1. Chapter 6— The Constitution and Regulation of Business REED SHEDD PAGNATTARO MOREHEAD F I F T E E N T H E D I T I O N McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 6-2 Introduction The United States Constitution provides the legal framework of our federal government and the authority it has to regulate business activities.

3. 6-3 Learning Objectives   To appreciate the structure of the United States Constitution.  To distinguish between basic concepts and basic protections contained in the Constitution.  To understand how these provisions impact business.  To learn about the constitutional framework granting governments authority to regulate business activities.  To comprehend how this governmental authority is implemented through administrative agencies.

4. 6-4 think TANK think TANKthink What is the mechanism through which the states receive their governmental power from the federal government? a. The Tenth Amendment of the US Constitution. b. Article VI of the US Constitution. c. The Federal States Power-Sharing Act of 1791. d.States do not receive their power from the Federal government.

5. 6-5 Strong Centralized Federal Government 3 Key Concepts Separation of Powers Supremacy Clause Contract Clause

6. 6-6 Separation of Powers  Success of constitutional experiment founded in division of powers  Checks and balances  Federalism – separate and distinct roles of levels of government.

7. 6-7 Supremacy Clause Constitution Supreme of all Laws Federal Law over State Law Preemption State Law may be invalid for Conflicting with Federal Law

8. 6-8 Contract Clause States cannot pass laws that impact rights and duties under existing contracts Does not apply to federal government May not apply in emergencies

9. 6-9 pop QUIZ pop QUIZ pop QUIZ Do the protections of the Bill of Rights apply to businesses? a. Yes b. No

10. 6-10 Amendments & Basic Protections  Not absolute  Balance with public policy  Removes issues from political process  Varies during emergencies

11. 6-11 Amendments & Basic Protections 1 st Amendment 14 th Amendment 2nd Amendment

12. 6-12  Freedoms: Religion Religion Press Press Speech Speech Assembly Assembly  Right To Petition For Redress Amendments & Basic Protections 1 st Amendment

13. 6-13 1 st Amendment – Freedom of Religion  Establishment  Free Exercise  Employment Discrimination Amendments & Basic Protections 1 st Amendment

14. 6-14 1 st Amendment – Freedom of Press  Organized Scrutiny of Government  Not Absolute – Prior Restraints  Defamation Libel Public Figure – Actual Malice Amendments & Basic Protections 1 st Amendment

15. 6-15 1 st Amendment – Freedom of Speech  Symbolic speech  Overbreadth Doctrine  Commercial Speech Protects Corporations Includes Freedom of Information Amendments & Basic Protections 1 st Amendment

16. 6-16  2008 individuals may have handguns in homes for self defense 2nd Amendment  Right to Possess Guns  Few Court Opinions Amendments & Basic Protections  Narrow Opinion  Increased litigation?

17. 6-17  Due Process Procedural- Proper Notice & Hearing Procedural- Proper Notice & Hearing Substantive- Property/Rights Affected By Gov’t Action Substantive- Property/Rights Affected By Gov’t Action 5 th Amendment- Federal 5 th Amendment- Federal 14 th Amendment- State Local 14 th Amendment- State Local  Incorporation Doctrine Amendments & Basic Protections 14 th Amendment

18. 6-18 Equal Protection  Minimum rationality  Strict scrutiny- compelling state purpose  Quasi-strict scrutiny

19. 6-19 Equal Protection Issues 1. Legislative Apportionment 2. Real Estate- Racial Segregation 3. Rights Of Legitimates & Illegitimates 4. Jury Makeup 5. Voting Requirements 6. Welfare Residency 7. Rights Of Aliens 8. Property Tax To Finance Schools

20. 6-20 pop QUIZ pop QUIZpop Is it ever permissible for a law or government regulation to discriminate? a. Yes b. No

21. 6-21 Commerce Clause “Congress shall have power... to regulate commerce with foreign Nations, and among the several states and with the Indian tribes.” Art. I, Sec. 8

22. 6-22 Commerce Clause “Key Areas” Regulation  Foreign Commerce  Interstate Commerce Limitation  State Police Power  State Taxation

23. 6-23 Foreign Commerce  Federal government has exclusive right to regulate foreign commerce  State can regulate commerce if occurs entirely within state boundaries

24. 6-24 Interstate Commerce  Persons Engaged In Activities “Affecting”  Power Is Very Broad

25. 6-25 think TANK think TANK think TANK Who is the ultimate interpreter of the Constitution? a. Congress b. The President of the United States c. The Supreme Court d. The general public

26. 6-26 Police Powers State Legislation And Regulation To Protect The Public’s Health, Safety, Morals, And General Welfare. Definition

27. 6-27 Dormant Commerce Clause: Limits State Police Powers Limits (Dormant Commerce Clause) Federal Commerce Clause Arbitrary, Capricious Or Unreasonable

28. 6-28 Areas of Regulation of Commerce Federal Preemption Regulation But No Preemption  Irreconcilable Conflicts  Undue Burden No Federal Regulation No Discrimination Exclusively Federal Exclusively State Dual Regulation

29. 6-29 State Taxation  Form Of Regulation  Limited By Commerce Clause  Apportionment  Must Be Sufficient Tie- Nexus Or Taxable Situs

30. 6-30 Regulatory Process – Administrative Agencies Authority of government to regulate professional and personal lives is founded in constitutional principles of: Commerce Clause Police Powers Performed by administrative agencies

31. 6-31 Administrative Agencies Examples  Federal Trade Commission  National Labor Relations Board  Equal Employment Opportunity Commission  Securities & Exchange Commission  Environmental Protection Agency  Federal Aviation Administration  Consumer Product Safety Commission  Federal Communications Commission  Federal Energy Regulatory Commission  Federal Reserve Board  Food & Drug Administration  Nuclear Regulatory Commission  Occupational Safety & Health Administration

32. 6-32 Quasi-Legislative (to issue rules or regulations with impact of law) Regulatory Authority Quasi-Judicial (to make decisions like a court)

33. 6-33  Rules & Regs Must Be Within Legislative Grant Of Power  Delegation Valid? Definite - Violate Due Process? Agency’s Power Limited To Certain Areas  Broad Language  Authority Exceeded? Judicial Review Of Agency Rule Making

34. 6-34 Review Of Adjudications: Procedural Aspects  Judicial Review Is Limited  Agency Authority Limited Delegated From Legislature Develop Rules Of Procedure  Courts Lack Authority To Substitute For Agency  Doctrines Exhaustion Of Remedies Primary Jurisdiction  Equal Access To Justice Act

35. 6-35 Review Of Factual Determinations  Court Does Presume Findings Of Fact Correct Analyze Agency Proceedings  Court Does Not  Reweigh Evidence  Make Independent Determination  Substitute Its View For Agency’s

36. 6-36 Growth of Government “All levels of government are larger and more complex in the first decade of the 21 st century than 25 years ago.”