Dormant Commerce Clause
WHAT IS THE DORMANT COMMERCE CLAUSE?
by Adam Sasiadek, Esq.
As we know, the U.S. Constitution is the document that defines the powers of the federal government. However, it also affects the powers of the state governments, including their power to enact laws affecting health, safety, and others interests, if those laws also have an impact on interstate commerce. The “dormant commerce clause” of the Constitution limits state power over interstate commerce. The dormant commerce clause is implicated when:
• A state enacts a law that regulates, directly or indirectly, interstate commerce; and
• Congress has not legislated on the matter that is regulated by the state law.
However, this doctrine is not based on the text of the Constitution. You will not find it spelled-out in any of the seven articles of that document, or in its 27 amendments. Article I, Section 8, of the Constitution only addresses the federal government’s power over interstate commerce: “The Congress shall have Power…To regulate Commerce with foreign nations, and among the several States, and with the Indian Tribes.” Rather, the dormant commerce clause is implied from the text of the Constitution and the historical setting in which it was framed.
The Articles of Confederation was our country’s governing document during and immediately after the American Revolution. After the thirteen colonies won their independence from the British, they quickly enacted laws that favored local interests over those of other the states. The Framers of the Constitution sought an arrangement that would put an end to this economic warfare. In H.P. Hood & Sons v. Du Mond, 336 U.S. 525 (1949), Justice Robert H. Jackson, who served on the Court from 1941 to 1954, explained with great eloquence how the Constitutional Convention of 1787 was driven by the need for economic unity among the states, above all other issues:
“The sole purpose for which Virginia initiated the movement which ultimately produced the Constitution was ‘to take into consideration the trade of the United States; to examine the relative situations and trade of the said states; to consider how far a uniform system in their commercial regulation may be necessary to their common interest and their permanent harmony.’…The desire of the Forefathers to federalize regulation of foreign and interstate commerce stands in sharp contrast to their jealous preservation of power over their internal affairs. No other federal power was so universally assumed to be necessary, no other state power so readily relinquished.”
One of the primary purposes for replacing the Articles of Confederation with the Constitution was to ensure that a system of open trade existed between every state of the country. This would be accomplished by transferring some of the states’ power over commerce to the federal government. As a result, the states are now prohibited from regulating interstate commerce in certain ways.
The Dormant commerce clause has been most frequently implicated by state regulation in three areas:
• The sale and production of agricultural goods.
• Transportation, especially regulations applying to trucking and railroads.
• Waste disposal and related public health issues.
Congress also has a role to play in the dormant commerce clause analysis. As was stated above, the dormant commerce clause only applies to state laws that do not have a federal counterpart. But Congress may preempt a particular state regulation by passing a law that regulates the same matters, and it may also expressly permit the states to regulate interstate commerce in ways that the dormant commerce clause would not allow.
The dormant commerce clause prohibits states from advancing “their own commercial interests by curtailing the movement of articles of commerce, either into or out of the state,” but it does generally support “their right to impose even burdensome regulations in the interest of local health and safety.” (H.P. Hood & Sons, at 535.) More specifically, there are four categories of state legislation affected by the dormant commerce clause:
I. Laws that openly discriminate against interstate commerce.
II. Laws that do not openly discriminate against interstate commerce, but place an “incidental burden” on it.
III. Laws that are facially neutral but have discriminatory effects on interstate commerce.
IV. Laws that make a state a “market participant.”
There are two standards of review that the courts apply to these laws. Laws in the first category – those that are facially discriminatory – are presumed invalid unless the state can show that they serve a legitimate purpose that cannot be achieved in any other way. This standard of review is referred to as “strict scrutiny.” The Supreme Court applies a balancing test to laws in the second category: the state law is presumed constitutionally valid and the challenger must show that the burden it places on interstate commerce far outweigh the local benefits it provides.
Laws in the third category are subjected to either standard of review, based on the discriminatory purpose and effect of the law in question (the cases discussed below will illustrate how the Supreme Court has grappled with laws in this category). Finally, when a state participates in the market economy, buying or selling goods or services as an individual or business entity would, it is exempt from the dormant commerce clause.
For more on the Commerce Clause see:
EVERYTHING'S COMING UP COMMERCE!
The Commerce Clause: Origins and Background
-Text of the Commerce Clause
-Birth of the Commerce Clause: The Annapolis Convention
-Debating the Commerce Clause at the Federal Convention
-James Madison on the Commerce Clause: Federalist No. 42
-Lighthouses and the Commerce Clause
The Commerce Clause in the Supreme Court: The Early Year (1824 to 1918)
-Marshall Defines Congress' Commerce Clause Power: Gibbons v. Ogden
-The Concurrent Commerce Clause: Cooley v. Board of Wardens
-Regulating Manufacturing Under the Commerce Clause: United States vs. E.C. Knight
-The Commerce Clause and the Federal Police Power: The Lottery Case (Champion v. Ames)
-The Stream of Commerce Argument: Swift and Company v. United States
-Intertwined Intrastate and Interstate Commerce: Houston, East & West Texas Railway Co. v. U.S. States (The Shreveport Rate Case)
-Early Social Welfare Legislation: Laissez Faire Strikes Back: Hammer v. Dagenhart
The Triumph of Commerce Clause Regulation: The Suprme Court and the New Deal Era (1936 to 1942)...a/k/a The Death of Federalism
-Federalism's Last Hurrah: A.L.A. Schecter Poultry Corp. v. United States and Carter v. Carter Coal Co.
-The Triumph of Commerce Clause Regulation: Substantial Affects and the NLRB v. Jones and Laughlin Steel Corp.
-The Substantial Effects Test: U.S. v. Darby
-The Commerce Clause Gone Wild!: Wickard v. Filburn and the Aggregation Theory
The Modern Commerce Clause: Post-New Deal into the 21st Century (1964 to 2005)
-The Civil Rights Movement: Equal Justice under the Commerce Clause: Heart of Atlanta Motel, Inc. v. US and Katzenbach v. McClung
-The Outer Limits of the Commerce Clause: U.S. v. Lopez
-The Commerce Clause Strikes Back! Gonzalez v. Raich