Commerce Clause questions after Morrison: some observations on the new formalism and the new realism.

Publication: Stanford Law Review

Publication Date: 01-NOV-02

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INTRODUCTION

In 1994, when Solicitor General Drew Days, III stood before the Supreme Court to argue United States v. Lopez, (1) he could truthfully characterize as an "extraordinary step" the lower court's decision to invalidate a federal law as exceeding Congress's powers under the Commerce Clause. (2) Lopez was the first time in almost sixty years that the Court found a federal statute to have exceeded the Article I congressional power "[t]o regulate Commerce ... among the several States." (3) Almost seven years after Lopez, however, there is no longer anything extraordinary about Commerce Clause challenges to federal laws. Of the four Commerce Clause cases heard by the Court in the last three Terms, the federal government has won only one, Reno v. Condon. (4) In the other case confronting the constitutional issue head-on, United States v. Morrison, (5) the Supreme Court struck down the civil remedies provision of the Violence Against Women Act (VAWA) (6) as exceeding Commerce Clause powers. And in the remaining two cases, Jones v. United States, (7) and Solid Waste Agency v. United States Army Corps of Engineers, (8) the Court evaded the constitutional issue, striking down the challenged government actions on restrictive statutory readings that themselves showed the strength of Lopez's shadow effects.

Lopez was greeted with some curiosity in academic circles, (9) and its application in the lower courts has been, on the whole, unenthusiastic, (10) But between Morrison, Solid Waste, and Jones, it should be clear by now that some sort of real Commerce Clause scrutiny, however tenuous its arrival, (11) is here to stay. Given that, this Note aims to take stock of the Court's current Commerce Clause jurisprudence, to observe possible future directions, and to determine the consequences for judicial review and the law of federalism.

Part I starts with a compressed history of Commerce Clause jurisprudence, in order to introduce the concepts of formalist and realist approaches to Commerce Clause issues past and present. The Lopez and Morrison majority shows an interest in both approaches--setting forth and purporting to apply formal tests about the scope of permissible commerce activity, while simultaneously voicing an attachment to more practically conceived, realist principles. On the one hand, formal rules give Congress regulatory authority over "channels" of commerce, "instrumentalities" of commerce, and activities with "substantial commercial effects." On the other hand, Lopez and Morrison evince the desire to advance a federalist balance as a practical matter--not merely a formal one.

In contrast, however, to the formalism/realism dichotomy of pre-1937 decisions--where formalism was a means for the Court to restrict congressional power, and realism a means to expand it--the formal doctrines advanced by the Morrison majority give Congress broader power than would a realist approach. As Part II will show, the rules discussed approvingly in Morrison and Lopez do not, as a practical matter, very well serve the majority's apparent underlying motivation. More precisely, because the Court insists that the formal rules preserve its post-1937 Commerce Clause jurisprudence, (12) the rules remain broad enough to permit the federal government to exercise a range of power well beyond what we might guess the Court considers appropriate. Indeed, congressional power over channels and instrumentalities is so broad--and channels and instrumentalities are so omnipresent in daily life--that a skillful Congress could draft laws taking back substantial authority over precisely the sorts of topics that Lopez and Morrison imply should be left to the states. (13) Far from constituting an "epochal" change, (14) Lopez and Morrison impose technical requirements that would prove inconvenient, but not prohibitory, to ambitious lawmakers. Lopez and Morrison can be read, in other words, as an invitation to artful legislating.

If that is the case, what are we to make of the much-discussed Commerce Clause revival? Part III will propose that the Court has two options for policing federalism in the future. While it would certainly be possible for the Court to jettison its exclusive reliance on the formal commerce rules in order to enforce, as a practical matter, substantive federalist principles, this Note will argue that the Court should envision its role differently. The Court can perform its role adequately by imposing technical requirements alone. By putting some friction in the way of congressional overreaching, while not declaring itself the final arbiter of the federalist balance, the Court can force Congress to examine the federalist implications of its laws, and provide a little breathing room for the states--without making the mistake of imposing its own subjective policy choices as a final matter. This would avoid the mistake of the pre-1937 Court, serve democratic principles, and fit within the overall structure of the overlapping regimes of federalism and separation of powers. (15)

I. REALISM AND FORMALISM IN PAST AND PRESENT COMMERCE CASES

A. The Historical Rise of the Realism/Formalism Dichotomy in Commerce Clause Jurisprudence

Federal control over commerce is central to our constitutional scheme. The Articles of Confederation's inadequacy in dealing with commercial matters figured prominently both in the initial decision to call the Constitutional Convention and in the form the Constitution eventually took. (16) Space does not permit discussion of the Constitutional Convention's decision to enumerate Article I powers rather than grant (as Edmund Randolph had suggested) general power over matters "concern[ing] the common interests of the Union", (17) however, it is clear that the decision to enumerate federal powers reflected the delegates' concern to limit the reach of the newly-created federal government and preserve state authority. (18) Nevertheless, from the Court's first Commerce Clause case, Gibbons v. Ogden, (19) through most of the nineteenth century, Commerce Clause cases in the courts primarily concerned the Clause's negative implications "as the means for limiting state powers in their inroads upon national policy." (20) These dormant Commerce Clause cases were the origin of much of the formalist doctrine--distinguishing between "direct" and "indirect" effects, between commerce and manufacturing, or between "original packages" and repackaged goods--that would later prove troubling to Progressive efforts to regulate the economy. (21)

The appearance of Commerce Clause cases explicitly limiting federal power was a post-Civil War phenomenon, resulting from "powerful economic forces" (22)--the "developments in industrialization, transportation, and communication [that] produced national economic problems" and led to federal legislation like the Interstate Commerce Act of 1887 and the Sherman Anti-Trust Act of 1890. (23) And the Court's response to legislation tampering with the laissez-faire marketplace was often hostile--shaped by a narrow reading of the Commerce Clause (striking down federal regulation as beyond Congress's Article I powers) and by a broad reading of the Due Process Clause (striking down state regulation as an infringement of the Fourteenth Amendment). (24) At times, however, the Court found a basis for federal regulation even in areas that seemed, by the then-extant formal doctrine, reserved to the states. Many view the Court's jurisprudence in this period as teetering between two modes of analysis--realism and formalism. "Under the formal approach, the Court examined the statute and the regulated activity to determine whether certain objective criteria [were] satisfied.... In contrast, the realist approach attempted to determine the actual economic impact of the regulation." (25) In this period, the formalist approach is associated with a restrictive view of commerce authority; the realist approach is associated with more expansive authority. But faced with a dramatic political backlash to cases hindering the federal response to the Depression-era economic crisis, the Court reversed course (26) and adopted a permissive attitude towards congressional commerce powers that manifested neither formalism nor realism, but rather abdication. This permissiveness persisted, with relatively few exceptions, (27) from the 1937 case NLRB v. Jones & Laughlin Steel Corp. (28) until Lopez.

As discussed below, the current Court still flirts with both formalist and realist perspectives, but it is possible that the roles have now reversed--that the motivating principle behind Lopez and Morrison is the desire to limit federal authority (and protect state authority) as a practical, realist matter, while the Court's formal rules permit a significantly broader federal jurisdiction.

B. The Realist Approach Motivating Lopez and Morrison

Lopez and Morrison show an allegiance to variously stated, never-formalized federalist principles implying a realist approach to federalism. The importance of these principles is apparent from their placement and emphasis in the Lopez opinion: "We start with first principles. The Constitution creates a Federal Government of enumerated powers." (29) And, as Gibbons had long before recognized, "`[t]he enumeration presupposes something not enumerated.'" (30) This principle of limited powers is the overriding principle at work in Lopez and the cases that have followed it--a principle that floats above the formal rules of channels, instrumentalities, and effects, and describes, instead, the Court's federalist aspirations. The Court's realist approach to achieving these principles is evident in its insistence that the enumerated powers leave certain matters beyond congressional control entirely--a concept that "lies at the heart of" recent commerce cases. (31) Again and again in Lopez and Morrison, the Court shows itself unable to tolerate government arguments that would lead down a slippery slope to practical federal domination. (32)

But the premise behind Lopez and Morrison is not merely that there must be some limit to national power. Rather, the Lopez/Morrison Court seems to have some inchoate sense of a particular limit that is appropriate--one that preserves the "federal and state balance." (33) And the Court's conception of this balance includes very definite views about what areas are to be regulated primarily by the states--that is, areas where congressional ambitions must be restrained. The state power the Justices aim to preserve is what is generally (if vaguely) described as the "police power" (34)--that is, general regulatory power for health, safety, and morals. (35) But such a goal-oriented notion of the police power cannot in itself be sufficiently definite--the federal government, too, can presumably exercise its enumerated powers to pursue public health or public safety. Rather, the term "police power" in federalism cases defines a power that is the opposite of enumerated powers--a residual power not limited in itself, but subject only to external limits. (36) And the Court's concern is to make the states' police powers the primary conduct regulator of certain subjects.

How do the recent commerce cases give content to this police power? By listing subjects the power is thought to cover--"the suppression of violent crime and vindication of its victims," (37) or power over "marriage, divorce, and childrearing." (38) Lopez suggests that power over education is part of the police power as well. (39) The root of the divergence between this principle of protecting state police power and the rules the Court has chosen for the task arises because the Court has defined the police power by reference to traditional subjects of state authority (40)--whereas the formal rules we are told to apply discuss, instead, economic behavior, commerce, and interstate connections. The Court's definition of the police power is essentially historical. In the language of a past era's federalism cases, this is about exclusive state jurisdiction over "services ... which the States have traditionally afforded their citizens." (41) Preserving state control over the police power is designed to permit states to "experiment[] and exercis[e] their own judgment in [areas] to which States lay claim by right of history and expertise." (42)

What is realist about the use of this federalist principle in Morrison and Lopez? A Court that sees its role as maintaining the federal-state balance, or preserving substantial state control over certain subjects, is likely to scrutinize federal legislation for more than just each individual law's formal connections to commerce. Such a Court is likely to watch for incursions on the states in toto--to peek behind the curtains of congressional regulation to examine, as a practical matter, how much federal law as a whole intrudes into the states' roles as primary regulators of certain types of activity.

C. Formal Commerce Rules in Morrison and Lopez

At the same time, Lopez shows the Court's historical fondness for a formalist, rules-based Commerce Clause jurisprudence. In the 177 years since Gibbons, the Court has relied on a number of overlapping schemes of formal rules--many criticized by modern commentators as artificial. (43) In Gibbons, the rule was, at least in part, one of state-line crossing--that congressional power did not include the "exclusively internal commerce of a State." (44) Later Courts drew formal lines based on temporal distinctions. One line designated when commerce began--separating commerce from such precommercial productive activities as manufacturing, (45) agriculture, (46) mining, (47) and (more generally) employment. (48) Another line determined when "interstate commerce ... ceased" and transactions became local. (49) In applying these temporal rules, the Court also developed a rule for cases of temporary in-state stops as part of and "incident to" the "current of commerce among the States"--hence the development of a subrule locating the entire "stream" of commerce, including its intrastate elements, within the commerce power. (50)

Other rules concentrated on the nature of the goods regulated, sometimes as a proxy for the goals of congressional regulation. For instance, Hammer v. Dagenhart and its cousins drew a formal line tolerating absolute congressional power over interstate traffic in items considered inherently harmful (such as lottery tickets, (51) adulterated foods, (52) prostitutes, (53) mistresses, (54) victims of kidnapping, (55) and stolen cars (56)), but restricting congressional power over goods whose harm related, instead, to circumstances of manufacture and competition. (57) Finally, well into the 1930s, the Court distinguished between permissible regulation of activities with "direct" effects on interstate commerce (58) and impermissible regulation of activities with only "indirect effects." (59)

In Morrison and Lopez, the Court put its faith in formal rules of more recent vintage. Borrowing a formulation originally devised by Justice Douglas, (60) the Court said:

"[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 that 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." (61)

The test for congressional authority, in other words, is whether the regulation formally fits into one of the three categories above--which we can refer to, in shorthand, as channel-, instrumentality-, or effects-based regulation. By setting forth these categories, and implicitly denying a federal role over anything not within the categories, the rules do, at first glance, serve the principle that the total power of the national government is "subject to outer limits." (62)

Moreover, the Court's recent activities seem to have significantly narrowed the reach of one of these categories: effects-based regulation. Because neither VAWA nor the Gun Free Schools Act had purported to regulate channels or instrumentalities, Morrison and Lopez dealt only with this substantial effects category--refining the criteria for recognizing activities Congress could regulate under this justification. Lopez raised the rhetorical bar for this category of regulation by specifying that the category only covered activities with substantial effects on commerce. (63) More concretely, Morrison narrowed Congress's power over conduct that substantially affects commerce in the aggregate, but whose individual instances affect commerce only trivially. The concept of focusing on the aggregate commercial effects of regulated activity, introduced in the 1942 case Wickard v. Filburn, (64) has a broad theoretical reach. It is difficult to think of any field of human activity that does not, in the aggregate, have some effect on commerce. While Lopez implied a nascent principle that "[t]he more an activity is like commercial or economic conduct, the more likely it is to be [regulable as] interstate commerce," (65) Morrison strengthened that principle considerably. Noting that "[g]ender-motivated crimes of violence are not, in any sense of the phrase, economic activity," Morrison imposed a limit on the methodology of aggregating effects under Wickard. The Court said, in extremely strong (but not absolute (66)) terms, that the aggregate effects test could only be used to justify regulation of economic activity: "While we need not adopt a categorical rule against aggregating the effects of any noneconomic activity in order to decide [this case], 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." (67)

In addition, while some readers of Lopez had speculated that the Court might be satisfied by congressional findings of substantial effects on commerce, Morrison made clear that such findings would not be automatically accepted, but would rather be subject to judicial scrutiny: "[T]he existence of congressional findings is not sufficient, by itself, to sustain the constitutionality of Commerce Clause legislation." (68) More particularly, the Court expressed very definite ideas on the "method of reasoning" Congress...

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