Roscoe Filburn owned a wheat farm in rural Montgomery County, Ohio. When he used his own farm to feed his own family, he fell under the hammer of the federal government.
It was 1938, and America was in the throes of the Great Depression and the Dust Bowl. Agricultural commodity prices—and specifically, wheat prices—fluctuated wildly, costing farmers their fortunes, farms, and families. In an effort to stabilize wheat prices, the federal government intervened and artificially capped the amount of wheat each farmer could grow. It sought to shrink the wheat supply while demand remained the same, and thereby increase the wheat price.
Under this federal policy, the government eventually fined Filburn. Justifiably skeptical that this was within the federal power, Filburn challenged the fine in court.
The case was Wickard v. Filburn — one that lives in infamy and whose effects are felt strongly to this day.
Unlike the state governments, the federal government is one of limited and enumerated power: It possesses only the powers specifically granted in the Constitution, and no others. As such, it based its wheat scheme on Congress’s power “to regulate Commerce … among the several States.” Widely known as the "Interstate Commerce Clause," as its text indicates, this federal power is restricted to commerce that takes place between states.
Wheat and similar commodities are often bought, shipped, and sold across state lines, and their availability within one state can affect markets in others. On its face, then, intervention into the wheat market could seem a reasonable expression of the power to regulate interstate commerce.
But the federal government went much further than that. Filburn’s case began in 1940, when the federal government had imposed a wheat cap for Filburn’s farm. He abided by that cap for wheat he sold on the market, but he retained some additional wheat to feed his family and his animals.
Despite this wholly local, non-commercial use of his own wheat, the federal government fined him for exceeding his quota. After two years of proceedings, the Supreme Court notoriously sided with the government.
The court’s reasoning? By eating wheat he grew himself, Filburn was failing to buy wheat on the national market, and by not buying wheat on the national market, he was engaging in an activity which, if others were to follow suit, could affect that national market. The federal government could therefore regulate even Filburn’s family activity on his own farm in Ohio because it could hypothetically affect interstate commerce.
Congress and federal agencies have taken that reasoning and run with it ever since. Under the logic of this precedent and ensuing cases, the federal commerce power has stretched to reach virtually every activity under the sun.
To this day, the federal government uses these cases to assert a nearly limitless sweep of power. The Commerce Clause has become a catch-all justification for thousands of federal laws and regulations. Agricultural production? Interstate commerce. Public health? Interstate commerce. Obscure spider species? Interstate commerce. Real estate disclosures? Also, somehow, interstate commerce.
For decades, public-interest lawyers like ourselves have sought to rework this line of jurisprudence. In April, our firm, the Center for the American Future, filed Corley v. U.S. Department of the Treasury, with the aim of restoring the Constitution’s proper balance of power in this space.
The plaintiffs in that case, a real estate attorney and a property owner in Lubbock, Texas, want to transfer residential real estate into a legal entity. This should be as simple as filling out the deed, handling the closing details, and signing the paperwork — that is how it has always worked.
And real estate is about the most “local” activity there is. It does not cross state lines, and each property is intrinsically unique. It is a stretch to say that such an activity, especially when no financing has been secured and no money has changed hands, falls within interstate commerce.
But, predictably, the federal government has argues otherwise.
The Treasury Department’s Financial Crimes Enforcement Network, known as “FinCEN,” has put in place roadblocks, rules, penalties, and paperwork for this simple intrastate activity. These extra steps require the disclosure of sensitive information, such as social security numbers, birthdates, closing costs, financing, and other data. FinCEN’s claimed purpose is to combat money laundering, but its restrictions apply to every single person making a covered real estate transfer, regardless of whether he or she is suspected of a crime.
Most importantly, the regulations apply with no regard to interstate commerce. Even if the property is next-door and is transferred for free, according to FinCEN, the agency can reach it under the Commerce Clause.
Our Constitution is clear in restricting federal power. Whether Congress legislates or an executive agency regulates, no part of the federal government may expand beyond the powers set forth in the Constitution.
For more than 80 years, those restrictions have been ignored as the federal commerce power has been pushed beyond the bounds of reason. But the Center for the American Future, through carefully crafted legal arguments, hopes to restore the Constitution’s careful balance of power.
Clayton Calvin is an attorney with the Texas Public Policy Foundation’s litigation arm, the Center for the American Future. Matt Miller is a senior attorney in the Center for the American Future.
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