A New York state law gave Robert R. Livingston and Robert Fulton a 20-year monopoly over navigation on waters within state jurisdiction. Aaron Ogden and other competitors tried to forestall the monopoly, but Livingston and Fulton largely succeeded in selling franchise or buying competitors’ boats. Thomas Gibbons — a steamboat owner who did business between New York and New Jersey under a federal coastal license – formed a partnership with Ogden, which fell apart after three years when Gibbons operated another steamboat on a New York route belonging to Ogden. Ogden filed suit against Gibbons in New York state court, and received a permanent injunction. The New York state court rejected Gibbons’ argument asserting that U.S. Congress controlled interstate commerce.
In regulating commerce with foreign nations, the power of Congress does not stop at the jurisdictional lines of the several states. It would be a very useless power, if it could not pass those lines. The commerce of the United States with foreign nations, is that of the whole United States. Every district has a right to participate in it. The deep streams which penetrate the country in every direction, pass through the interior of almost every state in the Union, and furnish the means of exercising this right. If Congress has the power to regulate it, that power must be exercised whenever the subject exists. If it exists within the states, if a foreign voyage may commence or terminate at a port within a state, then the power of Congress may be exercised within a state.
This is one of the foundational cases on the broad Congressional powers under the Commerce Clause. Interstate navigation is clearly part of interstate commerce, so states cannot interfere with it by overly regulating the area and creating burdens not imposed by Congress. The case is also notable in that it featured a virtual all-star cast of 19th-century American lawyers, which showed how much was at stake beyond the private dispute.
The Gibbons v. Ogden Decision The outcome of this case was a ruling in favor of the appellant based on the Court’s finding that the appellant and the appellee’s trade amounted to interstate commerce and that, under the Commerce Clause, such a trade could only be regulated by Congress and not by the state of New York. The Court found that New York State’s regulation of licenses for navigation was unconstitutional because it allotted the power to regulate interstate commerce to a state when the Commerce Clause reserved that power for the federal government. The Court examined whether mere transportation across water—which the court called “navigation”—constituted a “trade” such that regulation of it fell under the power to regulate interstate commerce. The Court concluded that navigation was a “trade” across state lines and was, thus, part of interstate commerce. Because of that, the Court reasoned that the federal government held the exclusive right to regulate the licenses and rights to travel across the New York-Elizabethtown waterway. It noted that no “concurrent power” rested in the states when the federal government regulated interstate commerce. That is, it recognized that the power to regulate interstate commerce is “concurrent” until Congress acts to regulate an instrument of interstate commerce. The Court detailed that the basis for that requirement in the Commerce Clause was the desire, in the 1780s, to establish a “uniform” body of trade regulations. The Court acknowledged how, under the Supremacy Clause of the Constitution, Congressional acts superseded state laws. It detailed how this was the case even if the subject of the law was within the state’s power to regulate. In that way, Gibbons’ federal license superseded Ogden’s New York state license. Ogden was not granted the injunction against Gibbons. The Court’s ruling also addressed the argument that the scenario in this case—that of concurrent state and federal waterway licenses—was analogous to the case of concurrent state and federal patents. The appellees had argued that, because states can award patents and have them recognized as valid, states can also award waterway licenses and have them recognized as valid. The Court did not explicitly rule on that issue but suggested that the case of patents was not a valid analogy. It reasoned that, while states may generally have the right to issue patents as rights in specific property, the state in the instant case was seeking to grant a right in something that was inextricably linked to interstate commerce.