Champion v. Ames, 188 U.S. 321 (1903)

Case Name: Champion v. Ames (U.S. Marshall)
Citation: 188 U.S. 321 (1903)

Key Facts: Congress enacted the Federal Lottery Act in 1895 , which prohibited the buying or selling of lottery tickets across state lines. Champion, was indicted for shipping lottery tickets from Texas to California. He challenged this on the grounds that the power to regulate commerce does not include the power to prohibit commerce of any item.

Holding: Upheld the federal law and rejected a 10th amendment challenge.

Reasoning: “Congress, for the purpose of guarding the people of the United States against the “widespread pestilence of lotteries” and to protect the commerce which concerns all the state, may prohibit the carrying of lottery tickets from one state to another.”

Hammer v. Dagenhart, 247 U.S. 251 (1918)

Hammer v. Dagenhart (1918)
Citation: 247 U.S. 251 (1918)

Issue: Does Congress have the authority to regulate child labor by prohibiting the interstate transportation of products that were manufactured by children?

Facts: A father filed the initial action because Congress had passed an act which prohibited the interstate trade of goods that were manufactured by children.

Procedural History: A North Carolina Court ruled it was unconstitutional and the US Attorney General (Hammer) appealed to the Supreme Court.

Holding: Production is over once the products are offered for shipment which would put them into interstate commerce. Further, the fact that the products were “intended for interstate commerce transportation does not make their production subject to federal control under the commerce power.”

Additional Contention and Answer: It was further contended that the allowance of child labor in one state was unfair because it put other states that did not allow child labor at a disadvantage. “There is no power vested in Congress to require the states to exercise their police power so as to prevent possible unfair competition….The commerce clause was not intended to give to Congress a general authority to equalize such conditions.”

Holding: Congress does not have the authority to regulate child labor in North Carolina.

Dissent (Holmes): The statute confines itself to prohibiting the shipment of goods in interstate and foreign commerce that were created by children. This is interstate commerce and Congress is given the power to regulate such commerce.

A.L.A. Schechter Poultry Corp. v. United States, 295 US 495 (1935)

Case Name: A.L.A. Schechter Poultry Corp. v. United States
Citation: 295 U.S. 495 (1935)

Issue: Whether Congress can regulate as regarding the slaughtering and selling by defendants which was solely in New York.

Facts: Schechter is a chicken slaughterhouse in New York. Almost all the poultry coming to New York is sent from other states. Schechter was convicted on eighteen counts for violating the “Live Poultry Code.”

This Code required sellers to sell only entire coops or half-coops of chickens and made it illegal for buyers to reject individual chickens as well as regulated employment (collective bargaining, prohibiting child labor, 40-hour work week, and minimum wage). Came out of the National Industrial Recovery Act.

Holding: Congress cannot regulate this because Schechter’s activities only occur in New York and only has an in-direct impact on interstate commerce.

Reasoning: The interstate commerce ended once the defendants purchased the chickens and took them to their slaughterhouse. The flow in interstate commerce (or “stream of commerce”) had ceased.

Houston, East & West Texas Railway Co. v. United States, 234 U.S. 342 (1914)

Case Name: Houston, East & West Texas Railway Co. v. United States
Citation: 234 U.S. 342 (1914)

Issue: Whether Congress can regulate pricing of a rail line completely within the borders of Texas in order to protect fair competition in interstate commerce.

Facts: Shreveport competed with Dallas for shipments from East Texas, but the skewed price structure (mandated by the Texas Railroad Commission), greatly favored shipments to and from Dallas over Shreveport. The Interstate Commerce Commission, acting on a complaint from the Railroad Commission of Louisiana, found that “an unlawful and undue preference and advantage” was thereby given to the Texas cities, ordered the company to change the rate structure to end discriminatory pricing.

In effect, the Interstate Commerce Commission was attempting to set the rate that the railroad could charge from Dallas to Marshall, a section of rail line completely within the borders of Texas. The railroads argued that “Congress is impotent to control the intrastate charges of an interstate carrier.”

Holding: Congressional authority “necessarily embraces the right to control… operations in all matters having a close and substantial relation to interstate traffic, to the efficiency of interstate service, and to the maintenance of conditions under which interstate commerce may be conducted upon fair terms.” In other words, the Court allowed Congress to regulate intrastate transactions because of their impact on interstate commerce.

Reasoning: “Congress does possess the power to foster and protect interstate commerce, and to take all measures necessary or appropriate to that end, although intrastate transactions of interstate carriers may thereby be controlled.”




Dormant Commerce Clause Analysis

A state violates the Dormant Commerce Clause if it “oversteps” its role in regulating interstate commerce. The first step in analyzing a state regulation under the Dormant Commerce Clause is to determine whether the regulation incidentally burdens interstate commerce or affirmatively discriminates against interstate commerce. An affirmative burden on interstate commerce exists if the regulation “on its face” or “in its practical effect” regulates interstate commerce.

An incidental burden violates the Commerce Clause only if the burdens it imposes on interstate trade are “clearly excessive in relation to the putative local benefits.” If an affirmative burden is found, the state has the burden to demonstrate that the statute “serves a legitimate local purpose” and that this purpose could not be well served by any available nondiscriminatory means. An affirmative burden is analyzed under strict scrutiny.

State laws that affirmatively discriminate against out-of-staters are almost always declared unconstitutional. Such a law will be allowed only if it is proven that the law is necessary and the least restrictive means were used to achieve a non-protectionist purpose. The only case to survive strict scrutiny under the Dormant Commerce Clause is Maine v. Taylor, 477 US 131 (1986).

If a law does not discriminate against out-of-staters, the Court balances its burdens on interstate commerce against its benefits.