Congress enacted the Bituminous
Coal Conservation Act (also known as
the Guffey Coal Act). The
Act regulated prices, minimum wages, maximum hours, and "fair
practices" of the coal industry.
Although compliance was
voluntary, tax refunds were established as incentives to abide by the regulations.
Congress felt they had the
authority to regulate this activity based on the Interstate Commerce
Clause.
Carter, a stockholder, brought
suit against his own company in an attempt to keep it from paying the tax
for noncompliance.
The US Supreme Court found the
Bituminous Coal Conservation Act
unconstitutional.
The US Supreme Court found
that the Act could not be justified under the Interstate Commerce
Clause.
The Court found that
"commerce" is plainly distinct from "production."
Employing workers, setting wages and working hours, and mining coal were
found to be part of the local process of production, separate from any
trade of goods that could be regulated under the Interstate Commerce
Clause.
In a dissent it was argued
that, "everything which moves in interstate commerce has had a local
origin. Without local production somewhere, interstate commerce would
practically disappear."
This case is the other side of
commerce from A.L.A. Schechter Poultry Corp. v United States (295 U.S. 495 (1935)). In that case, it was
decided where interstate commerce ends, while this case decides where
interstate commerce begins.
