Ch. 5. Federal limits on state regulation of inter-state commerce p.175
<limits on state power> this chapter, as limited by national concern
Article I restraints on state regulation of commerce
- (1) dormant commerce clause – Congress is silent on a given subject matter
o An objection to state regulation rests on negative implication of the commerce clause of Art. I, sec. 8, cl. 3
- (2) Congress did exercise commerce power – challenge inconsistent state action (regulation)
o i) rest on exercise of commerce power (state can argue against it )
o ii) the preemptive effect of the federal legislation under the Supremacy Clause of Art. VI
Article IV.Sec.2 restraints on state regulation of commerce
- the Privileges and Immunities Clause of Article IV, Sec. 2 – guarantees to the Citizens of each state all Privileges and Immunities of Citizens in the several States
- this provision bars certain state legislation that discriminates against out-of-state economic interests
sec. 1 dormant commerce clause p.175
- the Court invalidates some “protectionist” state legislation, even in the absence of congressional preemption – based on the negative implication of the Art.1.Sec.10.Cl.3
Gibbons v. Ogden, 22 U.S. 1, (1824)
- Marshall - (the power to regulate interstate commerce) "can never be exercised by the people themselves, but must be placed in the hands of agents, or lie dormant"
- But, noting that even if the national (inter-state) commerce power was exclusive, it still co-existed with state power to enact legislation which might affect commerce – “inspection laws, quarantine laws, health laws of every description”
o “inspection laws, quarantine laws, health laws of every description … are not in the exercise of a power to regulate commerce, within the meaning of” the Constitution
§ DO- exclude inspection … from commerce power ; thus from dormant comer power as well
o Division of power b/w Congress over inter-state commercial regulation and the states over police regulations designed to protect the health, safety or welfare of their own citizen
o Permissible state police regulation v. impermissible state commerce regulation
- Cf. the act of laying duties or imposts in imports or exports is under the constitution a branch of the taxing power to regulate commerce (DO- taxing is within commerce power ; But, West headnote the last one, to the contrary )
- Cf. the NY statute … is repugnant to commerce clause, so far as the NY statue prohibits vessels licensed according to the federal statute for carrying on the coasting trade from navigating the said water by means of fire or steam
o State statute is preempted by federal statute under Art.4.Sec.2 Supremacy Clause
- Cf. The act of Congress adopting the states’ system for regulation of pilots manifests intention to leave the subject to the states until congress should think proper to interpose
- Cf. the power expressly granted by the people to the government in the constitution are not to be construed strictly
Johnson, Concurring
- (he went further) Federal commerce power “must be exclusive”
Willson v. Black Bird Creek Marsh Co., 27 U.S. 245, (1829)
- Whether DE law which authorized dam (across a navigable stream) violated the commerce clause
- noting that the dam enhances the value of the property on its bank, also improves the health of the inhabitant , such power is reserved to states
- if congress had passed any law on the subject, a state law in conflict with such law would be void ; here, congress has not passed such law ; question is whether the state law (authorizing dam) is repugnant to congress’ inter-state commerce power
- conclude no , the DE law is not repugnant to national inter-state commerce power
- e.g. NY law which required out-of-state vessel to report the names and residents of the passengers ; not a regulation of commerce, but of police
- e.g. state law requiring licenses for the sale of intoxicating liquors ; state may make regulations of commerce, for the safety or convenience of trade, or for protection of health of its citizens
- state law imposing on out-of-state ships a tax for each passenger
Cooley v. Bd. of Wardens, 53 U.S. 299.
- establishing the Dormant Commerce Clause ; PA law which required entering and leaving port of PA to engage a local pilot to guide hen thru the harbor ; if failure, penalty ;
Held
- the PA state law was valid, not in conflict with any provisions of the Constitution ;
reasoning
- neither that (Congressional commerce power was exclusive ; the states lacked all power to regulate commerce) nor that (commerce clause, in the absence of national legislation, impose no limits on the states at all) – (adopted so-called, selective exclusiveness )
o mere grant of power to congress (which is) compatible with existence of similar power in states does not imply prohibition on states to exercise same power
- Pilotage fees or penalties are not imposts or duties ; therefore, the PA law, imposing on the master of every foreign vessel, and of every vessel of the burden of 75 tons or more, sailing from or bound to any port, who should refuse to take a pilot, a penalty equal to half pilotage, to the use of the society for the relief of distressed pilots, their widows and children,,, is not unconstitutional, as laying imposts or duties, on imports, exports, nor as interfering with the uniformity of duties, imposts, and excises throughout the U.S. ; the PA law ,,, does not give a preference to the members of one state over those of another
o (DO) which implies that a state statute (i) laying imposts or duties, on imports, exports, or (ii) interfering with the uniformity of duties, imposts, and excises throughout the United States, (i) and (ii) could be in violation of dormant commerce clause
o which implies that a state statute, if giving preference to one state over another, (i.e., discriminatory), is in violation of dormant commerce clause ;
- the power to regulate commerce includes regulation of navigation ; the power to regulate commerce includes regulation of pilot ; (however)
- the grant to regulate commerce of the power to regulate commerce did not of itself deprive the states of the power to regulate pilots ;
o DO- regulation of pilots is neither interfering with uniformity of duties, imposts, excises throughout the U.S., nor discriminatory
Note
<national v. local distinction in Cooley >
- abandoned “purpose” inquiry, adopted “subject” inquiry ; some subjects are “of such a nature” as to require “a single uniform rule” by Congress, (DO, See (ii)) whereas others are local
- the Court refused consider the congressional declaration binding ; just guidance ; “if the constitution excluded the States from making any law regulating commerce, certainly Congress cannot regrant … to the state that power”
- Congress has authority to consent to state regulation of commerce that would otherwise be (interpreted to be, by the Court) barred by the Dormant Commerce Clause (See prudential insurance co. Benjamin p.241)
Smith v. Alabama, 124 U.S. 465
- Justified the state regulation of inter-state train engineers, on the ground that the law rested on safety considerations and that its impact on commerce was merely “indirect,” not direct
Buck v. Kuykendall, 267 U.S. 307, p.184
- State regulation, which was adopted primarily to promote safety upon the highways and conservation in their use, are not obnoxious to the Commerce Clause ; but, here, the state’s purpose was not safety, but rather the prohibition of competition (protectionist)
(1),, state laws that facially discriminate against out-of-state commerce
- Almost always struck down under a virtually per se rule of invalidity
- E.g. invalidated a MO license requirement that applied to peddlers who sold merchandise not manufacture of MO, but not to peddlers of MO goods ; stating that “the very object” of the commerce clause was to protect against discriminating state legislation
(2),, state laws, facially neutral as b/w in-state and out-of-state interests, but have an impermissibly protectionist purpose or effect (protectionist in purpose or effect)
- Typically invalidated, on the ground that they in fact favor local economic interests at the expense of out-of-state competitors
(3),, state laws, facially neutral, but have a disproportionate adverse effect on interstate commerce
- may be struck down under the Pike balancing test (Pike v. Bruce Church, Inc., 397 U.S. 137 (1970))
- “Where the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits”
- “If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities”
(1), facial discrimination against out-of-state commerce p.185
Philadelphia v. New Jersey, 437 U.S. 617, p.185
- NJ statute prohibiting the importation of most solid or liquid waste which originated or was collected outside the territorial limits of the State
- Held – the NJ statute violated the commerce clause ; on its face and in its plain effect, the law violates the principle of non-discrimination
Reasoning
- Solid Waste Disposal Act (federal statute) did not preempt the NJ statute
- All objects of interstate trade merit commerce clause protection ; including banning of valueless out-of-state waste by state statute
- In absence of federal legislation, commerce is open to control by states so long as they act within restraints imposed by commerce clause
- In determining whether state law is within restraints imposed by commerce clause, crucial inquiry is whether statute is basically a protectionist measure, or whether … directed to legitimate local concerns, with only incidental effects upon inter-state commerce
- State may not isolate itself from problem common to many states by erecting barrier against movement of inter-state trade ( example of “a protectionist measure”, or facial discrimination against out-of-state commerce )
Here
- It is not quarantine law ; no claim here that the very movement of waste into or through NJ endangers health
Dissent
- The cases sustaining quarantine laws are dispositive of the present case ; e.g. NJ may require germ-infected rags or diseased meat to be disposed of as best as possible within NJ
Note
- Framers centralized the power to regulate inter-state commerce in the Congress largely because of the destructive trade wars among the states as a major problem
- Art.1.Sec.10.Cl.2 – import-export clause
o The Court interpreted the clause to apply only to good from and to nations outside the U.S., not among states ; thus, not import-export clause, but dormant commerce clause has been the source of limitation on state tariff and their regulatory equivalents
- Judicial invalidation of facial discrimination against out-of-state interests reinforces democracy by supplying a kind of virtual representation for out-of-state citizens
- Out-of-state interests are formally unrepresented in a state’s political process ; thus, state lawmakers may be expected to advance the interests of in-state constituents who can vote for them at the expense of out-of-state residents who cannot
- “our system, fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the certainty that he will have free access to every market in the Nation, that no home embargoes will withhold his exports, … “
- Maine v. Taylor, 477 US 131 – upheld a law banning the importation of out-of-state baitfish
- The ban had a legitimate environmental purpose stemming from “uncertainty about possible ecological effects on the possible presence of parasites and non-native species” in shipment of out-of-state baitfish
Hughes v. Oklahoma, 441 U.S. 322
- Invalidated OK law forbidding any person to transport minnows for sale outside the state which were procured within the waters of this state
- Held that the OK law had failed to resort to non-discriminatory alternatives ; the state places no limits on the number of minnows that can be taken by licensed minnow dealers ; yet it forbids the transportation of … out of state for sale
- NJ could not have imposed tax upon only waste that originated out-of-state
- NJ could not have imposed higher tax upon waste that originated out-of-state
- NJ could not have imposed tax on both in-state and out-of-state, and rebated part of tax only to in-state producers
- Discriminatory tax exemption is not permitted .p.194
Home processing requirements p.195
- The Court invalidated state requirements that products be inspected, (or) processed, or treated inside the state before they may be shipped out-of-state
o (DO- the food product should be able to be sold as it is exported from out-of-state)
- Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1 – “the purpose of the law is not to retain the shrimp for the use of the people of LA ; it is to favor the canning of the meat and the manufacture of bran in LA by withholding raw or unshelled shrimp from out-of-state plants ; the practical operation and effects of the provisions complained of will be directly to obstruct and burden inter-state commerce “
Dean Milk Co. v. Madison, 340 U.S. 349, <availability of less discriminatory alternatives for serving the purported state goal> p.196
- Madison, WI milk-processing ordinance which barred the sale of pasteurized milk unless it had been processed and bottled at an approved pasteurization plant within five miles of the central square of Madison
- Held – the five-mile provision (barring sale itself), as applied to IL milk dealer, unduly burdened inter-state commerce in view of the availability of reasonable and adequate alternatives
Reasoning
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o Difficulties in sanitary regulation of milk and milk products originating in remote areas may warrant regulation in the interest of safety, health and well-being of local communities
o DO- the purpose is not discriminatory nor protectionist measure
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o because Congress has not had spoken to the contrary ; though inter-state commerce may be affected
- it was immaterial that WI milk from outside the local area was subject to the same proscription as that moving in inter-state commerce
- <whether less discriminatory alternative available )> A city cannot discriminate against interstate commerce, even in exercise of unquestioned power to protect health and safety of people, if reasonable and un-discriminatory alternatives, adequate to conserve legitimate local interests, are available
o A city cannot adopt a regulation, not essential for protection of local health interests, which places a discriminatory burden on interstate commerce
§ DO- burden on inter-state commerce v. putative local benefit (– whether less restrictive measure available )
Here
- The city could charge the actual and reasonable cost of such inspection to the importing producers and processors, as opposed to barring the sale
C & a Carbone v. Town of Clarkstown, 511 U.S. 383, p.197
- Town built a solid waste recycling center and passed a local ordinance that required all solid waste generated in the town to pass through its new center, to recoup its cost to build the center
- Held - The court held the local ordinance un-constitutional, because the ordinance violated the Commerce Clause, . art. I, § 8, cl. 3, as it favored local enterprises and discriminated against non-local entities.
Reasoning
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o DO- effects on inter-state commerce : (i) requiring operators of recycling facility to send non-recyclable portion of its waste to the new center at additional cost, while out-of-state operators need not, thus, at in-state operator’s disadvantage, (ii) favor in-state operator ; deprive out-of-state biz of access to local market
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o (i) whether ordinance discriminates against inter-state commerce
§ rationale for inter-state commerce clause’s rule against discrimination – to prohibit state laws designed to effect local economic protectionism ; to excite jealousies and retaliatory measures
§ here, allowing only favored operator to process waste that was within town’s limits (DO- favoritism, protectionism, thus, discrimination)
o (ii) whether ordinance imposes burden on inter-state commerce that is clearly excessive in relation to putative local benefits (whether burden on inter-state commerce is out of proportionate to putative local benefits)
§ Here, the town had non-discriminatory alternatives for addressing health and environmental problems
per se rule for discrimination against inter-state commerce>
- Discrimination against inter-state commerce in favor of local biz is per se invalid, unless state demonstrates, under rigorous scrutiny, that it has no other means to advance legitimate local interest
- Here, revenue generation is not local interest that can justify discrimination against inter-state commerce
Dissent
- The local ordinance does not differentiate b/w all local and all out-of-town providers of a service ; but, instead, b/w one entity responsible for ensuring that the job gets done and all other enterprises, regardless of their location ; thus, the ordinance fall outside that class of tariff or protectionist measure
- While discrimination against inter-state commerce was, thus far, in markets served by private companies, the local ordinance is essentially by a municipal facility
o The municipal facility is one entity that enters the market to serve the public interest of local citizens, quite apart from private interest in private gain
United Haulers Ass'n v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, p.200
- counties and their solid waste management Authority (a public benefit corporation) entered into an agreement, which called for the Authority to manage solid waste
- The Authority, which provided recycling and other services at its facilities, collected tipping fees from private waste collectors that significantly exceeded fees charged at waste processing facilities in the open market
- The Counties enacted flow control ordinances requiring all solid waste generated within the Counties to be delivered to the Authority's processing facilities.
- Solid waste management companies brought suit, alleging the flow control ordinance violated commerce clause
Held
- (1) the flow control ordinances (that favored state-created public benefit corporation), (by requiring businesses hauling waste in counties to bring waste to facilities owned and operated by this public benefit corporation), (but that treated every private business, whether in-state or out-of-state, in exactly the same way), did not discriminate against interstate commerce in violation of “dormant” aspect of Commerce Clause
- (2) any incidental burden on interstate commerce that resulted from application of county flow control ordinances was not clearly excessive in relation to public benefits provided, in form of increased recycling
- (3) It was not the office of the Commerce Clause (i) to determine whether government or the private sector should provide waste management services or (ii) to override state policy that favored displacing competition with regulation in the waste management area
Reasoning
- Commerce clause operates as implicit restraint on state authority, even in absence of a conflicting federal statute
<first inquiry – whether discriminate against inter-state commerce>
- to determine whether law violates dormant commerce clause, court first ask whether it discriminates on its face against inter-state commerce
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- discrimination against inter-state commerce, motivated by economic protectionism is per se invalid under dormant commerce clause, unless state has no other means to advance legitimate local purpose
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o DO- Favoring local government is not protectionism, thus, not subject to the per se rule, nor discrimination ; the first inquiry is out
o When a law favors in-state business over out-of-state competition, rigorous commerce clause scrutiny is appropriate, because such law is often product of simple economic protectionism ; by contrast, law favoring local government (as opposed to in-state business) may be directed toward legitimate goals, unrelated to protectionism
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- Under the Pike test, court will uphold non-discriminatory statute from challenge under commerce clause, unless burden imposed on inter-state commerce is clearly excessive in relation to putative local benefits
- Here, Any incidental burden on interstate commerce that resulted from application of county flow control ordinances, (which required businesses hauling waste in counties to bring waste to facilities owned and operated by public benefit corporation,) was not clearly excessive in relation to public benefits (provided by these ordinances,) which increased recycling and conferred significant health and environmental benefits on citizens of the counties
Dissent
- The fact that the flow control ordinance discriminate in favor of a government-owned enterprise does not meaningfully distinguish this case from Carbone ;
o The preferred facility in Carbone was nominally owned by a private contractor, but it would be misleading to describe the facility as private
o (Carbone aside) the Court has long subjected discriminatory legislation to strict scrutiny, and has never, until today, recognized an exception for discrimination in favor of a state-owned entity
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o Under the market-participant doctrine, it allows States to engage in certain otherwise-discriminatory practice, e.g., selling exclusively to, or buying exclusively from, so long as the State is “acting as a market participant, rather than as a market regulator,
o (Respondents) are doing exactly what the market-participant doctrine says they cannot: While acting as market participants by operating a fee-for-service business enterprise in an area in which there is an established inter-state market, respondents are also regulating that market in a discriminatory manner and claiming that their special governmental status somehow insulates them from a dormant Commerce Clause challenge
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The market participant exception p.204
- A state or city discriminate in favor its own residents when it functions not as a “regulator” of the market but rather as a market participant ; e.g. when government acts as a buyer or seller of goods, or engage in a program of subsidies or other economic incentives to aid in-state biz,, even for facial discrimination ; the state, as a market participant, may choose to favor its own citizens
- The doctrine allows the state to favor its own residents in the course of its own dealings ; but not permit state to regulate other private parties in their dealings with the state-owned entity
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