Carter v. Carter Coal Co.
298 U.S. 238 (1936)

  • 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.