Brief Fact Summary. The mayor of Boston issued an executive order that required all construction projects funded in whole or in part by the city funds to have a work force consisting of at least half bona fide residents of Boston.
Synopsis of Rule of Law. When a state or local government enters the market as a participant it is not subject to the restraints of the Commerce Clause. The only question to ask is whether the program constituted direct state participation in the market.
The Court acknowledged that there are some limits on a state or local government's ability to impose restrictions that reach beyond the immediate parties with which the government transacts business.View Full Point of Law
Issue. Does the Commerce Clause prevent the city from giving effect to an order by the mayor that would require a workforce consisting of at least half bona fide residents on all construction projects funded by the city?
Held. Justice Rehnquist opinion. No. Supreme Judicial Court of Massachusetts judgment reversed.
To the extent the city expended its own funds, it was a market participant and therefore exempt from the Commerce Clause. To the extent that Congress provided the funds, the order was affirmatively sanctioned by the pertinent regulations.
Congress is granted authority under the Commerce Clause and is not restricted in what it may do. Where state or local government action is specifically authorized by Congress, it is not subject to the Commerce Clause even if it interferes with interstate commerce. There is no Dormant Commerce Clause issue presented by the federal funds.
The statute authorizing the federal programs shows that these programs were intended to encourage economic revitalization and improve opportunities for the poor, minorities, and the unemployed. The order was harmonious with those goals.
Discussion. Alexandria Scrap, Reeves, and now White all stand for the idea that if the state is a market participant it is not subject to the Commerce Clause. Here, it is important to note that Congress authorized the program and intended it to encourage economic revitalization. Congress has the final word on permissible state activity in interstate commerce.