The impact of the commerce clause on business activity in the United States

The impact of the commerce clause on business activity in the United States

The impact of the commerce clause on business activity in the United States is well documented through a series of court decisions and the role of Congress in its evolution. The clause provides the foundational basis on which the federal government controls interstate business and economic activity. Over the last century, the United States Supreme Court has interpreted the word “interstate commerce” variedly. Some parts are basically intrastate or local, but the federal government is still largely involved (Anderson, 2018). The Clause outlines the role of the US Congress in regulating commerce and foreign trade amongst America’s states. In the clause, Congress is given the outright power to legislate on interstate commerce and foreign trade (Anderson, 2018).

In Clause 3, Section 8, and the first article of the commerce clause, Congress is given the power to regulate commerce amongst several states and foreign countries, including what the law describes as Indian tribes (“Commerce Clause” Legal Information Institute, 2020). A huge chunk of federal legislation affecting economic activity across the country is affected and founded in the commerce clause. With the Congress’s expansive role in explaining and justifying how it exercises its legislative power and mandate to control commercial activities of the people and states, there is always some form of tension between the federal government and the states.

From a historical standpoint, the clause has been interpreted and evaluated from a grant of congressional power and authority, with the states having incredibly little or zero influence or regulatory power to address its key elements. The states play a negligible role in regulating or controlling business conducted in between them, with Congress boasting a huge play, an issue that remains in dispute to date.

The dormant commerce clause describes individual states being prohibited on discriminatory issues to interstate commerce (Knoll & Mason, 2017). The dormant clause prevents individual states’ protectionist policies that may favor individuals or state businesses at the expense of people from outside the said state conducting business within the state being evaluated. A good example is West Lynn Creamery Inc. v Healy in which the Supreme Court was involved. The court removed a Massachusetts state tax code on milk products since it was deemed by the court that such taxation impeded economic activity between the states because it discriminates against individuals who had come from outside of Massachusetts (“Commerce Clause” Legal Information Institute, 2020). The Court argued that the taxation impeded interstate commercial activity by discriminating against persons or individuals coming out of Massachusetts (“Commerce Clause” Legal Information Institute, 2020).

Evolution of Commerce Clause and Effect of Commerce Clause on Business Activity

The commerce clause’s evolution has been debated because of unending controversy, especially when looking at the balance between the role of the state and federal governments. The clause’s interpretation is not clear because the word “commerce” is not expressly stated and defined in the constitution. There is a clear dividing line between federal and state power and regulatory authority when discussing interstate commerce. There are some high profile and important cases that have helped shape the clause’s evolution and understanding.

The first case is that of Gibbons v. Ogden of 1824. This case is important because it shaped the understanding of intrastate commercial activities from the wider interstate commerce reach. The Supreme Court, in this case, determined that intrastate commercial activity can still be regulated under the provisions of interstate commerce under the commerce clause. However, the Court specified that the economic or business activity being considered here must be a part of the broader scheme of interstate business. Therefore, the clause can be used in regulating business activities taking place within the state, provided that the business meets the conditions of interstate commerce in the broader scheme of things.

In Swift and Company v. the United States, the Supreme Court authorized Congress to regulate local commercial activities, provided that they involved the movement of goods and services falling within the interstate commerce framework or purview. Following this decision, the court adopted a rather narrower view of the clause between 1905 and 1937. However, NLRB v. Jones created the platform on which the court started considering broader grounds upon which the clause would shape the control and regulation of business activity at the state level. According to this case and the Court’s determination, an activity would be considered commercial if it has a massive economic effect on the interstate business.

The case of Wickard Filburn demonstrated how the court was willing to give a broader and more comprehensive interpretation of the clause. In this case, the court determined that it was important for an integrated and dynamic national economy to be developed, and therefore a broader interpretation of the clause was adopted. In adopting the wider interpretation and application, the court held that even small scale and local commercial activities impact the larger framework of interstate commerce and the national economy (“Commerce Clause” Legal Information Institute, 2020).

In the United States v. Lopez, a leaner and conservative interpretation of the commerce clause was adopted. In this case, the Court tried to minimize Congress’s wide legislative mandate in regulating interstate commerce. In a case where the defendant was charged carrying a weapon to school, violating the Gun-Free School Zones Act of 1990, it was argued by the defense team that the federal government lacked the authority to regulate firearms in local school districts. While the government held that the violation was directly related to the commerce clause, the court differed. Instead, it argued that the case was beyond the confines of commerce and that Congress could only regulate actions that significantly affect interstate commerce and its instrumentalities (Killenbeck, 2013).

Proverbs 21:15 talks about justice and how it affects different categories of people, the righteous and the evildoers. The verse holds that when justice is dispensed, the righteous are joyed, while the evildoers are terrified. It is directly applicable to the commerce clause; those who are doing good and following the law are not affected by the law’s implementation, while those who cut corners are terrified when the law takes its course.