Congress passed the Agriculture Adjustment Act in 1938, which established a quota system for the amount of wheat that could be placed into “interstate commerce” between states and established penalties for violation. The Act established firm amounts which farmers could produce in a given year. Plaintiff produced a larger amount than was allowed by the act, but sold below the quota in the market place, keeping the rest for himself. He was caught and assessed a fine. At trial Plaintiff argued that by regulating the totality of production, Congress was necessarily regulating production of goods that was used just locally. In his case, the wheat he kept for himself was not used between state lines; it was for himself. Plaintiff sought to have the Act ruled unconstitutional and won at the trial level. It was appealed to the Supreme Court.
Whether Congress may regulate the overall production of a good, where not all of the good’s production is bought and sold across state lines.
Yes, reversed. The authority Congress has to regulate interstate commerce includes the ability to regulate overall commodity prices and all the concurrent activities which impact those prices. The court held that so long as the activity “exerts a substantial economic effect on interstate commerce” it may be regulated by Congress. The court also stated that the regulated activity must be “rationally related” to the Act and/or Congress’s goal.
The intention of the legislation was to regulate the extreme ebbing and flowing of wheat prices through restriction on production. The production had at the local level impacts this interstate commerce goal of the Agricultural Adjustment Act. Therefore, Congress may properly regulate wheat produced for personal/home consumption because its effects extend to the open market between states.