In Gibbons v. Ogden, the Supreme Court did option 2.) “expanded Congress’s power by ruling that trade on the nation’s waterways fell under the commerce clause of the Constitution.”
The Gibbons v. Ogden ruling was a court case decision resolved in New York that Congress had the ability to regulate interstate commerce. This meant states and smaller groups of people had less authority over their decisions and nothing passed without the permission of Congress or a higher group of officials.