Federalism Outlines

Federalism III – “Dormant” Commerce Clause

I.     Regulation of foreign commerce.

    A.     Congress has the exclusive power to regulate commerce with foreign nations.
    B.     Foreign commerce includes traffic on the high seas, even though both terminal ports are within the United States. Japan Line, Ltd. v. County of Los Angeles.
    C.     However, states may regulate local aspects of port pilotage and navigation of ships in foreign commerce (such as safety of boat handling, etc.).

II.     Regulation of interstate commerce.

    A.     In general.
      1.     The problem: The Cooley legacy.
        a.     Both Congress and states have subject matter jurisdiction over commerce.
          – And that’s enough to sustain legislation.
        b.     Where subject matter demands uniformity, Congress’ power is exclusive.
        c.     Congress determines whether uniformity is demanded.
      2.     Congressional power is presumptively exclusive.
        a.     Generally, when Congress regulates interstate commerce, conflicting state laws are superseded and even nonconflicting state laws in the field may be preempted.
        b.     Congress may even permit state regulations that would otherwise violate the Commerce Clause. Likewise, Congress may prohibit state regulations that could otherwise be upheld by the Commerce Clause.
          1)     South Carolina Highway Dept. v. Barnwell Bros. (1938). S.Ct upheld state statute which limited width and weight of trucks on state highways as a nondiscriminatory safety measure and as a means of securing the economical
          use of highways.
          2)     Southern Pacific Co. v. Arizona (1945). Court held unconstitutional a state law limiting the length of passenger and freight trains as a serious burden on interstate commerce.
          3)     See also, Maine v. Taylor.
      3.     State regulation of commerce (in the absence of Congressional action).
        a.     If Congress has not enacted laws regarding the subject, a state or local government may regulate local aspects of interstate commerce. To do so, however, it must not “discriminate against” or “unduly burden” interstate commerce. If it does, the state or local regulation will violate the Dormant or Negative Commerce Clause.
        b.     How to tell which subjects demand uniformity when Congress has not yet acted? Brown-Forman Distillers Corp. v. New York State Liquor Authority (1986).
          1)     A state law is per se unconstitutional which:
            A)     directly regulates interstate commerce,
            B)     directly discriminates against interstate commerce; or
            C)     favors in-state economic interests over out-of-state interests.
          2)     Even-handed regulation with only indirect effect on commerce is subject to balancing test (legitimate state interest). Examine whether state power is legitimate and whether burden on interstate commerce clearly exceeds the local benefits.
          3)     No clear line distinguishing between these two categories.
            – An abandonment of object analysis (legal rule test).
    B.     Discriminatory Regulations.
      1.     Generally, state or local regulations that discriminate against interstate commerce to protect local economic interests are almost always invalid.
        a.     New Energy Co. of Indiana v. Limbach (1988). S.Ct strikes down state law which grants a tax credit for gasahol produced in Ohio or another state granting a reciprocal tax credit to Ohio.
        b.     Buck v. Kuykendall (1925). Regulating the use of highways for the primary purpose of prohibiting competition from out-of-state companies is invalid.
        c.     Bibb v. Navajo Freight Lines (1959). Court struck down a state law mandating the use of truck mud flaps of a design different from what 45 other states approved.
        – Under modern jurisprudence, can one state be different from all the rest? Who determines that the subject requires uniformity? [Courts.]
      2.     Exception – Legitimate State Interest. A discriminatory state or local law may be valid if it furthers a legitimate state interest and there are no reasonable nondiscriminatory alternatives available.
        a.     Bradley v. Public Utilities Comm’n. (1933). Regulation of highways for the purpose of preventing congestion by interstate carrier is valid.
        b.     How to distinguish from or reconcile with Kuykendall?
      3.     Exception – State as Market Participant. A state may prefer its own citizens when acting as a market participant (e.g., when buying or selling, hiring labor, or giving subsidies).
        a.     White v. Mass. Council of Construction Employers, Inc. (1983). Court upheld mayoral order requiring at least half of private construction work force on projects funded by city funds to consist of bona fide city residents.
        b.     When a state is a market participant, the Commerce Clause does not apply.
        c.     The Commerce Clause places no limitations on Congress at all.
    C.     Nondiscriminatory Laws.
      1.     If a nondiscriminatory state law (i.e., local and out-of-state interests are treated alike) burdens interstate commerce, it will be valid unless the burden outweighs the promotion of a legitimate local interest. The court will consider whether less restrictive alternatives are
      2.     Kassel v. Consolidated Freightways Corp.. Iowa statute banning trucks over sixty feet was invalid because the state showed no significant evidence of increased safety and the burden on commerce
      was substantial.
        Is this a form of Balkanization the founders contemplated in the Commerce Clause? What is textual inference of Commerce Clause when Congress has failed to act? Who is regulating interstate commerce here – Congress or the Courts?
        a.     Court in Kassel (per Powell, for majority) determines validity of safety concerns.
        b.     Brennan’s concurrence: 1) courts may not second-guess legislative judgments of a statute’s utility; 2) burdens on commerce must be balanced against local benefits statute actually attempts to achieve; and 3) protectionism legislation is always unconstitutional. Here,
        statute is “protectionist.” How does Brennan know this? By reading the governor’s veto message on a bill which would have changed the statute, but didn’t! [Is that legislative intent?]
        c.     Rehnquist’s dissent. An appeal to federalism. The laws of nature do not prescribe the length of trucks.
      3.     Minnesota v. Clover Leaf Creamery Co. (1981). S.Ct upheld state law banning sale of milk in nonreturnable and nonrefillable plastic containers. Statute did not discriminate against certain sellers or producers based on state of origin. Court applied
      the balancing test of Pike, whether incidental burden on commerce clearly exceeds local benefits.
        – “Even-handed” non-protectionist example.
    D.     Economic Protectionism.
      1.     Dean Milk Co. v. City of Madison (1951). Court struck down city ordinance which prohibited sale of pasteurized milk in city unless it was processed and bottled within 5 miles of the city. An impermissible burden on interstate commerce.
      2.     Quill Corp. v. North Dakota (1992).
      3.     Hood & Sons v. DuMond (1949). Court struck down state denial of permit for Hood to open a fourth milk depot in state as erecting an impermissible barrier to free and open access to all markets nationwide. No state may “place itself in a position of
      economic isolation.”
      4.     Philadelphia v. New Jersey.
      5.     Hughes v. Oklahoma.
      6.     Maine v. Taylor.
      7.     Reeves, Inc. v. Stake.

III.     Lonang/Constitutional Critique. Principles of Federalism:

    A.     The Negative Commerce Clause is not a federal law.
      1.     The Commerce Clause is a grant of power to Congress to legislate, not a substantive rule or regulation of commerce in itself. The Clause does not itself prohibit or require specific commercial regulations.
      2.     The failure of Congress to exercise its grant of power with respect to commerce means there is no federal law to which a particular state law can be compared.
        a.     Court opinions are not U.S. laws (rules or regulations).
      3.     Recall Willson v. Black Bird Creek Marsh Co..
        a.     No federal statute conflicts with state statute here.
          1)     If Congress had acted, its will would control.
          2)     But federal statute here is not related to activity pursued under state law.
        b.     There is no “dormant” commerce clause!
      4.     Neither is the Commerce Clause a grant of power to federal courts. Courts have no power to regulate commerce when Congress has not first spoken.
      5.     When the courts regulate commerce in the absence of Congressional action, they speak in the place of Congress, that is, they are exercising a grant of power to the legislature. Hence, such judicial regulations are an exercise of will, not judgment, and are a form of
      judicial lawmaking/legislation.
    B.     Not all matters are “great,” requiring national uniformity.
      1.     It can be assumed that some state laws are “bad,” that is, they violate the laws of nature and of nature’s God.
        – Example: discriminatory laws violate the law of equality (no respecter of persons).
      2.     However, federal courts do not have “common law” jurisdiction to decide cases involving violations of the law of nature by state laws.
        a.     Federal jurisdiction is enumerated.
        b.     State courts have “common law” jurisdiction to judge offenses against the law of nature and to review police power legislation.
        c.     Federal courts have a limited common law jurisdiction only with respect to reviewing Congressional statutes within the scope of federal enumerated powers.
      3.     The exercise of common law jurisdiction by federal courts destroys federalism, in that:
        a.     All questions of right and wrong become “great” issues requiring national unity.
        b.     State diversity on state issues is lost.
        c.     The distinction between state general police powers and federal enumerated powers is lost.
    C.     A Balancing Test regards federalism as a matter of degree, not law.
      1.     An object/purpose analysis examines the validity of a state law’s purpose. It is an all-or-none proposition: either the state law’s purpose is valid, or not valid. It won’t ever be “a little bit valid” or “partially valid.”
      2.     On comparison of valid state law with valid federal law under the Supremacy Clause, the result is not only all-or-none, but is also one-sided.
        a.     That is, either the two laws do, or do not conflict.
        b.     If conflict exists, federal law always preempts state law, never the reverse.
        c.     Further, state law is totally preempted, not “a little bit preempted.”
      3.     A “balancing” approach, however, is different.
        a.     The balancing test used to evaluate state laws affecting commerce when Congress is silent regards the law of federalism as a matter of degree, not a legal requirement.
        b.     Under the Court’s balancing approach, either local interests or the interests of interstate commerce can prevail, but under the Supremacy Clause, when state and federal laws conflict, the federal law must always control. Hence, the Supremacy Clause cannot
        be invoked to validate the “Dormant” Commerce Clause doctrine.
        c.     There is no such thing as a “dormant” or “negative” Commerce Clause in the U.S. Constitution.