Federalism refers to the separation of powers from a federal government and the several state governments. This is different than decentralization. Decentralization is where there is one formal national government that delegates authority to geographical regions to manage some governance. Ultimately, decentralization, although unified, provides for less individual protection. Under federalism, the point is to give the federal government certain powers, such as the opportunity to regulate commerce, but retain the majority of powers for the states. This influences and increases individual participation in the political process.

Additional Notes

Some good reasons to have a federal system. First, the states are different and federalism allows the states to experiment then later adopt those methods. Second, federalism leads to additional economic efficiency (Iowa creates corn and Washington creates apples. Easier to interchange). Third, protecting liberty. Fourth, promoting democracy.

Lack of uniformity could be seen as a con.

Gibbons v. Ogden

22 U.S. (9 Wheat.) 1 (1824).

Ogden was the plaintiff. He won in trial court and Gibbons appealed.


What are the extensions and limits of the commerce clause?


Commerce extends to travel “among” the states. Thus Congress has the right to control interstate commerce, including navigation.


The injunction against Gibbons was incorrect. Reversed.


Fulton and Livingston were given the sole right to steamboats on New York waters. They licensed Ogden to run a ferry service on those waters. Gibbons ran a competing ferry service that ended up running into New York waters. Additionally, Gibbons was licensed under a Congressional statute encouraging “coasting trade.”

So, the question is, who rules? New York’s law, or Congress’s commerce power?


Commerce includes travel. Congress has the right to regulate commerce “among” the several states. Thus, if commerce of necessity travels over state borders, then Congress has the right to govern it. However, Congress does not have the right to regulate commerce that is limited to the borders of the state. State’s are free to regulate their commerce as long as it does not infringe on Congress’s power to do so.

Thus, because New York’s law infringed on Congress’s power to regulate interstate commerce (this being an instance of interstate commerce) the law is unconstitutional.

Additional Notes


  • Navigation is commerce
  • Congress has the ability to regulate interstate commerce
  • Gibbon was licensed by the federal government
  • Federal power (Gibbon’s license) overpowers state power (Ogden’s license).
  • States have the power to regulate any material that appears purely internally within the state.

What’s the scope of national legislative power v. the scope of state powers.


  • What’s the test?
  • Who should decide what the test is?

However, the states can regulate anything that remains within the one state.

The exception to the commerce clause is the police powers. If the state finds that the interstate commerce is potentially harmful, they can regulate that commerce (e.g. COVID quarantines).

This case interpreted the commerce clause broadly (because it expanded federal powers).

Political Constraints v. Judicial Enforcement

Hammer v. Dagenhart

247 U.S. 251 (1918).

This case explores the constitutionality of a statute that regulated commerce coming from factories where child labor was used. The plaintiff won in trial court.


Does the statute exceed Congress’s commerce power?


The commerce clause extends to the regulation of goods crossing over state lines. It does not extend to override the state’s police powers.


Affirmed, the statute is unconstitutional.


The Child Labor Act was created to protect children under the age of fourteen from employment and children between the ages of 14-16 from overwork (either from working too long during the day or too much during the week). The method of enforcing this act was by restricting the factories that engaged in child labor from shipping goods to the several states (citing the commerce clause as the authority).

In this present case, the plaintiff is the father of two children (one under 14 and the other between 14-16). He wanted his kids to work, so he wanted the act to be deemed unconstitutional.


The majority says that the mere fact that Congress can regulate commerce does not mean that there is complete control. Here, the goods here are ordinary. As such, Congress is not regulating commerce but instead regulating the factories engaging in the practice. Instead, this is an infringement on the police powers afforded to the states. This is not a proper exercise of commerce power and as such, the act is unconstitutional.

The dissent disagrees. They argue that there is no rules about what goods can be regulated. Simple, if a good passes over interstate lines, regulations can be made. So, the side effect of addressing child labor is not an issue. As such, the dissent would use this to address the evil of child labor.

Additional note: this case begins to explore the limits of congressional authority and how much the judicial power can limit that authority.

Additional Notes

This is separate than Gibbons. There, the court expanded Congressional authority to use the commerce clause. Here, it denied expanding Congressional authority further. However, you can still argue that this is still consistent with Gibbons. The reason is that this case focuses entirely on the manufacture within the same state.

So, we have a test here. The manufacture test. Just because the goods go over state lines does not mean that it can be regulated by Congress. In essence, Congress is attempting to regulate child labor, not commerce. This is a categorical/formalistic standard (what is Congress’s power v. State powers). Holmes dissents arguing that anything that crosses state lines can be regulated. Holmes standard is considered more of a “functional” approach.

Wickard v. Filburn

317 U.S. 111 (1942).

Filburn is the plaintiff. He was fined and sought an injunction against the statute. He was successful and Wichard appealed.


Did Congress exceed the scope of the commerce power by regulating all the wheat? Homegrown and otherwise.


Even if the activity is local, if the activity has a substantial economic effect on interstate commerce, it can be regulated.


There is a substantial economic effect, the commerce can be regulated. Reversed.


During the 1920s, the average consumption of wheat was 25%. With the decline of export trade, this declined to only 10%. The excess wheat thus created a backlog of production creating significant economic factors. Congress responded by directing how much wheat each person could produce.

Filburn was a farmer who focused primarily in dairy but had a section dedicated to wheat production. The use of the wheat was reinvested in the farm, seed, and the remainder was sold on the market. However, he exceeded his quota and was fined. He argued that the fine was unconstitutional because his economic effect on interstate commerce was minimal (the majority being reinvested into his farm and seed).


Although the economic effect on his own may be minimal, taken together, there is a substantial economic effect. In other words, if there are many farmers like Filburn who continue to exceed the quota, then even when the majority of goods are localized, it has a major effect on interstate commerce.

Consequently, Congress acted well within their powers to regulate these goods.

Takeaway: We saw in the child labor case that the Courts limited Congress’s influence. In the present case, they allowed it to expand. Why? What factors may have been in consideration? I have a feeling that there were policy concerns in addition to Congressional authority that had an influence.

Additional Notes

Here, there is a background of economic trials going throughout the United States. So, Congress was regulating several factors to help control for this economic trial. The farmer was fined and he countered saying that all his use had a minimal effect on the interstate commerce.

Here, the court argues that there is an substantial economic effect. Even though this farmer’s excess wheat was minimal, but if you combine his efforts with others, this goes too far. In other words, this aggregation would lead to a substantial economic effect.

So, the test is that Congress can regulate local commerce that would have a substantial economic effect on interstate commerce. The aggregation can be used to meet the substantial effect.

This case is an example of a really broad interpretation of the Commerce Clause. The substantial economic effect test above is still the test used today. This is a very functional (pragmatic, realistic) approach.


The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.

Will Laursen

Show Your Support


Table of Contents