Article I of the Constitution authorizes Congress “to regulate Commerce among the several States.” The Supreme Court has long interpreted this Commerce Clause as allowing Congress to legislate if it merely could have had a rational basis for determining that the activity regulated, considered in the aggregate nationwide, “substantially affects” interstate commerce.
The Court devised this extremely deferential standard of review in response to political pressure during the New Deal and has consistently reaffirmed it. The result has been to grant Congress nearly unrestrained discretion, because it could reasonably find that just about any activity, when added up nationally, “substantially affects” the interstate economy. No Justice has ever explained how this expansive construction of the Commerce Clause can be reconciled with its original meaning.
Recently, Akhil Amar and Jack Balkin have attempted to provide such a justification. They make two claims about the historical meaning of the Commerce Clause. First, the word “commerce” signified “intercourse”—all interactions, not merely economic but also social and political. Second, the phrase “among the states” authorized Congress to legislate in the national interest or when states acting separately could not adequately address an issue. Accordingly, Amar and Balkin contend that Congress can intervene whenever it might reasonably conclude that it should regulate interactions that extend beyond one state’s boundaries and create problems that can only be resolved at the national level. This interpretation would sustain all significant modern Commerce Clause legislation, such as that dealing with employment, civil rights, the environment, and Obamacare.
The foregoing reading of “commerce” and “among the states” is plausible only if considered in a linguistic vacuum, not in historical context. Indeed, Professors Amar and Balkin have not cited anyone during the Constitution’s framing, ratification, or early implementation period who suggested that those words, as used in the Commerce Clause, permitted Congress to reach all interactions that had out-of-state impacts. Rather, as I will demonstrate, the historical evidence reveals that the Founders understood “commerce” as including only commercial interactions—voluntary sales of products and services and accompanying activities intended for the marketplace, such as manufacturing goods for sale, paid transportation, and banking. Congress could regulate such “commerce” if it concerned more than one state. This market-based limitation is critical because the Constitution did not grant Congress general authority, but rather carefully enumerated its powers and left all other powers to the states or the People.
My “market” theory of the Commerce Clause would support most, but not all, federal laws. To take a topical example, application of this approach would have resulted in upholding most provisions of Obamacare, because they regulate “commerce” (the sale of health insurance products and services) that concerns more than one state. Nonetheless, the mandate that all individuals purchase medical insurance would have been struck down because Congress cannot require Americans to buy products or services, as such transactions are not voluntary sales in the market. Recognizing this basic insight about the nature of “commerce” would have provided the Court with a principled rationale to invalidate the “individual mandate,” instead of reaching this outcome as it did by manufacturing a new exception to the “substantially affects” test. More generally, the “market” theory coherently resolves most of the larger disputes about the extent of Congress’s power under the Commerce Clause.