Carter V. Carter Coal Co.

• Sutherland 1936. Much more significant blow to New Deal.

• Facts. This case involved a challenge to the Bituminous Coal Conservation Act of 1935, which set maximum hours and minimum wages for workers in coal mines.

• Held unconstitutional. The Act was found not to be a valid use of the commerce power. The SCt returned to the distinction (espoused in Knight) between “production” and “commerce.” Production, which was what was being regulated here, was a “purely local activity,” even though the materials produced would nearly all ultimately be sold in interstate commerce. Nor did the production “directly affect” interstate commerce; the issue was not the extent of the effect produced on interstate commerce, but the existence or non-existence of a direct logical relation between the production and the interstate commerce.

• Local evil. Furthermore, the SCt held, the issue was the link between the employer-employee relationship (the precise matter being regulated) and interstate commerce; it could not be said that this relationship had a sufficiently direct effect upon interstate commerce. Also, the employer-employee relationship was a “local relation,” and whatever evils currently characterized that relationship in the coal industries were all “local evils over which the federal government had no legislative control.”

• Dissent - Cardozo. The majority opinion did not give separate consideration to the validity of other aspects of the Act, such as the setting of minimum and maximum prices on coal sales. Majority viewed these price rules and wage-hour rules as being inescapably intertwined, so that the invalidity of the latter made the entire Act invalid. But Cardozo’s dissent contended that (1) regulating wages may be necessary to protect interstate commerce, and (2) at least the price rules were valid, even as applied to intrastate sales. He argued that the prices for intrastate coal sales had such a direct impact on those for interstate sales that regulation of the latter could not be successfully carried out without regulation of the former. Hughes agreed in separate opinion that price regulations were valid, but argued that labor provisions were severable.

Modern Trend

• Modern trend in SCt’s Commerce Clause analysis began in 1937 decision NLRB v. Jones & Laughlin Steel Corp. Beginning with that case, SCt showed vastly greater willingness to defer to legislative decisions. Under present doctrines, SCt will uphold commerce-based laws if SCt is convinced that the activity being regulated “substantially affects” interstate commerce. In fact, in only one case since 1937 has SCt found that Congress went beyond its Commerce Clause powers (Lopez). SCt expanded reach of Commerce power by recognizing three theories upon which a commerce-based regulation may be premised: (1) an expanded “substantial economic effect” theory; (2) a “cumulative effect” theory; and (3) an expanded “commerce-prohibiting” protective technique.