Chapter IV The Dormant Commerce Clause and Related Doctrines

The Dormant Commerce Clause Two sides of the Commerce Clause –A grant of power to Congress –A limitation on state power Preemption Implied limitation Conflict between: –The DCC (unexercised commerce power) –State Police Power

The DCC “The Constitution was framed under the domination of a political philosophy... That the peoples of the several states must sink or swim together, and that in the long run prosperity and salvation are in union and not division.” Justice Benjamin Cardozo Basic Idea: The nation forms a single economic unit. No state may isolate itself from the consequences of this unified market.

The DCC What type of analytical problem is presented by the Dormant Commerce Clause? Definitional scope of power? Structural limitation on power? External limit?

The DCC: Essential Model What an individual state cannot do: Regulate ISC (in purpose or through out-of- state regulatory effect) Discriminate against ISC. Excessively burden ISC.

The DCC: A Framework Is the law rationally related to a legitimate state purpose? Does the law have the practical effect of regulating out-of-state transactions? Does the law discriminate against ISC? –If so, has the state adopted the least discriminatory means to achieve its goal? Are the burdens the law places on ISC or foreign commerce clearly excessive in relation to the benefits which the law affords the state? Has the state adopted the least burdensome means to achieve its goal?

The DCC: Rational Basis Rational relation between the means adopted and the legitimate end to be achieved. –Highly deferential standard –Police Power: health, safety & welfare –Compare substantive due process Per se invalidity: –Impermissible: a purpose to regulate ISC –Impermissible: economic protectionism

Purpose to Regulate ISC Buck v. Kuykendall (1925) Limitation on number of common carriers serving state segment of interstate route in order to avoid excessive competition on the route. Bradley v. Public Utilities Comm’n (1933) Limitation on number of common carriers serving state segment of interstate route in order to promote highway safety within the state.

Purpose: Economic Protectionism South Central Timber Dev., Inc. v. Wunnicke (1984) State requires that a timber harvested within the state be processed into lumber within the state. Baldwin v. G.A.F. Selig, Inc. (1935) State law designed to protect local dairy farmers prohibits the importation of milk that was purchased out- of-state at a wholesale price below the state-imposed minimum for in-state wholesale transactions.

Discrimination against ISC Three ways in which a law may discriminate: –On its face –By design (economic protectionism) –Disproportionate impact –As applied

The DCC: A Framework Rationality (goal, legitimacy, means/ends rationality) Out-of-state regulatory effect (rare) Discriminate (identify the classification and the type) –Least discriminatory means –“Compelling” interest Burdens clearly excessive (burdens v. benefits) Least burdensome means (rare)

Philadelphia v. NJ (1978) What was the state’s goal? –Did the parties agree on this? –How did the Court resolve this disagreement? –What result if the Court had sided with the plaintiffs? Was the assumed goal legitimate? What means did the state adopt to advance that goal? Were those means rationally related to the assumed goal?

Philadelphia v. NJ (1978) Did the state law have the practical effect of regulating out-of-state transactions? –Out-of-state effect? –Regulatory? Was the state law discriminatory? If so, what type of discrimination? Are all discriminations against ISC invalid? –Quarantine laws? Did the state here adopt the least discriminatory means to advance its environmental goal of landfill preservation? Compare Maine v. Taylor (1986)

Dean Milk Co. v. Madison (1951) Illinois Wisconsin. Madison

Dean Milk Co. v. Madison (1951) Rationality –Goal –Legitimacy –Means/Ends Rationality Out-of-state regulatory effect Discrimination –Facial, Design, Impact, Applied –Least Discriminatory Means –Substantiality of the Ends (“compelling)”

Dean Milk Co. v. Madison (1951) Burdens –Benefits v. Burdens Least Burdensome Means [Note: The Dean Milk Court resolved the case on the discrimination issue.]

Hunt v. Wash. St. Apple Ad. Comm’n (1977)

Rationality –Goal –Legitimacy –Means/Ends Rationality Out-of-state regulatory effect Discrimination –Facial, Design, Impact, Applied –Least Discriminatory Means –Substantiality of the Ends (“compelling)”

Hunt v. Wash. St. Apple Ad. Comm’n (1977) Burdens –Benefits v. Burdens Least Burdensome Means [Note: The Hunt Court resolved the case on the discrimination issue.]

Exxon Corp. Governor of Md. (1978)

Rationality –Goal –Legitimacy –Means/Ends Rationality Out-of-state regulatory effect Discrimination –Facial, Design, Impact, Applied –Least Discriminatory Means –Substantiality of the Ends (“compelling)”

Exxon Corp. v. Governor of Md. (1978) Burdens –Benefits v. Burdens Least Burdensome Means

H.P. Hood & Sons v. DuMond (1949)

Rationality –Goal –Legitimacy –Means/Ends Rationality Out-of-state regulatory effect Discrimination –Facial, Design, Impact, Applied –Least Discriminatory Means –Substantiality of the Ends (“compelling)”

H.P. Hood & Sons v. DuMond (1949) Burdens –Benefits v. Burdens Least Burdensome Means

West Lynn Creamery, Inc. v. Healy (1994) A Tax A Subsidy

West Lynn Creamery, Inc. v. Healy (1994) Rationality –Goal –Legitimacy –Means/Ends Rationality Out-of-state regulatory effect Discrimination –Facial, Design, Impact, Applied –Least Discriminatory Means –Substantiality of the Ends (“compelling)”

West Lynn Creamery, Inc. v. Healy (1994) Burdens –Benefits v. Burdens Least Burdensome Means Note Justice Scalia’s concurrence.

Southern Pacific v. Arizona (1945)

Southern Pacific Co. v. Arizona (1945) Rationality –Goal –Legitimacy –Means/Ends Rationality Out-of-state regulatory effect Discrimination –Facial, Design, Impact, Applied –Least Discriminatory Means –Substantiality of the Ends (“compelling)”

Southern Pacific Co. v. Arizona (1945) Burdens –What burdens did the train limit law impose on ISC? –What were the potential benefits of the law? –On what grounds did the Court conclude that the burdens were clearly excessive? Least Burdensome Means –Can you think of any less burdensome means to accomplish the end (train safety)? A comment on Justice Black

Kassel v. Cons. Freightways Corp. (1981)

Rationality Out-of-state regulatory effect – NONE Discrimination Burdens Consider the different approaches of the plurality, the concurrence & the dissent.

Kassel v. Cons. Freightways Corp. (1981) Burdens –What burdens did the train limit law impose on ISC? –What were the potential benefits of the law? –On what grounds did the Court conclude that the burdens were clearly excessive? Least Burdensome Means –Can you think of any less burdensome means to accomplish the end (train safety)? A comment on Justice Black

Out-of-State Regulatory Effects Regulatory v. Economic Out-of-State Transaction Law prohibits or mandates certain out-of- state behavior such that a failure to comply will result in the imposition of legal sanctions.

Out-of-State Regulatory Effects NY Law: Monthly posting of wholesale liquor prices; affirmation of “lowest” price. Bars reduction of price (in- or out-of-state).

Dormant Commerce Clause: A Single Economic Unit

The Market Participant Doctrine The Case of the Inoperable Hulk Hughes v. Alexandria Scrap

The Market Participant Doctrine The Case of the Commie Concrete Reeves, Inc. v. State

The Market Participant Doctrine Key Questions: –Is the state regulating or is the state spending (buying or selling)? –If the latter, what is the scope of the market within which the state is participating?

The Market Participant Doctrine The Case of the Lumbering Tree South Central Timber Dev., Inc. v. Wunnicke

Dormant Commerce Clause: Dual Model REGULATION SPENDING

The Privileges and Immunities Clause Art. IV, § 2 “The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.” What type of constitutional principle does the P & I Clause represent? Similar to the Dormant Commerce Clause?

Discrimination Against citizens of another state. –Must be a US citizen & permanent resident of a state. –Corporations are not citizens for purposes of the P&I Clause. Facial, design, applied, impact.

P & I Fundamental Rights Right to pass through (travel) Right to reside Right to do business (work or common callings) Right to own & inherit property Exemption from higher taxes Right to seek redress in state courts

P & I Test (Mid-Level Scrutiny) Has the state shown a substantial reason for the discrimination? –Noncitizens constitute a unique and peculiar source of the evil at which the law is aimed. Has the state adopted the least discriminatory means to advance that interest?

P & I Hypotheticals State law limits bar membership to citizens of the state. State university charges lower tuition for in-state residents. State refuses to sell concrete processed at a state-owned plant to an out-of-state corporation. –Suppose the plaintiff were an individual out- of-state citizen.

Consent to State Regulation of ISC Dormant Commerce Clause Violation Congressional Consent to the State Regulation –Clear Statement of Intent

Dormant Commerce Clause & State Taxation The Complete Auto Body Test: 1.Substantial Nexus 2.Fairly Apportioned 3.Discrimination against ISC 4.Fairly Related

Supremacy Clause This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

Preemption Three Types: Express Preemption Conflict Preemption Field Preemption

Conflict Preemption Two Types: Physical Impossibility Obstacle to the Congressional Objective

Field Preemption Congressional intent to “occupy” the field: Express Implied (pervasiveness) Key question: What is the scope of the field?

Gade v. Nat’l Solid Waste Mgmt. Ass’n (1992) Potential conflict between Illinois law and the federal OSH Act & OSHA regulations. Plurality: –Express or Implied –Conflict or Field Kennedy Concurring Dissent