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Awful Eight #7: You May Now Regulate Everything

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Roscoe Filburn: Outlaw Farmer

Roscoe Filburn: Outlaw Farmer

Background

In February 1937, flush with confidence after his historic 1936 landslide, Franklin Roosevelt made a rare political miscalculation. The first wave of New Deal legislation often found the President at odds with the Court, as the Court struck down one piece of legislation after another. FDR figured he could remedy this inconvenience by packing the Court with Justices more to his liking. (Remember, there is nothing in the Constitution limiting the number of Justices to nine.)

Of course, naked politicization of the Supreme Court would never hold in the court of public opinion, so Roosevelt couched his proposal in a more benign way: Justices over 70 were not up to the rigors of the job, he rationalized, so each aging Justice would be supplemented with a younger “associate” Justice. These associates would have full voting rights. Since six Justices were over 70, FDR’s Judicial Procedures Reform Bill would virtually guarantee a friendlier court. And, since the Democrats held historic majorities of 70- 22 and 334-88 in the Senate and House, respectively, his likelihood of passing the bill through Congress was high.

His actions had the desired effect. In April, as the bill was working its way through Congress, two Justices had sudden liberal epiphanies. With their support the Court narrowly upheld the National Labor Relations Act and the Social Securities Act. Curiously, just two years before those same Justices ruled against a railroad pension plan essentially identical to Social Security. (FDR’s court-packing threat makes for fascinating reading about how SCOTUS is influenced by politics.) By summer public opinion had hardened against court-packing and the bill was voted down in Congress. Though FDR lost that particular battle he absolutely won his war with the judicial branch: the Court would never again strike down a piece of New Deal legislation.

So FDR began a new round of New Deal legislation historians refer to as the Second Wave. One major piece of Second Wave legislation was the Agricultural Adjustment Act (AAA) passed in 1938. Among other things, AAA regulated the amount of wheat a farmer could plant. The objective of the law was to stabilize and increase prices during a time of market volatility and over-production.

Which leads us to Roscoe Filburn, a farmer who owned 95-acres near Dayton, OH. He grew wheat and raised dairy cows and poultry. Under AAA Filburn’s wheat allotment was 11.1 acres at a yield of 20.1 bushels per acre. In the fall of 1940 Filburn planted 23 acres and harvested 239 excess bushels from the excess acreage. As he had in years past Filburn fed his livestock with the excess and also reserved some for his family’s personal use.

The local conservation committee charged with enforcing AAA was not pleased and the penalty was stiff. They fined him $0.49 for each excess bushel for a total of $117.11. (At the time the global price for wheat was around $0.40 per bushel and the U.S.-supported price was around $1.16.) They placed a lien on the excess wheat and, pending payment of the fine, withheld his marketing card which he needed to sell his other wheat.

The District Court ruled for Filburn in 1941 on the grounds that Secretary of Agriculture Claude Wickard had misled farmers when, during a radio address, he declared there would be no penalty for personally consuming excess wheat like Filburn had. Contrary to his public statements, Wickard was well aware Congress was considering an amendment to impose a 50% penalty- the amendment passed one week after his announcement. (Wickard apparently had no problem with heavy-handed government. During World War II he banned sliced bread.) The lower court’s decision never mentioned the Commerce Clause which would occupy center stage in the Supreme Court’s decision. The Department of Agriculture pressed their case to the Supreme Court.

The Case- Wickard v Filburn (1942)

At issue was whether the AAA violated the Constitution’s Commerce clause which states “the Congress…shall have the power… to regulate commerce among the several states….”

Filburn’s lawyers argued the wheat in question never entered commerce and therefore could not be subjected to federal regulation. Further, no portion of his crop entered interstate commerce, and much of his crop was for his own consumption. Personal production and consumption were different than commerce, and the Constitution enumerated no powers for these activities. Therefore, the AAA overstepped the Commerce Clause on multiple grounds.

The Court unanimously disagreed.

Even though the wheat in question never entered the market the Court found the Commerce Clause applied because “it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market….” In other words, Filburn’s production of wheat indirectly affected the overall market for wheat. The Court obliterated any distinction between production, consumption or marketing; the only valid consideration, they reasoned, was whether the activity “exerts a substantial effect on interstate commerce.” The origin of that effect could be direct or indirect; local or national; commercial or non-commercial.

The Court also added the concept of “aggregation” to the legal arsenal. An individual’s contribution may in itself be trivial, but if many others are similarly situated a person’s own small contribution “is not enough to remove him from the scope of federal regulation.” So an activity could be local, non-commercial and trivial… yet still be regulated under the Interstate Commerce Clause.

As a subsequent ruling put it, “if it is interstate commerce that feels the pinch, it does not matter how local the operation that applies the squeeze” (US v Women’s Sportswear Mfg Assn, 1949).

Implications

A recent commentary noted “in the wake of… Wickard, it has become clear Congress has the authority to regulate virtually all private economic activity.” Indeed, it would take 60 long years before the Court found an impermissible “commercial” activity. United States v Lopez (2005) concerned a teenager bringing a gun to school. The government argued that gun possession increased gun violence, which in turn harmed the educational environment, which in turn produced less productive citizens, which in turn hurt the economy, which therefore affected interstate commerce. The Court found the Commerce Clause did not apply in this situation. Barely. The decision was split 5-4 with the conservative Justices in the majority.

Wickard granted powers so sweeping that it required a substantial amount of bickering for the Court to narrowly find Congress could not regulate inactivity! (NFIB v Sibelius, 2012.) I suppose if Congress was ever in the mood to do with oil what they did with wheat, they could legally tell me when I could cut my grass because my lawnmower burns gasoline.

In our post-Wickard world, the government’s regulatory powers are virtually limitless.

Aftermath

And Roscoe Filburn?

Filburn didn’t exactly wear the white hat all the time. He intended to reserve some excess wheat for sale at a later date, which is exactly what the AAA was designed to prevent. He also claimed to use substantial amounts for his family. That claim is especially dubious- one scholar calculated if he had turned his excess wheat into bread for his family he could have supplied them with 44 one-pound loaves every day for a year.

However, it’s important to note that neither of these intentions were cited in the case.

Filburn, a fifth generation farmer, celebrated his 50th wedding anniversary in 1978 and lived on his farm until his death in 1987. According to his grandson Gerald Spurgeon he never talked about the case. “No, he wasn’t talkative,” Spurgeon said. “He was a farmer.”

Next up: The Power to Regulate Everything Becomes Reality

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