Interstate Commerce Laws

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INTERSTATE COMMERCE LAWS

INTERSTATE COMMERCE LAWS. The scope of interstate commerce laws in the United States is much broader than the jurisdiction of the Interstate Commerce Commission, which covers only some forms of transportation. However, at its formation in 1887, constitutional doctrine largely confined federal powers in the regulation of interstate commerce to transportation and communications. Much of the history of interstate commerce in the United States has to do with this expansion of federal powers over interstate commerce during the twentieth century. The Constitution specifically grants the federal government power "to regulate Commerce … among the several States." Chief Justice John Marshall stated in Gibbons v. Ogden (1824) that federal legislation was supreme over a state law that might affect interstate or foreign commerce. But for a century, there was little federal regulation of interstate commerce other than transportation and communications, for, with regard to the reserved powers of the states in the absence of federal legislation, the Supreme Court has tended to be generous to the states. The states have regulated grade crossings and public utilities, controlled practices in food production and sanitation, and limited the loads of trucks on their highways. Indeed, the main body of commercial law in the United States is state law.

It was not until the post–Civil War period, when the growth and power of the modern corporation became clearly evident through corrupt, arbitrary, and discriminatory practices, that the national political environment began to change. The Interstate Commerce Act of 1887 was only the first major example of a long series of important and complex federal statutes regulating business under the authority of the commerce clause, only a few of which can be noted here.

The Sherman Antitrust Act of 1890, aimed at curbing monopolies, was supported in 1914 by the Clayton Act, Labor Provisions (which, in addition, exempted labor organizations from antitrust laws) and by the creation of the Federal Trade Commission in 1914 to regulate "unfair methods in restraint of trade." The food and drug acts of 1906 and 1938 as amended—plus a series of related laws, such as the Meat Inspection Act of 1906—have been aimed at preventing adulteration and mislabeling. Additional powers given to the Federal Trade Commission in 1938 forbid false advertising. The Truth-in-Packaging Act of 1966 and the Consumer Credit Protection (Truth-in-Lending) Act of 1969 brought further protection to consumers. The publicity acts of 1903 and 1909 were forerunners of the Securities and Exchange Act of 1934, all of which were aimed at the sale of fraudulent securities.

Controls over additional modes of transport came with the Shipping Act of 1916, which established the U.S. Shipping Board, whose authority was reestablished in 1936 under the Maritime Commission. Federal regulation of utilities came with the creation in 1920 of the Federal Power Commission. The Federal Radio Commission of 1927 was broadened into the Federal Communications Commission in 1934. Government regulation of the labor relations of industries engaged in interstate commerce culminated in the formation of the National Labor Relations Board in 1935, whose powers and duties were revised by the Taft-Hartley Act of 1947 and several amendments to it. The Civil Aeronautics Act of 1938, setting up the Civil Aeronautics Authority (later Civil Aeronautics Board), concluded formation of the series of agencies known as the independent regulatory commissions. Moreover, some regulatory authority derived from the interstate commerce clause lies in the hands of the traditional departments and other agencies, such as the Atomic Energy Commission.

Interstate commerce laws are not limited to regulative and punitive measures. Subsidies are available, for example, to maritime shipping and to large segments of agriculture. Many federal agencies engage in, and disseminate the results of, research of interest to business and commercial organizations of all kinds. The Tennessee Valley Authority was created in 1933 to help in the total development of an entire economic area. Moreover, the federal government has from its beginning stimulated commerce through statutes implementing its additional powers over coinage and money, the mails, weights and measures, and copyrights and patents.

As the political environment changed and a network of federal laws evolved, the views of the Supreme Court on federal powers under the interstate commerce clause gradually broadened. Thus, for some decades, the implementation of certain statutes was modified or negated by the Court's opinions on what constituted interstate commerce. Not until the late 1930s did the Court include manufacturing plants and processes, for example, within the scope of regulation under the commerce clause: child-labor laws were struck down in 1918 (Hammer v. Dagenhart) and 1922 (Bailey v. Drexel Furniture Company), and it was frequently difficult to apply the Sherman Antitrust Act to some corporate combinations. By 1946, in the case of the American Power and Light Company v. Securities and Exchange Commission, the Court concluded that "the Federal commerce power is as broad as the economic needs of the nation." The determination of what interstate commerce is, and what shall be done in support or regulation of that commerce, now lies essentially in the political arena.

In the 1980s, the Reagan Administration pushed through Congress a sweeping package of deregulatory legislation that rolled back government regulation of business. Moreover, President Reagan and his successor, George H. W. Bush, appointed justices to the Supreme Court who were skeptical of the federal government's role in private economic affairs. Events took a different turn in the mid-1990s when the federal government began prosecution of the Microsoft Corporation for monopolistic business practices. The Microsoft case divided Congress, pitting liberal supporters of business regulation against conservative critics of regulation. In the early 2000s, the federal government's role in business regulation remained highly controversial.