Constitutional Law I Dormant Commerce Clause I Nov. 15, 2004

Fall, 2004Con Law I - Manheim2 Yuck, the Commerce Clause again The grant of enumerated power “The congress shall have Power … To regulate Commerce with foreign nations, and among the several States, and with the Indian Tribes” Is this power concurrent or exclusive? If exclusive, only congress can regulate IC (and those aspects of intra-state commerce that satisfy Lopez). If concurrent, states can also regulate IC (and intra-state commerce).

Fall, 2004Con Law I - Manheim3 Congress’ Power over IC If congress’ power is concurrent State law can be preempted by federal law, but otherwise are presumptively valid If congress’ power is exclusive precluded State law is precluded whether or not congress legislates Answer: Congress’ power over IC is sometimes exclusive and sometimes concurrent  What else would you expect?

Fall, 2004Con Law I - Manheim4 A little history doesn’t hurt Interstate (economic) rivalries Plagued the Articles of Confederation  States tried (succeeded) to gain economic advantage for their own citizens at expense of other states  States taxed and regulated imports and exports  Annapolis convention called to fix this problem Constitution Art. I, § 10: “No state shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports [or] lay any Duty of Tonnage” Art. I, § 8: Commerce Clause

Fall, 2004Con Law I - Manheim5 What’s so good about free trade? Protectionism creates more costs than benefits Problem of externalities Invites retaliation; Balkanization of commerce Political process cannot cure abuses In long run, free trade helps all parties collective AND individual benefits e.g., NAFTA, WTO Is this true? Race to the bottom Commerce does not outweigh other factors

Fall, 2004Con Law I - Manheim6 Working hypothesis exclusive Congress power to regulate IC directly is exclusive States have no power to directly regulate IC  E.g., the economic aspects of trade (IC qua IC) concurrent Congress’ power to regulate IC indirectly (local matters affecting IC) is concurrent States can regulate local matters (e.g., health & safety), despite having incidental impact on IC  Unless congress preempts state law  Ex: both congress & states can set food safety stds States can’t engage in economic protectionism

Fall, 2004Con Law I - Manheim7 The “dormant” Commerce Clause When Congress uses its power under the Com.Cl., it preempts inconsistent state law. When the commerce power is left unused by Congress (i.e., left “dormant”), State action is constitutionally precluded if it invades congress’ exclusive power, or if State action is protectionist (discriminates in favor of in-state commerce over out-state)

Fall, 2004Con Law I - Manheim8 The “dormant” Commerce Clause When Congress uses its power under the Com.Cl., it preempts inconsistent state law. When the commerce power is left unused by Congress (i.e., left “dormant”),

Fall, 2004Con Law I - Manheim9 H.P. Hood v. DuMond (1939) Facts: NY denied permission for Mass. company to build a plant and export milk to Mass. What is NY regulating? Health and safety?  Presumptively valid use of state’s police power Interstate commerce  NY cannot regulate directly Only congress can directly regulate interstate commerce  Can NY regulate indirectly? by using police power regulation of health/safety as guise? States have no power to regulate interstate commerce per se States have police power

Fall, 2004Con Law I - Manheim10 H.P. Hood v. DuMond (1939) When is a state’s use of its police power a disguised regulation of interstate commerce Clues:  Avowed purpose is to curtail imports/exports (economic protectionism)  Discriminates in favor of in-state business/residents  Connection to health & safety (or other legitimate state interests) is tenuous Depends upon state’s objective  If to regulate health and safety, consumer protection, etc., then ok, even if IC feels the pinch  If to protect economic interests, then unconst.

Fall, 2004Con Law I - Manheim11 H.P. Hood v. DuMond (1939) What is the state’s justification for denying H.P. Hood a permit for new bottling plant? New plant unnecessary? What state interest is plausibly at stake?  Lack of legitimate local benefits is indication that state is regulating IC, not health & safety  Promoting state’s own economic interests at expense of out-staters is not a legitimate local interest

Fall, 2004Con Law I - Manheim12 What if there were no DCC? States would be free to regulate IC either directly or indirectly Unless congress affirmatively preempted Shift responsibility for protecting national economy from Court to Congress Can congress overrule a S.Ct. decision holding a DCC violation (or no violation)? authorize state action preempt state action

Fall, 2004Con Law I - Manheim13 The DCC “Balancing Test” South Carolina v. Barnwell (1938) Size & weight limit for trucks on state highways What power does the state rely on?  Power over IC, which it does not have, or  Power over health & safety, which it does? Does the S.Car. law discriminate against IC?  Are in-state and out-state trucks treated differently?  Does it depend on source or destination of cargos? Is the law a proper regulation of state hiways?  What is the role of federal courts in this analysis?  Can they do a better job than the state legislature?

Fall, 2004Con Law I - Manheim14 The DCC “Balancing Test” Southern Pacific v. Arizona (1945) Size limit for trains on railroads within state What power does the state rely on (IC or H/S)? Does the Arizona law discriminate against IC? Is the law a proper regulation of railways?  Court focuses on “nature & extent of burden” Burden on IC imposed by Arizona law  Long trains (commonly used) must decouple  Serious burden on So.Pac. (in economic terms)  Regulation ought to be nationally uniform probably true generally of instrumentalities of IC

Fall, 2004Con Law I - Manheim15 The DCC “Balancing Test” Southern Pacific v. Arizona (1945) Serious burden on IC imposed by Arizona law Local benefit?  Trial court finds “no reasonable relation to safety” In fact, short trains are more dangerous (number vs length)  Other local benefits? Full employment of engineers? Role of Court  To balance burdens on IC against local benefits?  If not the court, then who? Congress Arizona legislature

Fall, 2004Con Law I - Manheim16 The DCC “Balancing Test” Problems with Balancing Institutional competence  Consider the evidence adduced in trial court Institutional legitimacy  Balancing of economics and safety is quintessentially a legislative role Which weighs more?  Added cost to So.Pac. in transporting goods, or  Health & Safety costs to Arizona?  Scalia: “incommensurate interests”  Easy case if local interests are “illusory” (weigh 0)

Fall, 2004Con Law I - Manheim17 Discriminatory State Laws Rule: Laws that discriminate against IC are invalid  unless no “non-discriminatory alternatives” Justification for Rule Historical basis for non-discrimination principle Courts are more adept at fereting out discrimi- nation than balancing Types of discrimination Facial discrimination (intentional) Discriminatory effect (intentional/unintentional)

Fall, 2004Con Law I - Manheim18 City of Philadelphia v. NJ (1978) Ban on garbage imports Questions: Is garbage (an article of) commerce? What is the local benefit obtained?  conservation of scarce landfill resources What is the burden imposed on IC?  increased cost of disposal for Phil. residents How does NJ balance the benefits & burdens?  Externalizes cost of conservation Discrimination (econ. protect- ionism) presumptively invalid

Fall, 2004Con Law I - Manheim19 City of Philadelphia v. NJ (1978) Discrimination (economic protect- ionism) is presumptively invalid but not conclusively invalid Can NJ protect scarce resources without discriminating against IC? raise the cost to everyone Is that fair? Why doesn’t PA have own dumps? Internalizing benefits and externalizing costs is always politically expedient and not always remediable by legislature

Fall, 2004Con Law I - Manheim20 Facial Neutrality Hunt v. WA Apple Com’n (1977) N.Car. law requires all closed containers of apples to bear USDA grade, and no other Rationale:  Consumer protection measure to reduce confusion  Is this plausible? NB:applies only to closed containers Is the S.Car. law discriminatory?  No, treats all apples the same, irrespective of origin  Yes, leveling removes WA competitive advantage benefiting local apple industry  Non-discriminatory alternatives available? Facially neutral with necessary discrim. effect intentional discrimination

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Fall, 2004Con Law I - Manheim22 Facial Neutrality Exxon Corporation v. MD (1978) MD law prohibits refinery-owned retail gas stations Discriminatory?  On face? No, statute draws no distinction between in-state and out-state refineries  In effect? No MD refineries; all out-state and all affected by law Necessarily discriminatory? Burden falls only on out-state companies Benefits flow to in-state and out-state companies (independent gas stations) But see Blackmun, J. DCC prohibits discrimination against IC not interstate companies Can’t tell whether law will ultimately have discriminatory effect What if law is neither facially nor necessarily discriminatory, but just turns out that way?  Doesn’t matter; not discriminatory for DCC purposes unintentional discrimination

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