Dormant Commerce Clause
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The Dormant Commerce Clause is a phrase that originated with a comment made by Chief Justice John Marshall in the case of Willson v. The Black Bird Creek Marsh Company, . It refers to the negative implications of the Commerce Clause of the United States Constitution. The Commerce Clause grants to Congress the power to enact legislation that affects interstate commerce. The idea behind the "dormant" commerce clause is that this grant of power implies a negative converse, a restriction prohibiting a state from passing legislation that improperly burdens interstate commerce. The question of whether such a negative implication should be recognized, and how far it should extend, has been a subject of extensive disagreement among Federal judges.
The premise of the doctrine is that the U.S. Constitution reserves for Congress the exclusive power "to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes" (Article I, § 8); therefore, individual states are excluded from, or at least limited in, their ability to legislate on such matters. The Dormant Commerce Clause does not expressly exist in the text of the United States Constitution. It is, rather, a doctrine necessarily inferred by the U.S. Supreme Court and lower courts from the actual Commerce Clause of the Constitution.
In its effect, the doctrine often operates as a kind of free-trade clause as among the states. The Supreme Court, in explaining the necessity for the dormant Commerce Clause, said, "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."[1]
In the first century of its jurisprudence, the Supreme Court often would evaluate Commerce Clause challenges to state laws or actions only for actual conflict with Congressional acts. See Cooley v. Board of Wardens, . Today, however, a more nuanced jurisprudence exists. If a law is alleged to violate the Dormant Commerce Clause, a court determines the law's constitutionality by examining its discriminatory and extra-territorial effects. In a Dormant Commerce Clause case, a court is initially concerned with whether the law discriminates against out-of-state actors or exists to protect in-state interests. If so, it is typically found to be unconstitutional. If the law is not outright or intentionally discriminatory or protectionist, but still has some impact on interstate commerce, the court will evaluate the law using a balancing test. The Court determines whether the interstate burden imposed by a law outweighs the local benefits. If such is the case, the law is usually deemed unconstitutional.
In evaluating a Dormant Commerce Clause challenge, a Court first looks at the language of the state statute, determining if the statute is facially discriminatory or facially neutral. If the statute is facially discriminatory, then the statute is presumed unconstitutional. Typical cases demonstrating this analysis are the City of Philadelphia v. New Jersey, 437 U.S. 617 (1978), Kassel v. Consolidated Freightways Corp., and C&A Carbone, Inc v. Town of Clarkstown, N.Y, 511 U.S. 383 (1994).
This presumption of unconstitutionality can be rebutted if the state can demonstrate under a strict scrutiny standard that the law is necessary (that no other non-discriminatory means were available) to serve a compelling state objective or legitimate local interest. This is a hard presumption to rebut, and consequently the Supreme Court has only upheld one facially discriminatory state law. See Maine v. Taylor, 477 U.S. 131 (1986).
States wishing to legislate protectionist measures might intentionally craft laws that appear facially neutral but still have a discriminatory effect - such as a state passing a law allowing the sale of milk from any state, but only if it was pasteurized within 5 miles of the place of sale. Because of this, if the state statute is facially neutral then the Court will also examine its purpose or effect. See Hunt v. Washington State Apple Advertising Comm., 432 U.S. 333 (1997) and Exxon Corp. v. Governor of Maryland 437 U.S. 117 (1978).
If the statute's purpose or effect is deemed discriminatory, then it is presumed unconstitutional. See Dean Milk Co. v. City of Madison, Wisconsin, 340 U.S. 349 (1951). Again, this presumption can be rebutted if the state can demonstrate under a strict scrutiny standard that the law is necessary (that no other non-discriminatory or less restrictive means were available) to serve a compelling state objective or local interest. The Court often finds that there are other means available and frequently holds the state law unconstitutional. See Hunt v. Washington State Apple Advertising Comm., 432 U.S. 333 (1997).
If the Court finds that the purpose or effect of the state statute was not discriminatory, but there is some impact on interstate commerce, then it applies a balancing test. In this test, the Court balances the burden on interstate commerce against the local state interest and putative benefit. If interstate impacts are infrequent or insignificant in relation to the alleged benefits to the state, a court frequently upholds the state law. See Pike v. Bruce Church, Inc., , and Bibb v. Navajo Freight Lines, Inc., .
[edit] Exceptions
There are two notable exceptions that can permit state laws or actions that otherwise violate the Dormant Commerce Clause to survive court challenges. The first exception occurs when Congress has legislated on the matter. See Western & Southern Life Ins. v. State Board of California, 451 U.S. 648 (1981). In this case the Dormant Commerce Clause is no longer "dormant" and the issue is a Commerce Clause issue, requiring a determination of whether congress has approved, preempted, or left untouched the state law at issue. The second exception is "market participation". This occurs when the state is acting "in the market," like a business or customer, rather than as a "market regulator".[2]. For example, when a state is contracting for the construction of a building or selling maps to state parks, rather than passing laws governing construction or dictating the price of state park maps, it is acting "in the market." Like any other business in such cases, a state may favor (or shun) just like a business may favor (or shun) certain customers or suppliers.
The primary cases enunciating the market participation exception principle are Reeves v. William Stake, 447 U.S. 429 (1980) and South-Central Timber v. Wunnicke, 467 U.S. 82 (1984). The Reeves case outlines the market participation exception test. In this case state-run cement co-ops were allowed to make restrictive rules (e.g. rules not to sell out-of-state). Here, this government-sponsored business was acting restrictively like an individually-owned business and this action was held to be constitutional. South-Central Timber is important because it limits the market exception. South-Central Timber holds that the market-participant doctrine is limited in allowing a State to impose burdens on commerce within the market in which it is a participant, but allows it to go no further. The State may not impose conditions that have a substantial regulatory effect outside of that particular market.
The "market participation exception" to the Dormant Commerce Clause does not give states unlimited authority to favor local interests, other laws and Constitutional limits still apply, just not the Dormant Commerce Clause. In United Building & Construction Trades Council v. Camden, 465 U.S. 208 (1984), the city of Camden, New Jersey had passed an ordinance requiring that at least forty percent of the employees of contractors and subcontractors on city projects be Camden residents. The Supreme Court found that while there law was not infirm due to the Dormant Commerce Clause, it violated the Privileges and Immunities Clause of Article IV of the Constitution. Justice Rehnquist's opinion distinguishes the market-participant doctrine from the privileges and immunities doctrine. Similarly, Congress has the power itself under the Commerce Clause to regulate and sanction states acting as "market participants," but it lacks power to legislate in ways that violate Article IV.
In the 21st Century, the Dormant Commerce Clause has been a frequent legal issue in cases arising under state laws regulating some aspects of Internet activity. Due to the interstate, and often international, nature of Internet communications, state laws addressing internet-related subjects such as spam, online sales or online pornography can often trigger Dormant Commerce Clause issues.
[edit] References
- ^ H.P. Hood & Sons, Inc. v. Du Mond, .
- ^ South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87 (1984).
[edit] See also
- In Granholm v. Heald, the US Supreme Court held that certain restrictions on interstate liquor shipments violated the Dormant Commerce Clause, notwithstanding section two of the Twenty-first Amendment.
