4 The Constitution Focus on Application to Business THE CONSTITUTION OF THE UNITED STATES We the people of the United States in Order to form a more perfect Union establish Justice insure domestic Tranquility provide for the common defense promote the general Welfare and secure the Blessings of Liberty to ourselves and our Posterity do ordain and establish this Constitution for the United States of America ARTICLES OF THE CONSTITUTION I II III IV V VI VII Composition and powers of Congress Selection and powers of the President Creation and powers of the federal judiciary Role of the states in the federal system Methods of amending the Constitution Declaring the Constitution to be supreme law of the land Method for ratifying the Constitution THE COMMERCE CLAUSE ARTICLE I SECTION 8 Congress has power Regulate Commerce with foreign Nations and among the several States and with the Indian Tribes Deals with interstate commerce More power in State of Federal Government Federal government THE NECESSARY PROPER CLAUSE CLAUSE 18 ARTICLE I SECTION 8 Constitution enumerates list of Congressional powers AND Power to make all Laws which shall be necessary and proper for carrying into Execution the forgoing Powers This power with the Commerce Clause provides BROAD Congressional control of commerce Almost everything is necessary and proper Gives all power to do N P not only FEDERAL SUPREMACY THE SUPREMACY CLAUSE ARTICLE VI PARAGRAPH 2 The Constitution and the Laws of the United States Shall be the supreme Law of the Land and the judges in every state shall be bound thereby McCulloch v Maryland states that when the federal government has power to act under the Constitution its actions are supreme In such a case federal government actions take precedence over actions of other governments CASE WICKARD V FILBURN Farmer Filburn raised livestock and crops on his 90 acre farm The Agricultural Adjustment Act imposed production limits to force up prices by cutting supply of crops Filburn planted wheat on 23 acres the USDA told him he could plant only 11 acres in 1940 He did not believe the government could tell him how much of what to grow on his property and he did not sell the output was consumed on his farm He was fined 117 and fought it up to the Supreme Court The holding made clear the sweeping use of the Commerce Clause from that time forward Beginning of the modern Affectation Doctrine The Court upholds federal regulation of even local personal activities Farmer was convicted of growing a small amount of wheat for consumption on his farm without USDA permission Even if the farmer s activity be local and though it may not be regarded as commerce it may still whatever its nature be reached by Congress irrespective of whether such effect on interstate commerce is what might at some earlier time have been defined as direct or indirect Any local businesses may be regulated by Congress the Court has ruled many times CASE KATZENBACH V MCCLUNG Ollie s Bar B Q Family owned restaurant in Birmingham AL 220 seats for white customers only Title II of 1964 Civil Rights Act prohibits racial segregation in public accommodations if serving interstate travelers or if food moved in interstate commerce Does Title II apply HELD Yes activity may exert a substantial economic effect on interstate commerce QUESTIONS 1 Might the Court might have found differently if the restaurant could have shown that all of its food was from within the state a The court would be unlikely to have found differently in this case even if all food served by the restaurant was shown to be produced within the state The Court held previously as in the Wickard v Filburn case that if Congress wishes to regulate a particular industry then the definition of interstate commerce may include essentially all commerce Even if commerce is within a single state the fact that it exists has an effect on the supply and demand for products in general so that intrastate business can have interstate effects FEDERAL STATE REGULATORY RELATIONS States often legislate on a matter on which Congress has legislated Federal regulation takes precedence over state regulation State regulations may not contradict federal law standards States may not enact laws that burden interstate commerce by imposing restrictions on business from other state See Exhibit 4 1 p 84 PERTINENT ECONOMIC UNIT NATION HUGHES V OKLAHOMA P 85 Oklahoma prohibits shipping or selling minnows out of state to protect Oklahoma minnows Hughes bought minnows in Oklahoma and took them to Texas Convicted of violating state law The OK Supreme Court upheld the statute as constitutional to protect OK natural resources Hughes appealed U S Supreme Court Reversed in favor of Hughes Test 1 Does statute regulate evenhandedly with only incidental effects on interstate commerce 2 Does statue serve a legitimate local purpose and if so 3 Could alternate means promote this local purpose as well without discriminating against interstate commerce Fine to protect wildlife but could be effected in less discriminatory way by the state QUESTIONS 1 The Court held that the Oklahoma law unfairly discriminated against interstate commerce How could the state have designed a regulation to achieve the same result protecting minnows that would not harm interstate commerce a If Oklahoma wanted to protect minnows it would prohibit their being caught or restrict the number that could be caught The point of the opinion is that once they were caught they could not be restricted to the Oklahoma market nor could trade be restricted to Oklahoma residents IMITATION NOT ALLOWED States may not copy federal regulations if imitation inhibits interstate commerce South Central Timber Development v Wunnicke Congress requires timber from federal lands must be milled prior to removal from Alaska Alaska tried same thing but Commerce clause long recognized as limiting power of states to pass laws imposing substantial burdens on such interstate and foreign commerce This power is granted to Congress THE TAXING POWER ARTICLE 1 SECTION 8 CLAUSE 1 Lay and collect taxes 16th Amendment fed gov power to impose income taxes Taxes used to raise revenue and or deter punish encourage certain behavior Supreme Court the power to tax includes the power to destroy Supreme Court upheld taxes on illegal gambling narcotics marijuana illegal business activities If reported evidence of illegal activity If don t violate tax laws SUPREME COURT gives only a CURSORY REVIEW