Chapter 6

TWO LIMITS ON STATE POWER: THE DORMANT COMMERCE CLAUSE AND CONGRESSIONAL ACTION

This Chapter examines two federalism-based limits on state and local power: (1) the so-called “dormant” Commerce Clause; and (2) ways in which Congress may block the states from legislating in particular areas. The most important concepts in this Chapter are:

•     Dormant Commerce Clause: The mere existence of the federal commerce power restricts the states from discriminating against, or unduly burdening, interstate commerce. This restriction is called the “dormant Commerce Clause.”
  •     Three part test: A state regulation which affects interstate commerce must satisfy each of the following three requirements in order to avoid violating the dormant Commerce Clause:
    •     The regulation must pursue a legitimate state end;
    •     The regulation must be rationally related to that legitimate state end; and
    •   The regulatory burden imposed by the state on interstate commerce must be outweighed by the state’s interest in enforcing its regulation.
  •     Intentional discrimination: Courts especially frown on intentional discrimination against out-of-staters. If the state is promoting its residents’ own economic interests, this will not be a legitimate state objective, so the regulation will almost always be found to violate the Commerce Clause.
  •     Market participant exception: There is one key exception to the dormant Commerce Clause rules: if the state acts as a market participant, it may favor local over out-of-state interests.
•     Preemption: Congress can preempt the states from affecting commerce. There are two ways it can do this:
  •     Conflict: First, the congressional statute and the state action may be in actual conflict. If so, the state regulation is automatically invalid.
  •     Federal occupation of field: Congress may also pre-empt state regulation not because there is an actual conflict between what Congress does and what the states do, but because Congress is found to have made the decision to occupy the entire field.
  •    Consent by Congress: Conversely, Congress may consent to state action that would otherwise violate the Commerce Clause. Congress may even allow a state to discriminate against out-of-staters.
•    The Supremacy Clause: Under the “Supremacy Clause” of the Constitution, the Constitution and federal laws take priority over any conflicting state law.