Are There Limits to Federal Power?

Date: March 31, 2017

You may recall that the National Federation of Independent Business took the lead in challenging the Affordable Care Act’s mandate to buy health insurance in NFIB v. Sibelius. And while it was very disappointing to see Chief Justice Roberts side with the progressive wing of the Court to uphold the individual mandate under Congress’ taxing powers, we nonetheless set an important precedent that it is beyond the federal government’s regulatory powers to affirmatively force an individual to buy a good or service. In so holding, the Court emphasized that there are meaningful limits on the federal government’s Commerce Clause powers—a point that was in some degree of question after the Supreme Court’s controversial 2005 decision in Gonzales v. Raich.

Originally conceived, the federal government was only supposed to have narrowly proscribed powers—which were enumerated in the Constitution in order to avoid any inference that the federal government might have a broad and open-ended “police power.” But today, that concept has been effectively rejected by the courts—such that there is almost no conceivable conduct that may truly be beyond the reach of the federal government. Whereas James Madison said, in the Federalist Papers, that the Constitution would ensure that we would live in a sea of liberty with only islands of federal regulation, the modern regulatory state flips that paradigm on its head. So how did we get from islands of regulation to a sea of red-tape governing virtually every aspect of modern life?

Well, in the early days the courts strictly enforced limits on federal powers. They construed Congress’ Commerce Clause power only to authorize regulation of goods or services that actually crossed state-lines. But during the New Deal era the Court took the teeth out of the Commerce Clause in a decision called Wickard v. Filburn, which held that the federal government could regulate a farmer’s decision to grow wheat to be consumed on his own farm—regardless of the fact that he had no intention of selling his wheat at market. The Wickard Court said that the Commerce Clause allowed for regulation even of purely intrastate non-economic conduct like this because, if everyone were to grow their own wheat, that would have an impact on the national market for wheat.

After Wickard the courts time-and-again upheld federal statutes against Commerce Clause challenges to the point that most legal scholars believed that there was nothing beyond the reach of the federal government. But in the 1990s the Supreme Court issued two significant decisions. The first, United States v. Lopez, held that Congress lacked authority to regulate guns within schools because there was no direct connection to interstate commerce. Second, in United States v. Morrison, the Supreme Court held that Congress could not regulate violence against women because—once again—there was no direct connection to interstate commerce. In so holding, the Court was very clear in saying that the government cannot defend a challenged enactment on a theory that would eviscerate all limits on federal power. In other words, federal regulation is permissible only if there is a real and non-tenuous connection to interstate commerce.

In Raich the Supreme Court appeared to back away—holding that the federal government could regulate even non-economic intrastate conduct if necessary for the vindication of a larger economic regulatory scheme. But in NFIB, a solid majority of the Court reaffirmed the rule in Lopez and Morrison that government cannot claim too attenuated of a connection to interstate commerce because otherwise the federal government could literally regulate anything and everything. That would suggest that courts should look critically at challenged federal regulations to determine whether in fact they govern purely non-economic conduct with no clear connection to interstate commerce. Accordingly, we’ve been looking to chip-away federal regulatory powers since our decision in NFIB, especially in the context of environmental regulation where the federal government imposes draconian restrictions to protect species that may be found only within a single state.

For example, the Utah Prairie Dog is found only in one state. They have no commercial use or value, and therefore regulation of their habitat constitutes regulation of non-economic activity, with no direct connection to interstate commerce. In fact, the best connection that anyone was able to come up with when defending Endangered Species Act (ESA) regulation of the Utah Prairie Dog was the contention that this species is somehow drawing tourism to the area (Really?), or that someone might—some day in the unforeseen future—discover that this species is more useful than we originally thought. (For now, the Utah Prarie Dog is known only for spreading the bubonic plague, which is anything but useful). Of course, the problem with such arguments is that they propose such abstract, hypothetical and tenuous connections to interstate commerce that they could justify regulation of virtually anything.

Unfortunately, rather than endeavoring to find a non-tenuous connection to interstate commerce, the Tenth Circuit Federal Court of Appeal recently issued a decision upholding federal Endangered Species Act regulation of the Utah Prairie Dog under an exceedingly flexible view of Congress’ Commerce Clause powers. The Court basically said that it need not consider whether the prairie dog has a connection to interstate commerce because the Endangered Species Act governs all sorts of other species that do have a clear connection to interstate commerce, and that this somehow justifies a “rational” conclusion that Congress might think it proper to regulate species that have no such connection. Or in the words of Jonathan Wood of the Pacific Legal Foundation, who argued the case, the Tenth Circuit ruled “that the federal government can regulate anything for any reason so long as it also regulates a lot of other stuff as part of one big ‘comprehensive regulatory scheme.’”

But wouldn’t that logic mean that the Supreme Court was wrong in holding that Congress could not affirmatively compel individuals to purchase health insurance under the Commerce Clause? After all, the Affordable Care Act regulated a whole lot of things that clearly bore a substantial relation to interstate commerce. So, by the Tenth Circuit’s flawed logic here, Congress should have been able to force individuals to buy health insurance under the Commerce Clause—regardless of whether the individual choice to remain a non-market participant is, on its own, beyond the reach of the federal commerce power. Indeed, as we read this deeply troubling decision, the Tenth Circuit is saying that the federal government may extend its commerce powers even to regulate things that it lacks power to regulate directly—so long as Congress imposes its regulation as part of a more sweeping regime.

Yet of course that runs contrary to the Supreme Court’s decision in SWANCC v. Army Corps as well. If you recall, we challenged the Environmental Protection Agency and Army Corps of Engineers’ joint rule, extending their regulatory powers under the Clean Water Act, in part because it would have allowed these agencies to govern lands that had no real connection to interstate commerce. This is because, in SWANCC, the Supreme Court said that—notwithstanding a generally broad grant of jurisdictional authority in the statute—the Clean Water Act cannot be read so as to allow federal agencies to regulate wetlands that do not have a real connection to interstate waters. This is precisely because the federal commerce powers can only be stretched but so far. And, of course, the Clean Water Act regulates thousands of miles of navigable rivers, streams and many lakes and wetlands—with a plain connection to interstate commerce. But, of course, the power to regulate some wetlands does not infer a broader power to sweep-in regulation of lands that have no such connection to interstate commerce.

Put another way, the power to regulate something cannot logically be construed as authority to regulate everything. To assume otherwise, as the Tenth Circuit did here, would be to turn the Constitution on its head. For all these reasons, we would hope to see the Supreme Court take this case up in order to reaffirm—and to make more clear—that there are meaningful limits on federal power. For those interested, here is the amicus brief we filed in the Tenth Circuit.

Amusingly, the case is captioned as People for the Ethical Treatment of Property Owners v. U.S. Fish & Wildlife Services. For more on this case, check out Jonathan Wood’s post on the PLF Liberty Blog here. Also Cato Institute offers some great analysis here

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