Tom Shepstone
Shepstone Management Company, Inc.

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Andrew Cuomo is repeating bad history from 1824 by trying to overrule Constitutional protection of free commerce. It’s a steamboat trip to the netherworld.

Andrew Cuomo, as I noted the other day, just isn’t that smart, although he’s got lots of street smarts. He also cares nothing for history. If he did he would know his pipeline stance is a steamboat trip to the legal netherworld. Why? Because he’s repeating some bad history by New York leaders from the past.

What I’m talking about is this reference in an excellent Forbes article recently:

In 1824, the U.S. Supreme Court voided a New York law that granted an exclusive right to navigate by steamboat within state waters.

New York is at it again, 195 years later, with Gov. Andrew Cuomo abusing the federal Clean Water Act to prevent the construction of natural gas pipelines across the state, not only denying New Yorkers a reliable, less expensive, and cleaner source of energy, but also denying those same benefits to people living to the east in New England.

New York’s interference in free commerce is a point we’ve been arguing for some time here. The natural gas industry doesn’t seem that inclined to pursue this approach but it remains the one closest to the truth of what’s happening in New York, so I was pleased to see Forbes contributor Chuck DeVore from the Texas Public Policy Foundation pick up on it.

Devore’s reference to the steamboat case immediately brought to mind the lengthy discussion of the case, Gibbons v. Ogden, in Richard Brookhiser’s fabulous biography of Supreme Court John Marshall, our most famous jurist. Brookhiser has a home in Upstate New York and surely would appreciate the applicability of the 1824 case to Cuomo’s pipeline obstruction.

The case was about steamboats. Here’s a short explanation from American System Now:

The case grew out of the monopoly granted by the State of New York in 1808 to inventor Robert Fulton and lawyer-jurist Robert Livingston, for exclusive rights to navigate the New York waters by steamboat. All other steam-powered craft were required to obtain licenses from the Livingston-Fulton partnership. In 1811, they were granted a similar monopoly by Louisiana for navigation of the lower Mississippi River. Other states–in New England and in the South–chartered their own monopolies, and New Jersey and Connecticut passed retaliatory legislation authorizing seizure of New York-based boats.  The latter three states seemed on the verge of civil war. And they certainly were at war in the courts, with lawsuits abounding, especially in New York. If such conflicts were to persist, commerce would be stifled, and the economic expansion of the nation jeopardized.

The case that finally made its way to the Supreme Court involved: (1) Col. Aaron Ogden, who was operating a ferry between New York and New Jersey under a license granted by the Livingston monopoly, and (2) Thomas Gibbons, who was running boats between New York and New Jersey under a federal license granted under the Federal Coasting Act…

Marshall delivered the opinion of the Court… which, in the words of Albert Beveridge written one hundred years ago, “has done more to knit the American people into an indivisible nation than any other force in our history, excepting only war.” As he did earlier in delivering the McCulloch opinion, Marshall came very quickly to the nature of the Union. It has been argued, he noted, that prior to the formation of the Union, the states “were sovereign, were completely independent, and were connected with each other only by a league.”

“This is true,” Marshall says. But when they converted their league into a government, and converted their “congress of ambassadors” into a legislature, the whole character of the relationship between the states and the general government underwent a change…

The Framers of the Constitution meant what they said, Marshall declared.  They wrote, “Congress shall have the power to regulate commerce with foreign nations, and among the several States, and with the Indian tribes.”  And that is what they intended; there is no basis for giving it any different construction.

Nor should we, as has been argued, limit “commerce” to just buying and selling, or barter. Commerce refers to commercial intercourse of all kinds, and of course this includes navigation. Everybody knows this, Marshall states; it was one of the primary reasons for forming the national government and writing the Constitution.

Moreover, the Constitution gets more specific.  (1) It says that no preference shall be given to the ports of one state over another with regard to regulation of commerce or revenue; (2) that vessels traveling to or from one State, shall not be made to pay duties in another States; and (3) Congress may impose embargoes–which are not only instruments of war (as was argued), but are also instruments of commerce.

What is this power? Marshall asks. It is the power to regulate, and it is complete in itself (plenary), subject to no other limitation than the Constitution. It encompasses navigation within a State, so far as it is connected “in any manner” with foreign commerce or commerce among the several States…

There are areas in which the States can act, Marshall acknowledged, such as under state inspection laws, or health measures, but these don’t derive from the commerce power.  A state may inspect goods for export for quality-control purposes, before they enter into commerce; or a state can enforce inspection laws or quarantine laws to protect the health of its citizens, without conflicting with the federal commerce power. Such laws are not on their face unconstitutional, and in fact federal authorities will cooperate with the states in these matters.

However, if the laws of New York come into conflict with an act of Congress, then New York must yield, Marshall says.  Some would argue that this constitutes a collision between two equal powers–but the Framers of the Constitution foresaw such eventualities, and provided for them, by declaring the supremacy of the Constitution, and the laws made in pursuance thereof.  A law enacted by a State which is inconsistent with the Constitution, is a nullity…

This was the only genuinely popular opinion that Marshall ever delivered.   The response was immediate, and overwhelmingly favorable.  Newspapers North, South, and West acclaimed the ruling for freeing commerce from monopoly…

Most important were the consequences for the real economy. Steamboat navigation multiplied at an explosive rate. By November 1824, it was reported that there were 43 steamboats plying New York waters, as compared to six before the Court’s ruling. The Albany Argus reported that since the ruling, ”steamboats in our waters are as ‘thick as blackberries.’”  One of the new steamers was named “Chief Justice John Marshall.”

Steamboat construction on the Ohio River almost doubled in the first year, and quadrupled in the second year after the ruling. Opening up river navigation propelled the growth of canals, which in turn spurred the takeoff of manufactures and industry.

The parallels with Cuomo’s pipeline obstruction are obvious. There is no missing them or the lessons to be learned. Pipeline infrastructure built with Federal approval to ensure Pennsylvania gas can get to New England is the essence of ensuring free commerce between the states. It is also essential to getting that gas to parts of New York (e.g., Westchester County) that need it to provide housing and ensure a vibrant economy. Andrew Cuomo is not only obstructing that commerce, but also taking his fellow New Yorkers on a steamboat trip to the netherworld. It’s time for some lawsuits citing Gibbons v. Ogden.