The economic/noneconomic activity distinction under the commerce clause.

• Author: Driesen, David M.

Contents Introduction I. The Role of the Economic/Noneconomic Distinction in Commerce Clause Jurisprudence A. Experience with Formalist Distinctions under the Commerce Clause B. Lopez, Morrison, Raich, and the Economic/Noneconomic Distinction C. Scholars' and Dissenting Justices' Reaction to the Economic/Noneconomic Distinction II. Lopez and Morrison's Guidance on Economic Activity A. Lopez's Broad Conception of Economic Activity B. Limits on the Economic Activity Concept III. Implications A. Challenges to the Broad Interpretation B. The Guidance's Theoretical Significance C. Resolving Uncertainty Conclusion Introduction

In the wake of the Supreme Court's decisions in United States v. Lopez (1) and United States v. Morrison, (2) the lower courts have struggled to figure out whether federal statutes challenged under the Commerce Clause regulate "economic" activity or "noneconomic" activity. For the Lopez Court created a distinction between these categories of activities, and the Court applied this distinction in both of these cases to strike down federal statutes regulating noneconomic activity as beyond Congressional authority under the Commerce Clause. (3) Lopez and Morrison strongly suggest that the Court will not, give statutes regulating noneconomic activities the full measure of deferential review afforded federal statutes challenged under the Commerce Clause since the late New Deal, and may well strike them down. (4)

Scholars agree that Lopez and Morrison offer no guidance about how to apply the economic/noneconomic distinction, leaving lower courts adrift when trying to figure out whether challenged federal statutes regulate economic activities or not. (5) This view about the absence of guidance stems from the Supreme Court's failure to explain why it categorized the activities regulated under the statutes it has invalidated as noneconomic activities. (6) In Lopez, the Court stated that the Gun-Free School Zones Act (GFSZA) regulated the activity of gun possession in school zones. It justified its characterization of gun possession as noneconomic by declaring that gun possession near schools has "nothing to do with ... any sort, of economic enterprise." (7) The Morrison Court concluded that the Violence Against Women Act regulated "gender-related crimes" such as rape. In similar conclusory fashion, the Court declared that "gender-motivated crimes" do not constitute economic activity "in any sense of the phrase." (8) So, the scholarly consensus about the lack of guidance is understandable, having roots in the leading cases' use of conclusory statements to justify characterization of the activities before them. (9)

Nevertheless, this Article argues that Lopez and Morrison offer substantial guidance about the economic/noneconomic distinction's meaning. This guidance stems not from explanation of the characterization of the activity that motivated these decisions (which is missing), but primarily from the Lopez Court's effort to distinguish prior precedent, an effort that was essential to obtaining a majority for its result. Prior to Lopez, the Court did not distinguish economic from noneconomic activity. The Lopez Court invented this dichotomy in order to distinguish an unrelieved decades-old line of precedent upholding all sorts of statutes as regulating activities having a substantial effect on interstate commerce. (10) The Lopez Court distinguished all of those precedents by characterizing them as regulating economic activity. (11) Thus, we know that all regulated activities that the Court has characterized as affecting interstate commerce constitute economic activities. Moreover, the Lopez Court examined some of this precedent and explained what (economic) activities those cases addressed, thereby giving the lower courts valuable additional guidance about how one characterizes activities regulated under federal statutes. This Article elucidates the guidance offered in Lopez about how to distinguish economic from noneconomic activity.

This Article, therefore, engages primarily in an analytical task. It does, however, take the analysis in a normative direction by asking what this guidance shows about the value and prospects of this new formalist distinction, which the dissenting Justices and many scholars have sharply criticized.

Part I lays the groundwork, explaining the role of the economic/ noneconomic distinction in Commerce Clause jurisprudence. It then reviews scholarly concerns about the lack of guidance and the distinction's theoretical unsoundness.

Part II, the heart of the Article, parses the Lopez decision and the precedent it relies upon in creating the economic/noneconomic distinction, elucidating the guidance offered. It shows that the Lopez majority intended a rather capacious understanding of economic activity, and that this breadth played a key role in securing the concurrences of Justices Kennedy and O'Connor, which were essential to obtaining a majority in Lopez. (12) At the same time, the Court imposed an important limit on the concept of economic activity by rejecting the relevance of the regulated activity's effects to the determination of whether the activity is economic.

Part, III addresses this analysis's implications in both practical and theoretical terms. It critically examines the question of whether this guidance should substantially ameliorate concerns about arbitrariness and inconsistency. It also addresses the question of whether this guidance should allay critics' concerns about the distinction's theoretical soundness.

1. The Role of the Economic/noneconomic Distinction in Commerce Clause Jurisprudence

   This Part will provide the background needed to understand the economic/noneconomic distinction's role in Commerce Clause jurisprudence. It begins with some Commerce Clause history in order to introduce the problematic nature of formalist distinctions, which informs reactions to the economic/noneconomic distinction. (13) It then moves to a discussion of the role of the economic/noneconomic distinction in Lopez and its progeny. This Part concludes with a review of scholarly opinion and the dissents that they have echoed. This review demonstrates that scholars have agreed that the Court, has provided 110 guidance to applying the economic/noneconomic distinction and that many of them have expressed more general concerns about the distinction's theoretical soundness, as have the dissenting Justices in Lopez and Morrison.

   1. Experience with Formalist Distinctions under the Commerce Clause

      Scholars and judges view the economic/noneconomic distinction through the lens of prior experience with formalist distinctions. (14) For that reason, some understanding of the history of Commerce Clause jurisprudence provides important background.

      Article I section 8 of the Constitution enumerates the limited powers of Congress. (15) Clause 3 of that section empowers Congress to regulate commerce among the states and with foreign nations. (16) Because this Commerce Clause power is much broader than the other listed powers, a conclusion that a particular matter lies outside the Commerce Clause authority often implies that it lies beyond the federal government's power altogether. (17) Hence, the Commerce Clause's interpretation plays an important role in establishing American federalism's basic contours.

      The early Commerce Clause jurisprudence gave the Commerce Clause a liberal construction. In Gibbons v. Ogden, the Supreme Court construed the authority to regulate interstate commerce as reaching all "commercial intercourse" touching more than one state. (18) The Gibbons Court suggested that Congress could regulate activities that affect other states, but not the "completely internal" commerce within a state. (19)

      The rise of federal regulatory power associated with nineteenth century progressivism and later, the early New Deal, gave rise to jurisprudence employing formalist distinctions to cabin the Commerce Clause's reach. The Court during this period held that the Commerce Clause did not authorize federal regulation of "manufacturing" or "mining," even when these activities produced goods to be shipped between states. (20) It distinguished commerce in the narrow sense of trade or exchange from manufacturing and mining. Belying the formalism of the cases forbidding federal regulation of production, the Court sometimes upheld regulation of intrastate activities on the ground that they directly affected interstate commerce. (21) On the other hand, it rejected regulation of other intrastate activities that affected interstate commerce on the ground that they only did so indirectly. (22) Thus, the Court's decisions hinged on arbitrary formal distinctions between production and commerce and between direct and indirect effects. These formalist distinctions made the jurisprudence unpredictable and seemed out of keeping with a functional understanding of the national economy, which new technologies and forms of business organization had transformed in ways that made activities in one state closely related to activities in other states.

      The Court also struggled during this period with the issue of whether the Commerce Clause only authorizes regulation for commercial purposes. It struck down early progressive legislation prohibiting child labor, which had a moral purpose of discouraging employment of young children. (23) On the other hand, it upheld regulation combatting the moral evils of gambling, (24) prostitution, (25) and kidnapping. (26)

      After creating quite a bit of political controversy by striking down early New Deal legislation seeking to address the Great Depression, (27) the Court began to retreat from the formalist approach of the late nineteenth and early twentieth centuries. (28) The Court accepted Congressional regulation of any activity substantially affecting interstate commerce whilst overruling the cases establishing the old formalist distinctions and prohibiting...