The Power to Regulate Commerce: Limits on Congressional Power
Released: 2014-05-16T00:00:00

Summary:
The Commerce Clause of the United States Constitution provides that the Congress shall have the power to regulate interstate and foreign commerce. The plain meaning of this language might indicate a limited power to regulate commercial trade between persons in one state and persons outside of that state. However, the Commerce Clause has never been construed quite so narrowly. Rather, the clause, along with the economy of the United States, has grown and become more complex. In addition, when Congress began to address national social problems, the Commerce Clause was often cited as the constitutional basis for such legislation. As a result, the Commerce Clause has become the constitutional basis for a significant portion of the laws passed by Congress over the last 50 years, and it currently represents one of the broadest bases for the exercise of congressional powers.
An examination of the United States Code shows that more than 700 statutory provisions, covering a range of issues, are explicitly based on regulation of either "interstate" or "foreign" commerce. Over the last two decades, however, the Supreme Court in United States v. Lopez and United States v. Morrison held that a gun possession law and a law regarding sexual violence were, respectively, beyond Congress's authority to regulate commerce. The effect of these cases, however, has so far been relatively modest in scope. For instance, a later case, Gonzales v. Raich, confirmed the authority of Congress to regulate medical marijuana, suggesting that the effect of the prior cases will be limited. Yet, in the case of National Federation of Business v. Sebelius, considering a challenge to an individual mandate to buy health insurance, the Court found that the Commerce Clause did not provide authority for such mandate. In Sebelius, the Court limited the use of the Commerce Clause to instances where individuals have already chosen to engage in a commercial activity (although it did find that such mandate could be enforced under Congress's power to tax).

subsections: section_title: Background
paragraphs: The Commerce Clause (Art. I, §8, cl. 3) of the United States Constitution provides that the Congress shall have the power to regulate interstate and foreign commerce. The plain meaning of this language might indicate a limited power to regulate commercial trade between persons in one state and persons outside of that state. However, the Commerce Clause has never been construed quite so narrowly. Rather, the clause, along with the economy of the United States, has grown and become more complex. In addition, when Congress began to address national social problems, the Commerce Clause was often cited as the constitutional basis for such legislation. As a result, the Commerce Clause has become the constitutional basis for a significant portion of the laws passed by Congress over the last 50 years, and it currently represents one of the broadest bases for the exercise of congressional powers.
An examination of the United States Code shows that more than 700 statutory provisions explicitly refer to either "interstate" or "foreign" commerce, covering a significant number of issues. These issues include agriculture, banking, antitrust, securities, business regulation, energy regulation, hazardous substances, consumer credit, sports regulation, the Internet, endangered species, civil rights, child support, child pornography, abortion, criminal law, controlled substances, food, firearms control, terrorism, obscenity, gambling devices, labor, industrial safety, pensions, environmental law, fish and wildlife, medical products, water pollution, atomic energy, shipping, motor vehicle safety, airplanes, and tort litigation.
Since the 1990s, however, Supreme Court case law has brought the limits of the Commerce Clause into question. While these cases have resulted in the overturning of federal laws, their overall effect has so far been relatively modest in scope. A 2005 Supreme Court case, Gonzales v. Raich , seems to confirm that the effect of these previous cases will be limited.
subsections: section_title: Textual Analysis
paragraphs: The Commerce Clause provides that "The Congress shall have Power ... To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." The word "commerce" appears to have the same primary meaning today as it did in 1789—"an interchange of goods or commodities between different countries or between areas of the same country" or in other words "trade." However, commentators have argued that a secondary meaning of commerce which was understood at the time of the drafting of the Constitution includes all productive activity which relates to commerce, such as manufacturing and agriculture.
A further question is then raised whether Congress's power to regulate commerce is significantly limited by the phrase "with foreign Nations, and among the several states, and with the Indian Tribes." For instance, the phrase "among the several States" could either be interpreted as "between people of different states" or more broadly as "between people who live in the various states." Some have argued that the broader definition, which would cover commerce between people of the same state, would render the phrase "among the several States" superfluous. This question, generally characterized as whether the power to regulate "interstate commerce" extends to "intrastate" commerce, has been mostly settled by case law, and most "intrastate" commercial transactions are vulnerable to some form of federal regulation.
section_title: Drafting and Ratification
paragraphs: The integration of commercial activities in the United States was a central theme of the Constitutional Convention of 1787. It appears, however, that the parameters of the Commerce Clause were not of particular concern to the framers of the Constitution. The commentary contemporary to the Constitution on the power did not concern itself with the federalism implications of managing interstate economic transactions, but rather focused on the issue of foreign trade. The primary purpose of the clause appears to have been raising federal revenue by the nationalization of the states' power to impose import tariffs, while a secondary purpose was apparently to allow Congress to regulate and restrict foreign commerce to advance American interests.
The argument has been made that while regulating free and fair trade between states was the principal motivation for adopting various other provisions of the Constitution, it may not have been a strong motivation for the drafting of the Commerce Clause. This is because state restrictions on trade between states were already prohibited under the Articles of Confederation, and the states generally complied with these restrictions. Consequently, commentary contemporary to the ratification of the Constitution indicating that the Commerce Clause was intended to limit state restrictions on interstate commerce was minimal.
section_title: Case Law Development
paragraphs: In Gibbons v. Ogden, the Supreme Court, in an opinion by Chief Justice Marshall, considered a challenge to a monopoly on the operation of steam-propelled vessels in New York waters. This monopoly was challenged by Gibbons, who transported passengers from New Jersey to New York under an act of Congress. The Chief Justice, in striking down the monopoly, wrote that "the power over commerce ... is vested in Congress as absolutely as it would be in a single government ..." and that "the influence which their constituents possess at elections, are ... the sole restraints" on this power.
The Chief Justice went on to write that "[t]he counsel for the appellee would limit [the term commerce] 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," which the Court found easily included the issue of navigation. Marshall did qualify the word "intercourse" with the word "commercial," thus retaining the element of monetary transactions.
The Court did not soon revisit this expansive view of the Commerce Clause. Instead, over the next several decades, the Court considered the boundaries of the "dormant Commerce Clause" doctrine—the implied limitation of the Commerce Clause on a state's ability to regulate commerce. This, combined with the relatively cautious exercise of the power by the early Congresses, meant that the Supreme Court did not have occasion to consider the limits of Congress's power under this doctrine for almost 60 years.
When the Court again revisited Congress's power under the clause, it generally approved of statutes regulating the interstate movement of goods or persons, such as lottery tickets, adulterated food, or prostitutes. But, during the early 1900s, the Supreme Court was confronted with statutes which went beyond regulation of trade, and addressed other related economic activities. Consequently, the Court struck down a series of federal statutes which attempted to extend commerce regulation to activities such as "production," "manufacturing" or "mining."
Starting in 1937, however, with the decision in NLRB v. Jones & Laughlin Steel Corporation , the Supreme Court held that Congress has the ability to protect interstate commerce from burdens and obstructions which "affect" commercial transactions. In the NLRB case, the Court upheld the National Labor Relations Act, finding that by controlling industrial labor strife, Congress was preventing burdens from being placed on interstate commerce. Thus, the Court rejected previous distinctions between the economic activities (such as manufacturing) which led up to interstate economic transactions, and the interstate transactions themselves. By allowing Congress to regulate activities which were in the "stream" of commerce, the Court also set the stage for the regulation of a variety of other activities which "affect" commerce.
Subsequent Court decisions found that Congress had considerable discretion in regulating activities which "affect" interstate commerce, as long as the legislation was "reasonably" related to achieving its goals of regulating interstate commerce. Thus the Court found that in some cases, events of purely local commerce (such as local working conditions) might, because of market forces, negatively affect interstate commerce, and thus would be susceptible to regulation. The Court has also held that an activity which in itself does not affect interstate commerce could be regulated if all such activities taken together in the aggregate did affect interstate commerce. Under the reasoning of these cases, the Court has upheld many diverse laws, including laws regulating production of wheat on farms, racial discrimination by businesses, and loan-sharking.
In the 1995 case of United States v. Lopez , however, the Supreme Court brought into question the extent to which Congress can rely on the Commerce Clause as a basis for federal jurisdiction. Under 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." In Lopez , the Court held that, because the act neither regulated a commercial activity nor contained a requirement that the possession was connected to interstate commerce, the act exceeded the authority of Congress under the Commerce Clause. Although the Court did not explicitly overrule any previous rulings upholding federal statutes passed under the authority of the Commerce Clause, the decision would appear to suggest new limits to Congress's legislative authority.
The Lopez case was significant in that it was the first time since 1937 that the Supreme Court struck down a federal statute purely based on a finding that Congress had exceeded it powers under the Commerce Clause. In doing so, the Court revisited its prior cases, sorted the commerce power into three categories, and asserted that Congress could not go beyond these three categories: (1) regulation of channels of commerce; (2) regulation of instrumentalities of commerce; and (3) regulation of economic activities which "affect" commerce.
Within the third category of activities which "affect commerce," the Court determined that the power to regulate commerce applies to intrastate activities only when they "substantially" affect commerce. Still, the Court in Lopez spoke approvingly of earlier cases upholding laws which regulated intrastate credit transactions, restaurants utilizing interstate supplies, and hotels catering to interstate guests. The Court also recognized that while some intrastate activities may by themselves have a trivial effect on commerce, regulation of these activities may be constitutional if their regulation is an essential part of a larger economic regulatory scheme. Thus, the Court even approved what has been perceived as one of its most expansive rulings, Wickard v. Filburn , which allowed the regulation of the production of wheat for home consumption.
The Court in Lopez found, however, that the Gun-Free School Zones Act fell into none of the three categories set out above. It held that it was not a regulation of channels of commerce, nor did it protect an instrumentality of commerce. Finally, its effect on interstate commerce was found to be too removed to be "substantial." The Court noted that the activity regulated, the possession of a gun in a school zone, neither by itself nor in the aggregate affected commercial transactions. Further, the statute contained no requirement that interstate commerce be affected, such as that the gun had been previously transported in interstate commerce. Nor was the criminalization of possession of a gun near a school part of a larger regulatory scheme which did regulate commerce. Finally, the Court indicated that criminal law enforcement is an area of law traditionally reserved to the states. Consequently, the Court found that Congress did not have the authority to pass the Gun-Free School Zones Act.
The Court also discussed the absence of legislative findings with respect to the statute's effect on interstate commerce. While noting that Congress is not formally required to make such findings, the Court nevertheless held that "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."
Although the Supreme Court has confirmed the dictates of Lopez in the case of United States v. Morrison , discussed infra , both of these decisions dealt primarily with the issue of "substantial impact" on commerce. However, as noted, the Court has identified two other categories of power that Congress has under the Commerce Clause—regulation of channels of commerce and regulation of instrumentalities of commerce—that have been interpreted almost as broadly. Thus, an evaluation of the impact of these cases requires an examination of all three categories of power.
section_title: The Three Categories of Commerce Clause Jurisprudence
subsections: section_title: Channels of Commerce
paragraphs: The channels of commerce doctrine has been interpreted so as to represent a broad power to regulate. To begin, this category is the basis for a variety of statutes that directly regulate the movement of persons or goods across state lines. For instance, the United States Code contains extensive references to mailing or shipping material in interstate commerce, including regulations or bans on shipping biological agents, counterfeit documents, explosives, or threatening communications.
Of more significance is that the Court has not required that any nexus exist between the time that a person crosses a state border and the time the person engages in a prohibited activity. For instance, in United States v. Sullivan , the Court addressed the application of Section 301k of the Federal Food, Drug, and Cosmetic Act to a local pharmacist. The section prohibits the "doing of any ... act with respect to, a ... drug ... if such act is done while such article is held for sale after shipment in interstate commerce and results in such article being misbranded." The pharmacist was charged with "misbranding" sulfathiazole by not providing sufficient information regarding dosage and usage.
The Court in Sullivan relied on precedent finding that Congress has not only the power to regulate commerce among the states, but also the power to "keep the channels of such commerce free from the transportation of illicit or harmful articles." The fact that the defendant here had bought the item after it had passed over state lines was not found to be of constitutional significance. Thus, the Court appears to require only that the criminal activity in question has some relation to the crossing of state lines.
Consistent with this line of reasoning, there are laws, such as criminal prohibitions on mail fraud, where the material is regulated not because it is by nature harmful, but rather because it relates to other behavior which is criminal. Or, there are laws prohibiting crimes based on a person crossing the state line with the intent to commit the sexual abuse of minors, where it is the activity engaged in after the line is crossed that is criminal. Finally, there are laws that regulate activities which utilize materials after they have been shipped in interstate commerce, even if the materials were perfectly legal when they were transported.
Ultimately, based on cases such as Sullivan , it would appear that statutes that would otherwise be in violation of the limitations of Lopez could be approved by courts because of the presence of the jurisdictional element that an item related to the crime had crossed a state line. Under this reasoning, the gun possession law struck down in Lopez, which has since been amended to require that the gun had previously been shipped in interstate commerce, would be upheld. Thus, an expansive reading of the channels of commerce doctrine would appear to stand in the way of a limited interpretation of the Commerce Clause.
section_title: Instrumentalities of Interstate Commerce
paragraphs: Under the "instrumentalities of commerce" category, Congress may properly make whatever regulations it sees fit for the safety, efficiency, and accessibility of the nationwide transportation and communications networks. For instance, in Preseault v. Interstate Commerce Commission , the Court considered whether Congress could prevent the reversion of railroad rights-of-way to property owners after abandonment in order to create recreational trails. The Interstate Commerce Commission (ICC) argued that turning the right-of-ways into recreational trails was preserving the rail corridors for future railroad use. Despite arguments that the preservation argument was a pretext, the Court held that it must defer to a congressional finding that a regulated activity affects interstate commerce "if there is any rational basis for such a finding."
The instrumentalities of commerce category represents yet another significant basis for expansive congressional authority. As noted previously, federal mail and wire fraud statutes make it a crime to engage in fraud while using the telephone or the mail. By analogy, Congress could reach many other activities that utilize these networks or similar networks such as railroads, interstate highways, and even the Internet. While this category has not been fully occupied by Congress, it would appear that a significant amount of federal power could be exercised in this manner, regardless of whether the matter regulated involved non-economic activity. The Court has not yet indicated whether the Lopez requirement that regulated activities have some connection to a commercial activity would be applicable in this category.
section_title: Substantial Impact on Interstate Commerce
subsections: section_title: Wickard v. Filburn
paragraphs: The third prong of Congress's power to regulate under the Commerce Clause involves those activities that have a substantial impact or effect on interstate commerce. To fully understand the scope and reach of this power, it is important to begin with an examination of the Court's 1942 decision in Wickard v. Filburn , which led to the expansive view of the Commerce Clause that Congress operated under until 1995. In Wickard , the Court was asked to determine whether, under the Commerce Clause, amendments to the Agricultural Adjustment Act of 1938 implementing a quota system to restrict the amount of wheat that could be harvested and sold applied to individuals who produced and consumed homegrown bushels of wheat.
In upholding the statute as constitutional, the Court held that economic activities, regardless of their nature, could be regulated by Congress if the activity "asserts a substantial impact on interstate commerce.... " The Court reasoned that the growing of wheat, even if only for a family's personal consumption, provided an alternative to the marketplace that was both viable and competitive. Although the Court admitted that one family's production alone would likely have a negligible impact on the overall price of wheat, if combined with other personal producers the effect would be substantial enough to make the activity subject to congressional regulation. The rationale of combining individual effects to find substantial impacts on interstate commerce has become known as the "aggregation theory," and arguably represents the most far reaching example of Congress's authority to regulate under the Commerce Clause.
section_title: Lopez and Morrison
paragraphs: After Wickard , the Court consistently held that a "rational basis" existed for Congress to enact laws under the theory that the regulated behavior substantially affected interstate commerce. Despite the consistency of these decisions, it was not always clear whether the activity in question met the "substantially affects" test. Then in 1995, when the Court decided the Lopez case, as discussed previously, it explored the limits of the "substantially affects" test.
Subsequently, in United States v. Morrison , the Court invalidated a portion of the Violence Against Women Act, which specifically created a private right of action against anyone who committed such a crime, allowing an injured party to obtain damages and other compensatory relief. Applying its holding in Lopez , the Court concluded that the activity regulated by the act could not be classified as "economic activity," and therefore the aggregation principle established by Wickard did not apply. The Court, however, stopped short of establishing a rule that all non-economic activity cannot be aggregated. In addition, the Court concluded that the act contained no jurisdictional element connecting the creation of a federal cause of action for gender-motivated violence to Congress's power to regulate interstate commerce.
Further, while in Morrison , unlike in Lopez , there were numerous congressional findings, the Court stressed that although findings by the legislative branch can serve to illuminate the relationship between the regulation and interstate commerce, constitutionality ultimately turns on the legal aspects of the substantial effects doctrine, and therefore, is for the Court to decide. In this case, the Court found that the legislative findings detailing the effects on interstate commerce by gender-motivated violence were based in large part on the "costs of crime," which was nearly identical to the reasoning expressly rejected by the Court in Lopez .
Finally, the Court considered the level of attenuation between the regulated activity and its effect on interstate commerce. In this case, the Court concluded that the regulation of gender-motivated violent crime was not directed at the instrumentalities, channels or goods involved in interstate commerce, and was therefore beyond the scope of Congress's authority.
In sum, after Lopez and Morrison , the test to determine whether a regulation has a substantial effect on interstate commerce requires reviewing courts to consider the following four factors: (1) whether the regulated activity is commercial or economic in nature; (2) whether an express jurisdictional element is provided in the statute to limit its reach; (3) whether Congress made express findings about the effects of the proscribed activity on interstate commerce; and (4) whether the link between the prohibited activity and the effect on interstate commerce is attenuated.
section_title: Gonzales v. Raich
paragraphs: After the decision in Lopez and Morrison , the question arose as to whether these cases were a harbinger of future restrictions on Congress's power to legislate. Arguably, the Court had intended Lopez and Morrison to have a limited effect, as the Court specifically reaffirmed much of its previous Commerce Clause case law. Further, the statutory provisions challenged in Lopez (criminal penalties for gun possession in or near schools) and Morrison (civil suits for gender-motivated crime) were relatively unusual for statutes based on the Commerce Clause in that they did not contain a specific requirement that the activities be related to commerce. In addition, while broad economic regulation may have noneconomic elements (e.g. , record-keeping requirements), the provisions in question were activities not associated with such larger schemes.
Accordingly, when provisions contained in broader regulatory schemes were challenged after Lopez and Morrison, the lower courts generally upheld them under a "broader scheme" doctrine. This doctrine is largely derived from language in Lopez that arguably permits congressional regulation of noneconomic activity if the regulation is "an essential part of a larger regulatory scheme, in which the regulatory scheme would be undercut unless the intrastate activity was regulated."
Nonetheless, some lower courts considering non-economic provisions of larger regulatory schemes found that such laws might be struck down in certain applications. Generally, a court reviewing the constitutionality of a federal statute may declare the statute unconstitutional either as invalid on its face, or "as applied" to a particular set of circumstances. Utilizing an "as applied" standard, various lower courts struck down particular applications of broader statutory schemes.
When presented with an "as applied" challenge, these courts initially attempted to define the relevant "class of activity" presented by the facts of the specific case. For instance, in Ashcroft v. Raich , the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) considered a challenge to the Controlled Substances Act. The challenging parties were seriously ill California residents who had obtained marijuana consistent with California's Compassionate Use Act but in violation of the federal Controlled Substances Act (CSA). The Ninth Circuit found the class of activity to be the "intrastate, noncommercial cultivation, possession and use of marijuana for personal medical purposes on the advice of a physician and in accordance with state law." Having defined the relevant class of activity, the court proceeded to apply the four factor Morrison test.
With respect to the first factor—whether or not the activity is commercial or economic in nature—the court concluded that the narrow class of activity in this case could not be considered commercial or economic in nature. The court next considered whether the CSA contains an express jurisdictional element that would limit its reach to those cases that substantially affect interstate commerce. With no stated analysis, and apparently persuaded by the reasoning of a district court opinion, the court concluded that "[n]o such jurisdictional hook exists in the relevant portions of the CSA."
With respect to whether the legislative history contains congressional findings regarding the effects on interstate commerce, the court was able to cite findings relating to the effect that intrastate drug trafficking activity would have on interstate commerce. While admitting that the legislative history lends support to the constitutionality of the statute under the Commerce Clause, the court proceeded to diminish the importance of these findings by arguing that they were not specific to either marijuana or the medicinal use of marijuana, but rather related to the general effects of drug trafficking on interstate commerce. In addition, the court referred to language in Morrison , discussing the limited role of congressional findings. Moreover, the court referenced Ninth Circuit precedent concluding that the first and fourth prongs of the Morrison test—whether the statute regulates an economic enterprise and whether the link is attenuated—are the most significant factors to the analysis.
Finally, with respect to whether the link between the regulated activity and a substantial effect on interstate commerce is attenuated, the court expressed doubt that the interstate effect of homegrown medical marijuana is substantial. Citing authority questioning the validity of the federal government's claim of an effect on interstate commerce, the court concluded that "this factor favors a finding that the CSA cannot constitutionally be applied to the class of activities at issue in this case."
The United States Supreme Court granted certiorari specifically on the question of whether the power vested in Congress by both the "Necessary and Proper Clause, and the Commerce Clause of Article I includes the power to prohibit the local growth, possession, and use of marijuana permissible as a result of California's law." Justice Stevens, writing for the majority in the now-entitled Gonzales v. Raich , reversed the Ninth Circuit's decision and held that Congress's power to regulate commerce extends to purely local activities that are "part of an economic class of activities that have a substantial effect on interstate commerce."
In reaching its conclusions, the Court relied heavily on its 1942 decision in Wickard v. Filburn , which held that the Agricultural Adjustment Act's federal quota system applied to bushels of wheat that were homegrown and personally consumed. Wickard stands for the proposition that Congress can rationally combine the effects that individual producers have on a commercial market to find substantial impacts on interstate commerce. The Court pointed to numerous similarities between the facts presented in Raich and those in Wickard . Initially, the Court noted that because the commodities being cultivated in both cases are fungible and that well-established interstate markets exist, both markets are susceptible to fluctuations in supply and demand based on production intended for home consumption being introduced into the national market.
According to the Court, just as there was no difference between the wheat Mr. Wickard produced for personal consumption and the wheat cultivated for sale on the open market, there is no discernable difference between personal home-grown medicinal marijuana and marijuana grown for the express purpose of being sold in the interstate market. Thus, the Court concluded that Congress had a rational basis for concluding that "leaving home-consumed marijuana outside federal control would similarly affect price and market conditions."
Respondents argued that Wickard was distinguishable because in the case of wheat the activity involved was purely commercial, and the evidence clearly established that the aggregate production of wheat had a significant effect on the interstate market. Conversely, respondents claimed that the activity at issue in Raich was non-commercial—the respondents had never attempted to sell their marijuana—and Congress had made no finding that the personal cultivation and use of medicinal marijuana has a substantial effect on the interstate marijuana market. The Court, however, noted that the standard for assessing the scope of Congress's power under the Commerce Clause is not whether the activity at issue, when aggregated, substantially affects interstate commerce; but rather, whether there exists a "rational basis" for Congress to have concluded as such. The Court, applying this deferential standard, concluded 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." Moreover, the Court affirmed that "Congress was acting well within its authority to 'make all Laws which shall be necessary and proper' to 'regulate Commerce ... among the several States.'"
Despite having concluded that under the "rational basis test" Congress had acted within its constitutional authority when it enacted the CSA and applied it to intrastate possession of marijuana, the Court nevertheless had to distinguish Lopez and Morrison , the Court's more recent Commerce Clause decisions. The Court concluded that the CSA, unlike the statutes in either Lopez (Gun-Free School Zones Act) or Morrison (Violence Against Women Act), regulated activity that is "quintessentially economic," therefore, neither Lopez or Morrison cast any doubts on the constitutionality of the statute. The Court specifically rejected the reasoning used by the Ninth Circuit, concluding that "Congress acted rationally in determining that none of the characteristics making up the purported class, whether viewed individually or in the aggregate, compelled an exemption from the CSA; rather, the subdivided class of activities defined by the Court of Appeals was an essential part of the larger regulatory scheme."
In supporting its conclusions, the Court noted that, by characterizing marijuana as a "Schedule I" narcotic, Congress was implicitly finding that it had no medicinal value at all. In addition, the Court returned to the fact that medicinal marijuana was a fungible good, thus making it indistinguishable from the recreational versions that Congress had clearly intended to regulate. According to the Court, to carve out medicinal use as a distinct class of activity, as the Ninth Circuit had done, would effectively make " any federal regulation (including quality, prescription, or quantity controls) of any locally cultivated and possessed controlled substance for any purpose beyond the 'outer limits' of Congress'[s] Commerce Clause authority." Moreover, the Court held that California's state law permitting the use of marijuana for medicinal purposes cannot be the basis for placing the respondent's class of activity beyond the reach of the federal government, due to the Supremacy Clause, which requires that, in the event of a conflict between state and federal law, the federal law shall prevail.
Finally, the Court replied to the respondent's argument that its activities are not an "essential part of a larger regulatory scheme" because they are both isolated and policed by the State of California and they are completely separate and distinct from the interstate market. The Court held that not only could Congress have rationally rejected this argument, but also that it "seem[ed] obvious" that doctors, patients, and caregivers will increase the supply and demand for the substance on the open market. In sum, the Court concluded that the case for exemption can be distilled down to an argument that a locally grown product used domestically is immune from federal regulation, which has already been precluded by the Court's decision in Wickard v. Filburn .
section_title: NFIB v. Sebelius
paragraphs: While the decision in Raich seemed to indicate that Congress still retained broad power over activity that affects interstate commerce, the Court has subsequently held that this power extends only to cases into which commercial activity has already been entered. In 2010, Congress passed the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010. Jointly referred to as the Affordable Care Act (ACA), the ACA, among other things, mandates the purchasing of health insurance by certain individuals who do not have such insurance. Following the enactment of the ACA, state attorneys general and others brought several lawsuits challenging various provisions of the ACA on constitutional grounds. Much of this litigation was resolved by the Supreme Court in the case of National Federation of Independent Business (NFIB) v. Sebelius .
Chief Justice Roberts, in a controlling opinion, found that the Commerce Clause does not provide Congress with the authority to enact the individual mandate. While the Chief Justice acknowledged that Congress's authority to regulate interstate commerce is quite broad, he also pointed out that Congress had never attempted to use this power to make individuals buy an undesired product. The Chief Justice further noted that the language of the clause (i.e., the power to regulate interstate commerce) reflects the idea that there must be something to regulate in the first place (i.e., some type of "activity").
The problem with the individual mandate, as indicated by the Chief Justice, is that it "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." The Chief Justice concluded that such a construction of the Commerce Clause would greatly expand the reach of the clause beyond permissible bounds. He further explained that regulating individuals based on what they fail to do would fundamentally change the relationship between the citizen and the federal government in a way that was not intended by the framers of the Constitution.
The Obama Administration had argued that virtually all individuals are active in the health care market because they will need health care at some point. However, the Chief Justice declined to accept this line of reasoning, opining that the Court's Commerce Clause precedent does not support the idea that Congress can dictate the conduct of an individual today based on predicted future activity. The Administration had also argued that the requirement to purchase health insurance was different from other products because, for example, individuals receive health care services even though they cannot pay for them, and the costs of those services can be passed on to others in various ways such as higher insurance premiums. The Chief Justice disagreed with this argument, noting that if the Court followed this reasoning, a mandatory purchase could be permitted to solve almost any problem. In other words, if Congress could require the purchase of health insurance, it could require Americans to purchase anything.