The Dormant Commerce Clause, or Negative Commerce
Clause, in American constitutional law, is
a legal doctrine that courts in the United
States have inferred from the Commerce Clause
in Article I of the US Constitution. The Dormant
Commerce Clause is used to prohibit state
legislation that discriminates against interstate
or international commerce.
For example, it is lawful for Michigan to
require food labels that specifically identify
certain animal parts, if they are present
in the product, because the state law applies
to food produced in Michigan as well as food
imported from other states and foreign countries;
the state law would violate the Commerce Clause
if it applied only to imported food or if
it was otherwise found to favor domestic over
imported products. Likewise, California law
requires milk sold to contain a certain percentage
of milk solids that federal law does not require,
which is allowed under the Dormant Commerce
Clause doctrine because California's stricter
requirements apply equally to California-produced
milk and imported milk and so does not discriminate
against or inappropriately burden interstate
commerce.
== Origin of the doctrine ==
The idea that regulation of interstate commerce
may to some extent be an exclusive Federal
power was discussed even before adoption of
the Constitution, but the framers did not
use the word "dormant". On September 15, 1787,
the Framers of the Constitution debated in
Philadelphia whether to guarantee states the
ability to lay duties of tonnage without Congressional
interference so that the states could finance
the clearing of harbors and the building of
lighthouses. James Madison believed that the
mere existence of the Commerce Clause would
bar states from imposing any duty of tonnage:
"He was more and more convinced that the regulation
of Commerce was in its nature indivisible
and ought to be wholly under one authority."Roger
Sherman disagreed: "The power of the United
States to regulate trade being supreme can
control interferences of the State regulations
when such interferences happen; so that there
is no danger to be apprehended from a concurrent
jurisdiction." Sherman saw the commerce power
as similar to the tax power, the latter being
one of the concurrent powers shared by the
federal and state governments. Ultimately,
the Philadelphia Convention decided upon the
present language about duties of tonnage in
Article I, Section 10, which says: "No state
shall, without the consent of Congress, lay
any duty of tonnage ..."The word "dormant,"
in connection with the Commerce Clause, originated
in dicta of Chief Justice John Marshall. For
example, in the case of Gibbons v. Ogden,
22 U.S. 1 (1824), he wrote that 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." Concurring Justice William Johnson
was even more emphatic that the Constitution
is "altogether in favor of the exclusive grants
to Congress of power over commerce."
Later, in the case of Willson v. Black-Bird
Creek Marsh Co., 27 U.S. 245 (1829), Marshall
wrote: "We do not think that the [state] act
empowering the Black Bird Creek Marsh Company
to place a dam across the creek, can, under
all the circumstances of the case, be considered
as repugnant to the power to regulate commerce
in its dormant state, or as being in conflict
with any law passed on the subject."
If Marshall was suggesting that the power
over interstate commerce is an exclusive federal
power, the Dormant Commerce Clause doctrine
eventually developed very differently: it
treats regulation that does not discriminate
against or unduly burden interstate commerce
as a concurrent power, rather than an exclusive
federal power, and it treats regulation that
does so as an exclusive federal power. Thus,
the modern doctrine says that congressional
power over interstate commerce is somewhat
exclusive but "not absolutely exclusive".
The approach began in the 1851 case of Cooley
v. Board of Wardens, in which Justice Benjamin
R. Curtis wrote for the Court: "Either absolutely
to affirm, or deny that the nature of this
[commerce] power requires exclusive legislation
by Congress, is to lose sight of the nature
of the subjects of this power, and to assert
concerning all of them, what is really applicable
but to a part." The first clear holding of
the Supreme Court striking down a state law
under the Dormant Commerce Clause came in
1873.
== Effect of the doctrine ==
Justice Anthony Kennedy has written that:
"The central rationale for the rule against
discrimination is to prohibit state or municipal
laws whose object is local economic protectionism,
laws that would excite those jealousies and
retaliatory measures the Constitution was
designed to prevent." In order to determine
whether a law violates a so-called "dormant"
aspect of the Commerce Clause, the court first
asks whether it discriminates on its face
against interstate commerce. In this context,
"discrimination" simply means differential
treatment of in-state and out-of-state economic
interests that benefits the former and burdens
the latter.
Thus, in a dormant Commerce Clause case, a
court is initially concerned with whether
the law facially discriminates against out-of-state
actors or has the effect of favoring in-state
economic interests over out-of-state interests.
Discriminatory laws motivated by "simple economic
protectionism" are subject to a "virtually
per se rule of invalidity", City of Philadelphia
v. New Jersey 437 U.S. 617 (1978), Dean Milk
Co. v. City of Madison, Wisconsin, 340 U.S.
349 (1951), Hunt v. Washington State Apple
Advertising Comm., 432 U.S. 333 (1977) which
can only be overcome by a showing that the
State has no other means to advance a legitimate
local purpose, Maine v. Taylor, 477 U.S. 131(1986).
See also Brown-Forman Distillers v. New York
State Liquor Authority, 476 U.S. 573 (1986).
On the other hand, when a law is "directed
to legitimate local concerns, with effects
upon interstate commerce that are only incidental"
(United Haulers Association, Inc.), that is,
where other legislative objectives are credibly
advanced and there is no patent discrimination
against interstate trade, the Court has adopted
a much more flexible approach, the general
contours of which were outlined in Pike v.
Bruce Church, Inc., 397 U.S. 137, 142 (1970)
and City of Philadelphia v. New Jersey, 437
U.S. at 624. 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. See Pike
v. Bruce Church, Inc., 397 U.S. 137 (1970).
In the Pike case, the Court explained that
a state regulation having only "incidental"
effects on interstate commerce "will be upheld
unless the burden imposed on such commerce
is clearly excessive in relation to the putative
local benefits". 397 U.S. at 142, 90 S.Ct.
at 847. When weighing burdens against benefits,
a court should consider both "the nature of
the local interest involved, and ... whether
it could be promoted as well with a lesser
impact on interstate activities". Id. Thus
regulation designed to implement public health
and safety, or serve other legitimate state
interests, but impact interstate commerce
as an incident to that purpose, are subject
to a test akin to the rational basis test,
a minimum level of scrutiny. See Bibb v. Navajo
Freight Lines, Inc. In USA Recycling, Inc.
v. Town of Babylon, 66 F.3d 1272, 1281 (C.A.2
(N.Y.), 1995), the court explained:
If the state activity constitutes "regulation"
of interstate commerce, then the court must
proceed to a second inquiry: whether the activity
regulates evenhandedly with only "incidental"
effects on interstate commerce, or discriminates
against interstate commerce. As we use the
term here, "discrimination" simply means differential
treatment of in-state and out-of-state economic
interests that benefits the former and burdens
the latter. The party challenging the validity
of a state statute or municipal ordinance
bears the burden of showing that it discriminates
against, or places some burden on, interstate
commerce. Hughes v. Oklahoma, 441 U.S. 322,
336, 99 S.Ct. 1727, 1736, 60 L.Ed.2d 250 (1979).
If discrimination is established, the burden
shifts to the state or local government to
show that the local benefits of the statute
outweigh its discriminatory effects, and that
the state or municipality lacked a nondiscriminatory
alternative that could have adequately protected
the relevant local interests. If the challenging
party cannot show that the statute is discriminatory,
then it must demonstrate that the statute
places a burden on interstate commerce that
"is clearly excessive in relation to the putative
local benefits." Minnesota v. Clover Leaf
Creamery Co., 449 U.S. 456, 471(1981) (quoting
Pike, 397 U.S. at 142, 90 S.Ct. at 847).
== State taxation ==
Over the years, the Supreme Court has consistently
held that the language of the Commerce Clause
contains a further, negative command prohibiting
certain state taxation even when Congress
has failed to legislate on the subject. Examples
of such cases are Quill Corp. v. North Dakota,
504 U.S. 298 (1992); Northwestern States Portland
Cement Co. v. Minnesota, 358 U.S. 450, 458
(1959) and H.P. Hood & Sons, Inc. v. Du Mond,
336 U.S. 525 (1949).
More recently, in the 2015 case of Comptroller
of Treasury of MD. v. Wynne, the Court addressed
Maryland's unusual practice of taxing personal
income earned in Maryland, and taxing personal
income of its citizens earned outside Maryland,
without any tax credit for income tax paid
to other states. The Court held this sort
of double-taxation to be a violation of the
dormant Commerce Clause. The Court faulted
Justice Antonin Scalia's criticism of the
dormant Commerce Clause doctrine by saying
that he failed to "explain why, under his
interpretation of the Constitution, the Import-Export
Clause
would not lead to the same result that we
reach under the dormant Commerce Clause".Application
of the dormant commerce clause to state taxation
is another manifestation of the Court's holdings
that the Commerce Clause prevents a State
from retreating into economic isolation or
jeopardizing the welfare of the Nation as
a whole, as it would do if it were free to
place burdens on the flow of commerce across
its borders that commerce wholly within those
borders would not bear. The Court's taxation
decisions thus "reflected a central concern
of the Framers that was an immediate reason
for calling the Constitutional Convention:
the conviction that in order to succeed, the
new Union would have to avoid the tendencies
toward economic Balkanization that had plagued
relations among the Colonies and later among
the States under the Articles of Confederation."
Wardair Canada, Inc. v. Florida Dept. of Revenue,
477 U.S. 1 (1986); Hughes v. Oklahoma, 441
U.S. 322 (1979); Oklahoma Tax Commission v.
Jefferson Lines, Inc., 514 U.S. 175 (1995).
=== Formalistic approach ===
As with the Court's application of the dormant
commerce clause to discriminatory regulation,
the pre-New Deal Court attempted to apply
a formalistic approach to state taxation alleged
to interfere with interstate commerce. The
history is described in Oklahoma Tax Commission
v. Jefferson Lines, Inc., 514 U.S. 175 (1995):
The command has been stated more easily than
its object has been attained, however, and
the Court's understanding of the dormant Commerce
Clause has taken some turns. In its early
stages, the Court held the view that interstate
commerce was wholly immune from state taxation
"in any form", "even though the same amount
of tax should be laid on (intrastate) commerce".
This position gave way in time to a less uncompromising
but formal approach, according to which, for
example, the Court would invalidate a state
tax levied on gross receipts from interstate
commerce, or upon the "freight carried" in
interstate commerce, but would allow a tax
merely measured by gross receipts from interstate
commerce as long as the tax was formally imposed
upon franchises, or "'in lieu of all taxes
upon (the taxpayer's) property,'" Dissenting
from this formal approach in 1927, Justice
Stone remarked that it was "too mechanical,
too uncertain in its application, and too
remote from actualities, to be of value."
=== 
Decline of formalism ===
Accompanying the revolution in approach in
the Court's Congressional powers jurisprudence,
the New Deal Court began to change its approach
to state taxation as well. The Jefferson Lines
decision continues:
In 1938, the old formalism began to give way
with Justice Stone's opinion in Western Live
Stock v. Bureau of Revenue, 303 U.S. 250,
which examined New Mexico's franchise tax,
measured by gross receipts, as applied to
receipts from out-of-state advertisers in
a journal produced by taxpayers in New Mexico
but circulated both inside and outside the
State. Although the assessment could have
been sustained solely on prior precedent,
Justice Stone added a dash of the pragmatism
that, with a brief interlude, has since become
our aspiration in this quarter of the law.
... The Court explained that "[i]t was not
the purpose of the commerce clause to relieve
those engaged in interstate commerce from
their just share of state tax burden even
though it increases the cost of doing the
business."
During the transition period, some taxes were
upheld based on a careful review of the actual
economic impact of the tax, and other taxes
were reviewed based on the kind of tax involved,
whether the tax had a nefarious impact on
commerce or not. Under this formalistic approach,
a tax might be struck down, and then re-passed
with exactly the same economic incidence,
but under another name, and then withstand
review.
The absurdity of this approach was made manifest
in the two Railway Express cases. In the first,
a tax imposed by the state of Virginia on
American business concerns operating within
the state was struck down because it was a
business privilege tax imposed on the privilege
of doing business in interstate commerce.
But then, in the second, Virginia revised
the wording of its statute to impose a "franchise
tax" on "intangible property" in the form
of "going concern" value as measured by gross
receipts.
The Court upheld the reworded statute as not
violative of the prohibition on privilege
taxes, even though the impact of the old tax
and new were essentially identical. There
was no real economic difference between the
statutes in Railway Express I and Railway
Express II. The Court long since had recognized
that interstate commerce may be made to pay
its way. Yet under the Spector rule, the economic
realities in Railway Express I became irrelevant.
The Spector rule (against privilege taxes)
had come to operate only as a rule of draftsmanship,
and served only to distract the courts and
parties from their inquiry into whether the
challenged tax produced results forbidden
by the Commerce Clause.
The death knell of formalism occurred in Complete
Auto Transit, Inc v. Brady, 430 U.S. 274 (1977),
[2] which approved a Mississippi privilege
tax upon a Michigan company engaged in the
business of shipping automobiles to Mississippi
dealers. The Court there explained:
Appellant's attack is based solely on decisions
of this Court holding that a tax on the "privilege"
of engaging in an activity in the State may
not be applied to an activity that is part
of interstate commerce. See, e. g., Spector
Motor Service v. O'Connor, 340 U.S. 602 (1951);
Freeman v. Hewit, 329 U.S. 249 (1946). This
rule looks only to the fact that the incidence
of the tax is the "privilege of doing business";
it deems irrelevant any consideration of the
practical effect of the tax. The rule reflects
an underlying philosophy that interstate commerce
should enjoy a sort of "free trade" immunity
from state taxation.
Complete Auto Transit is the last in a line
of cases that gradually rejected a per se
approach to state taxation challenges under
the commerce clause. In overruling prior decisions
which struck down privilege taxes per se,
the Court noted the following, in what has
become a central component of commerce clause
state taxation jurisprudence:
We note again that no claim is made that the
activity is not sufficiently connected to
the State to justify a tax, or that the tax
is not fairly related to benefits provided
the taxpayer, or that the tax discriminates
against interstate commerce, or that the tax
is not fairly apportioned.
These four factors, nexus, relationship to
benefits, discrimination, and apportionment,
have come to be regarded as the four Complete
Auto Transit factors applied repeatedly in
subsequent cases. Complete Auto Transit must
be recognized as the culmination of the Court's
emerging commerce clause approach, not just
in taxation, but in all of its aspects. Application
of Complete Auto Transit to State taxation
remains a highly technical and specialized
venture, requiring the application of commerce
clause principles to an understanding of specialized
tax law.
== Taxation of international commerce ==
In addition to satisfying the four-prong test
in Complete Auto Transit, the Supreme Court
has held state taxes which burden international
commerce cannot create a substantial risk
of multiple taxations and must not prevent
the federal government from "speaking with
one voice when regulating commercial relations
with foreign governments". Japan Lines, Ltd.
v. County of Los Angeles, 441 U.S. 434 (1979).
In Kraft Gen. Foods, Inc. v. Iowa Dept. of
Revenue and Finance, 505 U.S. 71 (1992), the
Supreme Court considered a case in which Iowa
taxed dividends from foreign subsidiaries,
without allowing a credit for taxes paid to
foreign governments, but not dividends from
domestic subsidiaries operating outside Iowa.
This differential treatment arose from Iowa's
adoption of the definition of "net income"
used by the Internal Revenue Service. For
federal income tax purposes, dividends from
domestic subsidiaries are allowed to be exempted
from the parent corporations income to avoid
double taxation. The Iowa Supreme Court rejected
a Commerce Clause claim because Kraft failed
to show "that Iowa businesses receive a commercial
advantage over foreign commerce due to Iowa's
taxing scheme." Considering an Equal Protection
Clause challenge, the Iowa Supreme Court held
that the use of the federal government's definitions
of income were convenient for the state and
was "rationally related to the goal of administrative
efficiency". The Supreme Court rejected the
notion that administrative convenience was
a sufficient defense for subjecting foreign
commerce to a higher tax burden than interstate
commerce. The Supreme Court held that "a State's
preference for domestic commerce over foreign
commerce is inconsistent with the Commerce
Clause even if the State's own economy is
not a direct beneficiary of the discrimination."
== 
Local processing requirements ==
Discrimination in the flow of interstate commerce
has arisen in a variety of contexts. A line
of important cases has dealt with local processing
requirements. Under the local processing requirement,
a municipality seeks to force the local processing
of raw materials before they are shipped in
interstate commerce.
=== No local processing preference ===
The basic idea of the local processing ordinance
was to provide favored access to local processors
of locally produced raw materials. Examples
of Supreme Court decisions in this vein are
set out in its Carbone decision. They include
Minnesota v. Barber, 136 U.S. 313, (1890)
(striking down a Minnesota statute that required
any meat sold within the State, whether originating
within or without the State, to be examined
by an inspector within the State); Foster-Fountain
Packing Co. v. Haydel, 278 U.S. 1 (1928) (striking
down a Louisiana statute that forbade shrimp
to be exported unless the heads and hulls
had first been removed within the State);
Johnson v. Haydel, 278 U.S. 16 (1928) (striking
down analogous Louisiana statute for oysters);
Toomer v. Witsell, 334 U.S. 385 (1948) (striking
down South Carolina statute that required
shrimp fishermen to unload, pack, and stamp
their catch before shipping it to another
State); Pike v. Bruce Church, Inc., supra
(striking down Arizona statute that required
all Arizona-grown cantaloupes to be packaged
within the State prior to export); South-Central
Timber Development, Inc. v. Wunnicke, 467
U.S. 82 (1984) (striking down an Alaska regulation
that required all Alaska timber to be processed
within the State prior to export). The Court
has defined "protectionist" state legislation
as "regulatory measures designed to benefit
in-state economic interests by burdening out-of-state
competitors". New Energy Co. of Indiana v.
Limbach, 486 U.S. 269, 273–74 (1988).
=== Carbone: local processing law benefiting
private entity ===
In the 1980s, spurred by RCRA's emphasis on
comprehensive local planning, many states
and municipalities sought to promote investment
in more costly disposal technologies, such
as waste-to-energy incinerators, state-of-the-art
landfills, composting and recycling. Some
states and localities sought to promote private
investment in these costly technologies by
guaranteeing a longterm supply of customers.
See Phillip Weinberg, Congress, the Courts,
and Solid Waste Transport: Good Fences Don't
Always Make Good Neighbors, 25 Envtl. L. 57
(1995); Atlantic Coast Demolition & Recycling,
Inc., 112 F.3d 652, 657 (3d Cir. 1997). For
about a decade, the use of regulation to channel
private commerce to designated private disposal
sites was greatly restricted as the result
of the Carbone decision discussed below.
Flow control laws typically came in various
designs. One common theme was the decision
to fund local infrastructure by guaranteeing
a minimum volume of business for privately
constructed landfills, incinerators, composters
or other costly disposal sites. In some locales,
choice of the flow control device was driven
by state bonding laws, or municipal finance
concerns. If a county or other municipality
issued general obligation bonds for construction
of a costly incinerator, for example, state
laws might require a special approval process.
If approval could be obtained, the bonds themselves
would be counted against governmental credit
limitations, or might impact the governmental
body's credit rating: in either instance the
ability to bond for other purposes might be
impaired. But by guaranteeing customers for
a privately constructed and financed facility,
a private entity could issue its own bonds,
privately, on the strength of the public's
waste assurance.
The private character of flow control regimens
can thus be explained in part by the desire
to utilize particular kinds of public financing
devices. It can also be explained by significant
encouragement at the national level, in national
legislation as well as in federal executive
policy to achieve environmental objectives
utilizing private resources. Ironically, these
public-private efforts often took the form
of local processing requirements which ultimately
ran afoul of the commerce clause.
The Town of Clarkstown had decided that it
wanted to promote waste assurance through
a local private transfer station. The transfer
station would process waste and then forward
the waste to the disposal site designated
by the Town. The ordinance had the following
features:
Waste hauling in the Town of Clarkstown was
accomplished by private haulers, subject to
local regulation. The scheme had the following
aspects: (A) The Town promoted the financing
of a privately owned transfer station through
a waste assurance agreement with the private
company. Thus the designated facility was
a private company. (B) The Town of Clarkstown
forced private haulers to bring their solid
waste for local processing at the designated
transfer station, even if the ultimate destination
of solid waste was an out-of-state disposal
site. (C) The primary rationale for forcing
in-state waste into the designated private
transfer station was financial; it was seen
as a device to raise revenue to finance the
transfer station.
The Town of Clarkstown's ordinance was designed
and written right in the teeth of the long
line of Supreme Court cases which had historically
struck down local processing requirements.
In short, it was as if the authors of the
ordinance had gone to a treatise on the commerce
clause and intentionally chosen a device which
had been traditionally prohibited. A long
line of Supreme Court case law had struck
down local processing requirements when applied
to goods or services in interstate commerce.
As the Court in Carbone wrote:
We consider a so-called flow control ordinance,
which requires all solid waste to be processed
at a designated transfer station before leaving
the municipality. The avowed purpose of the
ordinance is to retain the processing fees
charged at the transfer station to amortize
the cost of the facility. Because it attains
this goal by depriving competitors, including
out-of-state firms, of access to a local market,
we hold that the flow control ordinance violates
the Commerce Clause.
The Court plainly regarded the decision as
a relatively unremarkable decision, not a
bold stroke. As the Court wrote: "The case
decided today, while perhaps a small new chapter
in that course of decisions, rests nevertheless
upon well-settled principles of our Commerce
Clause jurisprudence." And, the Court made
it plain, that the problem with Clarkstown's
ordinance was that it created a local processing
requirement protective of a local private
processing company:
In this light, the flow control ordinance
is just one more instance of local processing
requirements that we long have held invalid
... The essential vice in laws of this sort
is that they bar the import of the processing
service. Out-of-state meat inspectors, or
shrimp hullers, or milk pasteurizers, are
deprived of access to local demand for their
services. Put another way, the offending local
laws hoard a local resource—be it meat,
shrimp, or milk—for the benefit of local
businesses that treat it. 511 U.S. at 392–393.
=== United Haulers: local processing law benefiting
public entity ===
The Court's 2007 decision in United Haulers
Association v. Oneida-Herkimer Solid Waste
Management Authority starkly illustrates the
difference in result when the Court finds
that local regulation is not discriminatory.
The Court dealt with a flow control regimen
quite similar to that considered in Carbone.
The "only salient difference is that the laws
at issue here require haulers to bring waste
to facilities owned and operated by a state-created
public benefit corporation." The Court decided
that the balancing test should apply, because
the regulatory scheme favored the government
owned facility, but treated all private facilities
equally.
Compelling reasons justify treating these
laws differently from laws favoring particular
private businesses over their competitors.
"Conceptually, of course, any notion of discrimination
assumes a comparison of substantially similar
entities." General Motors Corp. v. Tracy,
519 U.S. 278 (1997). But States and municipalities
are not private businesses—far from it.
Unlike private enterprise, government is vested
with the responsibility of protecting the
health, safety, and welfare of its citizens.
See Metropolitan Life Ins. Co. v. Massachusetts,
471 U.S. 724 (1985) ... These important responsibilities
set state and local government apart from
a typical private business.
The Court's United Haulers decision demonstrates
an understanding of the regulatory justifications
for flow control starkly missing in the Carbone
decision:
By the 1980s, the Counties confronted what
they could credibly call a solid waste " 'crisis.'
"... Many local landfills were operating without
permits and in violation of state regulations.
Sixteen were ordered to close and remediate
the surrounding environment, costing the public
tens of millions of dollars. These environmental
problems culminated in a federal clean-up
action against a landfill in Oneida County;
the defendants in that case named over local
businesses and several municipalities and
school districts as third-party defendants
The "crisis" extended beyond health and safety
concerns. The Counties had an uneasy relationship
with local waste management companies, enduring
price fixing, pervasive overcharging, and
the influence of organized crime. Dramatic
price hikes were not uncommon: In 1986, for
example, a county contractor doubled its waste
disposal rate on six weeks' notice
The Court would not interfere with local government's
efforts to solve an important public and safety
problem.
The contrary approach of treating public and
private entities the same under the dormant
Commerce Clause would lead to unprecedented
and unbounded interference by the courts with
state and local government. The dormant Commerce
Clause is not a roving license for federal
courts to decide what activities are appropriate
for state and local government to undertake,
and what activities must be the province of
private market competition. In this case,
the citizens of Oneida and Herkimer Counties
have chosen the government to provide waste
management services, with a limited role for
the private sector in arranging for transport
of waste from the curb to the public facilities.
The citizens could have left the entire matter
for the private sector, in which case any
regulation they undertook could not discriminate
against interstate commerce. But it was also
open to them to vest responsibility for the
matter with their government, and to adopt
flow control ordinances to support the government
effort. It is not the office of the Commerce
Clause to control the decision of the voters
on whether government or the private sector
should provide waste management services.
"The Commerce Clause significantly limits
the ability of States and localities to regulate
or otherwise burden the flow of interstate
commerce, but it does not elevate free trade
above all other values."
== 
Health and safety regulation ==
The history of commerce clause jurisprudence
evidences a distinct difference in approach
where the state is seeking to exercise its
public health and safety powers, on the one
hand, as opposed to attempting to regulate
the flow of commerce. The exact dividing line
between the two interests, the right of states
to exercise regulatory control over their
public health and safety, and the interest
of the national government in unfettered interstate
commerce is not always easy to discern. One
Court has written as follows:
Not surprisingly, the Court's effort to preserve
a national market has, on numerous occasions,
come into conflict with the states' traditional
power to "legislat[e] on all subjects relating
to the health, life, and safety of their citizens."
Huron Portland Cement Co. v. City of Detroit,
362 U.S. 440, 443 (1960). On these occasions,
the Supreme Court has "struggled (to put it
nicely) to develop a set of rules by which
we may preserve a national market without
needlessly intruding upon the States' police
powers, each exercise of which no doubt has
some effect on the commerce of the Nation."
Camps Newfound/Owatonna v. Town of Harrison,
520 U.S. 564, 596 (1997) (Scalia, J., dissenting)
(citing Okla. Tax Comm'n v. Jefferson Lines,
514 U.S. 175, 180–83 (1995)); see generally
Boris I. Bittker, Regulation of Interstate
and Foreign Commerce § 6.01[A], at 6–5
("[T]he boundaries of the [State's] off-limits
area are, and always have been, enveloped
in a haze."). Those rules are "simply stated,
if not simply applied." Camps Newfound/Owatonna,
520 U.S. at 596 (Scalia, J., dissenting).
A frequently cited example of the deference
afforded to the powers of state and local
government may be found in Exxon Corp. v.
Maryland, 437 U.S. 117 (1978), where the State
of Maryland barred producers of petroleum
products from operating retail service stations
in the state. It is difficult to imagine a
regimen which might have greater impact on
the way in which markets are organized. Yet,
the Court found the legislation constitutionally
permitted: "The fact that the burden of a
state regulation falls on some interstate
companies does not, by itself establish a
claim of discrimination against interstate
commerce," the Court wrote. The "Clause protects
interstate market, not particular interstate
firms, from prohibitive or burdensome regulations."
Similarly, in Minnesota v. Clover Leaf Creamery
Co., 449 U.S. 456 (1981) the Court upheld
a state law that banned nonreturnable milk
containers made of plastic but permitted other
nonreturnable milk containers. The Court found
that the existence of a burden on out-of-state
plastic industry was not 'clearly excessive'
in comparison to the state's interest in promoting
conservation. And the court continued:
In Exxon, the Court stressed that the Commerce
Clause protects the interstate market, not
particular interstate firms, from prohibitive
or burdensome regulations. A nondiscriminatory
regulation serving substantial state purpose
is not invalid simply because it causes some
business to shift from a predominantly out-of-state
industry to a predominantly in-state industry.
Only if the burden on interstate commerce
clearly outweighs the State's legitimate purpose
does such a regulation violate the commerce
clause. When a state statute regarding safety
matters applies equally to interstate and
intrastate commerce, the courts are generally
reluctant to invalidate it even if it may
have some impact on interstate commerce. In
Bibb v. Navajo Freight Lines 359 U.S. 520,
524 (1959), the United States Supreme Court
stated: 'These safety measures carry a strong
presumption of validity when challenged in
court. If there are alternative ways of solving
a problem, we do not sit to determine which
of them is best suited to achieve a valid
state objective. Policy decisions are for
the state legislature, absent federal entry
into the field. Unless we can conclude on
the whole record that "the total effect of
the law as a safety measure in reducing accidents
and casualties is so slight or problematical
as not to outweigh the national interest in
keeping interstate commerce free from interferences
which seriously impede it" we must uphold
the statute.
== Exceptions ==
There are two notable exceptions to the dormant
Commerce Clause doctrine that can permit state
laws or actions that otherwise violate the
Dormant Commerce Clause to survive court challenges.
=== Congressional authorization ===
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.
=== Market participation exception ===
The second exception is "market participation
exception". This occurs when the state is
acting "in the market", like a business or
customer, rather than as a "market regulator".
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 certain customers or suppliers.
The Supreme Court introduced the market participant
doctrine in Hughes v. Alexandria Scrap Corp.,
426 U.S. 794 (1976), which upheld a Maryland
program that offered bounties to scrap processors
to destroy abandoned automobile hulks. See
also Wisconsin Dep't of Indus., Labor & Human
Relations v. Gould Inc., 475 U.S. 282, 289
(1986); Reeves, Inc. v. Stake, 447 U.S. 429,
437 (1980). Because Maryland required out-of-state
processors, but not in-state processors, to
submit burdensome documentation to claim their
bounties, the state effectively favored in-state
processors over out-of-state processors. The
Court held that because the state was merely
attaching conditions to its expenditure of
state funds, the Maryland program affected
the market no differently than if Maryland
were a private company bidding up the price
of auto hulks. Because the state was not "regulating"
the market, its economic activity was not
subject to the anti-discrimination principles
underlying the dormant Commerce Clause—and
the state could impose different paperwork
burdens on out-of-state processors. "Nothing
in the purposes animating the Commerce Clause
prohibits a State, in the absence of congressional
action, from participating in the market and
exercising the right to favor its own citizens
over others."
Another important case is White v. Massachusetts
Council of Constr. Employers, Inc., in which
the Supreme Court held that the City of Boston
could require its building contractors to
hire at least fifty percent of their workforce
from among Boston residents. 460 U.S. at 214–15.
Because all of the employees covered by that
mandate were "in a substantial if informal
sense, 'working for the city,' " Boston was
considered to be simply favoring its own residents
through the expenditures of municipal funds.
The Supreme Court stated, "when a state or
local government enters the market as a participant
it is not subject to the restraints of the
Commerce Clause." Id. at 208. Nothing in the
Constitution precludes a local government
from hiring a local company precisely because
it is local.
Other important cases enunciating the market
participation exception principle are Reeves,
Inc. v. Stake, 447 U.S. 429 (1980) and South-Central
Timber Development, Inc. 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,
because limits from other laws and Constitutional
limits still apply. 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
the law was not infirm because of 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. Because
of 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.
== Criticism of the doctrine ==
A "negative" or "dormant" component to the
Commerce Clause has been the subject of scholarly
discussion for many decades. Both Supreme
Court Justices Antonin Scalia and Clarence
Thomas have rejected the notion of a Dormant
Commerce Clause. They believe that such a
doctrine is inconsistent with an originalist
interpretation of the Constitution—so much
so that they believe the doctrine is a "judicial
fraud".A number of earlier Supreme Court justices
also expressed dissatisfaction with the dormant
Commerce Clause doctrine. For example, Chief
Justice Taney said this in 1847:
If it was intended to forbid the States from
making any regulations of commerce, it is
difficult to account for the omission to prohibit
it, when that prohibition has been so carefully
and distinctly inserted in relation to other
powers ... [T]he legislation of Congress and
the States has conformed to this construction
from the foundation of the government ... The
decisions of this court will also, in my opinion,
when carefully examined, be found to sanction
the construction I am maintaining.
However, that statement by Taney in 1847 was
before the doctrine morphed in the 1851 case
of Cooley v. Board of Wardens, in which Justice
Benjamin R. Curtis wrote for the Court that
the Commerce Clause does not always require
"exclusive legislation by Congress".
== Puerto Rico ==
In Trailer Marine Transport Corp. v. Rivera
Vázquez, 977 F.2d 1, 7-8 (1st Cir. 1992),
the First Circuit held that the dormant Commerce
Clause applies to Puerto Rico.
== See also ==
Commerce Clause
Section 2 of the Twenty-first Amendment to
the United States Constitution, for Court
rulings discussing possible Commerce Clause
implications.
Free movement of goods, an analogous European
Union doctrine, which provides that Member
States may not create obstacles to trade within
the EU
