Dormant Commerce Clause

As explained in United States v. Lopez (1995), For nearly a century thereafter (i.e., after Gibbons), the Court's Commerce Clause decisions dealt but rarely with the extent of Congress' power, and almost entirely with the Commerce Clause as a limit on state legislation that discriminated against interstate commerce. Under this line of precedent, the Court held that certain categories of activity such as 'exhibitions,' 'production,' 'manufacturing,' and 'mining' were within the province of state governments, and thus were beyond the power of Congress under the Commerce Clause. When Congress began to engage in economic regulation on a national scale, the Court's dormant Commerce Clause decisions influenced its approach to Congressional regulation.

In this context, the Court took a formalistic approach, which distinguished between services and commerce, manufacturing and commerce, direct and indirect effects on commerce, and local and national activities. The concurring opinion of Justice Kennedy in United States v. Lopez: "One approach the Court used to inquire into the lawfulness of state authority was to draw content-based or subject-matter distinctions, thus defining by semantic or formalistic categories those activities that were commerce and those that were not." The Dormant Commerce Clause formalisms spilled over into its Article I jurisprudence. While Congress had the power to regulate commerce, it could not regulate manufacturing, which was seen as being entirely local. In Kidd v. Pearson (1888), the Court struck a federal law which prohibited the manufacture of liquor for shipment across state lines. Similar decisions were issued with regard to agriculture, mining, oil production, and generation of electricity. In Swift v. United States (1905), the Court ruled that the clause covered meatpackers; although their activity was geographically "local," they had an important effect on the "current of commerce," and thus could be regulated under the Commerce Clause. The Court's decision halted price fixing. Stafford v. Wallace (1922) upheld a federal law (the Packers and Stockyards Act) regulating the Chicago meatpacking industry, because the industry was part of the interstate commerce of beef from ranchers to dinner tables. The stockyards "are but a throat through which the current [of commerce] flows," Chief Justice Taft wrote, referring to the stockyards as "great national public utilities." As Justice Kennedy wrote: (in his concurring opinion in United States v. Lopez) "Though that [formalistic] approach likely would not have survived even if confined to the question of a State's authority to enact legislation, it was not at all propitious when applied to the quite different question of what subjects were within the reach of the national power when Congress chose to exercise it."

Similarly, the Court excluded most services by distinguishing them from commerce. In Federal Baseball Club v. National League (1922), which was later upheld in Toolson v. New York Yankees (1953) and Flood v. Kuhn (1973), the Court excluded services not related to production, such as live entertainment, from the definition of commerce:

That to which it is incident, the exhibition, although made for money, would not be called trade of commerce in the commonly accepted use of those words. As it is put by defendant, personal effort not related to production is not a subject of commerce.

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