Roscoe Philburn operated a wheat farm in rural Montgomery County, Ohio. When he used his harvest to feed his family, he found himself at odds with the federal government.
This was 1938, a time when the U.S. was grappling with the Great Depression and the Dust Bowl. Farmers, particularly wheat growers, faced plummeting prices, leading to widespread loss of properties, farms, and livelihoods. To stabilize wheat prices, the government intervened by limiting how much wheat each farmer could cultivate. The idea was to reduce supply while keeping demand steady, ultimately raising prices.
As a result of these federal policies, Philburn received a fine. Doubting the government’s authority to impose such a penalty, he decided to contest it in court.
This legal battle became known as Wickard vs. Philburn, and it’s a case whose implications are still felt today.
Unlike state governments, which have broader powers, the federal government operates under a specific set of enumerated powers. It can only exercise authorities recognized by the Constitution. Essentially, its wheat regulation hinged on Congress’s ability to “regulate commercial transactions… among several states,” commonly referred to as the “interstate commerce clause.” This clause suggests that federal authority is confined to interstate commercial activities.
Wheat and similar goods are often traded across state borders, and supply fluctuations in one state can influence markets elsewhere. Thus, government intervention in the wheat sector might seem justifiable as part of regulating interstate commerce.
However, the federal government overstepped its bounds. The situation began in 1940 when the government imposed wheat quotas on Philburn’s farm. While he sold some of his wheat, he kept a portion to feed his family and livestock.
Even though he used this extra wheat entirely for personal, non-commercial purposes, he was penalized for exceeding his allowed quota. After two years of legal battles, the Supreme Court ultimately sided with the government.
The court reasoned that by consuming wheat he had grown himself, Philburn’s actions could potentially affect national market conditions, especially if others did the same. Consequently, the federal government asserted its ability to regulate even on Philburn’s own farm in Ohio, based on the hypothetical impacts on interstate commerce.
Since that time, Congress and federal agencies have taken this rationale and expanded their reach. Under the logic established in this case and others, federal commercial authority has ballooned to encompass nearly every conceivable activity.
To this day, federal powers derived from the commerce clause justify a vast array of regulations and laws. Whether it’s agriculture, public health, or even obscure issues—even something like a non-threatening spider species—everything seems to fall under the umbrella of interstate commerce.
For years, attorneys like those at the American Future Center have been attempting to recalibrate this legal framework. In April, our organization sought to restore the constitutional balance of powers in a case known as Corley v. The United States.
The plaintiff, a real estate attorney based in Lubbock, Texas, aims to transfer a property’s ownership to a corporation. This should ordinarily be a straightforward process of filling out forms and signing documents. That’s how it’s always been done.
Real estate transactions are inherently local and rarely cross state lines; the uniqueness of each property makes the application of interstate commerce seem strained, particularly when no actual money is exchanged.
Yet, the federal government has taken the position that it is relevant.
The Financial Crime Enforcement Network, often referred to as “Fincen,” has imposed various regulations, penalties, and documentation requirements on this straightforward local activity. These rules necessitate the disclosure of personal details, including Social Security numbers and other sensitive information. While Fincen claims to combat money laundering, these restrictions apply to anyone involved in property transfers, regardless of whether they are suspected of any wrongdoing.
Critically, these regulations assert jurisdiction over cases that have no interstate element; even the simplest local transfer can fall under this federal oversight.
The Constitution clearly limits federal powers. Regardless of how Congress decides to regulate or enforce laws, there are boundaries that cannot be exceeded. For over 80 years, these limitations have largely been ignored, leading to a dramatic expansion of federal commercial authority beyond reasonable bounds. However, the American Future Center is committed to restoring a careful balance as envisioned in the Constitution through targeted legal challenges.
