Chapter 3: Constitutional and Administrative Law

Week 3. Chapter content to be written. The description below sets out what the chapter will cover.

The government's power to regulate business comes from the Constitution and is limited by it. This chapter covers the constitutional framework first, then turns to the administrative agencies that write and enforce most of the rules businesses deal with day to day: the EPA, FTC, SEC, OSHA, EEOC, and their state equivalents.

3.1 Planned Sections

The Constitutional Framework. Federalism, enumerated and reserved powers, the Supremacy Clause and preemption, and checks and balances among the three branches.

The Commerce Clause. How the Commerce Clause has grown from early cases to the modern "substantial effects" test. The dormant Commerce Clause and limits on state laws that burden interstate commerce. The taxing and spending powers.

The Bill of Rights and Business. Corporate speech and political speech, commercial speech and the Central Hudson test, freedom of religion in the workplace and marketplace, searches and seizures of business premises, the privilege against self-incrimination (and why it does not protect corporations), due process (procedural and substantive), equal protection and the levels of scrutiny, and privacy rights.

Administrative Agencies. Enabling legislation, executive and independent agencies, and agency powers: rulemaking (notice and comment), investigation (inspections and subpoenas), and adjudication before administrative law judges.

Limits on Agency Power. Judicial review under the Administrative Procedure Act, how much deference courts give agency interpretations (including developments after Loper Bright), executive and legislative controls, the Freedom of Information Act, and sunshine laws.

3.2 Featured Case

Wickard v. Filburn, 317 U.S. 111 (1942). Roscoe Filburn, an Ohio farmer, grew more wheat than his federal quota allowed under the Agricultural Adjustment Act. He argued that the extra wheat was fed to his own animals and never sold, so it could not be "interstate commerce." The Supreme Court upheld the penalty. It reasoned that even if one farmer's wheat was trivial, the combined effect of many farmers growing their own wheat would substantially affect the interstate wheat market.

Why this case: It is the clearest example of how far the Commerce Clause can reach, and students tend to have strong reactions to it. Their reactions lead naturally into a discussion of federalism and the limits later cases placed on the "aggregation" principle.

Discussion question: If Congress can regulate wheat a farmer grows for his own use, is there any economic activity Congress cannot regulate?

3.2.1 Short Case Summaries

• Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980). Sets out the four-part test for when government may restrict commercial speech. (The Bill of Rights and business)
• Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024). Overruled Chevron deference. Courts must now use their own judgment about what a statute means rather than deferring to an agency's reasonable interpretation. (Limits on agency power)

3.3 Planned Features

• A diagram of how an agency rule moves from proposal to final rule in the Federal Register.
• An exercise in which students evaluate whether a set of state regulations would survive a dormant Commerce Clause challenge.
• Key terms: federalism, preemption, Commerce Clause, police powers, commercial speech, due process, equal protection, strict scrutiny, rational basis, enabling legislation, rulemaking, administrative law judge.