo, who had bought her water-view home in 1997 and had spent considerable time and money renovating it, and Wilhelmina Dery, who had lived in her Fort Trumbull home since her birth in 1918. The properties involved were not blighted or in poor condition; the city condemned them only because they stood in the path of the redevelopment plan. The petitioners claimed that the plan failed to meet the Fifth Amendment’s public use requirement. After the Connecticut Supreme Court ruled in favor of the city, Kelo and the other petitioners requested review by the U.S. Supreme Court.

ARGUMENTS:

For the petitioners, Susette Kelo et al.:

The use of eminent domain purely for private business development is not a public use under the Fifth Amendment.

Allowing increased taxes and jobs to be considered a public use opens the door to the seizure of any private property. The distinction between public and private purposes is erased.

Economic development interests do not justify using government power forcibly to seize one person’s property and give it to another private party.

Unlike seizures for other purposes (to combat a slum, build a road, etc.) that have clearly defined standards and geographical limits, economic development seizures are open-ended and without natural limits. Any property can be taken for any purpose.

Economic development seizures usually target the residential areas of the working and lower classes.

For the respondents, city of New London and the New London Development Corporation:

Combating the deteriorating economic conditions in New London through this redevelopment program is a public use.

The Court should continue its policy of deferring to the political branches of government to decide what is a public purpose. The courts are ill suited to make such a determination.

The primary purpose of the takings clause is not to limit the use of eminent domain, but to ensure fair compensation for seized property.

The democratic process provides the electorate the power to curb abuses of eminent domain.

The home of Susette Kelo is shown here in February 2005, just four months before the Supreme Court ruled that the city of New London could seize it as part of an economic revitalization program.

AP Photo/Jack Sauer

The construction of the $300 million Pfizer Global Research and Development headquarters was the centerpiece of New London’s revitalization program that culminated in the Supreme Court’s takings clause ruling in Kelo v. City of New London (2005).

John Nordell/The Christian Science Monitor via Getty Images

JUSTICE STEVENS delivered the opinion of the Court.

Two polar propositions are perfectly clear. On the one hand, it has long been accepted that the sovereign may not take the property of A for the sole purpose of transferring it to another private party B, even though A is paid just compensation. On the other hand, it is equally clear that a State may transfer property from one private party to another if future “use by the public” is the purpose of the taking; the condemnation of land for a railroad with common-carrier duties is a familiar example. Neither of these propositions, however, determines the disposition of this case.

As for the first proposition, the City would no doubt be forbidden from taking petitioners’ land for the purpose of conferring a private benefit on a particular private party. . . . Nor would the City be allowed to take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit. The takings before us, however, would be executed pursuant to a “carefully considered” development plan. The trial judge and all the members of the Supreme Court of Connecticut agreed that there was no evidence of an illegitimate purpose in this case. Therefore, as was true of the statute challenged in [Hawaii Housing Authority v.] Midkiff [1984], the City’s development plan was not adopted “to benefit a particular class of identifiable individuals.”

On the other hand, this is not a case in which the City is planning to open the condemned land—at least not in its entirety—to use by the general public. Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers. But although such a projected use would be sufficient to satisfy the public use requirement, this “Court long ago rejected any literal requirement that condemned property be put into use for the general public.” [Midkiff.] Indeed, while many state courts in the mid-19th century endorsed “use by the public” as the proper definition of public use, that narrow view steadily eroded over time. Not only was the “use by the public” test difficult to administer (e.g., what proportion of the public need have access to the property? at what price?), but it proved to be impractical given the diverse and always evolving needs of society. . . .

The disposition of this case therefore turns on the question whether the City’s development plan serves a “public purpose.” Without exception, our cases have defined that concept broadly, reflecting our longstanding policy of deference to legislative judgments in this field.

In Berman v. Parker (1954), this Court upheld a redevelopment plan targeting a blighted area of Washington, D.C., in which most of the housing for the area’s 5,000 inhabitants was beyond repair. Under the plan, the area would be condemned and part of it utilized for the construction of streets, schools, and other public facilities. The remainder of the land would be leased or sold to private parties for the purpose of redevelopment, including the construction of low-cost housing. . . .

In Hawaii Housing Authority v. Midkiff (1984), the Court considered a Hawaii statute whereby fee title was taken from lessors and transferred to lessees (for just compensation) in order to reduce the concentration of land ownership. We unanimously upheld the statute and rejected the Ninth Circuit’s view that it was “a naked attempt on the part of the state of Hawaii to take the property of A and transfer it to B solely for B’s private use and benefit.” Reaffirming Berman’s deferential approach to legislative judgments in this field, we concluded that the State’s purpose of eliminating the “social and economic evils of a land oligopoly” qualified as a valid public use. Our opinion also rejected the contention that the mere fact that the State immediately transferred the properties to private individuals upon condemnation somehow diminished the public character of the taking. “[I]t is only the taking’s purpose, and not its mechanics,” we explained, that matters in determining public use. . . .

... For more than a century, our public use jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures broad latitude in determining what public needs justify the use of the takings power.

Those who govern the City were not confronted with the need to remove blight in the Fort Trumbull area, but their determination that the area was sufficiently distressed to justify a program of economic rejuvenation is entitled to our deference. The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including—but by no means limited to—new jobs and increased tax revenue. As with other exercises in urban planning and development, the City is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts. To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.

To avoid this result, petitioners urge us to adopt a new bright-line rule that economic development does not qualify as a public use. Putting aside the unpersuasive suggestion that the City’s plan will provide only purely economic benefits, neither precedent nor logic supports petitioners’ proposal. Promoting economic development is a traditional and long accepted function of government. There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized. . . . “Clearly, there is no basis for exempting economic development from our traditionally broad understanding of public purpose.

Petitioners contend that using eminent domain for economic development impermissibly blurs the boundary between public and private takings. Again, our cases foreclose this objection. Quite simply, the government’s pursuit of a public purpose will often benefit individual private parties. . . “We cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects.”

It is further argued that without a bright-line rule nothing would stop a city from transferring citizen A’s property to citizen B for the sole reason that citizen B will put the property to a more productive use and thus pay more taxes. Such a one-to-one transfer of property, executed outside the confines of an integrated development plan, is not presented in this case. While such an unusual exercise of government power would certainly raise a suspicion that a private purpose was afoot, the hypothetical cases posited by petitioners can be confronted if and when they arise. They do not warrant the crafting of an artificial restriction on the concept of public use. . . .

Just as we decline to second-guess the City’s considered judgments about the efficacy of its development plan, we also decline to second-guess the City’s determinations as to what lands it needs to acquire in order to effectuate the project. “It is not for the courts to oversee the choice of the boundary line nor to sit in review on the size of a particular project area. Once the question of the public purpose has been decided, the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch.”

In affirming the City’s authority to take petitioners’ properties, we do not minimize the hardship that condemnations may entail, notwithstanding the payment of just compensation. We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power. Indeed, many States already impose “public use” requirements that are stricter than the federal baseline. Some of these requirements have been established as a matter of state constitutional law, while others are expressed in state eminent domain statutes that carefully limit the grounds upon which takings may be exercised. As the submissions of the parties and their amici make clear, the necessity and wisdom of using eminent domain to promote economic development are certainly matters of legitimate public debate. This Court’s authority, however, extends only to determining whether the City’s proposed condemnations are for a “public use” within the meaning of the Fifth Amendment to the Federal Constitution. Because over a century of our case law interpreting that provision dictates an affirmative answer to that question, we may not grant petitioners the relief that they seek.

The judgment of the Supreme Court of Connecticut is affirmed.

It is so ordered.

JUSTICE KENNEDY, concurring.

I join the opinion for the Court and add these further observations.

This Court has declared that a taking should be upheld as consistent with the Public Use Clause as long as it is “rationally related to a conceivable public purpose.” Hawaii Housing Authority v. Midkiff (1984); see also Berman v. Parker (1954). This deferential standard of review echoes the rational-basis test used to review economic regulation under the Due Process and Equal Protection Clauses. The determination that a rational-basis standard of review is appropriate does not, however, alter the fact that transfers intended to confer benefits on particular, favored private entities, and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause.

A court applying rational-basis review under the Public Use Clause should strike down a taking that, by a clear showing, is intended to favor a particular private party, with only incidental or pretextual public benefits. . . .

This is not the occasion for conjecture as to what sort of cases might justify a more demanding standard, but it is appropriate to underscore aspects of the instant case that convince me no departure from Berman and Midkiff is appropriate here. This taking occurred in the context of a comprehensive development plan meant to address a serious city-wide depression, and the projected economic benefits of the project cannot be characterized as de minimus. The identity of most of the private beneficiaries were unknown at the time the city formulated its plans. The city complied with elaborate procedural requirements that facilitate review of the record and inquiry into the city’s purposes. In sum, while there may be categories of cases in which the transfers are so suspicious, or the procedures employed so prone to abuse, or the purported benefits are so trivial or implausible, that courts should presume an impermissible private purpose, no such circumstances are present in this case.

JUSTICE O’CONNOR, with whom the CHIEF JUSTICE, JUSTICE SCALIA, and JUSTICE THOMAS join, dissenting.

Over two centuries ago, just after the Bill of Rights was ratified, Justice Chase wrote:

“An act of the Legislature (for I cannot call it a law) contrary to the great first principles of the social compact, cannot be considered a rightful exercise of legislative authority. . . . A few instances will suffice to explain what I mean. . . . [A] law that takes property from A and gives it to B: It is against all reason and justice, for a people to entrust a Legislature with such powers; and, therefore, it cannot be presumed that they have done it.” Calder v. Bull (1798).

Today the Court abandons this long-held, basic limitation on government power. Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process. To reason, as the Court does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings “for public use” is to wash out any distinction between private and public use of property—and thereby effectively to delete the words “for public use” from the Takings Clause of the Fifth Amendment. Accordingly I respectfully dissent. . . .

This case returns us for the first time in over 20 years to the hard question of when a purportedly “public purpose” taking meets the public use requirement. It presents an issue of first impression: Are economic development takings constitutional? I would hold that they are not. We are guided by two precedents about the taking of real property by eminent domain. In Berman, we upheld takings within a blighted neighborhood of Washington, D.C. The neighborhood had so deteriorated that, for example, 64.3% of its dwellings were beyond repair. It had become burdened with “overcrowding of dwellings,” “lack of adequate streets and alleys,” and “lack of light and air.” Congress had determined that the neighborhood had become “injurious to the public health, safety, morals, and welfare” and that it was necessary to “eliminat[e] all such injurious conditions by employing all means necessary and appropriate for the purpose,” including eminent domain. Mr. Berman’s department store was not itself blighted. Having approved of Congress’ decision to eliminate the harm to the public emanating from the blighted neighborhood, however, we did not second-guess its decision to treat the neighborhood as a whole rather than lot-by-lot.

In Midkiff, we upheld a land condemnation scheme in Hawaii whereby title in real property was taken from lessors and transferred to lessees. At that time, the State and Federal Governments owned nearly 49% of the State’s land, and another 47% was in the hands of only 72 private landowners. Concentration of land ownership was so dramatic that on the State’s most urbanized island, Oahu, 22 landowners owned 72.5% of the fee simple titles. The Hawaii Legislature had concluded that the oligopoly in land ownership was “skewing the State’s residential fee simple market, inflating land prices, and injuring the public tranquility and welfare,” and therefore enacted a condemnation scheme for redistributing title. . . .

The Court’s holdings in Berman and Midkiff were true to the principle underlying the Public Use Clause. In both those cases, the extraordinary, precondemnation use of the targeted property inflicted affirmative harm on society—in Berman through blight resulting from extreme poverty and in Midkiff through oligopoly resulting from extreme wealth. And in both cases, the relevant legislative body had found that eliminating the existing property use was necessary to remedy the harm. Thus a public purpose was realized when the harmful use was eliminated. Because each taking directly achieved a public benefit, it did not matter that the property was turned over to private use. Here, in contrast, New London does not claim that Susette Kelo’s and Wilhelmina Dery’s well-maintained homes are the source of any social harm. Indeed, it could not so claim without adopting the absurd argument that any single-family home that might be razed to make way for an apartment building, or any church that might be replaced with a retail store, or any small business that might be more lucrative if it were instead part of a national franchise, is inherently harmful to society and thus within the government’s power to condemn.

In moving away from our decisions sanctioning the condemnation of harmful property use, the Court today significantly expands the meaning of public use. It holds that the sovereign may take private property currently put to ordinary private use, and give it over for new, ordinary private use, so long as the new use is predicted to generate some secondary benefit for the public—such as increased tax revenue, more jobs, maybe even aesthetic pleasure. But nearly any lawful use of real private property can be said to generate some incidental benefit to the public. Thus, if predicted (or even guaranteed) positive side-effects are enough to render transfer from one private party to another constitutional, then the words “for public use” do not realistically exclude any takings, and thus do not exert any constraint on the eminent domain power. . . .

Finally, . . . the Court suggests that property owners should turn to the States, who may or may not choose to impose appropriate limits on economic development takings. This is an abdication of our responsibility. States play many important functions in our system of dual sovereignty, but compensating for our refusal to enforce properly the Federal Constitution (and a provision meant to curtail state action, no less) is not among them. . . .

Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.

JUSTICE THOMAS, dissenting.

Today’s decision is simply the latest in a string of our cases construing the Public Use Clause to be a virtual nullity, without the slightest nod to its original meaning. In my view, the Public Use Clause, originally understood, is a meaningful limit on the government’s eminent domain power. . . .

... I would revisit our Public Use Clause cases and consider returning to the original meaning of the Public Use Clause: that the government may take property only if it actually uses or gives the public a legal right to use the property.

The consequences of today’s decision are not difficult to predict, and promise to be harmful. So-called “urban renewal” programs provide some compensation for the properties they take, but no compensation is possible for the subjective value of these lands to the individuals displaced and the indignity inflicted by uprooting them from their homes. Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful. If ever there were justification for intrusive judicial review of constitutional provisions that protect “discrete and insular minorities,” United States v. Carolene Products Co. (1938), surely that principle would apply with great force to the powerless groups and individuals the Public Use Clause protects. The deferential standard this Court has adopted for the Public Use Clause is therefore deeply perverse. It encourages “those citizens with disproportionate influence and power in the political process, including large corporations and development firms” to victimize the weak. (O’Connor, J., dissenting). . . .

The Court relies almost exclusively on this Court’s prior cases to derive today’s far-reaching, and dangerous, result. But the principles this Court should employ to dispose of this case are found in the Public Use Clause itself. . . . When faced with a clash of constitutional principle and a line of unreasoned cases wholly divorced from the text, history, and structure of our founding document, we should not hesitate to resolve the tension in favor of the Constitution’s original meaning. For the reasons I have given, and for the reasons given in Justice O’Connor’s dissent, the conflict of principle raised by this boundless use of the eminent domain power should be resolved in petitioners’ favor. I would reverse the judgment of the Connecticut Supreme Court.

box 11-2 AFTERMATH . . . KELO v. CITY OF NEW LONDON

THE Kelo decision touched off a storm of protest by private property rights advocates, and public opinion ran decidedly against the decision. Taking the Court’s admonishment that nothing in the decision prohibits the states from imposing their own limits, forty-four state legislatures reacted to the public opposition to Kelo by placing new restrictions on the use of eminent domain. Supporters of eminent domain, including the National League of Cities, countered by persuading legislators in several states to modify many of the more extreme anti-Kelo proposals.

Two months after the Kelo decision, its author, Justice John Paul Stevens, acknowledged that the ruling was “unwise” and that he would have opposed it had he been a legislator and not a federal judge bound by precedent.

Some protests were directed at the justices themselves. In Weare, New Hampshire, private property activists secured sufficient petition signatures to place a proposal on the ballot to have the town seize the two-hundred-year-old farmhouse home of Justice David Souter, who voted with the majority in Kelo. Under the proposal the property would be turned over to private investors who would build an inn to be named the “Lost Liberty Hotel,” featuring the “Just Desserts Café.” One of the proposal’s supporters said, “It would be more like a bed and breakfast. . . . There would be nine suites, with a black robe in each of the closets.” In March 2006 the Weare voters rejected the proposal 1,167 to 493, endorsing instead a resolution asking the state legislature to forbid the use of eminent domain approved in the Kelo decision.

In a related but also unsuccessful effort, members of the state Libertarian Party urged the city of Plainfield, New Hampshire, to seize a 167-acre vacation retreat owned by Justice Stephen Breyer. In its place they planned to create a “Constitution Park” including monuments to the U.S. and New Hampshire Constitutions.

In a reversal of sorts, the city of Hercules, California, in 2006 used Kelo to stop development. Wal-Mart Stores, Inc., had purchased a 17-acre parcel near the town’s waterfront for $15 million, intending to construct a 140,000-square-foot store on the property. The city council opposed the development and voted to seize the land to “ward off urban blight.” Wal-Mart vowed to take legal action against this use of eminent domain. In 2009, however, the dispute ended when the city purchased the property from Wal-Mart for $13.5 million.

New London used its victory in Kelo to continue its program of redeveloping the Fort Trumbull neighborhood. Pfizer built a $300 million research complex that served as the centerpiece for the project. The condemned houses were torn down, but the city’s dream that they would be replaced by new commercial, entertainment, lodging, and residential facilities did not materialize. In 2009, to the city’s great disappointment, Pfizer announced that it would abandon its New London facility and move its projects and most of its 1,400 jobs to another Pfizer operation in nearby Groton, Connecticut. The New London research facility had been in operation only eight years.

As for Susette Kelo, the New London nurse continued the fight to save her home from government seizure. She was aided by the Institute for Justice, a Washington, D.C., organization committed to property rights and other libertarian causes. In the end Kelo was forced to leave her home; she moved across the river to Groton. Her little pink house, however, avoided the city’s wrecking ball. It was disassembled and moved to another section of New London, where it was rebuilt. With the support of private property advocates, it was named the Kelo House and a monument was placed outside the home to commemorate the legal battle against New London’s use of eminent domain.

Kelo continues to oppose what she considers to be abuses of the power of eminent domain. “Do I feel like I won? No, I didn’t win. But other people did win. They got their properties back. People tell me all the time about towns that have passed a law limiting eminent domain,” she explains. “People have to be continually made aware of how wrong it was. It’s still wrong today.”

SOURCES: Valley News, July 28, 2005; Financial Times, January 26, 2006; New York Times, February 21, 2006, March 14, 2006, November 12, 2009; Associated Press, March 14, 2006; Los Angeles Times, May 25, 2006; San Francisco Chronicle, May 25, 2006, May 30, 2006; Money, September 2006, August 2012; Contra Costa Times, April 16, 2009; Norwich Bulletin, November 9, 2009; The Day, November 11, 2009.

ANNOTATED READINGS

A number of works have examined the history and constitutional foundations of private property rights in America. These include Bruce Ackerman, Economic Foundations of Property Law (Boston: Little, Brown, 1975); Bruce Ackerman, Private Property and the Constitution (New Haven, CT: Yale University Press, 1977); James W. Ely Jr., The Guardian of Every Other Right: A Constitutional History of Property Rights (New York: Oxford University Press, 1992); Nicholas Mercuro, Taking Property and Just Compensation (Boston: Kluwer, 1992); Jennifer Nedelsky, Private Property and the Limits of American Constitutionalism: The Madisonian Frame-work and Its Legacy (Chicago: University of Chicago Press, 1990); Ellen Frankel Paul, Liberty, Property, and the Foundations of the American Constitution (Albany: State University of New York Press, 1988); and David A. Schultz, Property, Power, and American Democracy (New Brunswick, NJ: Transaction, 1992).

Other works have specifically focused on the power of eminent domain and the government’s use of that authority. Examples are Alan T. Ackerman, Current Condemnation Law: Takings, Compensation, and Benefits (Chicago: American Bar Association, 1994); Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain (Cambridge, MA: Harvard University Press, 1985); Steven Greenhut, Abuse of Power: How the Government Misuses Eminent Domain (Santa Ana, CA: Seven Locks Press, 2004); Robin Paul Malloy, ed., Private Property, Community Development, and Eminent Domain (Burlington, VT: Ashgate, 2008); Ellen Frankel Paul, Property Rights and Eminent Domain (New Brunswick, NJ: Transaction, 1987); John Ryskamp, The Eminent Domain Revolt (New York: Algora, 2007); and William B. Stoebuck, Nontrespassory Takings in Eminent Domain (Charlottesville, VA: Michie, 1977).

The growing concern over the use of regulation as a form of property taking is explored in the following works: Dennis J. Coyle, Property Rights and the Constitution: Shaping Society through Land Use Regulation (Albany: State University of New York Press, 1993); Steven J. Eagle, Regulatory Takings (Newark, NJ: LexisNexis, 2005); William A. Fischel, Regulatory Takings: Law, Economics, and Politics (Cambridge, MA: Harvard University Press, 1995); Thomas J. Miceli and Kathleen Segerson, Compensation for Regulatory Takings (Greenwich, CT: JAI Press, 1996); and Alfred M. Olivetti, This Land Is Your Land, This Land Is My Land: The Property Rights Movement and Regulatory Takings (New York: LFB Scholarly Publishing, 2003).

Works examining individual cases that have been significant in developing the Court’s takings clause jurisprudence are also available. See, for example, Jeff Benedict, Little Pink House: A True Story of Defiance and Courage (New York: Grand Central Publishing, 2009); Gerald Korngold and Andrew P. Morriss, eds., Property Stories (New York: Thomson Reuters/Foundation Press, 2009); Carla T. Main, Bulldozed: “Kelo,” Eminent Domain, and the American Lust for Land (New York: Encounter Books, 2007); Dwight H. Merriam and Mary Massaron Ross, eds., Eminent Domain Use and Abuse: Kelo in Context (Chicago: American Bar Association, 2006); Thomas E. Roberts, ed., Taking Sides on Takings Issues: The Impact of Tahoe-Sierra (Chicago: American Bar Association, 2003); and David A. Schultz, Evicted: Property Rights and Eminent Domain in America (Westport, CT: Praeger, 2009).

1. James W. Ely Jr., The Guardian of Every Other Right: A Constitutional History of Property Rights (New York: Oxford University Press, 1992), 55.

2. Armstrong v. United States (1960).

3. For a discussion of these early provisions, see Ely, The Guardian of Every other Right, chap. 2.

4. For a discussion of this case, see Epstein and Walker, Constitutional Law for a Changing America: Rights, Liberties, and Justice.

5. The implications of this decision went far beyond the takings clause issue. By ruling as it did, the Supreme Court held that the states did not have to abide by any of the provisions of the Bill of Rights, and that those sections of the Constitution limited federal government actions only. The states were governed only by their own bills of rights. Over time, the Court incrementally changed its position, but it took more than 130 years for it to conclude that the states were bound by almost all the provisions of the Bill of Rights. For a discussion of this history, see ibid., chap. 3.

6. See David A. Schultz, Property, Power, and American Democracy (New Brunswick, NJ: Transaction, 1992).

7. Occasionally, compensation controversies involve critical issues and large amounts of money. In United States v. Sioux Nation of Indians (1980), the Supreme Court settled a long-standing dispute over the abrogation of the Fort Laramie Treaty of 1868. The treaty had established the right of the Sioux nation to the Black Hills, but an 1877 act of Congress essentially took back those lands. The Court ruled that the treaty abrogation was governed by the takings clause and that the Sioux were entitled to the value of the land in 1877 plus 5 percent annual ierest since that year, amounting to a total claim of some $100 million.

8. See Ely, The Guardian of Every Other Right, chap. 6.

9. See Agins v. City of Tiburon (1980).

10. Miller v. Schoene (1928), Hadacheck v. Los Angeles (1915), and Goldblatt v. Hempstead (1962), respectively.

11. Such expansive views of a taking, however, have not extended to temporary measures. For example, in Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency (2002) the Court found that a temporary moratorium on new construction in the Lake Tahoe basin while the government conducted a study of appropriate land-use regulations did not constitute a taking even when that moratorium was in effect for over thirty-two months.

Reference Material

1. Constitution of the United States

2. The Justices

3. Glossary

4. Online Case Archive Index

Appendix 1: Constitution of the United States

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

ARTICLE I

Section 1. All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.

Section 2. The House of Representatives shall be composed of Members chosen every second Year by the People of the several States, and the Electors in each State shall have the Qualifications requisite for Electors of the most numerous Branch of the State Legislature.

No Person shall be a Representative who shall not have attained to the age of twenty five Years, and been seven Years a Citizen of the United States, and who shall not, when elected, be an Inhabitant of that State in which he shall be chosen.

[Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.]¹ The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct. The Number of Representatives shall not exceed one for every thirty Thousand, but each State shall have at Least one Representative; and until such enumeration shall be made, the State of New Hampshire shall be entitled to chuse three, Massachusetts eight, Rhode-Island and Providence Plantations one, Connecticut five, New-York six, New Jersey four, Pennsylvania eight, Delaware one, Maryland six, Virginia ten, North Carolina five, South Carolina five, and Georgia three.

When vacancies happen in the Representation from any State, the Executive Authority thereof shall issue Writs of Election to fill such Vacancies.

The House of Representatives shall chuse their Speaker and other Officers; and shall have the sole Power of Impeachment.

Section 3. The Senate of the United States shall be composed of two Senators from each State, [chosen by the Legislature thereof,]² for six Years; and each Senator shall have one Vote.

Immediately after they shall be assembled in Consequence of the first Election, they shall be divided as equally as may be into three Classes. The Seats of the Senators of the first Class shall be vacated at the Expiration of the second Year, of the second Class at the Expiration of the fourth Year, and of the third Class at the Expiration of the sixth Year, so that one third may be chosen every second Year; [and if Vacancies happen by Resignation, or otherwise, during the Recess of the Legislature of any State, the Executive thereof may make temporary Appointments until the next Meeting of the Legislature, which shall then fill such Vacancies].³

No Person shall be a Senator who shall not have attained to the Age of thirty Years, and been nine Years a Citizen of the United States, and who shall not, when elected, be an Inhabitant of that State for which he shall be chosen.

The Vice President of the United States shall be President of the Senate, but shall have no Vote, unless they be equally divided.

The Senate shall chuse their other Officers, and also a President pro tempore, in the Absence of the Vice President, or when he shall exercise the Office of President of the United States.

The Senate shall have the sole Power to try all Impeachments. When sitting for that Purpose, they shall be on Oath or Affirmation. When the President of the United States is tried, the Chief Justice shall preside: And no Person shall be convicted without the Concurrence of two thirds of the Members present.

Judgment in Cases of Impeachment shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States: but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment and Punishment, according to Law.

Section 4. The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.

The Congress shall assemble at least once in every Year, and such Meeting shall [be on the first Monday in December],⁴ unless they shall by Law appoint a different Day.

Section 5. Each House shall be the Judge of the Elections, Returns and Qualifications of its own Members, and a Majority of each shall constitute a Quorum to do Business; but a smaller Number may adjourn from day to day, and may be authorized to compel the Attendance of absent Members, in such Manner, and under such Penalties as each House may provide.

Each House may determine the Rules of its Proceedings, punish its Members for disorderly Behaviour, and, with the Concurrence of two thirds, expel a Member.

Each House shall keep a Journal of its Proceedings, and from time to time publish the same, excepting such Parts as may in their Judgment require Secrecy; and the Yeas and Nays of the Members of either House on any question shall, at the Desire of one fifth of those Present, be entered on the Journal.

Neither House, during the Session of Congress, shall, without the Consent of the other, adjourn for more than three days, nor to any other Place than that in which the two Houses shall be sitting.

Section 6. The Senators and Representatives shall receive a Compensation for their Services, to be ascertained by Law, and paid out of the Treasury of the United States. They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place.

No Senator or Representative shall, during the Time for which he was elected, be appointed to any civil Office under the Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased during such time; and no Person holding any Office under the United States, shall be a Member of either House during his Continuance in Office.

Section 7. All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law. But in all such Cases the Votes of both Houses shall be determined by Yeas and Nays, and the Names of the Persons voting for and against the Bill shall be entered on the Journal of each House respectively. If any Bill shall not be returned by the President within ten Days (Sundays excepted) after it shall have been presented to him, the Same shall be a Law, in like Manner as if he had signed it, unless the Congress by their Adjournment prevent its Return, in which Case it shall not be a Law.

Every Order, Resolution, or Vote to which the Concurrence of the Senate and House of Representatives may be necessary (except on a question of Adjournment) shall be presented to the President of the United States; and before the Same shall take Effect, shall be approved by him, or being disapproved by him, shall be repassed by two thirds of the Senate and House of Representatives, according to the Rules and Limitations prescribed in the Case of a Bill.

Section 8. 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;

To borrow Money on the credit of the United States;

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

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

To establish Post Offices and post Roads;

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

To constitute Tribunals inferior to the supreme Court;

To define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations;

To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

To provide and maintain a Navy;

To make Rules for the Government and Regulation of the land and naval Forces;

To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;

To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;

To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings;—And

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

Section 9. The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person.

The Privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.

No Bill of Attainder or ex post facto Law shall be passed.

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.⁵

No Tax or Duty shall be laid on Articles exported from any State.

No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.

No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.

Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

ARTICLE II

Section 1. The executive Power shall be vested in a President of the United States of America. He shall hold his Office during the Term of four Years, and, together with the Vice President, chosen for the same Term, be elected, as follows

Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress: but no Senator or Representative, or Person holding an Office of Trust or Profit under the United States, shall be appointed an Elector.

[The Electors shall meet in their respective States, and vote by Ballot for two Persons, of whom one at least shall not be an Inhabitant of the same State with themselves. And they shall make a List of all the Persons voted for, and of the Number of Votes for each; which List they shall sign and certify, and transmit sealed to the Seat of the Government of the United States, directed to the President of the Senate. The President of the Senate shall, in the Presence of the Senate and House of Representatives, open all the Certificates, and the Votes shall then be counted. The Person having the greatest Number of Votes shall be the President, if such Number be a Majority of the whole Number of Electors appointed; and if there be more than one who have such Majority, and have an equal Number of Votes, then the House of Representatives shall immediately chuse by Ballot one of them for President; and if no Person have a Majority, then from the five highest on the list the said House shall in like Manner chuse the President. But in chusing the President, the Votes shall be taken by States, the Representation from each State having one Vote; A quorum for this Purpose shall consist of a Member or Members from two thirds of the States, and a Majority of all the States shall be necessary to a Choice. In every Case, after the Choice of the President, the Person having the greatest Number of Votes of the Electors shall be the Vice President. But if there should remain two or more who have equal Votes, the Senate shall chuse from them by Ballot the Vice President.]⁶

The Congress may determine the Time of chusing the Electors, and the Day on which they shall give their Votes; which Day shall be the same throughout the United States.

No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.

In Case of the Removal of the President from Office, or of his Death, Resignation, or Inability to discharge the Powers and Duties of the said Office,⁷ the Same shall devolve on the Vice President, and the Congress may by Law provide for the Case of Removal, Death, Resignation or Inability, both of the President and Vice President, declaring what Officer shall then act as President, and such Officer shall act accordingly, until the Disability be removed, or a President shall be elected.

The President shall, at stated Times, receive for his Services, a Compensation, which shall neither be encreased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.

Before he enter on the Execution of his Office, he shall take the following Oath or Affirmation:—“I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.”

Section 2. The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States; he may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices, and he shall have Power to grant Reprieves and Pardons for Offences against the United States, except in Cases of Impeachment.

He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.

Section 3. He shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient; he may, on extraordinary Occasions, convene both Houses, or either of them, and in Case of Disagreement between them, with Respect to the Time of Adjournment, he may adjourn them to such Time as he shall think proper; he shall receive Ambassadors and other public Ministers; he shall take Care that the Laws be faithfully executed, and shall Commission all the Officers of the United States.

Section 4. The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.

ARTICLE III

Section 1. The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.

Section 2. The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;—to all Cases affecting Ambassadors, other public Ministers and Consuls;—to all Cases of admiralty and maritime Jurisdiction;—to Controversies to which the United States shall be a Party;—to Controversies between two or more States;—between a State and Citizens of another State;⁸—between Citizens of different States;—between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.⁸

In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the supreme Court shall have original Jurisdiction. In all the other Cases before mentioned, the supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.

The Trial of all Crimes, except in Cases of Impeachment, shall be by Jury; and such Trial shall be held in the State where the said Crimes shall have been committed; but when not committed within any State, the Trial shall be at such Place or Places as the Congress may by Law have directed.

Section 3. Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.

The Congress shall have Power to declare the Punishment of Treason, but no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted.

ARTICLE IV

Section 1. Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.

Section 2. The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.

A Person charged in any State with Treason, Felony, or other Crime, who shall flee from Justice, and be found in another State, shall on Demand of the executive Authority of the State from which he fled, be delivered up, to be removed to the State having Jurisdiction of the Crime.

[No Person held to Service or Labour in one State, under the Laws thereof, escaping into another, shall, in Consequence of any Law or Regulation therein, be discharged from such Service or Labour, but shall be delivered up on Claim of the Party to whom such Service or Labour may be due.]⁹

Section 3. New States may be admitted by the Congress into this Union; but no new State shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.

The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State.

Section 4. The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened) against domestic Violence.

ARTICLE V

The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as Part of this Constitution, when ratified by the Legislatures of three fourths of the several States, or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress; Provided [that no Amendment which may be made prior to the Year One thousand eight hundred and eight shall in any Manner affect the first and fourth Clauses in the Ninth Section of the first Article; and]¹⁰ that no State, without its Consent, shall be deprived of its equal Suffrage in the Senate.

ARTICLE VI

All Debts contracted and Engagements entered into, before the Adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation.

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

The Senators and Representatives before mentioned, and the Members of the several State Legislatures, and all executive and judicial Officers, both of the United States and of the several States, shall be bound by Oath or Affirmation, to support this Constitution; but no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.

ARTICLE VII

The Ratification of the Conventions of nine States, shall be sufficient for the Establishment of this Constitution between the States so ratifying the Same. Done in Convention by the Unanimous Consent of the States present the Seventeenth Day of September in the Year of our Lord one thousand seven hundred and Eighty seven and of the Independence of the United States of America the Twelfth. IN WITNESS whereof We have hereunto subscribed our Names,

George Washington,

President and deputy from Virginia.

New Hampshire: John Langdon,

Nicholas Gilman.

Massachusetts: Nathaniel Gorham,

Rufus King.

Connecticut: William Samuel Johnson,

Roger Sherman.

New York: Alexander Hamilton.

New Jersey: William Livingston,

David Brearley,

William Paterson,

Jonathan Dayton.

Pennsylvania: Benjamin Franklin,

Thomas Mifflin,

Robert Morris,

George Clymer,

Thomas FitzSimons,

Jared Ingersoll,

James Wilson,

Gouverneur Morris.

Delaware: George Read,

Gunning Bedford Jr.,

John Dickinson,

Richard Bassett,

Jacob Broom.

Maryland: James McHenry,

Daniel of St. Thomas Jenifer,

Daniel Carroll.

Virginia: John Blair,

James Madison Jr.

North Carolina: William Blount,

Richard Dobbs Spaight,

Hugh Williamson.

South Carolina: John Rutledge,

Charles Cotesworth Pinckney,

Charles Pinckney,

Pierce Butler.

Georgia: William Few,

Abraham Baldwin.

[The language of the original Constitution, not including the Amendments, was adopted by a convention of the states on September 17, 1787, and was subsequently ratified by the states on the following dates: Delaware, December 7, 1787; Pennsylvania, December 12, 1787; New Jersey, December 18, 1787; Georgia, January 2, 1788; Connecticut, January 9, 1788; Massachusetts, February 6, 1788; Maryland, April 28, 1788; South Carolina, May 23, 1788; New Hampshire, June 21, 1788.

Ratification was completed on June 21, 1788.

The Constitution subsequently was ratified by Virginia, June 25, 1788; New York, July 26, 1788; North Carolina, November 21, 1789; Rhode Island, May 29, 1790; and Vermont, January 10, 1791.]

AMENDMENTS

Amendment I

(First ten amendments ratified December 15, 1791.)

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Amendment II

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

Amendment III

No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.

Amendment IV

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Amendment V

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Amendment VI

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

Amendment VII

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

Amendment VIII

Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.

Amendment IX

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Amendment X

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Amendment XI

(Ratified February 7, 1795)

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

Amendment XII

(Ratified June 15, 1804)

The Electors shall meet in their respective states and vote by ballot for President and Vice-President, one of whom, at least, shall not be an inhabitant of the same state with themselves; they shall name in their ballots the person voted for as President, and in distinct ballots the person voted for as Vice-President, and they shall make distinct lists of all persons voted for as President, and of all persons voted for as Vice-President, and of the number of votes for each, which lists they shall sign and certify, and transmit sealed to the seat of the government of the United States, directed to the President of the Senate;—The President of the Senate shall, in the presence of the Senate and House of Representatives, open all the certificates and the votes shall then be counted;—The person having the greatest number of votes for President, shall be the President, if such number be a majority of the whole number of Electors appointed; and if no person have such majority, then from the persons having the highest numbers not exceeding three on the list of those voted for as President, the House of Representatives shall choose immediately, by ballot, the President. But in choosing the President, the votes shall be taken by states, the representation from each state having one vote; a quorum for this purpose shall consist of a member or members from two-thirds of the states, and a majority of all the states shall be necessary to a choice. [And if the House of Representatives shall not choose a President whenever the right of choice shall devolve upon them, before the fourth day of March next following, then the Vice-President shall act as President, as in the case of the death or other constitutional disability of the President.]¹¹ The person having the greatest number of votes as Vice-President, shall be the Vice-President, if such number be a majority of the whole number of Electors appointed, and if no person have a majority, then from the two highest numbers on the list, the Senate shall choose the Vice-President; a quorum for the purpose shall consist of two-thirds of the whole number of Senators, and a majority of the whole number shall be necessary to a choice. But no person constitutionally ineligible to the office of President shall be eligible to that of Vice-President of the United States.

Amendment XIII

(Ratified December 6, 1865)

Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

Section 2. Congress shall have power to enforce this article by appropriate legislation.

Amendment XIV

(Ratified July 9, 1868)

Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Section 2. Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age,¹² and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.

Section 3. No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

Amendment XV

(Ratified February 3, 1870)

Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.

Amendment XVI

(Ratified February 3, 1913)

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Amendment XVII

(Ratified April 8, 1913)

The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures.

When vacancies happen in the representation of any State in the Senate, the executive authority of such State shall issue writs of election to fill such vacancies: Provided, That the legislature of any State may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct.

This amendment shall not be so construed as to affect the election or term of any Senator chosen before it becomes valid as part of the Constitution.

Amendment XVIII

(Ratified January 16, 1919)

Section 1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

Section 2. The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.¹³

Amendment XIX

(Ratified August 18, 1920)

The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex.

Congress shall have power to enforce this article by appropriate legislation.

Amendment XX

(Ratified January 23, 1933)

Section 1. The terms of the President and Vice President shall end at noon on the 20th day of January, and the terms of Senators and Representatives at noon on the 3d day of January, of the years in which such terms would have ended if this article had not been ratified; and the terms of their successors shall then begin.

Section 2. The Congress shall assemble at least once in every year, and such meeting shall begin at noon on the 3d day of January, unless they shall by law appoint a different day.

Section 3.¹⁴ If, at the time fixed for the beginning of the term of the President, the President elect shall have died, the Vice President elect shall become President. If a President shall not have been chosen before the time fixed for the beginning of his term, or if the President elect shall have failed to qualify, then the Vice President elect shall act as President until a President shall have qualified; and the Congress may by law provide for the case wherein neither a President elect nor a Vice President elect shall have qualified, declaring who shall then act as President, or the manner in which one who is to act shall be selected, and such person shall act accordingly until a President or Vice President shall have qualified.

Section 4. The Congress may by law provide for the case of the death of any of the persons from whom the House of Representatives may choose a President whenever the right of choice shall have devolved upon them, and for the case of the death of any of the persons from whom the Senate may choose a Vice President whenever the right of choice shall have devolved upon them.

Section 5. Sections 1 and 2 shall take effect on the 15th day of October following the ratification of this article.

Section 6. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of three-fourths of the several States within seven years from the date of its submission.

Amendment XXI

(Ratified December 5, 1933)

Section 1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed.

Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by conventions in the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.

Amendment XXII

(Ratified February 27, 1951)

Section 1. No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once. But this Article shall not apply to any person holding the office of President when this Article was proposed by the Congress, and shall not prevent any person who may be holding the office of President, or acting as President, during the term within which this Article become operative from holding the office of President or acting as President during the remainder of such term.

Section 2. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of three-fourths of the several States within seven years from the date of its submission to the States by the Congress.

Amendment XXIII

(Ratified March 29, 1961)

Section 1. The District constituting the seat of Government of the United States shall appoint in such manner as the Congress may direct:

A number of electors of President and Vice President equal to the whole number of Senators and Representatives in Congress to which the District would be entitled if it were a State, but in no event more than the least populous State; they shall be in addition to those appointed by the States, but they shall be considered, for the purposes of the election of President and Vice President, to be electors appointed by a State; and they shall meet in the District and perform such duties as provided by the twelfth article of amendment.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.

Amendment XXIV

(Ratified January 23, 1964)

Section 1. The right of citizens of the United States to vote in any primary or other election for President or Vice President, for electors for President or Vice President, or for Senator or Representative in Congress, shall not be denied or abridged by the United States or any State by reason of failure to pay any poll tax or other tax.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.

Amendment XXV

(Ratified February 10, 1967)

Section 1. In case of the removal of the President from office or of his death or resignation, the Vice President shall become President.

Section 2. Whenever there is a vacancy in the office of the Vice President, the President shall nominate a Vice President who shall take office upon confirmation by a majority vote of both Houses of Congress.

Section 3. Whenever the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the contrary, such powers and duties shall be discharged by the Vice President as Acting President.

Section 4. Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.

Thereafter, when the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists, he shall resume the powers and duties of his office unless the Vice President and a majority of either the principal officers of the executive department or of such other body as Congress may by law provide, transmit within four days to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office. Thereupon Congress shall decide the issue, assembling within forty-eight hours for that purpose if not in session. If the Congress, within twenty-one days after receipt of the latter written declaration, or, if Congress is not in session, within twenty-one days after Congress is required to assemble, determines by two-thirds vote of both Houses that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President; otherwise, the President shall resume the powers and duties of his office.

Amendment XXVI

(Ratified July 1, 1971)

Section 1. The right of citizens of the United States, who are eighteen years of age or older, to vote shall not be denied or abridged by the United States or by any State on account of age.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.

Amendment XXVII

(Ratified May 7, 1992)

No law varying the compensation for the services of the Senators and Representatives shall take effect, until an election of Representatives shall have intervened.

Source: United States Government Manual, 1993–94 (Washington, DC.: Government Printing Office, 1993), 5–20.

1. The part in brackets was changed by Section 2 of the Fourteenth Amendment.

2. The part in brackets was changed by the first paragraph of the Seventeenth Amendment.

3. The part in brackets was changed by the second paragraph of the Seventeenth Amendment.

4. The part in brackets was changed by Section 2 of the Twentieth Amendment.

5. The Sixteenth Amendment gave Congress the power to tax incomes.

6. The material in brackets has been superseded by the Twelfth Amendment.

7. This provision has been affected by the Twenty-fifth Amendment.

8. These clauses were affected by the Eleventh Amendment.

9. This paragraph has been superseded by the Thirteenth Amendment.

10. Obsolete.

11. The part in brackets has been superseded by Section 3 of the Twentieth Amendment.

12. See the Nineteenth and Twenty-sixth Amendments.

13. This Amendment was repealed by Section 1 of the Twenty-first Amendment.

14. See the Twenty-fifth Amendment.

Source: United States Government Manual, 1993–94 (Washington, DC: Government Printing Office, 1993), 5–20.

Appendix 2: The Justices

The justices of the Supreme Court are listed below in alphabetical order, each with birth and death years, state from which he or she was appointed, political party affiliation at time of appointment, educational institutions attended, appointing president, confirmation date and vote, date of service termination, and major preappointment offices and activities.

Alito, Samuel A., Jr. (1950–). New Jersey. Republican. Princeton, Yale. Nominated associate justice by George W. Bush; confirmed 2006 by 58–42 vote. U.S. attorney for New Jersey, federal appeals court judge.

Baldwin, Henry (1780–1844). Pennsylvania. Democrat. Yale. Nominated associate justice by Andrew Jackson; confirmed 1830 by 41–2 vote; died in office 1844. U.S. representative.

Barbour, Philip Pendleton (1783–1841). Virginia. Democrat. College of William and Mary. Nominated associate justice by Andrew Jackson; confirmed 1836 by 30–11 vote; died in office 1841. Virginia state legislator, U.S. representative, U.S. Speaker of the House, state court judge, federal district court judge.

Black, Hugo Lafayette (1886–1971). Alabama. Democrat. Birmingham Medical College, University of Alabama. Nominated associate justice by Franklin Roosevelt; confirmed 1937 by 63–16 vote; retired 1971. Alabama police court judge, county solicitor, U.S. senator.

Blackmun, Harry Andrew (1908–1999). Minnesota. Republican. Harvard. Nominated associate justice by Richard Nixon; confirmed 1970 by 94–0 vote; retired 1994. Federal appeals court judge.

Blair, John, Jr. (1732–1800). Virginia. Federalist. College of William and Mary; Middle Temple (England). Nominated associate justice by George Washington; confirmed 1789 by voice vote; resigned 1796. Virginia legislator, state court judge, delegate to Constitutional Convention.

Blatchford, Samuel (1820–1893). New York. Republican. Columbia. Nominated associate justice by Chester A. Arthur; confirmed 1882 by voice vote; died in office 1893. Federal district court judge, federal circuit court judge.

Bradley, Joseph P. (1813–1892). New Jersey. Republican. Rutgers. Nominated associate justice by Ulysses S. Grant; confirmed 1870 by 46–9 vote; died in office 1892. Private practice.

Brandeis, Louis Dembitz (1856–1941). Massachusetts. Republican. Harvard. Nominated associate justice by Woodrow Wilson; confirmed 1916 by 47–22 vote; retired 1939. Private practice.

Brennan, William Joseph, Jr. (1906–1997). New Jersey. Democrat. University of Pennsylvania, Harvard. Received recess appointment from Dwight Eisenhower to be associate justice 1956; confirmed 1957 by voice vote; retired 1990. New Jersey Supreme Court.

Brewer, David Josiah (1837–1910). Kansas. Republican. Wesleyan, Yale, Albany Law School. Nominated associate justice by Benjamin Harrison; confirmed 1889 by 53–11 vote; died in office 1910. Kansas state court judge, federal circuit court judge.

Breyer, Stephen G. (1938–). Massachusetts. Democrat. Stanford, Oxford, Harvard. Nominated associate justice by William Clinton; confirmed 1994 by 87–9 vote. Law professor; chief counsel, Senate Judiciary Committee; federal appeals court judge.

Brown, Henry B. (1836–1913). Michigan. Republican. Yale, Harvard. Nominated associate justice by Benjamin Harrison; confirmed 1890 by voice vote; retired 1906. Michigan state court judge, federal district court judge.

Burger, Warren Earl (1907–1995). Virginia. Republican. University of Minnesota, St. Paul College of Law. Nominated chief justice by Richard Nixon; confirmed 1969 by 74–3 vote; retired 1986. Assistant U.S. attorney general, federal appeals court judge.

Burton, Harold Hitz (1888–1964). Ohio. Republican. Bowdoin College, Harvard. Nominated associate justice by Harry Truman; confirmed 1945 by voice vote; retired 1958. Ohio state legislator, mayor of Cleveland, U.S. senator.

Butler, Pierce (1866–1939). Minnesota. Democrat. Carleton College. Nominated associate justice by Warren G. Harding; confirmed 1922 by 61–8 vote; died in office 1939. Minnesota county attorney, private practice.

Byrnes, James Francis (1879–1972). South Carolina. Democrat. Privately educated. Nominated associate justice by Franklin Roosevelt; confirmed 1941 by voice vote; resigned 1942. South Carolina local solicitor, U.S. representative, U.S. senator.

Campbell, John Archibald (1811–1889). Alabama. Democrat. Franklin College (University of Georgia), U.S. Military Academy. Nominated associate justice by Franklin Pierce; confirmed 1853 by voice vote; resigned 1861. Alabama state legislator.

Cardozo, Benjamin Nathan (1870–1938). New York. Democrat. Columbia. Nominated associate justice by Herbert Hoover; confirmed 1932 by voice vote; died in office 1938. State court judge.

Catron, John (1786–1865). Tennessee. Democrat. Self-educated. Nominated associate justice by Andrew Jackson; confirmed 1837 by 28–15 vote; died in office 1865. Tennessee state court judge, state chief justice.

Chase, Salmon Portland (1808–1873). Ohio. Republican. Dartmouth. Nominated chief justice by Abraham Lincoln; confirmed 1864 by voice vote; died in office 1873. U.S. senator, Ohio governor, U.S. secretary of the Treasury.

Chase, Samuel (1741–1811). Maryland. Federalist. Privately educated. Nominated associate justice by George Washington; confirmed 1796 by voice vote; died in office 1811. Maryland state legislator, delegate to Continental Congress, state court judge.

Clark, Tom Campbell (1899–1977). Texas. Democrat. University of Texas. Nominated associate justice by Harry Truman; confirmed 1949 by 73–8 vote; retired 1967. Texas local district attorney, U.S. attorney general.

Clarke, John Hessin (1857–1945). Ohio. Democrat. Western Reserve University. Nominated associate justice by Woodrow Wilson; confirmed 1916 by voice vote; resigned 1922. Federal district judge.

Clifford, Nathan (1803–1881). Maine. Democrat. Privately educated. Nominated associate justice by James Buchanan; confirmed 1858 by 26–23 vote; died in office 1881. Maine state legislator, state attorney general, U.S. representative, U.S. attorney general, minister to Mexico.

Curtis, Benjamin Robbins (1809–1874). Massachusetts. Whig. Harvard. Nominated associate justice by Millard Fillmore; confirmed 1851 by voice vote; resigned 1857. Massachusetts state legislator.

Cushing, William (1732–1810). Massachusetts. Federalist. Harvard. Nominated associate justice by George Washington; confirmed 1789 by voice vote; died in office 1810. Massachusetts state court judge, Electoral College delegate.

Daniel, Peter Vivian (1784–1860). Virginia. Democrat. Princeton. Nominated associate justice by Martin Van Buren; confirmed 1841 by 22–5 vote; died in office 1860. Virginia state legislator, state Privy Council member, federal district court judge.

Davis, David (1815–1886). Illinois. Republican. Kenyon College, Yale. Nominated associate justice by Abraham Lincoln; confirmed 1862 by voice vote; resigned 1877. Illinois state legislator, state court judge.

Day, William Rufus (1849–1923). Ohio. Republican. University of Michigan. Nominated associate justice by Theodore Roosevelt; confirmed 1903 by voice vote; resigned 1922. Ohio state court judge, U.S. secretary of state, federal court of appeals judge.

Douglas, William Orville (1898–1980). Connecticut. Democrat. Whitman College, Columbia. Nominated associate justice by Franklin Roosevelt; confirmed 1939 by 62–4 vote; retired 1975. Law professor, member of the Securities and Exchange Commission.

Duvall, Gabriel (1752–1844). Maryland. Democratic-Republican. Privately educated. Nominated associate justice by James Madison; confirmed 1811 by voice vote; resigned 1835. Maryland state legislator, U.S. representative, state court judge, presidential elector, comptroller of the U.S. Treasury.

Ellsworth, Oliver (1745–1807). Connecticut. Federalist. Princeton. Nominated chief justice by George Washington; confirmed 1796 by 21–1 vote; resigned 1800. Connecticut state legislator, delegate to Continental Congress and Constitutional Convention, state court judge, U.S. senator.

Field, Stephen J. (1816–1899). California. Democrat. Williams College. Nominated associate justice by Abraham Lincoln; confirmed 1863 by voice vote; retired 1897. California state legislator, California Supreme Court justice.

Fortas, Abe (1910–1982). Tennessee. Democrat. Southwestern College, Yale. Nominated associate justice by Lyndon Johnson; confirmed 1965 by voice vote; resigned 1969. Counsel for numerous federal agencies, private practice.

Frankfurter, Felix (1882–1965). Massachusetts. Independent. College of the City of New York, Harvard. Nominated associate justice by Franklin Roosevelt; confirmed 1939 by voice vote; retired 1962. Law professor, War Department law officer, assistant to secretary of war, assistant to secretary of labor, War Labor Policies Board chairman.

Fuller, Melville Weston (1833–1910). Illinois. Democrat. Bowdoin College, Harvard. Nominated chief justice by Grover Cleveland; confirmed 1888 by 41–20 vote; died in office 1910. Illinois state legislator.

Ginsburg, Ruth Bader (1933–). New York. Democrat. Columbia. Nominated associate justice by Bill Clinton; confirmed 1993 by 96–3 vote. Law professor, federal court of appeals judge.

Goldberg, Arthur J. (1908–1990). Illinois. Democrat. Northwestern. Nominated associate justice by John Kennedy; confirmed 1962 by voice vote; resigned 1965. Secretary of labor.

Gray, Horace (1828–1902). Massachusetts. Republican. Harvard. Nominated associate justice by Chester A. Arthur; confirmed 1881 by 51–5 vote; died in office 1902. Massachusetts Judicial Supreme Court justice.

Grier, Robert Cooper (1794–1870). Pennsylvania. Democrat. Dickinson College. Nominated associate justice by James Polk; confirmed 1846 by voice vote; retired 1870. Pennsylvania state court judge.

Harlan, John Marshall (1833–1911). Kentucky. Republican. Centre College, Transylvania University. Nominated associate justice by Rutherford B. Hayes; confirmed 1877 by voice vote; died in office 1911. Kentucky attorney general.

Harlan, John Marshall (1899–1971). New York. Republican. Princeton, Oxford, New York Law School. Nominated associate justice by Dwight Eisenhower; confirmed 1955 by 71–11 vote; retired 1971. Chief counsel for New York State Crime Commission, federal court of appeals.

Holmes, Oliver Wendell, Jr. (1841–1935). Massachusetts. Republican. Harvard. Nominated associate justice by Theodore Roosevelt; confirmed 1902 by voice vote; retired 1932. Law professor; justice, Supreme Judicial Court of Massachusetts.

Hughes, Charles Evans (1862–1948). New York. Republican. Colgate, Brown, Columbia. Nominated associate justice by William Howard Taft; confirmed 1910 by voice vote; resigned 1916; nominated chief justice by Herbert Hoover; confirmed 1930 by 52–26 vote; retired 1941. New York governor, U.S. secretary of state, Court of International Justice judge.

Hunt, Ward (1810–1886). New York. Republican. Union College. Nominated associate justice by Ulysses S. Grant; confirmed 1872 by voice vote; retired 1882. New York state legislator, mayor of Utica, state court judge.

Iredell, James (1751–1799). North Carolina. Federalist. English schools. Nominated associate justice by George Washington; confirmed 1790 by voice vote; died in office 1799. Customs official, state court judge, state attorney general.

Jackson, Howell Edmunds (1832–1895). Tennessee. Democrat. West Tennessee College, University of Virginia, Cumberland University. Nominated associate justice by Benjamin Harrison; confirmed 1893 by voice vote; died in office 1895. Tennessee state legislator, U.S. senator, federal circuit court judge, federal court of appeals judge.

Jackson, Robert Houghwout (1892–1954). New York. Democrat. Albany Law School. Nominated associate justice by Franklin Roosevelt; confirmed 1941 by voice vote; died in office 1954. Counsel for Internal Revenue Bureau and Securities and Exchange Commission, U.S. solicitor general, U.S. attorney general.

Jay, John (1745–1829). New York. Federalist. King’s College (Columbia University). Nominated chief justice by George Washington; confirmed 1789 by voice vote; resigned 1795. Delegate to Continental Congress, chief justice of New York, minister to Spain and Great Britain, secretary of foreign affairs.

Johnson, Thomas (1732–1819). Maryland. Federalist. Privately educated. Nominated associate justice by George Washington; confirmed 1791 by voice vote; resigned 1793. Delegate to Annapolis Convention and Continental Congress, governor, state legislator, state court judge.

Johnson, William (1771–1834). South Carolina. Democratic-Republican. Princeton. Nominated associate justice by Thomas Jefferson; confirmed 1804 by voice vote; died in office 1834. South Carolina state legislator, state court judge.

Kagan, Elena (1960–). Massachusetts. Democrat. Princeton, Oxford, Harvard. Nominated associate justice by Barack Obama; confirmed 2010 by 63–37 vote. Law professor and dean, solicitor general of the United States.

Kennedy, Anthony McLeod (1936–). California. Republican. Stanford, London School of Economics, Harvard. Nominated associate justice by Ronald Reagan; confirmed 1988 by 97–0 vote. Federal appeals court judge.

Lamar, Joseph Rucker (1857–1916). Georgia. Democrat. University of Georgia, Bethany College, Washington and Lee. Nominated associate justice by William Howard Taft; confirmed 1910 by voice vote; died in office 1916. Georgia state legislator, Georgia Supreme Court justice.

Lamar, Lucius Quintus Cincinnatus (1825–1893). Mississippi. Democrat. Emory College. Nominated associate justice by Grover Cleveland; confirmed 1888 by 32–28 vote; died in office 1893. Georgia state legislator, U.S. representative, U.S. senator, U.S. secretary of the interior.

Livingston, Henry Brockholst (1757–1823). New York. Democratic-Republican. Princeton. Nominated associate justice by Thomas Jefferson; confirmed 1806 by voice vote; died in office 1823. New York state legislator, state court judge.

Lurton, Horace Harmon (1844–1914). Tennessee. Democrat. University of Chicago, Cumberland. Nominated associate justice by William Howard Taft; confirmed 1909 by voice vote; died in office 1914. Tennessee Supreme Court justice, federal court of appeals judge.

Marshall, John (1755–1835). Virginia. Federalist. Privately educated, College of William and Mary. Nominated chief justice by John Adams; confirmed 1801 by voice vote; died in office 1835. Virginia state legislator, minister to France, U.S. representative, U.S. secretary of state.

Marshall, Thurgood (1908–1993). New York. Democrat. Lincoln University, Howard University. Nominated associate justice by Lyndon Johnson; confirmed 1967 by 69–11 vote; retired 1991. Chief counsel for NAACP Legal Defense Fund, federal court of appeals judge, U.S. solicitor general.

Matthews, Stanley (1824–1889). Ohio. Republican. Kenyon College. Nominated associate justice by Rutherford B. Hayes; no Senate action on nomination; renominated associate justice by James A. Garfield; confirmed 1881 by 24–23 vote; died in office 1889. Ohio state legislator, state court judge, U.S. attorney for southern Ohio, U.S. senator.

McKenna, Joseph (1843–1926). California. Republican. Benicia Collegiate Institute. Nominated associate justice by William McKinley; confirmed 1898 by voice vote; retired 1925. California state legislator, U.S. representative, federal court of appeals judge, U.S. attorney general.

McKinley, John (1780–1852). Alabama. Democrat. Self-educated. Nominated associate justice by Martin Van Buren; confirmed 1837 by voice vote; died in office 1852. Alabama state legislator, U.S. senator, U.S. representative.

McLean, John (1785–1861). Ohio. Democrat. Privately educated. Nominated associate justice by Andrew Jackson; confirmed 1829 by voice vote; died in office 1861. U.S. representative, Ohio Supreme Court justice, commissioner of U.S. General Land Office, U.S. postmaster general.

McReynolds, James Clark (1862–1946). Tennessee. Democrat. Vanderbilt, University of Virginia. Nominated associate justice by Woodrow Wilson; confirmed 1914 by 44–6 vote; retired 1941. U.S. attorney general.

Miller, Samuel Freeman (1816–1890). Iowa. Republican. Transylvania University. Nominated associate justice by Abraham Lincoln; confirmed 1862 by voice vote; died in office 1890. Medical doctor, private law practice, justice of the peace.

Minton, Sherman (1890–1965). Indiana. Democrat. Indiana University, Yale. Nominated associate justice by Harry Truman; confirmed 1949 by 48–16 vote; retired 1956. U.S. senator, federal court of appeals judge.

Moody, William Henry (1853–1917). Massachusetts. Republican. Harvard. Nominated associate justice by Theodore Roosevelt; confirmed 1906 by voice vote; retired 1910. Massachusetts local district attorney, U.S. representative, secretary of the navy, U.S. attorney general.

Moore, Alfred (1755–1810). North Carolina. Federalist. Privately educated. Nominated associate justice by John Adams; confirmed 1799 by voice vote; resigned 1804. North Carolina legislator, state attorney general, state court judge.

Murphy, William Francis (Frank) (1880–1949). Michigan. Democrat. University of Michigan, London’s Inn (England), Trinity College (Ireland). Nominated associate justice by Franklin Roosevelt; confirmed 1940 by voice vote; died in office 1949. Michigan state court judge, mayor of Detroit, governor of the Philippines, governor of Michigan, U.S. attorney general.

Nelson, Samuel (1792–1873). New York. Democrat. Middlebury College. Nominated associate justice by John Tyler; confirmed 1845 by voice vote; retired 1872. Presidential elector, state court judge, New York Supreme Court chief justice.

O’Connor, Sandra Day (1930–). Arizona. Republican. Stanford. Nominated associate justice by Ronald Reagan; confirmed 1981 by 99–0 vote; retired 2006. Arizona state legislator, state court judge.

Paterson, William (1745–1806). New Jersey. Federalist. Princeton. Nominated associate justice by George Washington; confirmed 1793 by voice vote; died in office 1806. New Jersey attorney general, delegate to Constitutional Convention, U.S. senator, governor.

Peckham, Rufus Wheeler (1838–1909). New York. Democrat. Albany Boys’ Academy. Nominated associate justice by Grover Cleveland; confirmed 1895 by voice vote; died in office 1909. New York local district attorney, city attorney, state court judge.

Pitney, Mahlon (1858–1924). New Jersey. Republican. Princeton. Nominated associate justice by William Howard Taft; confirmed 1912 by 50–26 vote; retired 1922. U.S. representative, New Jersey state legislator, New Jersey Supreme Court justice, chancellor of New Jersey.

Powell, Lewis Franklin, Jr. (1907–1998). Virginia. Democrat. Washington and Lee, Harvard. Nominated associate justice by Richard Nixon; confirmed 1971 by 89–1 vote; retired 1987. Private practice, Virginia State Board of Education president, American Bar Association president, American College of Trial Lawyers president.

Reed, Stanley Forman (1884–1980). Kentucky. Democrat. Kentucky Wesleyan, Yale, Virginia, Columbia, University of Paris. Nominated associate justice by Franklin Roosevelt; confirmed 1938 by voice vote; retired 1957. Federal Farm Board general counsel, Reconstruction Finance Corporation general counsel, U.S. solicitor general.

Rehnquist, William Hubbs (1924–2005). Arizona. Republican. Stanford, Harvard. Nominated associate justice by Richard Nixon; confirmed 1971 by 68–26 vote; nominated chief justice by Ronald Reagan; confirmed 1986 by 65–33 vote; died in office 2005. Private practice, assistant U.S. attorney general.

Roberts, John G., Jr. (1955–). Maryland. Republican. Harvard. Nominated associate justice by George W. Bush 2005; nomination withdrawn; nominated chief justice by George W. Bush; confirmed 2005 by 78–22 vote. Deputy solicitor general, federal appeals court judge.

Roberts, Owen Josephus (1875–1955). Pennsylvania. Republican. University of Pennsylvania. Nominated associate justice by Herbert Hoover; confirmed 1930 by voice vote; resigned 1945. Private practice, Pennsylvania local prosecutor, special U.S. attorney.

Rutledge, John (1739–1800). South Carolina. Federalist. Middle Temple (England). Nominated associate justice by George Washington; confirmed 1789 by voice vote; resigned 1791. Nominated chief justice by George Washington August 1795 and served as recess appointment; confirmation denied and service terminated December 1795. South Carolina legislator, state attorney general, governor, chief justice of South Carolina, delegate to Continental Congress and Constitutional Convention.

Rutledge, Wiley Blount (1894–1949). Iowa. Democrat. Maryville College, University of Wisconsin, University of Colorado. Nominated associate justice by Franklin Roosevelt; confirmed 1943 by voice vote; died in office 1949. Law professor, federal court of appeals judge.

Sanford, Edward Terry (1865–1930). Tennessee. Republican. University of Tennessee, Harvard. Nominated associate justice by Warren G. Harding; confirmed 1923 by voice vote; died in office 1930. Assistant U.S. attorney general, federal district court judge.

Scalia, Antonin (1936–). Virginia. Republican. Georgetown, Harvard. Nominated associate justice by Ronald Reagan; confirmed 1986 by 98–0 vote. Assistant U.S. attorney general, law professor, federal court of appeals judge.

Shiras, George, Jr. (1832–1924). Pennsylvania. Republican. Ohio University, Yale. Nominated associate justice by Benjamin Harrison; confirmed 1892 by voice vote; retired 1903. Private practice.

Sotomayor, Sonia (1954–). New York. Democrat. Princeton, Yale. Nominated associate justice by Barack Obama; confirmed 2009 by 68–31 vote. New York state assistant district attorney, federal district court judge, federal appeals court judge.

Souter, David Hackett (1939–). New Hampshire. Republican. Harvard, Oxford. Nominated associate justice by George H. W. Bush; confirmed 1990 by 90–9 vote; retired 2009. New Hampshire attorney general, state court judge, federal appeals court judge.

Stevens, John Paul (1920–). Illinois. Republican. Chicago, Northwestern. Nominated associate justice by Gerald Ford; confirmed 1975 by 98–0 vote; retired 2010. Federal court of appeals judge.

Stewart, Potter (1915–1985). Ohio. Republican. Yale, Cambridge. Received recess appointment from Dwight Eisenhower to be associate justice in 1958; confirmed 1959 by 70–17 vote; retired 1981. Cincinnati city councilman, federal court of appeals judge.

Stone, Harlan Fiske (1872–1946). New York. Republican. Amherst College, Columbia. Nominated associate justice by Calvin Coolidge; confirmed 1925 by 71–6 vote; nominated chief justice by Franklin Roosevelt; confirmed 1941 by voice vote; died in office 1946. Law professor, U.S. attorney general.

Story, Joseph (1779–1845). Massachusetts. Democratic-Republican. Harvard. Nominated associate justice by James Madison; confirmed 1811 by voice vote; died in office 1845. Massachusetts state legislator, U.S. representative.

Strong, William (1808–1895). Pennsylvania. Republican. Yale. Nominated associate justice by Ulysses S. Grant; confirmed 1870 by voice vote; retired 1880. U.S. representative, Pennsylvania Supreme Court justice.

Sutherland, George (1862–1942). Utah. Republican. Brigham Young, University of Michigan. Nominated associate justice by Warren G. Harding; confirmed 1922 by voice vote; retired 1938. Utah state legislator, U.S. representative, U.S. senator.

Swayne, Noah Haynes (1804–1884). Ohio. Republican. Privately educated. Nominated associate justice by Abraham Lincoln; confirmed 1862 by 38–1 vote; retired 1881. Ohio state legislator, local prosecutor, U.S. attorney for Ohio, Columbus city councilman.

Taft, William Howard (1857–1930). Connecticut. Republican. Yale, Cincinnati. Nominated chief justice by Warren G. Harding; confirmed 1921 by voice vote; retired 1930. Ohio local prosecutor, state court judge, U.S. solicitor general, federal court of appeals judge, governor of the Philippines, secretary of war, U.S. president.

Taney, Roger Brooke (1777–1864). Maryland. Democrat. Dickinson College. Nominated associate justice by Andrew Jackson; nomination not confirmed 1835; nominated chief justice by Andrew Jackson; confirmed 1836 by 29–15 vote; died in office 1864. Maryland state legislator, state attorney general, acting secretary of war, secretary of the Treasury (nomination later rejected by Senate).

Thomas, Clarence (1948–). Georgia. Republican. Holy Cross, Yale. Nominated associate justice by George H. W. Bush; confirmed 1991 by 52–48 vote. U.S. Department of Education assistant secretary for civil rights, Equal Employment Opportunity Commission chairman, federal appeals court judge.

Thompson, Smith (1768–1843). New York. Democratic-Republican. Princeton. Nominated associate justice by James Monroe; confirmed 1823 by voice vote; died in office 1843. New York state legislator, state court judge, secretary of the navy.

Todd, Thomas (1765–1826). Kentucky. Democratic-Republican. Liberty Hall (Washington and Lee). Nominated associate justice by Thomas Jefferson; confirmed 1807 by voice vote; died in office 1826. Kentucky state court judge, state chief justice.

Trimble, Robert (1776–1828). Kentucky. Democratic-Republican. Kentucky Academy. Nominated associate justice by John Quincy Adams; confirmed 1826 by 27–5 vote; died in office 1828. Kentucky state legislator, state court judge, U.S. attorney, federal district court judge.

Van Devanter, Willis (1859–1941). Wyoming. Republican. Indiana Asbury University, University of Cincinnati. Nominated associate justice by William Howard Taft; confirmed 1910 by voice vote; retired 1937. Cheyenne city attorney, Wyoming Territorial legislature member, Wyoming Supreme Court justice, assistant U.S. attorney general, federal court of appeals judge.

Vinson, Frederick Moore (1890–1953). Kentucky. Democrat. Centre College. Nominated chief justice by Harry Truman; confirmed 1946 by voice vote; died in office 1953. U.S. representative, federal appeals court judge, director of Office of Economic Stabilization, secretary of the Treasury.

Waite, Morrison Remick (1816–1888). Ohio. Republican. Yale. Nominated chief justice by Ulysses S. Grant; confirmed 1874 by 63–0 vote; died in office 1888. Private practice, Ohio state legislator.

Warren, Earl (1891–1974). California. Republican. University of California. Recess appointment as chief justice by Dwight Eisenhower 1953; confirmed 1954 by voice vote; retired 1969. California local district attorney, state attorney general, governor.

Washington, Bushrod (1762–1829). Virginia. Federalist. College of William and Mary. Nominated associate justice by John Adams; confirmed 1798 by voice vote; died in office 1829. Virginia state legislator.

Wayne, James Moore (1790–1867). Georgia. Democrat. Princeton. Nominated associate justice by Andrew Jackson; confirmed 1835 by voice vote; died in office 1867. Georgia state legislator, mayor of Savannah, state court judge, U.S. representative.

White, Byron Raymond (1917–2002). Colorado. Democrat. University of Colorado, Oxford, Yale. Nominated associate justice by John Kennedy; confirmed 1962 by voice vote; retired 1993. Deputy U.S. attorney general.

White, Edward Douglass (1845–1921). Louisiana. Democrat. Mount St. Mary’s College, Georgetown. Nominated associate justice by Grover Cleveland; confirmed 1894 by voice vote; nominated chief justice by William Howard Taft; confirmed 1910 by voice vote; died in office 1921. Louisiana state legislator, Louisiana Supreme Court justice, U.S. senator.

Whittaker, Charles Evans (1901–1973). Missouri. Republican. University of Kansas City. Nominated associate justice by Dwight Eisenhower; confirmed 1957 by voice vote; retired 1962. Federal district court judge, federal appeals court judge.

Wilson, James (1742–1798). Pennsylvania. Federalist. University of St. Andrews (Scotland). Nominated associate justice by George Washington; confirmed 1789 by voice vote; died in office 1798. Delegate to Continental Congress and Constitutional Convention.

Woodbury, Levi (1789–1851). New Hampshire. Democrat. Dartmouth, Tapping Reeve Law School. Nominated associate justice by James Polk; confirmed 1846 by voice vote; died in office 1851. New Hampshire state legislator, state court judge, governor, U.S. senator, secretary of the navy, secretary of the Treasury.

Woods, William B. (1824–1887). Georgia. Republican. Western Reserve College, Yale. Nominated associate justice by Rutherford B. Hayes; confirmed 1880 by 39–8 vote; died in office 1887. Ohio state legislator, Alabama chancellor, federal circuit court judge.

Appendix 3: Glossary

Abstention:

A doctrine or policy of the federal courts to refrain from deciding a case so that the issues involved may first be definitively resolved by state courts.

Acquittal:

A decision by a court that a person charged with a crime is not guilty.

Advisory opinion:

An opinion issued by a court indicating how it would rule on a question of law should such a question come before it in an actual case. Federal courts do not hand down advisory opinions, but some state courts do.

Affidavit:

A written statement of facts voluntarily made under oath or affirmation.

Affirm:

To uphold a decision of a lower court.

A fortiori:

With greater force or reason.

Aggravating circumstances:

Conditions that increase the seriousness of a crime but are not a part of its legal definition.

Amicus curiae:

“Friend of the court.” A person (or group), not a party to a case, who submits views (usually in the form of written briefs) on how the case should be decided.

Ante:

Prior to.

Appeal:

The procedure by which a case is taken to a superior court for a review of the lower court’s decision.

Appellant:

The party dissatisfied with a lower court ruling who appeals the case to a superior court for review.

Appellate jurisdiction:

The legal authority of a superior court to review and render judgment on a decision by a lower court.

Appellee:

The party usually satisfied with a lower court ruling against whom an appeal is taken.

Arbitrary:

Unreasonable; capricious; not done in accordance with established principles.

Arguendo:

In the course of argument.

Arraignment:

A formal stage of the criminal process in which the defendant is brought before a judge, is confronted with the charges against him or her, and then enters a plea to those charges.

Arrest:

The act of physically taking into custody or otherwise depriving of freedom a person suspected of violating the law.

Attainder, bill of:

A legislative act declaring a person or easily identified group of people guilty of a crime and imposing punishments without the benefit of a trial. Such legislative acts are prohibited by the U.S. Constitution.

Attest:

To swear to; to be a witness.

Bail:

A security deposit, usually in the form of cash or bond, that allows a person accused of a crime to be released from jail and guarantees the accused’s appearance at trial.

Balancing test:

A process of judicial decision making in which the court weighs the relative merits of the rights of the individual against the interests of the government.

Bench trial:

A trial, without a jury, conducted before a judge.

Bicameral:

Having two houses within a legislative body, as does the U.S. Congress.

Bona fide:

Good faith.

Brandeis brief:

A legal argument that stresses economic and sociological evidence along with traditional legal authorities. Named for Louis Brandeis, who pioneered the use of such briefs.

Brief:

A written argument of law and fact submitted to the court by an attorney representing a party having an interest in a lawsuit.

Case:

A legal dispute or controversy brought to a court for resolution.

Case-in-chief:

The primary evidence offered by a party in a court case.

Case law:

Law that has evolved from past court decisions, as opposed to law created by legislative acts.

Case or controversy rule:

The constitutional requirement that courts may hear only real disputes brought by adverse parties.

Certification:

A procedure whereby a lower court requests that a superior court rule on specified legal questions so that the lower court may correctly apply the law.

Certiorari, writ of:

An order of an appellate court to an inferior court to send up the records of a case that the appellate court has elected to review. The primary method by which the U.S. Supreme Court exercises its discretionary jurisdiction to accept appeals for a full hearing.

Civil law:

Law that deals with the private rights of individuals (e.g., property, contracts, negligence), as contrasted with criminal law.

Class action:

A lawsuit brought by one or more persons who represent themselves and all others similarly situated.

Collateral estoppel:

A rule of law that prohibits an already settled issue from being relitigated in another form.

Comity:

The principle by which the courts of one jurisdiction give respect and deference to the laws and legal decisions of another jurisdiction.

Common law:

Law that has evolved from usage and custom as reflected in the decisions of courts.

Compensatory damages:

A monetary award, equivalent to the loss sustained, to be paid to the injured party by the party at fault.

Concurrent powers:

Authority that may be exercised by both the state and federal governments.

Concurring opinion:

An opinion that agrees with the result reached by the majority but disagrees as to the appropriate rationale for reaching that result.

Confrontation:

The right of a criminal defendant to see the testimony of prosecution witnesses and subject such witnesses to cross-examination.

Consent decree:

A court-ratified agreement voluntarily reached by parties to settle a lawsuit.

Constitutional court:

A court created under authority of Article III of the Constitution. Judges serve for terms of good behavior and are protected against having their salaries reduced by the legislature.

Contempt:

A purposeful failure to carry out an order of a court (civil contempt) or a willful display of disrespect for the court (criminal contempt).

Contraband:

Articles that are illegal to possess.

Courts of appeals (federal):

The intermediate-level appellate courts in the federal system, each of which has jurisdiction over a particular region known as a circuit.

Criminal law:

Law governing the relationship between individuals and society. Deals with the enforcement of laws and the punishment of those who, by breaking laws, commit crimes.

Curtilage:

The land and outbuildings immediately adjacent to a home and regularly used by its occupants.

Declaratory judgment:

A court ruling determining a legal right or interpretation of the law, but not imposing any relief or remedy.

De facto:

In fact, actual.

Defendant:

A party at the trial level being sued in a civil case or charged with a crime in a criminal case.

De jure:

As a result of law or official government action.

De minimis:

Small or unimportant. A de minimis issue is an issue too trivial for a court to consider.

Demurrer:

A motion to dismiss a lawsuit in which the defendant admits to the facts alleged by the plaintiff but contends that those facts are insufficient to justify a legal cause of action.

De novo:

New, from the beginning.

Deposition:

Sworn testimony taken out of court.

Dicta; obiter dicta:

Those portions of a judge’s opinion that are not essential to deciding the case.

Directed verdict:

An action by a judge ordering a jury to return a specified verdict.

Discovery:

A pretrial procedure whereby one party to a lawsuit gains access to information or evidence held by the opposing party.

Dissenting opinion:

A formal written expression by a judge who disagrees with the result reached by the majority.

Distinguish:

A court’s explanation of why a particular precedent is inapplicable to the case under consideration.

District courts:

The trial courts of general jurisdiction in the federal system.

Diversity jurisdiction:

The authority of federal courts to hear cases in which a party from one state is suing a party from another state.

Docket:

The schedule of cases to be heard by a court.

Double jeopardy:

The trying of a defendant a second time for the same offense. Prohibited by the Fifth Amendment to the Constitution.

Due process:

Government procedures that follow principles of essential fairness.

Eminent domain:

The authority of the government to take private property for public purpose.

En banc:

An appellate court hearing with all the judges of the court participating.

Enjoin:

An order from a court requiring a party to do or refrain from doing certain acts.

Entrapment:

Situation in which law enforcement officials induce an otherwise innocent person into the commission of a criminal act.

Equity:

Law based on principles of fairness rather than strictly applied statutes.

Error, writ of:

An order issued by an appeals court commanding a lower court to send up the full record of a case for review.

Exclusionary rule:

A principle of law that illegally gathered evidence may not be admitted in court.

Exclusive powers:

Powers reserved for either the federal government or the state governments, but not exercised by both.

Ex parte:

A hearing in which only one party to a dispute is present.

Ex post facto law:

A criminal law passed by the legislature and made applicable to acts committed prior to passage of the law. Prohibited by the U.S. Constitution.

Ex rel:

Upon information from. Used to designate a court case instituted by the government but instigated by a private party.

Ex vi termini:

From the force or very meaning of the term or expression.

Federal question:

A legal issue based on the U.S. Constitution, laws, or treaties.

Felony:

A serious criminal offense, usually punishable by incarceration of one year or more.

Gerrymander:

To construct political boundaries for the purpose of giving advantage to a particular political party or interest.

Grand jury:

A panel of twelve to twenty-three citizens who review prosecutorial evidence to determine if there are sufficient grounds to issue an indictment binding an individual over for trial on criminal charges.

Guilty verdict:

A determination that a person accused of a criminal offense is legally responsible as charged.

Habeas corpus:

“You have the body.” A writ issued to determine if a person held in custody is being unlawfully detained or imprisoned.

Harmless error:

An error occurring in a court proceeding that is insufficient in magnitude to justify the overturning of the court’s final determination.

Hearsay:

Testimony based not on the personal knowledge of the witness but on a repetition of what the witness has heard others say.

Immunity:

An exemption from prosecution granted in exchange for testimony.

In camera:

A legal hearing held in the judge’s chambers or otherwise in private.

Incorporation:

The process whereby provisions of the Bill of Rights are declared to be included in the due process guarantee of the Fourteenth Amendment and made applicable to state and local governments.

Indictment:

A document issued by a grand jury officially charging an individual with criminal violations and binding the accused over for trial.

In forma pauperis:

“In the form of a pauper.” A special status granted to indigents that allows them to proceed without payment of court fees and to be exempt from certain procedural requirements.

Information:

A document, serving the same purpose as an indictment, but issued directly by the prosecutor.

Infra:

Below.

Injunction:

A writ prohibiting the person to whom it is directed from committing certain specified acts.

In pari materia:

On the same subject.

In re:

“In the matter of.” The designation used in a judicial proceeding in which there are no formal adversaries.

In rem:

An act directed against a thing and not against a person.

Inter alia:

Among other things.

Interlocutory decree:

A provisional action that temporarily settles a legal question pending the final determination of a dispute.

Judgment of the court:

The final ruling of a court, independent of the legal reasoning supporting it.

Judicial activism:

A philosophy that courts should not be reluctant to review and if necessary strike down legislative and executive actions.

Judicial notice:

The recognition by a court of the truth of certain facts without requiring one of the parties to put them into evidence.

Judicial restraint:

A philosophy that courts should defer to the legislative and executive branches whenever possible.

Judicial review:

The authority of a court to determine the constitutionality of acts committed by the legislative and executive branches and to strike down acts judged to be in violation of the Constitution.

Jurisdiction:

The authority of a court to hear and decide legal disputes and to enforce its rulings.

Justiciable:

Capable of being heard and decided by a court.

Legislative court:

A court created by Congress under authority of Article I of the Constitution to assist in carrying out the powers of the legislature.

Litigant:

A party to a lawsuit.

Magistrate:

A low-level judge with limited authority.

Mandamus:

“We command.” A writ issued by a court commanding a public official to carry out a particular act or duty.

Mandatory jurisdiction:

A case that a court is required to hear.

Marque and reprisal:

An order from the government of one country requesting and legitimating the seizure of persons and property of another country. Prohibited by the U.S. Constitution.

Merits:

The central issues of a case.

Misdemeanor:

A less serious criminal act, usually punishable by less than one year of incarceration.

Mistrial:

A trial that is prematurely ended by a judge because of procedural irregularities.

Mitigating circumstances:

Conditions that lower the moral blame of a person who commits a criminal act but do not justify or excuse the act.

Moot:

A question presented in a lawsuit that cannot be answered by a court either because the issue has resolved itself or because conditions have so changed that the court is unable to grant the requested relief.

Motion:

A request made to a court for a certain ruling or action.

Natural law:

Law considered applicable to all persons in all nations because it is thought to be basic to human nature.

Nolle prosequi:

The decision of a prosecutor to drop criminal charges against an accused.

Nolo contendere:

No contest. A plea entered by a criminal defendant in which the accused does not admit guilt but submits to sentencing and punishment as if guilty.

Opinion of the court:

An opinion announcing the judgment and reasoning of a court endorsed by a majority of the judges participating.

Order:

A written command issued by a judge.

Original jurisdiction:

The authority of a court to try a case and to decide it, as opposed to appellate jurisdiction.

Per curiam:

An unsigned or collectively written opinion issued by a court.

Peremptory challenge:

An action taken by an attorney to excuse a prospective juror without explaining the reasons for doing so.

Per se:

In and of itself.

Petitioner:

A party seeking relief in court.

Petit jury:

A trial court jury to decide criminal or civil cases.

Plaintiff:

The party who brings a legal action to court for resolution or remedy.

Plea bargain:

An arrangement in a criminal case in which the defendant agrees to plead guilty in return for the prosecutor reducing the criminal charges or recommending a lenient sentence.

Plurality opinion:

An opinion announcing the judgment of a court with supporting reasoning that is not endorsed by a majority of the justices participating.

Police power:

The power of the state to regulate for the health, safety, morals, and general welfare of its citizens.

Political question:

An issue more appropriate for determination by the legislative or executive branch than by the judiciary.

Precedent:

A previously decided case that serves as a guide for deciding a current case.

Preemption:

A doctrine under which an area of authority previously left to the states is, by act of Congress, brought into the exclusive jurisdiction of the federal government.

Prima facie:

“At first sight.” A case that is sufficient to prevail unless effectively countered by the opposing side.

Pro bono publico:

“For the public good.” Usually refers to legal representation done without fee for some charitable or public purpose.

Pro se:

A person who appears in court without an attorney.

Punitive damages:

A monetary award (separate from compensatory damages) imposed by a court for punishment purposes to be paid by the party at fault to the injured party.

Quash:

To annul, vacate, or totally do away with.

Ratio decidendi:

A court’s primary reasoning for deciding a case the way it did.

Recuse:

The action taken by a judge who decides not to participate in a case because of conflict of interest or other disqualifying condition.

Remand:

To send a case back to an inferior court for additional action.

Res judicata:

A legal issue that has been finally settled by a court judgment.

Respondent:

The party against whom a legal action is filed.

Reverse:

An action by an appellate court setting aside or changing a decision of a lower court.

Ripeness:

A condition in which a legal dispute has evolved to the point where the issues it presents can be effectively resolved by a court.

Selective incorporation:

The policy of the Supreme Court to decide incorporation issues on a case-by-case, right-by-right basis.

Show cause:

A judicial order commanding a party to appear in court and explain why the court should not take a proposed action.

Solicitor general:

Justice Department official whose office represents the federal government in all litigation before the U.S. Supreme Court.

Standing; standing to sue:

The right of parties to bring legal actions because they are directly affected by the legal issues raised.

Stare decisis:

“Let the decision stand.” The doctrine that once a legal issue has been settled it should be followed as precedent in future cases presenting the same question.

State action:

An action taken by an agency or official of a state or local government.

Stay:

To stop or suspend.

Strict construction:

Narrow interpretation of the provisions of laws.

Subpoena ad testificandum:

An order compelling a person to testify before a court, legislative hearing, or grand jury.

Subpoena duces tecum:

An order compelling a person to produce a document or other piece of physical evidence that is relevant to issues pending before a court, legislative hearing, or grand jury.

Sub silentio:

“Under silence.” A court action taken without explicit notice or indication.

Summary judgment:

A decision by a court made without a full hearing or without the presentation of briefs or oral arguments.

Supra:

Above.

Temporary restraining order:

A judicial order prohibiting certain challenged actions from being taken prior to a full hearing on the question.

Test:

A criterion or set of criteria used by courts to determine if certain legal thresholds have been met or constitutional provisions violated.

Three-judge court:

A special federal court made up of appellate and trial court judges, created to expedite the processing of certain issues made eligible for such priority treatment by congressional statute.

Ultra vires:

Actions taken that exceed the legal authority of the person or agency performing them.

Usus loquendi:

The common usage of ordinary language.

Vacate:

To void or rescind.

Vel non:

“Or not.”

Venireman:

A juror.

Venue:

The geographical jurisdiction in which a case is heard.

Voir dire:

“To speak the truth.” The stage of a trial in which potential jurors are questioned to determine their competence to sit in judgment of a case.

Warrant:

A judicial order authorizing an arrest or search and seizure.

Writ:

A written order of a court commanding the recipient to perform or not to perform certain specified acts.

Appendix 4: Online Case Archive Index

Space limitations prevent us from including in this volume excerpts of every important Supreme Court decision dealing with constitutional powers and constraints. To make a larger number of decisions available to instructors and students, we have created an online archive of additional case excerpts (see list below). In the text, boldface case names indicate that they can be found in the archive. As the Court hands down new rulings of significance, we will add them to the archive to ensure that the materials available to our readers will always be current. Access the archive at http://clca.cqpress.com.

American Insurance Association v. Garamendi (2003)

Arizona Christian School Tuition Organization v. Winn (2011)

Barron v. Baltimore (1833)

Board of Trustees of the University of Alabama v. Garrett (2001)

Boumediene v. Bush (2008)

Brown v. Maryland (1827)

Buckley v. Valeo (1976)

Bunting v. Oregon (1917)

Carter v. Carter Coal Company (1936)

Chicago, Burlington & Quincy Railroad Company v. Chicago (1897)

Chicago, Milwaukee & St. Paul Railway v. Minnesota (1890)

Chisholm v. Georgia (1793)

City of Boerne v. Flores (1997)

Cohens v. Virginia (1821)

Colegrove v. Green (1946)

Collector v. Day (1871)

Daniel v. Paul (1969)

DeFunis v. Odegaard (1974)

Dickerson v. United States (2000)

El Paso v. Simmons (1965)

Energy Reserves Group, Inc. v. Kansas Power and Light Company (1983)

Ex parte Endo (1944)

Ex parte Quirin (1942)

First English Evangelical Lutheran Church of Glendale v. County of Los Angeles (1987)

Frothingham v. Mellon (1923)

Gibson v. Florida Legislative Investigating Commission (1963)

Goldwater v. Carter (1979)

Graves v. New York ex rel. O’Keefe (1939)

Griswold v. Connecticut (1965)

Haig v. Agee (1981)

Hamdan v. Rumsfeld (2006)

Hampton & Co. v. United States (1928)

Hein v. Freedom from Religion Foundation (2007)

Helvering v. Gerhardt (1938)

Hirabayashi v. United States (1943)

Holden v. Hardy (1898)

Houston, E. & W. Texas Railway Co. v. United States (1914)

Hutchinson v. Proxmire (1979)

Hylton v. United States (1796)

Keystone Bituminous Coal Association v. DeBenedictis (1987)

Kidd v. Pearson (1888)

Kilbourn v. Thompson (1881)

Kimel v. Florida Board of Regents (2000)

Lawrence v. Texas (2003)

Loretto v. Teleprompter Manhattan CATV Corp. (1982)

Loving v. United States (1996)

Low v. Austin (1872)

Lujan v. Defenders of Wildlife (1992)

Luther v. Borden (1849)

Marchetti v. United States (1968)

Meyer v. Nebraska (1923)

Mayor of New York v. Miln (1837)

Morehead v. New York ex rel. Tipaldo (1936)

Mugler v. Kansas (1887)

Murdock v. City of Memphis (1875)

National Bellas Hess, Inc. v. Department of Revenue of Illinois (1967)

National League of Cities v. Usery (1976)

Nevada Department of Human Resources v. Hibbs (2003)

Northern Securities Company v. United States (1904)

Northwestern Fertilizing Company v. Hyde Park (1878)

Panama Refining Company v. Ryan (1935)

Pennell v. City of San Jose (1988)

Pennsylvania Coal Co. v. Mahon (1922)

Raines v. Byrd (1997)

Rasul v. Bush (2004)

Roe v. Wade (1973)

Saenz v. Roe (1999)

Seminole Tribe of Florida v. Florida (1996)

Shelby County v. Holder (2013)

Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers (2001)

South Carolina State Highway Department v. Barnwell Brothers (1938)

South Central Bell Telephone v. Alabama (1999)

Spector Motor Service v. O’Connor (1951)

Springer v. United States (1881)

State Farm Mutual Automobile Insurance Co. v. Campbell (2003)

Swift & Company v. United States (1905)

Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency (2002)

Train v. City of New York (1975)

United States ex rel. Tennessee Valley Authority v. Welch (1946)

United States v. Belmont (1937)

United States v. Comstock (2010)

United States v. Kahriger (1953)

United States v. Windsor (2013)

Veazie Bank v. Fenno (1869)

Wayman v. Southard (1825)

West Lynn Creamery v. Healy (1994)

Williams-Yulee v. Florida Bar (2015)

Willson v. Black-Bird Creek Marsh Company (1829)

Zivotofsky v. Clinton (2012)

Case Index

Excerpted cases are in bold typeface.

Please refer to page 743 for cases in the Online Case Archive.

Addyston Pipe and Steel Co. v. United States 175 U.S. 211 (1899), 427n

Adkins v. Children’s Hospital 261 U.S. 525 (1923), 654–658, 663, 664, 665, 666

Agins v. City of Tiburon 447 U.S. 255 (1980), 689n

Alabama v. King and Boozer 314 U.S. 1 (1941), 534n

A. L. A. Schechter Poultry Corp. v. United States 295 U.S. 495 (1935), 271–274, 278n, 367, 427, 442, 443–448, 453, 474, 483, 485, 626t

Alden v. Maine 527 U.S. 706 (1999), 77, 389–393

Allegeyer v. Louisiana 165 U.S. 578 (1897), 304, 626t, 640–642

Allied Structural Steel Co. v. Spannaus 438 U.S. 234 (1978), 616, 620–623

Alvarez-Machain, United States v. 504 U.S. 655 (1992), 33

American Insurance Association v. Garamendi 539 U.S. 396 (2003), 406–407, 745

Anderson v. Dunn 19 U.S. 204 (1821), 157

Andrews v. Andrews 188 U.S. 14 (1903), 401

Arizona Christian School Tuition Organization v. Winn 563 U.S.___ (2011), 112n, 745

Arkansas Game & Fish Commission v. United States 568 U.S. ___ (2012), 703

Armstrong v. United States 364 U.S. 49 (1960), 684n

Ashton v. Cameron County District Court 298 U.S. 513 (1936), 442

Ashwander v. Tennessee Valley Authority 297 U.S. 288 (1936), 118, 119

Association of Data Processing Service Organizations v. Camp 397 U.S. 150 (1970), 111

Atkins v. Virginia 536 U.S. 304 (2002), 33n

Atlantic Coast Line Railroad Co. v. Brotherhood of Locomotive Engineers 398 U.S. 281 (1970), 57n

Bailey v. Drexel Furniture Co. 259 U.S. 20 (1922), 544, 545–547, 563, 626t

Baker v. Carr 369 U.S. 186 (1962), 95–101, 109, 129

Barenblatt v. United States 360 U.S. 109 (1959), 167–171

Barron v. Baltimore 7 Pet. 243 (1833), 684–685

Barry v. United States ex rel. Cunningham 279 U.S. 597 (1929), 126n

Belmont, United States v. 310 U.S. 324 (1937), 267

Berman v. Parker 348 U.S. 26 (1954), 706–708, 710, 716

BMW of North America v. Gore 517 U.S. 559 (1996), 669–674, 681

Board of Trustees of the University of Alabama v. Garrett 531 U.S. 356 (2001), 78, 393, 745

Boerne, City of v. Flores 521 U.S. 507 (1997), 70, 84, 118, 176, 180, 278, 745

Boston Beer Company v. Massachusetts 97 U.S. 25 (1877), 614

Boumediene v. Bush 553 U.S. 723 (2008), 89, 331t, 339–340, 745

Bowsher v. Synar 478 U.S. 714 (1986), 284–289

Brandeis Brief (Muller v. Oregon), 649–652

Brewster, United States v. 408 U.S. 501 (1972), 139n, 144t

Bronson v. Kinzie 1 How. 311 (1843), 608

Brown v. Board of Education 347 U.S. 483 (1954), 22, 42, 79, 89, 170, 467

Brown v. Maryland 12 Wheat. 419 (1827), 501n, 570–572, 745

Brushaber v. Union Pacific Railroad 240 U.S. 1 (1916), 531

Buckley v. Valeo 424 U.S. 1 (1976), 213n, 285, 745

Bunting v. Oregon 243 U.S. 426 (1917), 654, 657, 745

Burbank, City of v. Lockheed Air Terminal 411 U.S. 624 (1973), 408t

Burnet v. Coronado Oil & Gas Co. 285 U.S. 393 (1932), 31n

Bush v. Gore 531 U.S. 98 (2000), 40, 79, 106, 186–195

Bush v. Palm Beach County Canvassing Board 531 U.S. 70 (2000), 187, 191

Butchers’ Benevolent Association v. Crescent City Livestock Landing & Slaughter House Company (Slaughterhouse cases) 83 U.S. (16 Wall.) 36 (1873), 627–633, 641

Butler, United States v. 297 U.S. 1 (1936), 194, 367, 442, 548–553, 556, 558, 559, 560, 626t

Butz v. Economou 438 U.S. 478 (1978), 250

C & A Carbone, Inc. v. Clarkstown 511 U.S. 383 (1994), 519

Caperton v. A. T. Massey Coal Co. 556 U.S. 868 (2009), 56, 674–679

Cappaert v. United States 426 U.S. 128 (1976), 515

Carolene Products, United States v. 304 U.S. 144 (1938), 667n

Carter v. Carter Coal Co. 298 U.S. 238 (1936), 93, 367, 442, 448, 453, 462, 472, 474, 483, 485, 626t, 745

Causby, United States v. 328 U.S. 256 (1946), 686–688, 691

Champion v. Ames 188 U.S. 321 (1903), 432–434, 471

Chapman, in re 166 U.S. 661 (1897), 126n

Chemical Waste Management, Inc. v. Hunt 504 U.S. 334 (1992), 519, 580

Chicago, Burlington & Quincy Railroad Co. v. McGuire 166 U.S. 226 (1897), 665, 685, 745

Chicago, Milwaukee & St. Paul Railway v. Minnesota 134 U.S. 418 (1890), 638–639, 745

Chicago Board of Trade v. Olsen 262 U.S. 1 (1923), 431

Chisholm v. Georgia 2 Dall. 419 (1793), 76, 346, 387, 745

Cincinnati v. Vester 281 U.S. 439 (1930), 706

Cipollone v. Liggett Group 505 U.S. 504 (1992), 408t

City of Boerne v. Flores 521 U.S. 507 (1997), 70, 84, 118, 176, 180, 278, 745

City of Burbank v. Lockheed Air Terminal 411 U.S. 624 (1973), 408t

City of Cuyahoga Falls, Ohio v. Buckeye Community Hope Foundation 538 U.S. 188 (2003), 669n

City of Richmond v. J. A. Croson Co. 488 U.S. 469 (1989), 85

Clinton v. City of New York 524 U.S. 417 (1998), 113, 207–211, 270, 278

Clinton v. Jones 520 U.S. 681 (1997), 251–256, 257

Cohens v. Virginia 6 Wheat. 264 (1821), 76, 351, 388, 605, 745

Colegrove v. Green 328 U.S. 459 (1946), 95, 96, 97, 745

Coleman v. Court of Appeals of Maryland 566 U.S. ___ (2012), 78, 393

Coleman v. Miller 307 U.S. 433 (1939), 97, 118

Cole v. LaGrange 113 U.S. 1 (1884), 705

Collector v. Day 11 Wall. 113 (1871), 534, 538, 745

Commodity Futures Trading Commission v. Schor 478 U.S. 833 (1986), 567

Complete Auto Transit v. Brady 430 U.S. 274 (1977), 572–575, 577, 578, 581

Comstock, United States v. 560 U.S. 126 (2010), 155, 156, 326, 493, 496

Consolidated Edison Company v. NLRB 305 U.S. 197 (1938), 459

Constantine, United States v. 296 U.S. 287 (1935), 563

Cook v. Gralike 531 U.S. 510 (2001), 138

Cooley v. Board of Wardens 53 U.S. (12 How.) 299 (1852), 503–506, 508, 520

Coombs, United States v. 12 Pet. 72 (1838), 489

Cooper Industries v. Leatherman Tool Group 532 U.S. 424 (2001), 674

Cooper v. Aaron 358 U.S. 1 (1958), 79

Corfield v. Coryell 6 Fed. Cas. 546 (C.C.E.D. Pa. 1823), 629

Coyle v. Smith 221 U.S. 559 (1911), xiii, 363, 364–366

Crandall v. Nevada 73 U.S. 35 (1868), 629

Crosby v. National Foreign Trade Council 530 U.S. 363 (2000), 401–407

Curtiss-Wright Export Corp., United States v. 299 U.S. 304 (1936), 178–180, 263–266, 271, 272n, 323, 327, 331

Cutter v. Wilkinson 544 U.S. 709 (2005), 70n

Cuyahoga Falls, Ohio v. Buckeye Community Hope Foundation 538 U.S. 188 (2003), 669n

Dames & Moore v. Regan 453 U.S. 654 (1981), 267n, 316, 317–319, 405

Daniel v. Paul 395 U.S. 298 (1969), 471, 745

Darby, United States v. 312 U.S. 100 (1941), 93, 368–369, 376, 458, 459–463, 464, 466, 485, 497, 547

Davidson v. New Orleans (1878), 633n

Davis v. Michigan Department of Treasury 489 U.S. 803 (1989), 537–540

Davis v. Passman 442 U.S. 228 (1979), 144t

Dean Milk Co. v. Madison 340 U.S. 349 (1951), 512, 518

Debs, in re 158 U.S. 564 (1895), 204

De Canas v. Bica 424 U.S. 351 (1976), 413

Defunis v. Odegaard 416 U.S. 312 (1974), 93, 745

Department of Commerce v. Montana 503 U.S. 442 (1992), 123n

Dickerson v. United States 530 U.S. 428 (2000), 70, 118, 745

Dobbins v. Commissioners of Erie County 16 Pet. 435 (1842), 534, 538

Dr. Bonham’s Case (England, 1610), 80

Doe v. McMillan 412 U.S. 306 (1973), 144t

Donovan v. San Antonio Metropolitan Transit Authority (1985), 370

Doremus, United States v. 249 U.S. 86 (1919), 548

Eakin v. Raub 12 Sargent & Rawle 330 (PA. 1825), 81–83

Eastland v. U.S. Servicemen’s Fund 421 U.S. 491 (1975), 144t

E. C. Knight Co., United States v. 156 U.S. 1 (1895), 366, 367, 423–427, 431, 438, 465, 471, 474, 485

Edelman v. Jordan 415 U.S. 651 (1974), 78

Edmond v. United States 520 U.S. 651 (1997), 219

Edwards v. California 314 U.S. 160 (1941), 502n

El Paso v. Simmons 379 U.S. 497 (1965), 616, 618, 745

Employment Division v. Smith 494 U.S. 872 (1990), 70, 176, 278

Endo, ex parte 323 U.S. 283 (1944), 310

Energy Reserves Group, Inc. v. Kansas Power and Light Company 459 U.S. 400 (1983), 623, 745

Evansville-Vanderburgh Airport Authority Dist. v. Delta Airlines, Inc. 405 U.S. 707 (1972), 532

Ex parte Endo 323 U.S. 283 (1944), 310, 745

Ex parte Garland 71 U.S. 333 (1867), 257n

Ex parte Grossman 267 U.S. 87 (1925), 258–260

Ex parte McCardle 74 U.S. (7 Wall.) 506 (1869), 87–89, 119, 339n

Ex parte Milligan 71 U.S. (24 Wall.) 2 (1866), 88n, 295–301, 334–335, 337

Ex parte Quirin 317 U.S. 1 (1942), 302, 333, 334, 745

Ex parte Virginia 100 U.S. 339 (1880), 174

Ex parte Yerger 75 U.S. 85 (1869), 89n

Exxon Corporation v. Eagerton 462 U.S. 176 (1983), 623n

Fairfax’s Devisee v. Hunter’s Lessee 7 Cr. 603 (1813), 72

First English Evangelical Lutheran Church of Glendale v. County of Los Angeles 482 U.S. 304 (1987), 693, 745

Fisher v. University of Texas 570 U.S. ___ (2013), 42

Fitzpatrick v. Bitzer 427 U.S. 445 (1976), 77, 78, 388, 391

Flast v. Cohen 392 U.S. 83 (1968), 91n, 108–112, 114

Fletcher v. Peck 10 U.S. (6 Ct.) 87 (1810), 593–597, 618

Fletcher v. Rhode Island (1847), 502n. See also License Cases

Florida Lime & Avocado Growers, Inc. v. Paul 373 U.S. 132 (1963), 408t

Free Enterprise Fund v. Public Company Accounting Oversight Board 561 U.S. ___ (2010), 494

Freeman v. Hewit 329 U.S. 249 (1946), 573, 574

Frothingham v. Mellon 262 U.S. 447 (1923), 108, 110, 111, 745

Garcia v. San Antonio Metropolitan Transit Authority 469 U.S. 528 (1985), 349, 369–374, 375, 377, 380, 472t

Garland, ex parte 71 U.S. 333 (1867), 257n

Georgia v. Stanton 6 Wall. 50 (1868), 246

Gertz v. Robert Welch, Inc. 418 U.S. 323 (1974), 670

Gibbons v. Ogden 22 U.S. (9 Wheat.) 1 (1824), 20, 145, 175, 417–422, 431, 433, 461, 465, 469, 471n, 474, 485, 489, 493, 508, 605

Gibson v. Florida Legislative Investigating Committee 372 U.S. 539 (1963), 170, 745

Gillespie v. Oklahoma 257 U.S. 501 (1922), 534n

Glidden Co. v. Zdanok 368 U.S. 814 (1962), 89n

Goldberg v. Sweet 488 U.S. 252 (1989), 575

Goldblatt v. Hempstead, 689n

Goldwater v. Carter 444 U.S. 996 (1979), 101, 266, 745

Gonzales v. Raich 545 U.S. 1 (2005), 471n, 472t, 484, 485, 486–491, 498–499

Goodridge v. Department of Public Health 450 Mass. 309 (2003), 399

Granholm v. Heald 544 U.S. 460 (2005), 517–520

Gravel v. United States 408 U.S. 606 (1972), 139, 140–143

Graves v. New York ex rel. O’Keefe 306 U.S. 466 (1939), 534, 539, 745

Gregory v. Ashcroft 501 U.S. 452 (1991), 474

Griswold v. Connecticut 381 U.S. 479 (1965), 38, 680, 745

Grossman, ex parte 267 U.S. 87 (1925), 258–260

Grutter v. Bollinger 539 U.S. 306 (2003), 41–42

Hadacheck v. Los Angeles, 689n

Haig v. Agee 453 U.S. 280 (1981), 267, 745

Hamdan v. Rumsfeld 548 U.S. 557 (2006), 89, 212, 302, 331t, 339, 745

Hamdi v. Rumsfeld 542 U.S. 507 (2004), 325, 331t, 332–339

Hammer v. Dagenhart 247 U.S. 251 (1918), 366, 367, 368, 431, 435–439, 459, 460, 461, 544, 547, 626t

Hampton & Co. v. United States 276 U.S. 394 (1928), 271–272, 275, 745

Hans v. Louisiana 134 U.S. 1 (1890), 388

Hatter, United States v. 532 U.S. 557 (2001), 56n

Hawaii Housing Authority v. Midkiff 467 U.S. 229 (1984), 708–711, 714, 715, 716

Haywood v. Drown 556 U.S. ___ (2009), 413

Heart of Atlanta Hotel, Inc. v. United States 379 U.S. 241 (1964), 467–470

Hein v. Freedom from Religion Foundation 551 U.S. 587 (2007), 112, 745

Helstoski, United States v. 442 U.S. 477 (1979), 143, 144t

Helvering v. Davis 301 U.S. 619 (1937), 459, 557n, 566

Helvering v. Gerhardt 304 U.S. 405 (1938), 534, 539, 745

Herb v. Pitcairn 324 U.S. 117 (1945), 394n

Hines v. Davidowitz 312 U.S. 52 (1941), 409, 410, 413

Hipolite Egg Company v. United States 220 U.S. 45 (1911), 434n

Hirabayashi v. United States 320 U.S. 81 (1943), 304, 311, 745

Hoffman Plastic Compounds, Inc. v. NLRB 535 U.S. 137 (2002), 411

Hoke v. United States 227 U.S. 308 (1913), 431, 434

Holden v. Hardy 169 U.S. 366 (1898), 642, 644, 647, 657, 665, 745

Hollingsworth v. Perry 570 U.S. ___ (2013), xiii, 108n, 113–118

Home Building & Loan Assn. v. Blaisdell 290 U.S. 398 (1934), 612–616, 617–618, 621

Hopkins Savings Association v. Cleary 296 U.S. 315 (1935), 442

Horne v. Department of Agriculture 576 U.S. ___ (2015), xiii, 702–705

Houston, E. & W. Texas Railway Co. v. United States 234 U.S. 342 (Shreveport Rate Case, 1914), 427–428, 471, 474, 485, 745

H. P. Hood & Sons, Inc. v. Du Mond 336 U.S. 525 (1949), 580

Hudson Water Co. v. McCarter 209 U.S. 349 (1908), 618

Hughes v. Oklahoma 441 U.S. 322 (1979), 513, 515, 516, 518, 580

Humphrey’s Executor v. United States 295 U.S. 602 (1935), 234–237, 286–287, 443

Hunt v. Washington State Apple Advertising Commission 432 U.S. 333 (1977), 510, 511–513, 516

Hustler Magazine v. Falwell 485 U.S. 46 (1988), 24

Hutchinson v. Proxmire 443 U.S. 111 (1979), 143, 144t, 745

Hylton v. United States 3 Dall. 171 (1796), 24, 61, 523–525, 529, 564, 745

Immigration and Naturalization Service v. Chadha 462 U.S. 919 (1983), 30, 55, 79, 120, 209, 279–284, 288

Immigration and Naturalization Service v. Lopez-Mendoza 468 U.S. 1032 (1983), 411

Indian Motorcycle Co. v. United States 238 U.S. 570 (1931), 534n

In re Chapman 166 U.S. 661 (1897), 126n

In re Debs 158 U.S. 564 (1895), 204

In re Neagle 135 U.S. 1 (1890), 199, 200–204, 311

International Business Machines Corp., United States v. (IBM) 517 U.S. 843 (1996), 532

International Longshoreman’s Union v. Boyd 347 U.S. 222 (1954), 94

Interstate Commerce Commission v. Alabama-Midland Railway Co. 168 U.S. 144 (1897), 428n

Interstate Commerce Commission v. Brimson 154 U.S. 447 (1894), 428n

Interstate Commerce Commission v. Cincinnati, New Orleans & Texas Pacific Railway Co. 167 U.S. 479 (1897), 428n

Jones v. United States 529 U.S. 848 (2000), 483

J. W. Hampton, Jr., & Co. v. United States 276 U.S. 394 (1928), 271–272, 275, 541

Kahriger, United States v. 345 U.S. 22 (1953), 548

Karcher v. May 484 U.S. 72 (1987), 114, 115, 117

Kelo v. City of New London 545 U.S. 469 (2005), 712–719

Kendall, Postmaster General v. Stockton & Stokes 37 U.S. 524 (1838), 245

Keystone Bituminous Coal Association v. DeBenedictis 480 U.S. 470 (1987), 623n, 693, 745

Kidd v. Pearson 128 U.S. 1 (1888), 423, 425, 745

Kilbourn v. Thompson 103 U.S. 168 (1881), 139, 156–157, 158, 165, 169n, 745

Kimel v. Florida Board of Regents 528 U.S. 62 (2000), 78, 393, 745

Klein, United States v. 13 Wall. 128 (1872), 90

Knowlton v. Moore (1900), 543

Korematsu v. United States 323 U.S. 214 (1944), 39, 303–310, 332

Lane County v. Oregon 74 U.S. (7 Wall.) 71 (1869), 365–366

Lawrence, United States v. 3 U.S. 42 (1795), 63

Lawrence v. Texas 539 U.S. 558 (2003), 90t, 680–681, 745

Leon, United States v. (1984), 32

License Cases 56 U.S. 504 (1847), 502

License Tax Cases 72 U.S. (5 Wall.) 462 (1866), 563

Lochner v. New York 198 U.S. 45 (1905), 626t, 642–649, 652

Long v. Rockwood 277 U.S. 142 (1928), 534n

Lopez, United States v. 514 U.S. 549 (1995), 385, 390, 472t, 473–480, 481, 482, 485, 487, 490, 560

Lord v. Veazie 29 U.S. 251 (1850), 92n

Loretto v. Teleprompter Manhattan CATV Corp. 458 U.S. 419 (1982), 686, 695, 703–705, 745

Lorillard Tobacco Co. v. Reilly 533 U.S. 525 (2000), 408t

Louisville Bank v. Radford 295 U.S. 555 (1935), 442, 443n

Loving v. United States 517 U.S. 748 (1996), 278n, 745

Low v. Austin 13 Wall. 29 (1872), 569, 571, 745

Lucas v. South Carolina Coastal Council 505 U.S. 1003 (1992), 697–701

Lujan v. Defenders of Wildlife 504 U.S. 555 (1992), 107n, 114, 745

Luther v. Borden 7 How. 1 (1849), 94, 98, 375, 605, 745

Mackenzie v. Hare 239 U.S. 299 (1915), 265

Maine v. Taylor 477 U.S. 131 (1986), 514–517

Mapp v. Ohio 367 U.S. 643 (1961), 32

Marbury v. Madison 5 U.S. (1 Cranch) 137 (1803), 12, 40, 58, 61–70, 79–80, 87, 94, 117n, 119–120, 241, 245, 494, 506

Marchetti v. United States 390 U.S. 39 (1968), 548, 745

Martin v. Hunter’s Lessee 14 U.S. (1 Wheat.) 304 (1816), 57n, 71, 72–76, 344n, 355

Maryland v. Louisiana 452 U.S. 456 (1981), 581

Massachusetts v. United States 435 U.S. 444 (1978), 532

Mayor of New York v. Miln 11 Pet. 102 (1837), 501–502, 745

McCardle, ex parte 74 U.S. (7 Wall.) 506 (1869), 87–89, 119, 339n

McCray v. United States 195 U.S. 27 (1904), 542–544

McCullagh, United States v. 54 U.S. 216 (1851), 400

McCulloch v. Maryland 17 U.S. (4 Wheat.) 316 (1819), 20, 30, 146–154, 174, 176, 351–355, 373, 375, 462, 493, 496, 533–534, 538, 539, 540, 543, 605, 614, 704

McGrain v. Daugherty 273 U.S. 135 (1927), 157–160

Meyer v. Nebraska 262 U.S. 390 (1923), 304, 680, 745

Michelin Tire Corp. v. Wages 423 U.S. 276 (1976), 569–572

Michigan v. Long 463 U.S. 1032 (1983), 395–399

Michigan v. Mosley 423 U.S. 96 (1975), 395n

Miller v. California 413 U.S. 15 (1973), 483

Miller v. Schoene, 689n

Milligan, ex parte 71 U.S. (24 Wall.) 2 (1866), 88n, 295–301, 334–335, 337

Minnesota Rate Case 230 U.S. 352 (1913), 446

Miranda v. Arizona 384 U.S. 436 (1966), 70, 90

Mississippi v. Johnson 71 U.S. (4 Wall.) 475 (1867), 244–246

Missouri, State of v. Holland 242 U.S. 416 (1920), 399–401

Missouri Pacific Railway Company v. Nebraska 164 U.S. 403 (1896), 705, 710

Missouri v. Holland 252 U.S. 416 (1920), 614

Mistretta v. United States 488 U.S. 361 (1989), 43, 83–84, 274–278

Monongahela Navigation Co. v. United States 148 U.S. 312 (1893), 86

Morehead v. New York ex rel. Tipaldo 298 U.S. 587 (1936), 452n, 626t, 662, 663, 664, 665, 666, 745

Morrison, United States v. 529 U.S. 598 (2000), 472t, 479–484, 485, 488, 490, 493

Morrison v. Olson 487 U.S. 654 (1988), 213, 214–219, 285, 289

Motor Coach Employees v. Lockridge 403 U.S. 274 (1971), 411

Mugler v. Kansas 123 U.S. 623 (1887), 638, 745

Mulford v. Smith 307 U.S. 38 (1939), 459, 553n

Muller v. Oregon 208 U.S. 412 (1908), 36, 649–654, 657

Munn v. Illinois 94 U.S. 113 (1877), 633–638, 667, 669

Murdock v. City of Memphis 20 Wall. 590 (1875), 77, 78, 394

Murphy v. Ford 390 F. SUPP. 1372 (1975), 260, 261–263

Muskrat v. United States 219 U.S. 346 (1911), 92

Myers v. United States 272 U.S. 52 (1926), 198n, 205, 229–234, 236

National Bellas Hess, Inc. v. Department of Revenue of Illinois 383 U.S. 753 (1967), 575–577, 578, 745

National Federation of Independent Business v. Sebelius 567 U.S. ___ (2012), xiii, 21, 155, 387, 472t, 485, 491, 492–500, 561–568

National Geographic Society v. California Board of Equalization 430 U.S. 551 (1977), 577

National Labor Relations Board v. Canning 573 U.S. ___ (2014), xiii, 220–228

National Labor Relations Board v. Fainblatt 306 U.S. 601 (1939), 459

National Labor Relations Board v. Friedman-Harry Marks Clothing Company 301 U.S. 58 (1937), 459

National Labor Relations Board v. Fruehaf Trailer Company 301 U.S. 49 (1937), 459

National Labor Relations Board v. Jones & Laughlin Steel Corporation 301 U.S. 1 (1937), 367, 452, 453–458, 462, 472t, 475, 479, 480, 485, 487–488, 497

National League of Cities v. Usery 426 U.S. 833 (1976), 30, 349, 368, 369, 370–374, 377, 473n, 483, 745

National Meat Association v. Harris 565 U.S. ___ (2012), 408t

National Mutual Insurance Company v. Tidewater Transfer Company 337 U.S. 582 (1949), 88n

Neagle, in re 135 U.S. 1 (1890), 199, 200–204, 311

Nebbia v. New York 291 U.S. 502 (1934), 458, 658–662

Nevada Department of Human Resources v. Hibbs 538 U.S. 721 (2003), 78, 393, 746

Newdow v. U.S. Congress 542 U.S. 1 (2003), 90

New Energy Co. of Indiana v. Limbach 486 U.S. 269 (1988), 513, 519, 581

New Jersey v. Wilson 7 Cr. 164 (1812), 597

Newport v. Fact Concerts, Inc.453 U.S. 247 (1981), 670

New State Ice Co. v. Liebmann 285 U.S. 311 (1932), 343n, 489

New York v. United States 505 U.S. 144 (1992), 374–380, 382, 384–386, 390, 472–473, 479, 560

Nigro v. United States 276 U.S. 332 (1928), 548

Nixon, United States v. 418 U.S. 683 (1974), 79, 217, 238, 239–243, 249, 250, 254

Nixon v. Fitzgerald 457 U.S. 731 (1982), 247–251, 256

Nixon v. United States 506 U.S. 224 (1993), 26, 101, 102–107, 132

Nollan v. California Coastal Commission 483 U.S. 825 (1987), 694–696

Norris v. Boston 7 How. 283 (1849), 502

Northern Pipeline Construction Co. v. Marathon Pipe Line Co. 458 U.S. 50 (1982), 288

Northern Securities Company v. United States 193 U.S. 197 (1904), 427, 746

Northwestern Fertilizing Company v. Hyde Park 97 U.S. 659 (1878), 608–609, 614, 746

Obergefell v. Hodges 576 U.S. ___ (2015), 90, 117, 399, 681

Ogden v. Saunders 12 Wheat. 213 (1827), 598n, 605

Oklahoma Tax Commission v. Jefferson Lines 514 U.S. 175 (1995), 575

Old Dominion Co. v. United States 269 U.S. 55 (1925), 710

Oregon Waste Systems, Inc. v. Department of Environmental Quality of Oregon 511 U.S. 93 (1994), 518, 579–583

Osborn v. Bank of United States 9 Wheat. 783 (1824), 78, 605

Otis v. Parker 187 U.S. 606 (1903), 647

Pace v. Burgess 92 U.S. 372 (1876), 533

Pacific Gas & Electric Company v. State Energy Resources Conservation and Development Commission 461 U.S. 190 (1983), 408t

Pacific Mutual Life Insurance Co. v. Haslip 499 U.S. 1 (1991), 670, 671, 672, 673

Panama Refining Company v. Ryan 293 U.S. 388 (1935), 179, 271–274, 278n, 442, 626t, 746

Panhandle Oil Co. v. Mississippi 277 U.S. 218 (1928), 534n

Passenger Cases 48 U.S. (7 How.) 283 (1849), 502

Paul v. Virginia 8 Wall. 168 (1869), 629

Peirce v. New Hampshire 5 How. 504 (1847), 502n

Penn Central Transportation Company v. City of New York 438 U.S. 104 (1978), 689–693, 703

Pennell v. City of San Jose 485 U.S. 1 (1988), 669n, 746

Pennsylvania Coal Co. v. Mahon 260 U.S. 393 (1922), 688–689, 691, 698–699, 703, 746

Pennsylvania v. Union Gas Co. 491 U.S. 1 (1989), 77, 78, 388

Perez v. United States 402 U.S. 146 (1971), 471, 474, 487, 489, 494, 500

Philadelphia v. New Jersey 437 U.S. 617 (1978), 518

Phillips Chemical Co. v. Dumas Independent School District 361 U.S. 376 (1960), 539

Pink, United States v. 315 U.S. 203 (1942), 267n, 319, 322

Piqua Branch of the State Bank of Ohio v. Knoop 16 How. 369 (1854), 608

Pollock v. Farmer’s Loan and Trust Co. 157 U.S. 429 (1895), 526n

Pollock v. Farmer’s Loan and Trust Co. 158 U.S. 601 (1895), 93, 525, 526–530, 534, 535, 536, 537

Powell v. McCormack 395 U.S. 486 (1969), 24, 25t, 126n, 127–132, 134, 241

Printz v. United States 521 U.S. 898 (1997), 30, 381–386, 472t, 479, 560, 564

Prize Cases 67 U.S. (22 Bl.) 635 (1863), 291, 292–295

Proprietors of Charles River Bridge v. Proprietors of Warren Bridge 36 U.S. (11 Pet.) 420 (1837), 603, 604–608

Quill Corp. v. North Dakota 504 U.S. 298 (1992), 506, 576–579

Quirin, ex parte 317 U.S. 1 (1942), 302, 333, 334, 745

Railroad Retirement Board v. Alton Railroad Co. 295 U.S. 300 (1935), 442, 443n

Raines v. Byrd 521 U.S. 811 (1997), 112, 206, 208, 285, 746

Rasul v. Bush 542 U.S. 466 (2004), 331t, 339, 746

Rayburn House Office Building Room 2113, United States v. 551 U.S. ___ (2008), 144

Redrup v. New York 386 U.S. 767 (1967), 483

Regents of the University of California v. Bakke 438 U.S. 265 (1978), 41, 42, 92

Reorganized CF&I Fabricators of Utah, Inc., United States v. 518 U.S. 213 (1996), 563, 567

Richmond, City of v. J. A. Croson Co. 488 U.S. 469 (1989), 85

Riegel v. Medtronic 552 U.S. 312 (2008), 408t

Rochin v. California 342 U.S. 165 (1952), 32

Rock Royal Cooperative, United States v. 307 U.S. 533 (1939), 459

Roe v. Wade 410 U.S. 113 (1973), 20, 36, 37, 79, 85, 89, 90, 93, 680, 681, 746

Ruckelshaus v. Monsanto Co. 467 U.S. 986 (1984), 704

Saenz v. Roe 526 U.S. 489 (1999), 632n, 746

Sanchez, United States v. 340 U.S. 42 (1950), 548

Santa Cruz Fruit Packing v. NLRB 303 U.S. 453 (1938), 459

Scott v. Sandford 60 U.S. (19 How.) 393 (1857), 69, 86, 244, 297, 357, 358–363, 627

Seminole Tribe of Florida v. Florida 517 U.S. 44 (1996), 77, 388, 746

Shauver, United States v. 214 F. 154 (1914), 400

Shelby County v. Holder 570 U.S. ___ (2013), 177, 180, 746

Sheldon v. Sill 49 U.S. 441 (1850), 57n

Shreveport Rate Case (Houston, E. & W. Texas Railway Co. v. United States) 234 U.S. 342 (1914), 427–428, 471, 474, 485

Silkwood v. Kerr-McGee Corp. 464 U.S. 238 (1984), 408t, 411

Sioux Nation of Indians, United States v. 448 U.S. 371 (1980), 685n

Slaughterhouse Cases (Butchers’ Benevolent Association v. Crescent City Livestock Landing & Slaughter House Company) 83 U.S. (16 Wall.) 36 (1873), 627–633, 641

Smith v. Turner 7 How. 283 (1849), 502

Solid Waste Agency of Northern Cook County v. United States Army Corps. of Engineers 531 U.S. 159 (2001), 483n, 746

Sonzinsky v. United States 300 U.S. 506 (1937), 548, 555

South Carolina State Highway Department v. Barnwell Brothers 303 U.S. 177 (1938), 507, 508, 577, 746

South Carolina v. Baker 485 U.S. 505 (1988), 535–537, 539

South Carolina v. Katzenbach 383 U.S. 301 (1966), 172–177

South Carolina v. United States 199 U.S. 437 (1905), 534n

South Central Bell Telephone v. Alabama 526 U.S. 160 (1999), 583, 746

South Dakota v. Dole 483 U.S. 203 (1987), 557–560, 565, 568

Southern Pacific Company v. Arizona 325 U.S. 761 (1945), 507–511, 512

Spector Motor Service v. O’Connor 340 U.S. 602 (1951), 573, 574, 746

Sperry Corp., United States v. 493 U.S. 52 (1989), 532

Springer v. United States 102 U.S. 586 (1881), 525, 746

Sproles v. Binford 286 U.S. 374 (1932), 614

Stafford v. Wallace 258 U.S. 495 (1922), 428, 429–431, 453, 485

State Farm Mutual Automobile Insurance Co. v. Campbell 538 U.S. 408 (2003), 674, 746

State of Missouri v. Holland 242 U.S. 416 (1920), 399–401

The State v. Makwanyane (South Africa) (1995), 33

Steward Machine Co. v. Davis 301 U.S. 548 (1937), 459, 553, 564

Stone v. Mississippi 101 U.S. 814 (1880), 609–611, 614, 618

Sturges v. Crowninshield 4 Wheat. 122 (1819), 598

Swift & Company v. United States 196 U.S. 375 (1905), 428, 430, 477, 485, 746

Swift v. Tyson 41 U.S. 1 (1842), 605

Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency 535 U.S. 302 (2002), 703, 704, 717n, 746

Tennessee Valley Authority (TVA) v. Hill 437 U.S. 153 (1978), 515

Terry v. Ohio 392 U.S. 1 (1968), 396, 397

Texas v. White 74 U.S. 700 (1869), 365

Thompson v. Oklahoma 487 U.S. 815 (1987), 33n

Thurlow v. Massachusetts 5 How. 504 (1847), 502n

Towne v. Eisner 245 U.S. 418 (1918), 29

Train v. City of New York 420 U.S. 35 (1975), 205, 746

Trustees of Dartmouth College v. Woodward 17 U.S. (4 Wheat.) 518 (1819), 598–603, 605, 610

Tumey v. Ohio 273 U.S. 510 (1927), 676

TXO Production Corp. v. Alliance Resources Corp. 509 U.S. 443 (1993), 670, 671, 673

Underwriters Association, United States v. 32 U.S. 533 (1944), 30n

United Public Workers v. Mitchell 330 U.S. 75 (1947), 93–94

United States ex rel. Tennessee Valley Authority v. Welch 327 U.S. 546 (1946), 706, 710, 746

United States Shoe Corp., United States v. 523 U.S. 360 (1998), 531–533

United States Trust Co. v. New Jersey 431 U.S. 1 (1977), 616, 617–620

United States v. Alvarez-Machain 504 U.S. 655 (1992), 33

United States v. Belmont 310 U.S. 324 (1937), 267, 746

United States v. Brewster 408 U.S. 501 (1972), 139n, 144t

United States v. Butler 297 U.S. 1 (1936), 194, 367, 442, 548–553, 556, 558, 559, 560, 626t

United States v. Carolene Products 304 U.S. 144 (1938), 667n

United States v. Causby 328 U.S. 256 (1946), 686–688, 691

United States v. Comstock 560 U.S. 126 (2010), 155, 156, 326, 493, 496, 746

United States v. Constantine 296 U.S. 287 (1935), 563

United States v. Coombs 12 Pet. 72 (1838), 489

United States v. Curtiss-Wright Export Corp. 299 U.S. 304 (1936), 178–180, 263–266, 271, 272n, 323, 327, 331

United States v. Darby 312 U.S. 100 (1941), 93, 368–369, 376, 458, 459–463, 464, 466, 485, 497, 547

United States v. Doremus 249 U.S. 86 (1919), 548

United States v. E. C. Knight Co. 156 U.S. 1 (1895), 366, 367, 423–427, 431, 438, 465, 471, 474, 485

United States v. Hatter 532 U.S. 557 (2001), 56n

United States v. Helstoski 442 U.S. 477 (1979), 143, 144t

United States v. International Business Machines Corp. (IBM) 517 U.S. 843 (1996), 532

United States v. Kahriger 345 U.S. 22 (1953), 548, 746

United States v. Klein 13 Wall. 128 (1872), 90

United States v. Lawrence 3 U.S. 42 (1795), 63

United States v. Leon (1984), 32

United States v. Lopez 514 U.S. 549 (1995), 385, 390, 472t, 473–480, 481, 482, 485, 487, 490, 560

United States v. McCullagh 54 U.S. 216 (1851), 400

United States v. Morrison 529 U.S. 598 (2000), 472t, 479–484, 485, 488, 490, 493

United States v. Nixon 418 U.S. 683 (1974), 79, 217, 238, 239–243, 249, 250, 254

United States v. Pink 315 U.S. 203 (1942), 267n, 319, 322

United States v. Rayburn House Office Building Room 2113 551 U.S. ___ (2008), 144

United States v. Reorganized CF&I Fabricators of Utah, Inc. 518 U.S. 213 (1996), 563, 567

United States v. Rock Royal Cooperative 307 U.S. 533 (1939), 459

United States v. Sanchez 340 U.S. 42 (1950), 548

United States v. Shauver 214 F. 154 (1914), 400

United States v. Sioux Nation of Indians 448 U.S. 371 (1980), 685n

United States v. Sperry Corp. 493 U.S. 52 (1989), 532

United States v. Underwriters Association 32 U.S. 533 (1944), 30n

United States v. United States Shoe Corp. 523 U.S. 360 (1998), 531–533

United States v. Will 449 U.S. 200 (1980), 218

United States v. Windsor 570 U.S. ___ (2013), 19, 117n, 205n, 746

U.S. Term Limits, Inc. v. Thornton 514 U.S. 779 (1995), 24, 132–139

Veazie Bank v. Fenno 8 Wall. 533 (1869), 541

Veazie v. Moor 14 How. 568 (1853), 423, 746

Virginia, ex parte 100 U.S. 339 (1880), 174

Wabash, St. Louis & Pacific Railway Co. v. Illinois 118 U.S. 557 (1886), 427n

Wardair Canada v. Florida Department of Revenue 10 Wheat. 1 (1986), 575

Watkins v. United States 354 U.S. 178 (1957), 161–166, 168, 169, 170

Wayman v. Southard 23 U.S. 1 (1825), 271, 746

Wesberry v. Sanders 376 U.S. 1 (1964), 123n

West Coast Hotel v. Parrish 300 U.S. 379 (1937), 449, 452, 457, 458, 663–667

Western Live Stock v. Bureau of Revenue 303 U.S. 250 (1938), 573–574

West Lynn Creamery v. Healy 512 U.S. 186 (1994), 583, 746

West River Bridge v. Dix 6 How. 507 (1848), 605, 608

Wheaton v. Peters 33 U.S. 591 (1834), 605

Wickard v. Filburn 317 U.S. 111 (1942), 458, 463–466, 474, 475, 482, 484, 485, 488, 494, 500, 553n

Wiener v. United States 357 U.S. 349 (1958), 237

Will, United States v. 449 U.S. 200 (1980), 218

Williamson v. Lee Optical Company 348 U.S. 483 (1955), 667–669

Williams v. Fears 179 U.S. 270 (1900), 304

Williams-Yulee v. Florida Bar 575 U.S. ___ (2015), 680, 746

Willson v. Black-Bird Creek Marsh Company 2 Pet. 245 (1829), 501, 508, 746

Wilson v. New 243 U.S. 332 (1917), 613

Windsor, United States v. 570 U.S. ___ (2013), 19, 117n, 205n

Wisconsin Department of Industry v. Gould Inc. 475 U.S. 282 (1986), 411

Wisconsin Public Intervenor v. Mortier 501 U.S. 597 (1991), 408t

Wisconsin v. Mitchell 508 U.S. 476 (1993), 36

Wolf v. Colorado 338 U.S. 25 (1949), 32

Wyeth v. Levine 555 U.S. 555 (2009), 408t, 413

Wynehame v. People 13 N.Y. 378 (1856), 627

Yerger, ex parte 75 U.S. 85 (1869), 89n

Younger v. Harris 401 U.S. 37 (1971), 78

Youngstown Sheet & Tube Co. v. Sawyer 343 U.S. 579 (1952), 204–205, 241, 251, 266, 288, 310–316, 318, 321, 327, 331, 405

Zivotofsky v. Clinton 566 U.S. ___ (2012), 101n, 106–107, 320, 746

Zivotofsky v. Kerry 576 U.S. ___ (2015), xiii, 107n, 205n, 212, 263n, 266, 316, 319–329, 331

Subject Index

Adams, John, 50, 61, 122, 185, 290

Adams, John Quincy, 594

Adequate and independent state grounds test, 77, 394–399

Advisory opinions of the Supreme Court, 91–92

Affirmative action, 41–42

Affordable Care Act. See Patient Protection and Affordable Care Act

Afghanistan conflict, 330, 332

Agee, Philip, 267

Agnew, Spiro, 196

Agricultural Adjustment Act (AAA) of 1933, 548–553

Agricultural market regulation, 702–705

Agricultural production regulation, 463–466

Alcoholic beverage regulation, 502

minimum drinking age, 557–560

substantive due process and, 638

Twenty-first Amendment, 517–520, 557

Alito, Samuel, 733

appellate jurisdiction removal opinion, 89

commerce power opinion, 500

conservative ideology, 35, 36

presidential foreign affairs power opinion, 327–328

spending power opinion, 567–568

standing to sue opinion, 116–117

state immigration law opinion, 413

taxpayer standing to sue opinion, 112

Al-Qaeda, 330, 332

Ambassador appointment, 263

Amendments. See Constitutional amendments; specific amendments

American Bar Association, 637

Amicus curiae briefs, 18, 19, 20, 41–42

Amnesty power, 90

Anti-Federalists, 10, 61

Antitrust legislation, 423–431

Appeals courts, 59

Appellate jurisdiction of Supreme Court, 12–14, 87–89

congressional powers to remove, 87–90, 119

jurisdiction over state courts, 72–77

Appointment powers. See Presidential appointment powers

Argentina, 71

Arizona illegal immigration law, 407–413

Article I, 7, 51, 121, 722–725

amendment-enforcement power, 171

commerce power and, 366, 416. See also Commerce power; Interstate commerce

congressional internal affairs, 125–144

contract clause, 588, 592. See also Contract clause

enumerated powers, 121, 124–125, 144–146

export tax prohibition, 531

historical overview, 122–124

membership qualifications, 125–139

military and war powers, 269, 290

necessary and proper clause, 124, 145–156

qualifications for Congress members, 24

restrictions on state taxing authority, 569

speech or debate clause, 139–144

suspension of habeas corpus, 296

tax and spend provision, 124, 521–522

Article II, 725–726

appointment powers, 212. See also Presidential appointment powers

military and foreign policy powers, 263

pardoning power, 257–258

presentment clause, 206, 208

presidential powers provisions, 7, 11, 51, 183, 196–198, 214. See also Presidential powers

presidential selection, 51, 184–186

removal from office, 228

take care clause, 198, 205, 211, 316

Article III, 7, 726

cases and controversies provision, 90–91, 114

compensation clause, 56

constraints on judicial power, 86–120. See also Judicial power, Article III restraints

Court jurisdiction, 12, 58

exceptions clause, 88–90

jurisdiction provisions, 12, 87

standing to sue requirement, 107–108

vesting clause, 51

Article IV, 94, 364, 726–727

Articles of Confederation, 3–5, 49–50

congressional powers, 122

state burdens on interstate commerce, 506

taxation authority and, 521–522

weaknesses of, 5, 183

Article V, 727

Article VI, 124, 727

Article VII, 727

Ashwander Principles, 118–119

Australia, 71, 139

Austria, 15, 71

Authorization for Use of Military Force Against Iraq (AUMF), 291, 330, 332, 334, 336, 338

Balanced Budget and Emergency Deficit Control Act of 1985, 284–289

Baldwin, Henry, 733

Bank of the United States, 30, 146–154, 351–355, 356, 533

Bankruptcy laws, 592, 598

Barber, Sotirios A., 271

Barbour, Philip P., 76, 502, 733

Baum, Lawrence, 86

Beard, Charles, 6, 588

Belgium, 15, 71

Belz, Herman, 122

Benjamin, Brent, 674–676, 679

Bicameral legislature, 122

Bickel, Alexander, 80

Bill of Rights, 9, 10. See also specific amendments

Bill of Rights, English, 139

Black, Charles, 30

Black, Hugo, 3, 439, 733

congressional investigation power opinion, 169–170

discrimination and interstate commerce and opinion, 471

Japanese American internment opinion, 305–306

literalist approach, 28–29

on congressional power to create courts, 57

privacy rights opinion, 680

seizure of industrial plants opinion, 311–312

state commercial regulation power opinion, 510

takings clause opinion, 684, 688

voting rights opinion, 175–176

Blackmun, Harry A., 733

contract clause opinion, 617–619

delegation of lawmaking powers opinion, 275–276

executive immunity opinion, 249–250

on polling foreign jurisprudence, 33

privacy rights opinion, 680

sample docket, 17f

state commercial regulation power opinion, 515–516

states’ rights opinions, 370–372, 379–380

state taxation power opinion, 572, 573–574, 579, 582

takings clause opinion, 701

Blair, John, Jr., 733

Blankenship, Don, 674–675, 679

Blatchford, Samuel, 638–639, 733

Bobbitt, Philip, 30

Bond interest taxation, 535–537

Bork, Robert, 27, 239

Bowsher, Charles A, 286

Bradley, Joseph P., 631–632, 639, 733

Brady, James S., 381–386

Brady Handgun Violence Prevention Act of 1993, 381–386

Brandeis, Louis, 31, 118, 119, 233–234, 343, 649, 733

Brazil, 139

Brennan, William J., Jr., 374–386, 733

contract clause opinion, 619, 622–623

criticism of originalism, 27

executive immunity opinion, 249–250

intergovernmental tax immunity opinion, 536–537

new judicial federalism, 394–395

on oral arguments, 20

reapportionment political question decision, 96–99, 101

reverse discrimination opinion, 93

speech or debate clause opinion, 142–143

states’ rights opinions, 369

states’ rights versus federal spending authority opinion, 557, 560

state taxation power opinion, 570–572

takings clause opinion, 690–692, 696

Brewer, David J., 639, 652–653, 733

Brewer, Janice, 407

Breyer, Stephen G., 733

commerce power opinion, 477–478, 497–499

executive immunity opinion, 255–256

Kelo aftermath, 718

line-item veto opinion, 210, 270

on implied congressional powers, 155

presidential election controversy opinion, 191–194

presidential foreign affairs power opinion, 325

punitive damages opinion, 672

recess appointments opinion, 221–225

sovereign immunity opinion, 392–393

war on terrorism detention opinion, 333–336

Briefs, 18–20

British anti-terrorism laws, 291

British judicial review, 80

British Parliament system, 122, 139

British Privy Council, 71

Brown, Henry B., 733

Brzonkala, Christy, 479, 484

Budget cut authority issues, 284–289

Burger, Warren Earl, 368, 394, 616, 733

executive privilege opinion, 241–243

ideology and decision making, 34–35

legislative veto opinion, 30

separation of powers opinions, 279, 281–283, 287–288

state commercial regulation power opinion, 511–513

takings clause opinion, 692–693

Burger Court (1969–1985)

ideology and case selection, 18

precedents overruled, 32t

Burma economic sanctions, 401–407

Burr, Aaron, 185, 238

Burton, Harold, 733–734

Bush, George H. W., 197, 218, 374, 472

Bush, George W.

executive agreements, 267

executive privilege and, 238

Jerusalem status policy, 320

military actions, 291, 330

recess appointments, 219

signing statements, 211, 320

use of pardon power, 263

war against terrorism, 330–332

Butler, Pierce, 57, 440, 441, 556–557, 658, 662, 734

Butler, William M., 549

Byrnes, James, 40, 734

Calhoun, John C., 356, 357

California Proposition 8, 113–118

Campaign contributions and judicial bias, 674–680

Campbell, John A., 734

Canada, 71, 329

Caperton, Hugh, 674–675

Capital punishment, 33, 36

Cardozo, Benjamin, 40, 439, 447–448, 554–556, 734

Carter, Jimmy, 258, 279, 317

Cases and controversies clause, 90–91, 114

Casper, Jonathan, 40

Catron, John, 603n, 734

Central Intelligence Agency (CIA), 267

Centralized court systems, 15

Certification, 12

Certified orders list, 16n

Certiorari, 14

factors affecting case selection, 16–18

Chase, Salmon P., 87, 89, 365–366, 734

Chase, Samuel, 524, 734

Checks and balances, 8–9, 49

constitutional provisions, 51–52

democratic checks on the Court, 83–84

origins of system of, 49–50

See also Separation of powers

Chief justice of Supreme Court

case selection decisions, 16

opinion assignment and circulation, 22

presidential impeachment process, 195

presiding over deliberations, 21

state of the judiciary report, 92

Child labor laws, 118, 366, 431, 435–439, 544–547

Circuit courts, 59, 60

Citizenship requirements for presidential office, 184

Civil liberties. See Civil rights and liberties

Civil Rights Act of 1957, 171

Civil Rights Act of 1964, 415, 467–470

Civil rights and liberties, 9–10

Civil War martial law, 295–301

commerce power and, 467–471, 479–484

due process and, 626–627

economic liberties and, 587–589. See also Contract clause; Economic substantive due process; Takings clause

judicial review and role of the Supreme Court, 85

justice ideology and case decision making, 35

literalist approach, 28–29

new judicial federalism, 394–399

substantive due process and privacy, 680–681

vested rights, 587, 589

war against terrorism and, 330–340

World War II era, 301–310

Civil War

events leading to, 356

federal income tax and, 525

war powers litigation, 291–301

Civil War Amendments, 174. See also specific amendments

Clark, Tom C., 32, 99, 166, 468–470, 734

Clarke, John Hessin, 734

Clay, Henry, 3

Cleveland, Grover, 204

Clifford, Nathan, 734

Clinton, Bill, 207, 381

executive immunity claim, 251–256, 257

impeachment, 195, 218, 257

line item veto and, 113, 206–211

military policy, 290

recess appointments, 219

signing statements, 211

use of pardon power, 263

Collusive suits, 92–93, 523, 526

Commerce power, 415

anti-trust legislation and, 423–431

Article I provisions, 366, 416

civil rights applications, 467–471

constraints on state taxing authority, 522

cooperative and dual federalism approaches, 415

defining interstate commerce, 423–431. See also Interstate commerce

dormant commerce clause, 506, 510

evolution of interstate commerce doctrine, 485

foundations of, 416–422

interstate and intrastate commerce differentiation, 366

key cases after Garcia v. SAMTA (1985), 472t

later 19th century interpretations, 422–427

New Deal era litigation, 367–368, 439–466

police powers, 431–439, 466–467

post-New Deal expansion (1960s-1970s), 466–472

Republican Court era (after Reagan’s appointments), 472–500

state burdens on interstate commerce, 506–520, 572–583

See also Interstate commerce; State commercial regulation power

Commodity price controls, 658–662

Compassionate Use Act of 1996, 486–491

Compensation clause, 56

Comptroller general, 284–289

Concurring opinion, 22

Conflict of interest and judicial bias, 674–680

Congress

legislator privileges and immunities (speech or debate clause), 139–144

membership qualifications, 24, 125–139

structure and composition of, 122–124

See also House of Representatives; Senate

Congressional powers, 121, 124–125, 144–145

admitting new states to the U.S., 364–366

amendment enforcement, 171–178

Article I provisions, 7, 51, 121, 124–125, 144. See also Article I

Articles of Confederation and, 122

confirmation of presidential appointments, 57

constitutional amendments overriding Court judgments, 118–119

constitutional interpretation, 84

creation of lower federal courts, 57, 58

delegation of, 270–278

exercise of executive powers, 278–289

exercise of judicial powers, 278

foreign affairs, 266, 328–329, 399–401

impeachment, 195

influence on Court decision making, 41

inherent powers, 178–180

investigation, 156–171

legislative veto, 30, 55, 83, 120, 206, 278–284

limitations on executive power, 204–205

military and war powers, 269, 279, 290, 291. See also War powers

necessary and proper clause, 124, 145–156, 346, 349, 355, 499

presidential veto and, 206

regulation of commerce, 366. See also Commerce power; Interstate commerce

separation of powers system, 51. See also Separation of powers

sources, 145t

Supreme Court appellate jurisdiction, 87–90

See also Commerce power; Tax and spend power

Congressional term limits, 24, 25t, 132–139

Conservative ideology and Court decision making, 34–36

Constitutional amendments, 728–732

congressional enforcement powers, 171–178

overriding Court judgments, 118–119

Constitutional Convention of 1787, 5–6, 50, 122

commerce and, 416–417

executive system development, 183–184

property rights considerations, 591–593

Constitutional courts, 15, 71, 351, 352

Constitutional interpretation, 180–181

judicial supremacy, 84–85

legalistic approaches, 23–33. See also Supreme Court decision making, legalistic approaches

nonjudicial players, 54, 84, 180

realistic approaches, 33–43. See also Supreme Court decision making, realistic approaches

See also Judicial review

Contempt of Congress, 161, 164

Continental Congress, 3

Contract clause, 588, 591

corporate charters, 598–603

Depression era mortgage relief, 612–616

Marshall Court interpretations, 593–603

modern applications, 616–623

pension benefits and, 620–623

post-Civil War era, 608–611

state bankruptcy laws and, 598

Taney Court and, 603–608

the framers and, 591–593

Controlled Substances Act (CSA), 486–491

Cooley, Thomas M., 633, 639

Coolidge, Calvin, 258, 439, 541

Cooperative federalism, 349–350, 351

commerce power and, 415

reemergence of national supremacy (New Deal to 1980s), 367–374

Corporate charters as contracts, 598–603

Corwin, Edward S., 69, 81

Council of revision proposal, 58

Cox, Archibald, 239

Crawford, Jan, 21

Crosskey, William W., 26, 28n

Crowley, Francis X. T., 167

Currie, David, 84

Curtis, Benjamin Robbins, 362, 504–506, 734

Cushing, William, 524n, 734

Dagenhart, Reuben, 438

Dahl, Robert, 85

Daniel, Peter V., 608, 734

Dartmouth College case, 598–603, 610

Darwin, Charles, 633

Davis, David, 295, 298–300, 734

Day, William R., 92, 366, 437–438, 734

Days, Drew S., III, 41

Death penalty, 33, 36

Debs, Eugene, 204

Declaration of Independence, 3

Defense of Marriage Act (DOMA), 19, 117n, 205

Delegation of lawmaking powers, 270–278

Democratic-Republicans, 185

Denmark, 139, 329

Detainee Treatment Act of 2005, 89, 339n

Diplomatic powers, 263

Direct taxes, 522–525

Discrimination and interstate commerce, 467–470

Dissenting opinion, 22, 34

District courts, 59

Docket number, 16

Doctrine of selected exclusiveness, 506

Dormant commerce clause, 506, 510

Douglas, William O., 734

appellate jurisdiction removal opinion, 89

commerce clause opinion, 471

privacy rights decision, 38

speech or debate clause opinion, 142–143

state commercial regulation power opinion, 510

substantive due process opinion, 668–669

takings clause opinion, 687–688

Dual federalism, 349–350, 351

commerce power and, 415

laissez-faire Court decisions, 363, 367

post-Civil War era, 363–367

Rehnquist Court, 374–386

Taney Court and, 355–363, 367

Due process of law, 588, 625–627

judicial bias and, 674–680

private property protections, 685

See also Economic substantive due process; Substantive due process

Duvall, Gabriel, 734

Easterbrook, Frank, 29

Eastland, James, 79

E-commerce, 578–579

Economic liberties, 587–589. See also Contract clause; Economic substantive due process; Takings clause

Economic sanctions, 401–407

Economic substantive due process, 588

commodity price controls, 658–662

contemporary relevance, 669–680

early cases after Slaughterhouse, 633–642

initial 14th Amendment interpretations (Slaughterhouse Cases), 627–633

judicial bias and, 674–680

jury awards for punitive damages, 669–674

laissez-faire Court and (1923–1936), 654–658

late 19th century to 1917, 642–654

legal tools of the laissez-faire Courts, 626t

minimum wage laws, 654–658, 662–667

New Deal era and decline of, 658–667

post-New Deal (1955), 667–669

rational basis test, 667

reasonableness standard, 638, 639, 642, 649, 654

substantive due process doctrine, 625–627

Eighteenth Amendment, 171, 730–731

Eighth Amendment, 729

Eisenhower, Dwight D., 237, 258, 279

Electoral College, 51, 184, 186

Eleventh Amendment, 76–77, 78, 346–347, 387–389, 729

Ellsworth, Oliver, 377, 524n, 734

Ely, John Hart, 681

Eminent domain power, 683–685. See also Takings clause

Enclave approach, 346, 351, 366–367, 368, 369

English Bill of Rights, 139

English Parliament, 122, 139

Environmental regulation

state versus federal commerce powers, 514–517

takings clause considerations, 697–701

Epstein, Lee, 21

Eskridge, William, 52

Exceptions clause, 88–90

Excise taxes

agricultural market regulation, 548–553

constitutional constraints, 522–524

definition, 522

regulatory applications, 540–548

unemployment programs, 553–557

See also Tax and spend power

Exclusionary rule, 32

Executive agreements, 267

Executive branch, 183

global perspective, 185

influence on Court decision making, 40

presidential power of remove, 228

See also Presidency; Presidential powers

Executive clemency (pardon power), 90, 256–263

Executive immunity, 243–256

Executive power, 197–198

congressional delegation of lawmaking powers, 272–274

congressional exercise of, 278–289

congressional limitations, 204–205

Neagle interpretation, 199–204

See also Article II; Presidential powers

Executive privilege, 238–243

Export tax, 531–533

Fair Labor Standards Act (FLSA) of 1938 and amendments, 349, 367–374, 389–393, 415, 459–463

Family and Medical Leave Act of 1993, 78, 393

Faubus, Orville, 79

Federal income tax, 93

Federalism, 9, 349

Article VI supremacy clause, 124

complexity and inefficiency, 343–344, 347

cooperative approach, 349–350, 351. See also Cooperative federalism

definition, 343

domestic policy preemption decisions, 408t

dual approach, 349–350, 351. See also Dual federalism

foreign affairs and, 399–407

judicial power in global perspective, 352

new judicial federalism, 394–399

preemption of state laws, 399–413

sovereign immunity, 387–394. See also State sovereign immunity

structural analysis, 29–30

supremacy clause, 346, 347, 351, 355

the framers and, 344–345

See also State and local government powers; Tenth Amendment

Federalism, doctrinal cycles, 350–351

dual federalism and the Rehnquist Court, 374–386

Marshall Court, 351–355

post-Civil War era, 363–367

reemergence of national supremacy (New Deal to 1980s), 367–374

Roberts Court, 387

Taney Court, 355–363

The Federalist Papers, 10

Federalist No. 7, 592

Federalist No. 15, 383

Federalist No. 21, 523

Federalist No. 22, 416

Federalist No. 23, 179

Federalist No. 27, 383, 386

Federalist No. 36, 383

Federalist No. 39, 346, 383, 384

Federalist No. 42, 416

Federalist No. 44, 613

Federalist No. 45, 346, 383, 431

Federalist No. 51, 198, 384

Federalist No. 67, 219

Federalist No. 69, 322

Federalist No. 70, 198, 384

Federalist No. 77, 228

Federalist No. 78, 41, 56

Federalist No. 81, 387

Federalist Party, 10, 146–147, 185

Federal judge impeachment, 101–107

Federal judicial system, 14f

Article III provisions, 7, 51, 56–58. See also Judicial power, Article III restraints

comity principle and state legal decisions, 394

global perspective, 15

judge selection system, 52, 56

Judiciary Act of 1789, 57, 58–61

jurisdiction, 12, 58, 59–61. See also Jurisdiction of the Supreme Court

lower courts, 57, 58

separation of powers system, 52, 53f. See also Separation of powers

state sovereign immunity and, 78–79

supervision over the states, 78

See also Judicial review; Supreme Court

Federal regulatory powers

agricultural production limits, 463–466

domestic policy preemption decisions, 408t

gun control, 381–386, 473–480

police powers, 431–439, 479–484

radioactive waste disposal, 374–380, 473

state medical marijuana law versus, 486–491

states’ rights versus, 374–380

states’ rights versus federal spending authority, 557–568

takings clause considerations, 688–689. See also Takings clause

taxation authority and, 540–548

Federal Reserve System, 146

Federal Trade Commission (FTC), 234–235, 443

Federal Water Pollution Control Act Amendments of 1972, 205

Ferejohn, John, 52

Field, Stephen J., 199, 200, 631, 637, 639, 734

Fifteenth Amendment, 730

enforcement provision, 177

takings clause, 588. See also Takings clause

voting rights, 171, 174, 363

Fifth Amendment, 625, 683, 728

Filburn, Roscoe, 463

FindLaw, 43

First Amendment, 728

Fish importation law, 515–517

Fitzgerald, A. Ernest, 247

Ford, Gerald R., 196

Nixon pardon, 260–263

Foreign commerce

federal import taxes, 541

state import taxes, 569–572

state regulation of ports, 504–506

Foreign policy

Arizona illegal immigration law, 407–413

Articles of Confederation and, 5

congressional powers, 266, 328–329, 399–401

economic sanctions, 401–407

executive agreements, 267

executive privilege and, 238

federal preemption of state laws, 399–407

inherent presidential powers, 179

passport regulation, 267, 319–329

political questions, 101

presidential powers, 179, 263–267, 316–329

private claims against foreign governments, 317–319

two presidencies, 206

See also War powers

Formalism, 52, 270, 277

Fortas, Abe, 40, 734

Four Horseman of the Apocalypse, 440, 441, 658

Fourteenth Amendment, 123, 363, 729–730

congressional membership restrictions, 125

due process clause, 588, 625, 685. See also Economic substantive due process

early substantive due process interpretations, 627–642

enforcement provision, 177

equal protection and civil rights, 467

private property protections, 685

reapportionment issues, 96, 100–101

state 11th Amendment immunities and, 78

Fourth Amendment, 32, 728

Fox, Noel, 261–262

France, 329

Frank, John, 302

Franklin, Charles H., 85

Frankfurter, Felix, 735

Adkins case and, 655

congressional investigation power opinion, 166

Japanese American internment opinion, 306

judicial self-restraint and, 83

legislative reapportionment decision, 95

mootness decision, 94

on chief justice opinions, 22

on congressional power to remove appellate jurisdiction, 88

on Quirin, 302

presidential power of removal opinion, 237

reapportionment opinion, 99–101

search and seizure opinion, 32

state taxation power opinion, 574

Franklin, Benjamin, 57

Freedom from Religion Foundation, 112

Fuller, Melville Weston, 203–204, 424–426, 427, 434, 527–529, 735

Functionalism, 52, 270, 277

Galanter, Marc, 42

Gambling regulation, 609–611

Gender discrimination, 393

Gender-motivated violence, 479–484

General welfare, 548

Geneva conventions, 330

German legal system, 15, 71

Gibbons, Thomas, 417, 418

Gibson, John, 81–83

Ginsburg, Ruth Bader, 735

Affordable Care Act opinion, 497–499, 566–567

commerce power opinion, 497–499

export tax opinion, 532–533

on implied congressional powers, 156

presidential election controversy opinion, 191–194

punitive damages opinion, 673–674

sovereign immunity opinion, 392–393

spending power opinion, 566–567

voting rights opinion, 177–178

war on terrorism detention opinion, 336–337

Global perspectives

chief executive, 185

federalism and judicial power, 352

judicial review, 15, 70, 71

legal systems, 15

legislator privileges and immunities, 139

U.S. polls of other jurisdictions, 33

war against terrorism, 329

Goldberg, Arthur J., 735

Goldman, Jerry, 21

Goldwater, Barry, 266

Gore, Al, 186, 194

Grain storage regulation, 633–638

Gramm-Rudman-Hollings Act of 1985, 284–289

Grant, Ulysses S., 206, 228

Gravel, Mike, 140

Gray, Horace, 705, 735

Great Depression, 367, 658

contract clause and mortgage relief, 612–616

political change and, 439–440

See also New Deal

Grier, Robert Cooper, 292–294, 295

Guantanamo Bay, Cuba, 89, 330, 339

Guarantee clause, 94, 375n

Guide to the U.S. Supreme Court, 45

Gun control laws, 381–386, 473–480

Habeas corpus petitions, 78

Detainee Treatment Act of 2005, 89

war against terrorism and, 330–331, 333, 335, 339

wartime suspensions, 295–302

Haig, Alexander M., Jr., 197

Hall, Kermit L., 627

Hamdi, Yaser, 332

Hamilton, Alexander

Bank of the United States and, 146, 148–149

Constitutional Convention and, 5

economic plan, 146

on Bill of Rights, 9

on commerce power, 416

on executive power, 198

on foreign affairs powers, 179

on implied congressional powers, 178

on judicial review, 81

on judiciary, 56

on laws impairing contract obligations, 592

on presidential foreign affairs powers, 322

on president’s power to remove, 228

on recess appointments, 219

on state sovereign immunity, 387

on Supreme Court decision making, 41

on taxation, 523, 524

on taxing/spending for the general welfare, 548

The Federalist Papers and, 10

Hancock, John, 10

Harbison, Winfred, 122

Harbor Maintenance Tax (HMT), 531–533

Harding, Warren, 658

Harlan, John Marshall (1833–1911), 425–426, 432–434, 529–530, 685, 735

Harlan, John Marshall (1899–1971), 99–101, 110–111, 167–169, 680, 735

Harper, Robert Goodloe, 594

Harrington, James, 50

Hatch Act of 1940, 94

Hate crime laws, 36

Hayden, Carl, 196

Healthcare reform. See Patient Protection and Affordable Care Act

Hollingsworth, Dennis, 113

Holmes, Oliver Wendell, Jr., 29, 83, 400–401, 428, 438, 647–648, 657, 665, 688–689, 693, 735

Hoover, Herbert, 234, 279, 658

House of Representatives

election system, 51

membership qualifications, 125

presidential impeachment process, 195

reapportionment issues, 95–101

structure and composition, 122–123

See also Congress

House Un-American Activities Committee (HUAC), 161–171

Hughes, Charles Evans, 92, 118, 180, 439, 445–447, 454–456, 612, 613–615, 664–666, 735

Hunt, Ward, 735

Hutchinson, Ronald R., 143

Ideology and Supreme Court case selection, 18

Ideology and Supreme Court decision making, 34–36

Immigration and Nationality Act, 269, 279–284

Immigration policy, state versus federal power, 407–413, 501–502

Impeachment of federal judge, 101–107

Impeachment of president, 195, 218, 228, 239, 257

Imperial presidency, 52

Import taxes, 541, 569–572

Income tax, 93, 525–531

Independent counsel appointments, 213–219

India, 71

Individual mandate, 492–500, 561–568

In forma pauperis briefs, 16

Inherent powers, 178–180

Insurance company regulation, 640–642

Intelligible principle, 272

Intentionalism and originalism, 23–28

Interest groups and Court decision making, 41–43

Intergovernmental tax immunity, 533–540

Internet commerce, 578–579

Interstate commerce, 415

child labor laws and, 366, 431, 435–439

civil rights laws and, 467–471, 486–491

definitional problems, 417

doctrinal evolution, 485

gender-motivated violence law, 479–484

gun control laws, 473–480

individual mandate requirement and, 492–500

manufacturing and, 423–427

Marshall Court and, 417–422

minimum wage laws, 459–463

New Deal era litigation, 367–368

railroads and the Shreveport doctrine, 427–428

regulating morality, 431–434

solid waste disposal fees, 579–583

state burdens on, 506–520, 572–583. See also State commercial regulation power

state medical marijuana law and, 486–491

state regulation of ports, 503–506

stream of commerce doctrine, 428–431

Tenth Amendment interpretation, 366, 376, 422, 431, 466, 483

See also Commerce power; Foreign commerce

Interstate Commerce Act of 1887, 423, 427

Interstate Commerce Commission (ICC), 427–428

Investigative powers of Congress, 156–171

Iran-Contra affair, 218

Iran hostage crisis, 316–317

Iraq conflicts, 291

Iredell, James, 524, 735

Ireland, 71

Israel, Jerusalem and, 320

Israeli Constitution, 139

Italy, 15, 71, 329

Jackson, Andrew, 154, 356, 603

Jackson, Howell, 526, 735

Jackson, Robert Houghwout, 27, 308–310, 313–315, 464–466, 735

Japanese American internment, 39, 302, 303–310, 332

Japanese legal system, 15, 71

Jaworski, Leon, 239

Jay, John, 10, 735

Jay Treaty, 238

Jefferson, Thomas, 64

Bank of the United States and, 146, 148

election of, 185

executive privilege and, 238

judicial advisory opinions and, 91

Marbury case and, 61–62, 69, 79–80

on executive power, 198

Yazoo land controversy and, 594, 597

Jefferson, William, 144

Jerusalem, 320

Johnson, Andrew, 195, 228, 244, 296

Mississippi v. Johnson, 244–246

Johnson, Lyndon, 40, 195–196, 290

Johnson, Thomas, 735

Johnson, Timothy, 21

Johnson, William, 735

Jones, Paula, 252

Judicial activism, 36–37

Judicial appointments, 57–58. See also Presidential appointment powers

Judicial attitudes and Court decision making, 34–36

Judicial bias and due process, 674–680

Judicial power, Article III restraints, 86–87

jurisdiction, 87–90

justiciability, 90–107

separation of powers, 118–120

standing to sue, 107–118

See also Justiciability issues for Supreme Court lawsuits

Judicial powers

comity principle, 394

congressional exercise of, 278

council of revision proposal, 58

democratic checks, 83–84

federalism and in global perspective, 352

sentencing discretion, 83–84, 274–278

separation of powers and constraints, 119–120

war and, 291

See also Judicial review

Judicial restraint, 36–37, 81, 118

Judicial review, 55–56, 61

adequate and independent state grounds test, 77

cases citing Marbury v. Madison, 70

controversies, 79–81

Court’s use of, 86

criticism of Marbury, 79–80

democratic checks, 83–84

Eleventh Amendment and, 76–77

English precedent, 80

global perspective, 15, 70, 71

intent of the framers, 80–81

judicial self-restraint and, 81–83

judicial supremacy, 84–85

Marbury decision, 61–70

minority rights protection, 85

of state court decisions, 70–79

public opinion and Court decisions, 85

significance of, 86

Judicial role conceptions, 36–37

Judicial supremacy, 84–85

Judiciary Act of 1789, 57, 58–61, 70, 78, 80, 271

Judiciary Act of 1925, 92

Jurisdiction of the Supreme Court. See Appellate jurisdiction of Supreme Court; Supreme Court

Jury punitive damage awards, 669–674

Justiciability issues for Supreme Court lawsuits, 90–107

advisory opinions, 91–92

Article III cases and controversies clause, 90–91

collusive suits, 92–93

mootness, 93

political questions, 94–107

ripeness, 93–94

Kagan, Elena, 35, 497–499, 735

Kelly, Alfred, 122

Kelo, Susette, 712, 718

Kennedy, Anthony McLeod, 696, 735

commerce power opinion, 479, 500

delegation of lawmaking powers opinion, 278

intergovernmental tax immunity opinion, 538–540

judicial bias and due process opinion, 676–678

presidential foreign affairs power opinion, 321–325

privacy rights opinion, 681

public use opinion, 715–716

sovereign immunity opinion, 389–392

spending power opinion, 567–568

standing to sue opinion, 116–117

state commercial regulation power opinion, 518–519

state immigration law opinion, 409–413

war on terrorism detention opinion, 333–336, 338, 339

Kennedy, John F., 195

Kobylka, Joseph, 369

Korean conflict, 310–316

Korematsu, Fred, 304, 309

Kosaki, Liame, 85

Labor disputes, 204, 310–311

Lamar, Lucius Quintus Cincinnatus, 203–204, 423, 736

Landes, William, 21

Landmarks preservation laws, 689–693

Landon, 449

Law clerks, 16n

Lawyers Edition, 43

Legal Information Institute, 43, 45

Legalistic theory of judicial decision making, 23

Legal systems, global perspective, 15

Legislative reapportionment, 95–101, 123n

Legislative veto, 30, 55, 83, 120, 206, 278–284

Legislator privileges and immunities (speech or debate clause), 139–144

Lewinsky, Monica, 257

LexisNexis, 43

Libel suits, 143

Liberal ideology and Court decision making, 34–36

Lincoln, Abraham, 292, 295, 296, 363

Line-item veto, 112–113, 206–211, 270, 278

Literalism, 28–29

Livingston, Henry B., 736

Lotteries, 432–434

Lottery regulation, 609–611

Lucas, David, 697, 701

Lurton, Horace Harmon, 363, 364–366, 736

Mack, Richard, 382

Madison, James, 64

commerce power and, 416

Constitutional Convention and, 5

distrust of concentration of power, 51

executive departments proposal, 228

notes on constitutional debates, 27

on executive power, 198

on federal government powers, 344, 383–384

on inherent congressional powers, 178

on judicial advisory opinions, 91

on laws impairing contract obligations, 592–593

on private rights and justice, 587

on spending power, 522

on state and federal powers, 346, 431

on taxing/spending for the general welfare, 548

proposed congressional veto over state laws, 124

takings clause and, 684

The Federalist Papers and, 10

Magna Carta, 703

Mail-order sales taxation, 575–579

Mann Act, 431, 434

Manufacturing and interstate commerce, 423–427

Marbury, William, 63, 69

Marijuana, state medical use law, 484, 486–491

Marketplace Fairness Act of 2015, 579

Marriage issues, 19, 113–118, 205, 399, 681

Marshall, John, 63, 374–386, 493–497, 736

commerce power opinion, 419–422, 431

contract clause jurisprudence, 588, 593–603

delegation of legislative powers and, 271

executive immunity opinion, 249–250

federal supremacy opinion, 76–77, 353–355

import tax opinion, 569, 570

Marbury decision, 58, 63–70, 79–80, 87, 94, 119–120, 506

McCulloch decision, 150–154, 156, 493, 533–534, 543

national supremacy and, 351–355

on enumerated congressional powers, 145

on presidential pardon power, 256

single opinion precedent, 524n

sovereign immunity opinion, 388

state commercial regulation power opinion, 501

state taxation power decision, 30

takings clause opinion, 684

Taney and, 356

tax power and power to destroy statement, 354, 533, 537, 540, 543

Marshall, Thomas R., 85

Marshall, Thurgood, 472, 736

contract clause opinion, 619, 622–623

criticism of originalism, 27

NAACP counsel, 42

new judicial federalism, 394–395

on the Constitution, 6

speech or debate clause opinion, 142–143

takings clause opinion, 696

Martial law, habeas corpus suspension, 295–301

Martin, Luther, 147, 154, 594

Matthews, Stanley, 639, 736

Maximum working hours laws, 642–654

McCarthy, Joseph R., 161, 162

McCormack, John, 196

McCulloch, James, 147, 154

McHenry, James, 124

McKenna, Joseph, 654, 736

McKinley, John, 736

McLean, John, 736

McReynolds, James Clark, 232–233, 440, 441, 456–457, 458, 556, 658, 661–662, 736

Meatpacking industry, 428–431

Medicaid expansion, 387, 561–562, 564–568

Medical marijuana law, 484, 486–491

Meese, Edwin, 27

Mere designation, 197–198, 205, 316

Migratory bird treaty, 399–401

Military commissions, 339

Military powers. See War powers

Military tribunals, 301–302

Miller, Samuel Freeman, 201–203, 295, 628–631, 632, 633, 736

Milligan, Lambdin P., 296, 301

Minimum wage laws, 349, 367, 368, 369–374, 459–463, 589, 662–667

Minority representation, 123

Minton, Sherman, 736

Missouri Compromise, 357, 358, 361

Monson, Diane, 486

Montesquieu, Charles de, 50

Moody, William Henry, 736

Moore, Alfred, 736

Mootness and nonjusticiability, 93

Morality regulation

commerce power and, 431–434

contract clause jurisprudence, 609–611

See also Police power

Mortgage relief, 612–616

Muller, Curt, 648

Murphy, Walter F., 54, 170

Murphy, William Francis, 306–308, 736

Myanmar (Burma) economic sanctions, 401–407

National Association for the Advancement of Colored People (NAACP), 42, 170

National Industrial Recovery Act (NIRA) of 1914, 272

National Industrial Recovery Act (NIRA) of 1933, 442–448

National Labor Relations Act of 1935, 453–458

National Organization for Women (NOW), 484

National security. See War powers

National Security Act of 1947, 197

Nation-state relations. See Federalism; State and local government powers

Necessary and proper clause, 124, 145–156, 346, 349, 355, 499

Negative commerce clause, 506

Nelson, Samuel, 294–295, 736

New Deal, 367

agricultural production limits, 463–466

decline of economic substantive due process, 658–667

delegation of lawmaking powers issues, 272–274

early Court challenges, 439–449

federal supremacy issues, 367–368

interstate commerce regulation and, 427

legislation summary, 441

minimum wage laws, 459–463

public opinion and Court decisions, 39

Roosevelt’s Court-packing scheme, 92, 367, 448–452, 458

Social Security Act of 1935, 553–557

taxing/spending for the general welfare jurisprudence, 548–557

New Jersey Plan, 6t, 183

Newmyer, R. Kent, 357

Nineteenth Amendment, 731

Ninth Amendment, 729

Nixon, Richard

executive immunity claim, 247–251

executive privilege claim, 238–243

Ford’s pardon of, 260–263

impeachment, 195, 228

judicial appointments, 368, 394, 616

popular vote in 1960, 186n

state-federal relations and, 368

Supreme Court relationship, 40

Nixon, Walter L., Jr., 102, 107

Nondelegation doctrine, 271

Norpoth, Helmut, 39

Norway, 71

Obama, Barack, 407, 491

executive agreements, 267

executive privilege and, 238

medical marijuana prosecution policy, 491

recess appointments, 219, 220

signing statements, 211–212

use of pardon power, 263

war on terrorism detention policy, 340

“Obamacare.” See Patient Protection and Affordable Care Act

Obscenity, 29

O’Connor, Sandra Day, 736–737

commerce power opinion, 489–490

intergovernmental tax immunity opinion, 537

legislative experience, 125

line item veto opinion, 210

new judicial federalism opinion, 396–397

public use opinion, 709–711, 716–717

punitive damages opinion, 672

state commercial regulation power opinion, 519–520

states’ rights opinions, 373–374, 375–379

states’ rights versus federal spending authority opinion, 557, 559–560

term limits opinion, 137–138

war on terrorism detention opinion, 333–336, 338

Ogden, Aaron, 417, 418

Oklahoma, admission to the U.S., 364

Olney, Richard, 424

Olson, Theodore, 213, 214

One person one vote principle, 123

Optical business regulation, 667–669

Oral arguments, 20–21, 45

Originalism, 23–28, 80–81

Original jurisdiction, 12, 60, 87

Original package doctrine, 569

Oxford Companion to the Supreme Court of the United States, 45

Oyez Project, 44

Pardon power, 90, 256–263

Passport regulation power, 267, 319–329

Paterson, William, 524–525, 737

Patient Protection and Affordable Care Act (“Obamacare”), 387, 490

amicus briefs, 42

Medicaid expansion, 387, 561–562, 564–568

oral arguments, 20

Sebelius, 21, 491–500, 561–568

Peckham, Rufus, 640–642, 644–647, 737

Pension benefits and contract law, 620–623

Pentagon Papers, 140–143

Per curiam opinion, 188n

Perry, Kris, 113

Persian Gulf conflict, 291

Personal property appropriation, 703–705

Philippines, 71

Pinckney, Charles, 377

Pinkney, William, 147

Pitney, Mahlon, 737

Pocket veto, 206

Police power, 635

contract clause jurisprudence, 609–611

federal commerce power and, 431–439, 466–467

insurance company regulation, 640–642

maximum working hours laws, 642–654

minimum wage laws, 654–658, 662–667

state burdens on interstate commerce, 506–520

state commerce power and, 501–502. See also State commercial regulation power

state lottery regulation, 609–611

takings clause jurisprudence, 697–701

See also State commercial regulation power

Political factors

Supreme Court case selection, 17

Supreme Court decision making, 23, 40–41

Political parties, 185

Political questions and nonjusticiability, 94–107, 129

Polls of other jurisdictions, 25t, 32–33

Port Authority of New York, 617

Port regulation, state versus federal powers, 503–506

Port tax or user fee, 531–533

Portugal, 15, 71

Posner, Richard, 21, 23

Powell, Adam Clayton, Jr., 127–132, 248–250, 372–373

Powell, Lewis F., Jr., 92, 737

Pragmatic analysis, 25t, 31–32

Preference-based Court decision making, 34–36

Presentment clause, 206, 208

Presidency

Constitutional Convention context, 183–184

global perspective, 185

influence on Court decision making, 40–41

powers. See Presidential powers

qualifications, 184

removal from office (impeachment), 195, 218, 228, 239, 257

succession, 195–196, 197

tenure, 51, 195

two presidencies, 206

See also Article II

Presidential appointment powers, 212

ambassadors and foreign ministers, 263

Article II provisions, 212

judicial appointments, 57–58

principal versus inferior officers, 212–219

recess appointments, 212, 219–228

special prosecutors or independent counsels, 213–219

Presidential powers

amnesties and pardons, 90

Article II provisions, 7, 11, 51, 183, 196–198, 214, 217. See also Article II

congressional delegation of lawmaking powers, 272–274

congressional exercise of, 278–289. See also Legislative veto

congressional limitations, 204–205

enforcement obligations, 205–206

executive immunity, 243–256

executive privilege, 238–243

foreign affairs, 179, 263–267, 316–329

inherent powers, 178–179

In rea Neagle (1890), 199–204

judicial appointments, 57–58

mere designation view, 197–198, 205, 316

military and war powers, 263, 290. See also War powers

pardon, 90, 256–263

removal of administrative officers, 228–237, 289

separation of powers system, 51–52. See also Separation of powers

signing statements, 54, 211–212

Steel Seizure Case (1952), 204–205

take care clause, 198, 205, 211, 316

theories of executive power, 197–198

two presidencies, 206

veto, 206–211. See also Veto power

war against terrorism and, 330–340

See also Presidential appointment powers

Presidential selection system, 51, 184–186

Bush v. Gore (2000), 40, 79, 106, 186–195

Electoral College, 51, 184, 186

Presidential signing statements, 54, 211–212, 320

Price control, 658–662

Pritchett, C. Herman, 27, 34, 366

Privacy rights, 627

birth control case (Griswold), 38

substantive due process interpretation, 680–681

textualist interpretations, 28

Private property rights, 587–589, 683–685

Fourteenth Amendment due process protections, 685

national emergencies and seizures, 310–316

personal property appropriation, 702–705

See also Takings clause

Procedural due process, 625

Prostitution, 431

Proxmire, William, 143, 247

Pryor, William, 219

Public access requirements, 694–696

Public opinion and Court decision making, 38–40, 85

Public use, 705–719

land redistribution, 708–711

urban renewal, 706–708, 712–719

Punitive damages, 669–674

Qualifications for members of Congress, 24

Qualifications for presidential office, 184

Racial discrimination, interstate commerce and, 467–470

Radioactive waste disposal, 374–380, 473

Raich, Angel, 486

Railroad Retirement Act of 1934, 442–443

Railroads and interstate commerce regulation, 427–428

Ratio decidendi, 31

Rational basis test, 667

Reagan, Ronald, 83, 197, 211, 218, 374, 472

Realistic theory of judging, 23. See also Supreme Court decision making, realistic approaches

Reapportionment issues, 95–101, 123n

Reasonableness standard, 638, 639, 642, 649, 654

Recess appointments, 212, 219–228

Reconstruction Acts of 1867, 244–246

Reed, Stanley F., 737

Regulatory enforcement, 205–206

Rehnquist, William H., 374–386, 737

commerce power opinions, 474–477, 480–482, 489–490

ideology and decision making, 34–35

line item veto opinion, 208

meaning of the words approach, 26

on Quirin, 302

on state sovereign immunity, 77

political question opinions, 101, 103–105

presidential appointments opinion, 213–214, 215–217

presidential election controversy opinion, 190–191

presidential foreign affairs power opinion, 318–319

punitive damages opinion, 673–674

sovereign immunity opinion, 388–389, 393

standing to sue opinion, 112

state commercial regulation power opinion, 519–520

state rights opinion, 368–369

states’ rights opinion, 373–374

states’ rights versus federal spending authority opinion, 557, 558–559

state taxation power opinion, 579, 582

takings clause opinions, 692–693

war on terrorism detention opinion, 333–336, 338

Rehnquist Court

commerce power jurisprudence, 472–491

dual federalism approach, 374–386

precedents overruled, 32t

Religious Freedom Restoration Act of 1993 (RFRA), 70, 84, 176–177, 278

Representation and the Constitution, 122–124

Retirement benefits taxation, 537–540

Ripeness and justiciability, 93–94

Roberts, Brigham H., 127

Roberts, John G., Jr., 737

“advising” the Senate, 92

commerce power opinion, 493–497, 500

federalism jurisprudence, 387

Hamdan case and, 89

health care reform decision (Sebelius), 21, 22, 38, 155, 562–566

ideology and decision making, 34–36

judicial bias and due process opinion, 678

necessary and proper clause and, 155

political question opinion, 106–107

presidential foreign affairs power opinion, 327

standing to sue opinion, 114–116

takings clause opinion, 703–705

Roberts, Owen J., 88–89, 439, 457, 548, 550–552, 660–661, 662, 737

Robinson, Joseph, 458

Rockefeller, Nelson, 196

Rolleston, Moreton, Jr., 467, 470

Roosevelt, Franklin, 39, 40, 195, 367, 439

agricultural market regulation, 548

arms sale embargo, 178–179, 264

Court-packing scheme, 92, 367, 448–452, 458

FTC commissioner removal, 234–235

judicial advisory opinions and, 91

judicial appointments, 439

wartime policies affecting civil rights, 301–310

See also New Deal

Roosevelt, Theodore, 198

Rule 10, 17

Rule of Four, 16

Russian legal system, 15, 71, 351, 352

Rutledge, John, 737

Rutledge, Wiley Blount, 737

Sales taxes and interstate commerce, 575–579

Same-sex marriage, 113–118, 399, 681

Sanford, Edward Terry, 737

Scalia, Antonin, 737

appellate jurisdiction removal opinion, 89

commerce power opinion, 489, 500

conservative ideology, 36

delegation of lawmaking powers opinion, 276–277

federal preemption of state law opinion, 406

judicial bias and due process opinion, 678–679

line item veto opinion, 210

on foreign jurisprudence, 33

on implied congressional powers, 155

on originalism, 26

presidential appointments opinion, 214, 217–218, 219

presidential election controversy opinion, 190–191

presidential foreign affairs power opinion, 327–328

presidential signing statements opinion, 212

public use opinion, 716–717

punitive damages opinion, 672–673, 681

recess appointments opinion, 225–227

spending power opinion, 567–568

state immigration law opinion, 413

states’ rights opinion, 382–385

takings clause opinions, 694–696, 698–701

taxpayer standing to sue opinion, 112

term limits opinion, 137–138

war on terrorism detention opinion, 337–338, 340

Scott, Dred, 357, 358

SCOTUSblog, 45

Search and seizure rights, 395–399

Sebelius, Kathleen, 492, 561

Second Amendment, 728

Sedition Act of 1798, 180

Segal, Jeffrey A., 27, 29, 39

Senate

confirmation of presidential appointments (“advice and consent”), 57–58

confirmation of presidential removals, 228

election system, 51, 122

membership qualifications, 125

presidential impeachment process, 195

structure and composition, 122–123

treaty confirmation power, 266

See also Congress

Sentencing discretion, 83–84, 274–278

Separation of powers, 49, 269

congressional exercise of executive powers, 278–289

congressional exercise of judicial powers, 278

constitutional provisions, 7–9, 50–52

constraints on judicial power, 118–120. See also Judicial power, Article III restraints

contemporary thinking, 52–54

Court decisions, 1970s-2000s, 285

delegation of legislative power, 270–278

foreign affairs. See Foreign policy

formalist and functionalist approaches, 52, 270, 277

limitations on executive power, 204–205

military and war powers, 289–340. See also War powers

origins of system of, 49–50

structural analysis, 29–30

war against terrorism, 330–340

See also Congressional powers; Judicial powers; Presidential powers

Separation of powers games, 52–54

Seventeenth Amendment, 51, 122, 730

Seventh Amendment, 729

Shays’s Rebellion, 5, 416

Sherman Anti-Trust Act of 1890, 415, 423, 428

Shiras, George, Jr., 737

Shreveport doctrine, 428

Signing statements, 54, 211–212, 320

Sixteenth Amendment, 93, 530–531, 730

Sixth Amendment, 728–729

Slavery

constitutional amendments regarding, 363, 629. See also Fifteenth Amendment; Fourteenth Amendment; Thirteenth Amendment

Scott v. Sandford, 86, 357–363

three-fifths plan, 357, 523

Social Darwinism, 633, 649

Social Security Act of 1935, 553–557

Solicitor general (SG), 17–18, 40–41

Solid waste disposal fees, 579–583

Sotomayor, Sonia, 737

commerce power opinion, 497–499

liberal label, 35

standing to sue opinion, 116–117

takings clause opinion, 705

Souter, David Hackett, 105–106, 207, 737

commerce power opinion, 482–483

federal preemption of state law opinion, 401–406

Kelo aftermath, 718

presidential election controversy opinion, 191–194

punitive damages opinion, 672

sovereign immunity opinion, 392–393

states’ rights opinions, 386

war on terrorism detention opinion, 336–337

The Southern Manifesto, 79

Sovereign immunity, 76–77, 78, 79, 387–394

Spaeth, Harold J., 27, 29, 45

Spain, 15, 71

Special prosecutor appointments, 213–219, 239

Speech or debate clause, 139–144

Spencer, Herbert, 633

Spending power, 522

Affordable Care Act Medicaid expansion and, 561, 564–568

agricultural market regulation, 548–553

alcohol consumption regulation, 557–560

federal-state fiscal tensions, 557–568

general welfare and, 548

unemployment programs, 553–557

See also Tax and spend power

Standing to sue in the Supreme Court, 107–118

government-based suits, 112–118

taxpayer suits, 108–111

Stanton, Edward M., 228

Stare decisis, 25t, 30–31

Starr, Kenneth, 218

State admission to the Union, 364–366

State and local government powers, 9

alcohol regulation, 517–520, 557–560

allocating government power, 343–347

commerce, 501–520. See also Commerce power; Interstate commerce; State commercial regulation power

contract clause applications, 592. See also Contract clause

cooperative federalism (1940s to 1980s), 368–374. See also Cooperative federalism

domestic policy preemption decisions, 408t

dual federalism and the Rehnquist Court, 374–386

dual or cooperative approaches, 349–350. See also Cooperative federalism; Dual federalism

enclave approach, 346, 351, 366–367, 368, 369

environmental health regulation, 514–517

federal gun control law enforcement and, 381–386

federal regulatory policies and, 374–380

federal-state fiscal tensions, 557–568

federal supremacy clause, 346

Fifteenth Amendment and, 363

foreign affairs and, 399–407

immigration policy, 407–413, 501–502

laissez-faire Court decisions, 363, 367

land redistribution, 708–711

Marshall Court and, 351–355

medical marijuana laws, 486–491

minimum wage laws, 349, 367, 368, 369–374

New Deal era, 367–368

new judicial federalism, 394–399

police powers, 431

post-Civil War era, 363–367

proposed congressional veto over state laws, 124

takings clause applications, 684–685, 689–701

Taney Court and, 355–363, 367

Tenth Amendment and powers reserved to the states, 346–347, 350–351. See also Tenth Amendment

the Constitution as contract, 344–345

See also Federalism; Police power; State commercial regulation power; State sovereign immunity

State and municipal bonds, 535–537

State bankruptcy laws, 592, 598

State commercial regulation power

burdens on interstate commerce, 506–520

commodity price controls, 658–662

doctrine of selected exclusiveness, 506

dormant commerce clause, 506, 510

early decisions, 501–506

early substantive due process interpretations, 627–642. See also Economic substantive due process

immigration policy, 501–502

insurance companies, 640–642

lotteries, 609–611

maximum working hours laws, 642–654

minimum wage laws, 654–658, 662–667

optical business regulation, 667–669

police powers, 501–502

port regulation, 503–506

rational basis test, 667

reasonableness standard, 638, 639, 642, 649, 654

See also Commerce power; Police power; State and local government powers

State constitutions, takings clause type provisions, 684

State court system, 15

federal court supervision mechanisms, 78

federal judges and comity principle, 394

federal judicial review of decisions, 70–79

new judicial federalism, 394–399

State of the judiciary report, 92

State sovereign immunity, 76–77, 78, 79, 387–394

State taxation power, 9, 521

Article I provisions, 569

burdens on interstate commerce, 572–583

federal constitutional restraints, 522

federal restrictions, 568–583

foreign commerce, 569–572

intergovernmental tax immunity, 533–540

protecting intrastate interests, 579–583

retirement benefits, 537–540

sales taxes and use taxes, 575–579

solid waste disposal fees, 579–583

taxing federal entities, 30, 147, 351–355, 533–534

State unemployment compensation programs, 553–557

Steel Seizure Case (1952), 204–205

Stevens, John Paul, 106, 737

appellate jurisdiction removal opinion, 89

commerce power opinion, 487–489, 506

executive immunity opinion, 253–255

intergovernmental tax immunity opinion, 540

line item veto opinion, 209–210

new judicial federalism opinion, 397–398

presidential election controversy opinion, 191–194

public use opinion, 714–715, 718

punitive damages opinion, 670–672

sovereign immunity opinion, 392–393

state commercial regulation power opinion, 516–517, 519–520

states’ rights opinions, 379–380, 385–386

takings clause opinion, 692–693

term limits opinion, 133–137

war on terrorism detention opinion, 337–338

Stewardship theory, 198

Stewart, Potter, 129, 142, 170, 219, 368, 471–472, 621–622, 737

Stier, Sandy, 113

Stockyards, 428–431

Stone, Harlan F., 30, 368, 460–463, 466, 507, 508–510, 552–553, 737–738

Story, Joseph, 72–76, 147, 178, 344, 356, 594, 602–603, 607–608, 738

Strategic approaches for Court decision making, 37–38

Stream of commerce doctrine, 428–431

Strikes, 204, 310–311

Strong, William, 738

Structural analysis, 25t, 29–30

Subpoena power, 156

Substantive due process, 588, 625–627

jury awards for punitive damages, 669–674

privacy application, 680–681

See also Economic substantive due process

Succession Act of 1947, 197

Sumner, Charles, 363

Supremacy clause, 124, 346, 347, 349, 351, 355, 399

Supreme Court

Article III constraints on power, 86–120. See also Judicial power, Article III restraints

case reporting system, 43, 44t

jurisdiction, 12, 58, 59–61, 87–90, 119. See also Appellate jurisdiction of Supreme Court

locating reference material, 43–45

state of the judiciary report, 92

Supreme Court case processing, 11–12, 13f

appellate jurisdiction, 12–14

case selection considerations, 16–18

case selection process, 14–16

opinion assignment and circulation, 22–23

oral arguments, 20–21

original jurisdiction, 12

private conference, 21–22

written arguments (briefs), 18–20

Supreme Court decision making, legalistic approaches, 23, 25t

originalism, 23–28

polls of other jurisdictions, 32–33

pragmatism, 31–32

stare decisis analysis, 30–31

structural analysis, 29–30

textualism, 28–29

Supreme Court decision making, realistic approaches, 23, 33–34

bargaining, 38

ideological preferences, 34–37

interest groups, 41–43

judicial role conceptions, 36–37

partisan politics, 40–41

presidential influence, 40–41

public opinion, 38–40, 85

strategic, 37–38

vote shifts, 38

Supreme Court justices, 733–739

case selection decisions, 16

ideology and case selection, 18

ideology and decision making, 34–36

judicial selection system, 52

law clerks, 16n

legislative experience, 125, 126t

number of, 58

presidential appointments, 57–58. See also Presidential appointment powers

Roosevelt’s Court-packing scheme, 92, 367, 448–452, 458

Supreme Court Reporter, 43

Sutherland, George, 108, 179, 180, 235–237, 264–266, 440, 441, 556, 612, 615–616, 656, 658, 666–667, 738

Swayne, Noah, 295, 609, 738

Switzerland, 71

Synar, Mike, 286

Taft, William Howard, 229, 738

delegation of lawmaking powers opinion, 272

import duties opinion, 541

interstate commerce opinion, 429–431

Judiciary Act of 1925 and, 92

minimum wage law opinion, 656–657

on executive power, 198

presidential pardon power opinion, 259–260

presidential power of removal opinion, 230–232

regulatory taxation opinion, 546–547

Taft-Hartley Act of 1947, 204, 311

Take care clause, 198, 205, 211, 316

Takings clause, 588–589, 683–685

airspace above property and, 686–688

cases determining what a taking is, 686–705

environmental regulations and, 697–701

just compensation issues, 685

landmarks preservation case, 689–693

land-use permit requirements, 694–696

“per se” takings, 697, 702, 703

personal property appropriation, 702–705

public use, 705–719

state actions and, 684–685

state constitutions and, 684

state land redistribution, 708–711

urban renewal, 706–708, 712–719

Taney, Roger B., 86, 92, 94–95, 356–363, 501, 571–572, 603–608, 627, 635, 738

Taney Court

contract clause jurisprudence, 603–608

states’ rights opinions, 355–363, 367

Tariff duties, 541

Tax and spend power, 9, 521

Affordable Care Act (Sebelius), 492, 561–568

agricultural market regulation, 548–553

Articles of Confederation and, 5

constitutional provisions, 124, 521–522

direct taxes, 522–525

export tax, 531–533

federal income tax, 93, 525–531

geographical and apportionment uniformity, 522–525

import taxes, 541, 569–572

intergovernmental tax immunity, 533–540

New Deal era jurisprudence, 548–557

regulatory power, 540–548

restrictions on state revenue powers, 568–583. See also State taxation power

Sixteenth Amendment, 530–531

taxing/spending for the general welfare, 548–568

unemployment programs, 553–557

See also Spending power; State taxation power

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), 535–537

Taxpayer standing to sue, 108–111

Teapot Dome scandal, 157

Tennessee Valley Authority (TVA), 440, 515, 706

Tenth Amendment, 178, 350–351, 729

Darby interpretation, 367–368

dual federalism approach and, 349, 351, 366–367

enclave approach, 346, 351, 366–367, 368, 369

federal regulatory policies and, 375–377, 380

interstate commerce regulation and, 366, 376, 422, 431, 466, 483

laissez-faire Court decisions, 363

McCulloch and, 352, 355

Taney’s interpretation, 357

term limits jurisprudence, 137–138

Tenure of Office Act of 1867, 228–229

Term limits

congressional, 24, 25t, 132–139

presidential, 51, 195

Terrorism, war against, 291, 329

Terry, David S., 199, 200

Terry, Sarah Althea Hill, 199, 200

Textualism, 25t, 28–29

Third Amendment, 728

Thirteenth Amendment, 363, 628–629, 729

Thomas, Clarence, 472, 696, 738

appellate jurisdiction removal opinion, 89

commerce power opinions, 479, 489–491, 500

federal preemption of state law opinion, 406

on implied congressional powers, 155

originalism approach, 27

presidential election controversy opinion, 190–191

presidential foreign affairs power opinion, 325–327

public use opinion, 716–717

punitive damages opinion, 672–673

spending power opinion, 567–568

standing to sue opinion, 116–117

state commercial regulation power opinion, 519–520

state immigration law opinion, 413

states’ rights opinions, 385

term limits opinion, 137–138

war on terrorism detention opinion, 338

Thompson, Smith, 738

Three-fifths plan, 357, 523

Todd, Thomas, 738

Train Limit Law of 1912, 507–511

Treaty making power, 263, 266, 399–401

Tribe, Laurence H., 394

Trimble, Robert, 738

Truman, Harry, 156, 204, 211, 266

Tushnet, Mark, 84

Twelfth Amendment, 184, 186, 729

Twentieth Amendment, 731

Twenty-first Amendment, 517–520, 557, 731

Twenty-second Amendment, 195, 731

Twenty-third amendment, 731–732

Twenty-fourth Amendment, 732

Twenty-fifth Amendment, 196, 732

Twenty-sixth Amendment, 732

Twenty-seventh Amendment, 732

Tyler, John, 94

Unemployment compensation programs, 553–557

Unitary executive theory, 197n, 228

Urban renewal projects, 706–708, 712–719

Urofsky, Melvin I., 6, 146

U.S. Constitution, 3, 122, 722–727

allocation of powers, 344–345

amendments, 728–732

as contract, 344–345, 347

framers of, 6. See also Constitutional Convention of 1787

historical background, 3–7. See also Articles of Confederation; Constitutional Convention of 1787

longevity of, 7

ratification, 9–10, 728

underlying principles of, 7–10. See also Federalism; Separation of powers

See also specific articles and amendments

Use taxes, 575–579

U.S. Law Week, 43

U.S. Reports, 43

U.S. Sentencing Commission, 274–278

U.S. solicitor general (SG), 17–18, 40–41

U.S. Supreme Court Database, 45

Van Buren, Martin, 603n

Van Devanter, Willis, 92, 158–160, 439, 440, 441, 458, 658, 738

Vested rights, 587, 589

Vesting clauses, 51, 197, 214

Veto power, 206–211, 269

council of revision proposal, 58

legislative veto, 30, 55, 83, 120, 206, 278–284

line-item veto, 112–113, 206–211, 270, 278

pocket veto, 206

proposed congressional veto over state laws, 124

Vice presidency

impeachment, 195

presidential succession, 195–196, 197

selection system, 184–185, 186

Vinson, Frederick, 310, 315–316, 738

Violence Against Women Act of 1994, 479–484

Virginia Plan, 5, 6t, 57, 122, 123, 124

Virtual representation, 122

Vose, Clement E., 658

Voting Rights Act of 1965, 171–178

Waite, Morrison Remick, 610–611, 635–638, 667, 669, 738

Wallace, George, 79

Walsh, Lawrence E., 218

War against terrorism, 291, 330–340

associated cases, 331t

citizen detention as enemy combatant, 332–339

global perspective, 329

Obama’s policy, 340

War Claims Commission, 237

War powers, 290–291

civil liberties cases, 295–310

Civil War, 291–301

Congress and, 269, 279, 290

constitutional provisions, 263, 269, 290

habeas corpus suspension, 295–302

judicial role, 291

Korean conflict, 310–316

military tribunals, 301–302

property seizure case, 310–316

war against terrorism, 330–340

World War II, 301–310

War Powers Resolution of 1973, 279, 291

Warren, Earl, 394, 616, 738

Brown decision, 22

congressional investigation power opinion, 164–166

congressional membership exclusion opinion, 128–131

ideology and decision making, 34–35

on inherent congressional powers, 178

on justiciability, 90–91

on oral arguments, 20

taxpayer standing to sue opinion, 109–110

voting rights opinion, 173–175, 176

Warren Court (1953–1969)

ideology and case selection, 18

precedents overruled, 32t

Washington, Bushrod, 738

Washington, George, 185, 195, 238

Watergate affair, 239

Wayne, James, 295, 738

Webb-Kenyon Act of 1913, 517–520

Webster, Daniel, 147, 418, 598–599, 603, 604–607

Weddington, Sarah, 20

Weingast, Barry, 52

Westlaw, 43

Wheelock, Eleazar, 598–599

Wheelock, John, 598–599

White, Byron R., 738

contract clause opinion, 619, 622–623

exclusionary rule opinion, 32

executive immunity opinion, 249–250

Roe v. Wade oral arguments, 20

separation of powers opinions, 30, 55, 279, 283, 288

speech or debate clause opinion, 141–142

states’ rights opinion, 379–380

structural analysis approach, 30

White, Edward Douglass, 542–544, 738

Whittaker, Charles Evans, 170, 739

Wilson, James, 524n, 525n, 739

Wilson, Woodrow, 654

Wirt, William, 418

Woll, Peter, 639

Woodbury, Levi, 739

Woods, William B., 739

Woodward, William, 598–599

World War II, war powers litigation, 301–310

Writ of certiorari, 14

Writs of Assistance Case (England) (1761), 80

Writs of certification, 12

Writs of mandamus, 60

Marbury case, 63–64

Written arguments (briefs), 18–20

Yazoo River land controversy, 593–597

Yoo, John, 330n