Also known as: substantial economic effects
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
An attribute of intrastate activity that permits congressional regulation under the Commerce Clause when the activity, considered in the aggregate with similar conduct by others, influences supply and demand in national markets.
An attribute of intrastate activity that permits congressional regulation under the Commerce Clause when the activity, considered in the aggregate with similar conduct by others, influences supply and demand in national markets.
Select any source to read its text and confirm it supports the definition.
A requirement for special allocations of partnership income, gain, loss, deduction, or credit under IRC section 704(b) that ensures the allocations are consistent with the partners economic arrangements and capital accounts.
Select any source to read its text and confirm it supports the definition.
A requirement for special allocations of partnership income, gain, loss, deduction, or credit under IRC section 704(b) that ensures the allocations are consistent with the partners economic arrangements and capital accounts.
Each sense below has its own examples, sources, and questions.
Elias grows barley on his farm solely to feed his livestock. He sells beef and dairy products across state lines but never sells the barley. When a federal statute caps on-farm grain production, Elias challenges the limit. The aggregate decisions of many farmers to self-supply rather than purchase feed reduce national demand and affect prices, satisfying the requirement for regulation.
A student carries a handgun to school in violation of a federal statute. The conduct occurs entirely within one state and involves no commercial transaction. Because the activity is not economic and its aggregate effects on interstate commerce are too attenuated, the statute exceeds congressional authority.
Patients cultivate marijuana in a single state greenhouse for personal medical use. They forgo purchases of FDA-approved pharmaceuticals manufactured out of state. When similar cultivation occurs nationwide, the cumulative reduction in demand affects national pharmaceutical markets, permitting federal regulation.
A victim sues her attacker under a federal civil remedy statute for gender-motivated violence. The conduct is noneconomic and occurs locally. Even when aggregated, such acts do not exert the required influence on interstate markets, so the statute cannot rest on the commerce power.
Individuals who choose not to purchase health insurance face a federal penalty. The decision to remain uninsured is not itself economic activity. Congress may not compel entry into the market merely to create the substantial aggregate effects needed for regulation.
Mining companies conduct surface operations entirely within one state. The cumulative environmental damage from many such operations alters land values and coal supply across state lines. The aggregate economic consequences on national energy markets support federal regulation.
No. Courts examine whether the regulated class of activities, viewed in the aggregate, exerts a substantial effect on interstate commerce. Individual proof is not required.
Supporting sources
Yes when the production substitutes for purchases in a national market and the aggregate substitution affects supply or demand. The test focuses on economic consequences rather than commercial intent.
Supporting sources
No. The test reaches noncommercial conduct such as home consumption when the aggregate effect on a national market is substantial, as in on-farm wheat production.
Supporting sources
The Tenth Amendment does not independently limit the commerce power once substantial economic effects on interstate commerce are shown. Traditional state concerns do not immunize economic activity from federal regulation.
Supporting sources
Section 704(b) recharacterizes the allocation according to the partner's interest in the partnership, determined by all facts and circumstances including capital accounts.
Supporting sources
…be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as direct' or indirect.' " Id. , at 125. The Wickard Court…