The New York state government granted a twenty-year steamboat operations monopoly to Robert Livingston and Robert Fulton, limiting other business operations from happening on New York and New Jersey waters. After a few years, Livingston and Fulton sold their monopoly to Aaron Ogden. Ogden used to be business partners with Thomas Gibbons, but their business relationship ended negatively. Gibbons continued his steamboat business from New York to New Jersey, but since he was not part of the monopoly, Ogden sued him, and the New York court ordered Gibbons to cease operations. Gibbons appealed the decision, arguing that he had a license to work on the waters via the Federal Coasting Act of 1793, and the state law was at odds with federal law. Gibbons argued that the Supremacy Clause, which means that federal law takes precedence over state law, was violated by New York.
In this fairly new democratic republic, there was the question of what the commerce power meant and what scope it had. The Commerce Clause, in Article I Section 8 of the Constitution, says that “Congress shall have the power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” There was also the question of whether Congress has different authority over interstate commerce, which occurs between the states, and intrastate commerce, which takes place inside one state. The case reached the Supreme Court, where they were asked to determine if the Commerce Clause allows Congress to regulate interstate navigation.
In a unanimous decision written by Chief Justice John Marshall, the Court agreed with Gibbons, allowing him to continue his business in New York and New Jersey waters. Marshall focused heavily on whether or not the Commerce Clause gave Congress the authority to regulate interstate navigation. The Court believed it did, and the New York state law did not apply above federal law, so New York could not interfere with it. Marshall viewed the Commerce Clause as a broad power, giving Congress a lot of discretion. Marshall wrote that the commerce power “is complete in itself and acknowledges no limitations.” However, while interstate commerce could be regulated, intrastate commerce broadly belonged to the state. Thus, Congress could regulate intrastate commerce only when it is intertwined with interstate commerce.
Justice William Johnson wrote a concurring opinion arguing for an even more expansive view of the Commerce Clause and stated that it should be used for “the advancement of society.”
This case was the first to decide on the Commerce Clause, granting the federal government regulatory powers it still uses now. The Commerce Clause, now widely seen as the Interstate Commerce Clause, has prompted more competitive prices. Even though other broad powers are hotly debated, the Interstate Commerce Clause is widely agreed upon today. However, the view of commerce has expanded even more since the Gibbons v. Ogden decision. President Franklin Delano Roosevelt’s New Deal legislation, which revived the economy out of the Great Depression, was upheld by the Court’s through the interstate commerce power.
In 2012, the Court was asked to determine the constitutionality of the Affordable Care Act’s individual mandate, which required Americans to pay a tax penalty if they chose not to enroll in health insurance. Chief Justice John Roberts argued that Congress could not regulate economic inactivity and, therefore, the mandate was not covered under the Interstate Commerce Clause. However, Roberts argued that the individual mandate was a tax, and under the congressional taxing power, it could stand. The Court did not extend the Interstate Commerce Clause to include the mandate like some thought it would, but federal control nonetheless played a role in establishing the mandate’s constitutionality.