Meaning of Commerce

Meaning of Commerce

The Commerce Clause gives Congress power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes," and every dispute over its reach begins with what the word "commerce" covers.¹ The clause was meant to replace the trade barriers and tariffs that the newly independent States had erected against one another with a common market, in which the nation is the economic unit and every buyer and seller in every State participates on equal terms.² Control of that market sits in Congress for a political reason as well. A state legislature answers to in-state voters and tends to favor local producers over out-of-state competitors, while Congress answers to the people of the entire nation and can be expected to weigh the interests of the whole market.³ Those purposes push toward a generous definition of commerce, since a common market depends on the movement of goods, people, and vessels across state lines. The same Constitution withholds a general police power from Congress, so the definition also needs an edge.

Chief Justice Marshall supplied both the definition and the edge in Gibbons v. Ogden, and he did so in a single dispute in which a steamboat monopoly granted by New York collided with a federal coasting license.⁴ The first move defines commerce broadly: it is traffic, but it is something more, namely intercourse, and so it reaches navigation.⁵ The second move draws a boundary from the words of the clause itself, and it keeps that broad definition from absorbing every activity within a State. Later cases take these two premises as their starting point. The definition leaves room for the commerce power to grow as the economy changes, and the boundary supplies the argument that the power must stop somewhere. The first subsection, Commerce as Intercourse, sets out the facts of the steamboat dispute once and follows Marshall's reasoning from the text to the broad definition.

Commerce as Intercourse

Chief Justice Marshall opened his analysis in Gibbons v. Ogden by observing that the Constitution is "one of enumeration, and not of definition," which means that measuring the extent of a listed power requires first settling what the word naming it covers.⁶ Counsel for Ogden would have limited the word to traffic, meaning buying and selling or the interchange of commodities, and denied that it comprehends navigation. Marshall replied that this would shrink a general term to one of its several senses, and he supplied the fuller one: "Commerce, undoubtedly, is traffic, but it is something more: it is intercourse."⁷ The intercourse he had in mind is commercial intercourse between nations and parts of nations in all its branches, and Congress regulates it by prescribing the rules under which that intercourse is carried on.⁸ The word commercial ties the definition to trade, while the reference to all of its branches carries it past the moment of sale to the movement of goods and people from place to place.

The case for the broader definition begins with what regulation of commerce between nations would have to look like. A system of rules that said nothing about vessels, was silent on whether one nation's ships may enter another's ports, and spoke only to individuals engaged in buying, selling, or barter would leave the trade itself ungoverned, because goods and travelers cannot cross water without ships.⁹ Marshall added a point from practice. If commerce excluded navigation, the Union would have no power to say what counts as an American vessel or to require that American seamen crew it, yet Congress had exercised that power since the government began, with the consent of all, as a regulation of commerce.¹⁰ A power to regulate commerce therefore has to follow the way commerce moves, which is why a vessel carrying cargo between ports in different States falls inside it.

The wording of the Constitution supplies a second, independent confirmation. A familiar rule of construction holds that exceptions from a power mark its extent, because it would be absurd and useless to carve out of a grant something the grant never covered.¹¹ The Constitution contains exceptions of exactly this kind. Article I, Section 9 provides that "No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another," and that vessels bound to or from one State shall not be obliged to enter, clear, or pay duties in another.¹² Those restrictions govern regulations of commerce as they bear on ports and vessels, so the people who wrote them must have understood that regulating commerce reaches ports and vessels in the first place.¹³ Even a restrictive account of the word's founding-era meaning treats transporting goods for sale as part of commerce, which leaves navigation inside the clause on any reading.¹⁴

With the definition fixed, Marshall described the power over commerce in sweeping terms. It is the power to prescribe the rule by which commerce is governed, and like every power vested in Congress it is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than those the Constitution prescribes.¹⁵ The completeness follows from the purpose of the clause. The clause places control of the common market in one national legislature answerable to the voters of the whole country, and a power Congress could exercise only in part would let each State fill the gap with rules favoring its own producers, which is the local favoritism the clause was meant to end.¹⁶ Because the legislature holding the power answers to the nation as a whole, the principal check on how fully it uses the power lies in the political process. The phrase leaving room for limits found in the Constitution itself matters, however, because it leaves space for the textual boundary that the next subsection takes up.

The power also operates inside state borders. A voyage between New Jersey and New York must pass through waters within each State, so a power that stopped at the state line would regulate almost nothing. Marshall accordingly held that the power of Congress comprehends navigation within the limits of every State, so far as that navigation is connected with commerce among the States or with foreign nations, and that it may pass the jurisdictional line of New York and act on the very waters the state monopoly governed.¹⁷ The qualifying phrase, connected with commerce, is what keeps the breadth from becoming unlimited.

The dispute that produced these holdings set a state monopoly against a federal license. New York had granted Robert R. Livingston and Robert Fulton an exclusive right to run steamboats on its waters, and that right passed to Aaron Ogden, who claimed it for service between Elizabethtown, New Jersey, and New York City.¹⁸ Thomas Gibbons operated two steamboats, the Stoudinger and the Bellona, over the same route under a federal license issued under the Act of February 18, 1793, which provided for enrolling and licensing vessels in the coasting trade.¹⁹ The New York courts sustained the monopoly, and Gibbons appealed to the Supreme Court. Because navigation is commerce and this voyage connected New Jersey with New York, the federal license governed the voyage, the New York grant collided with it, and the Court held the state act void and reversed the decree.²⁰ The collision between state and federal law rests on supremacy, but the federal law applied only because the voyage was commerce, and that premise is the subject of this subsection.

On an exam, the usual error is treating commerce as nothing more than buying and selling, which would exclude the vessels and routes by which trade moves. A fact pattern describing a ship, a port, or a licensed carrier raises the question whether the activity is commercial intercourse connected with more than one State, and when it is, the activity is commerce within the clause.

Internal Commerce Reserved

The power just described as complete in itself has an edge, and Gibbons v. Ogden draws it in the same passage that describes how far the power reaches. Marshall wrote that the words of the clause do not comprehend commerce that is completely internal, meaning commerce carried on between one person and another within a State, or between different parts of the same State, and that does not extend to or affect other States, because a power over such commerce would be inconvenient and certainly unnecessary.²² The description has two parts, and both must be met. The commerce must lie inside a single State, and it must reach no other State, so a transaction that extends into a second State, or affects one, falls outside the reservation. From that description Marshall drew the conclusion that the completely internal commerce of a State may be considered as reserved for the State itself.²³

Marshall supported the boundary with arguments from the wording of the clause. The first concerns the word 'among,' which he granted is comprehensive but held may properly be restricted to commerce that concerns more States than one, since it is not an apt phrase for the interior traffic of a single State.²⁴ The second argument concerns the list. The clause names commerce with foreign nations, among the several States, and with the Indian tribes, and Marshall reasoned that the list would not have been made had the intention been to extend the power to every description of commerce, because the enumeration 'presupposes something not enumerated.'²⁵ A general power over all commerce would absorb each named class and leave the list with no work to do. By the language and subject of the sentence, the thing left out must be the exclusively internal commerce of a State.²⁶

Marshall added a reason drawn from the character of the whole government. Its action, he said, is to be applied to all the external concerns of the nation and to those internal concerns that affect the States generally, but not to concerns that are completely within a particular State, that do not affect other States, and with which interference is unnecessary for executing the general powers of the government.²⁷ The purpose of the Commerce Clause explains why this division makes sense. The clause exists to end trade barriers between the States and to place control of the national market in a legislature answerable to the whole country.²⁸ A sale between two neighbors in one State involves no out-of-state competitor, so a State's temptation to favor its own producers has nothing to act on, and national control has little to accomplish. The last qualifier also matters for later sections, because it leaves room for federal interference with local matters when interference is needed to carry out one of the government's other general powers.

The reservation does not confine Congress to the borders between States, because commerce among the States cannot be carried on without crossing them. Marshall made the point first about foreign commerce: the power of Congress does not stop at the jurisdictional lines of the States, and a power that could not pass those lines would be useless, since the deep streams that carry foreign trade run through the interior of nearly every State and a foreign voyage may begin or end at a port inside one.²⁹ He found the principle even clearer for commerce among the States, which either adjoin one another along a mathematical line or lie far apart with other States between them.³⁰ A trading expedition between distant States must commence in one, end in another, and probably pass through a third, so the power of Congress, whatever its extent, must be exercised within the territorial jurisdiction of the several States.³¹

That reasoning yields the clearest application of the rule. A trading voyage that begins in one State, ends in another, and passes through a third is commerce among the States, and Congress may regulate it even though the regulated acts occur inside the territory of each.³² At the opposite pole is the commerce Marshall himself described as completely internal, in which one resident of a State trades goods with another inside that State in a transaction that does not extend to or affect other States.³³ The two situations differ in the single fact on which the whole boundary turns, namely whether the commerce concerns more States than one.

One word in Marshall's formulation looks ahead. The reserved category is commerce that neither extends to nor affects other States, and the word affect adds a question about consequences to the question of physical crossing. That word is the seed of the modern effects test, which the next section takes up. Justice Breyer, dissenting in Lopez, cited the same passage of Gibbons for the proposition that Congress may regulate local activities that significantly affect interstate commerce.³⁴ Justice Thomas, concurring in Lopez, read it differently. On his account, commerce that did not affect another State could never be commerce among the several States, and even the broadest reading would allow Congress to reach only intrastate commerce that substantially affects interstate commerce, not every activity that does.³⁵ The Lopez majority drew a third lesson from the passage, which is that limits on the commerce power are inherent in the very language of the clause.³⁶

The category of completely internal commerce also changed shape after Marshall. For nearly a century the Court's commerce decisions seldom addressed the extent of congressional power, and when federal regulatory statutes began arriving in the late nineteenth century, the Court sorted activities by label, treating 'production,' 'manufacturing,' and 'mining' as matters for the States beyond the reach of the commerce power.³⁷ The Court later gave up that labeling in favor of an inquiry into the actual effects of an activity on commerce, a shift that Wickard v. Filburn put into words, as the next section describes.³⁸ The reservation is therefore best held as a statement of structure rather than as a modern bright line. Marshall's premise is that the power has an edge and that the edge excludes some commerce inside the States. Where that edge falls has been contested ever since, and the tension between a power described as complete in itself and a power limited by enumeration returns in Lopez.

The usual exam error is to treat location inside a State as the test for what is reserved. Commerce among the States passes through state territory as a matter of course, so the first question is whether the commerce concerns more States than one. Only commerce carried on within a State that neither extends to nor affects other States falls within Marshall's reservation.³⁹ An answer that stops at the observation that the activity is local is incomplete, because later cases ask what a local activity does to interstate commerce.