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So let's say you were some financial market that operated solely in a US state so all of your transactions never crossed state lines. Would federal government agencies like the Commodities Future Trading Commission be able to regulate you? As far as I understand it, it shouldn't because it's not interstate commerce, right?

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  • I'm fairly sure the US claims sovereignty for any transaction undertaken in dollars regardless of location in the world, just a note
    – ScottishTapWater
    Nov 28, 2022 at 14:12

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No.

Imagine, for instance, that you're a dairy and poultry farmer in Ohio. You grow a small crop of wheat every year to feed your animals. From whatever is leftover, you take enough to make flour for yourself and your family. After that, you sell whatever is left to someone locally.

You could argue that your wheat-related activities would not be interstate, that they would not be commerce, and that they would have at most indirect effects on interstate commerce.

But the Supreme Court would reject that argument, as it did in Wickard v. Filburn, 317 U.S. 111 (1942).

Even if appellee's activity be local, and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as "direct" or "indirect."

So the general rule is that any activity that has a "substantial economic effect" on interstate commerce -- by reducing demand, for instance -- is within the reach of the federal government's authority to regulate.

While there continues to be controversy over this broad interpretation of Commerce Clause authority, it's a well-settled principle, and everyone recognizes that practically speaking, there's virtually no commercial activity that Congress cannot regulate.

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    To be clear, U.S. securities laws do contain an express statutory intrastate commerce exception which is broader than it is constitutionally required to be. But, the statutory intrastate commerce exceptions in the securities acts are nonetheless narrow and very difficult to qualify for in any economically meaningful way not already exempt on other grounds (and still do not escape state securities regulations which closely parallel the federal ones in most states). So, as a practical matter, issuers predominantly use exceptions to the federal securities laws other than the intrastate exception.
    – ohwilleke
    May 20, 2020 at 21:55
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    A recent case affirming the broad scope of the commerce clause is Taylor v. United States, U.S. (June 20, 2016). supremecourt.gov/opinions/15pdf/14-6166_o7jp.pdf See also Gonzales v. Raich, 545 U. S. 1 (2005).
    – ohwilleke
    May 20, 2020 at 22:03
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    And for discussions on the limitations of Commerce Clause authority, see United States v. Morrison, 529 U.S. 598 (2000) law.cornell.edu/supct/html/99-5.ZS.html; and National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012) supreme.justia.com/cases/federal/us/567/519.
    – bdb484
    May 21, 2020 at 2:36

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