• Generally applicable statutes
• Financial incentives to regulate in a certain way (the spending power)
• When regulating private activity, Congress can give states the choice of regulating according to federal standards or having the federal government preempt state regulation.

Dormant Commerce Clause

• What are the "negative" implications of Congress’ Commerce Clause power?
• That is, to what extent does the Commerce Clause preclude state legislation in the absence of federal legislation?

Commerce Clause

Art. I, § 8, cl. 3

Interpreting Congressional Silence

• The Commerce Clause speaks only to Congressional action--states free to act when Congress has not acted.
• The Commerce Clause gives Congress exclusive authority to regulate interstate commerce.
• Congressional inaction is a form of regulation so preempts state regulation.
• States may not unreasonably interfere with interstate commerce.

Old Dormant Commerce Clause

• Purposes of the state regulation (commercial goals vs. police power goals like public health or safety)
• Direct or indirect effect on commerce (as in the pre-1937 commerce clause cases)
• Regulating matters of local concern or matters that demand uniform national rules.

Dormant Commerce Clause Today

To what extent does state regulation undermine the purposes of Congress’ Commerce Clause power?

• The goal of a truly integrated country in which states are working together.
• The goal of a well-functioning national economy.

Dormant Commerce Clause Today

• If there is pure economic protectionism at work (e.g., facial discrimination, laws that block the flow of interstate commerce at the state's borders), state regulation is prohibited, unless the state can show no other way (or no reasonable alternative) to achieve a legitimate state interest.
• If an even-handed effect on intrastate and interstate commerce, and effects on interstate commerce are incidental, statute allowed unless burdens on interstate commerce clearly excessive in relation to local benefits.

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  Federalism and 10th A/Dormant CC

  Concern about state autonomy means that

  Congress cannot conscript state legislatures or executive officers in the exercise of its Commerce Clause power

  States may interfere with interstate commerce when engaged as a market participant

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  Market Participation

  Maryland can favor in-state junkyards when paying bounties for scrapping junk cars

  South Dakota can sell cement from state-owned plant only to South Dakotans

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                                  Wunnicke

  Market participant doctrine is limited when

  regulation is applied beyond the narrow market
  foreign commerce is involved
  the state is dealing in a natural resource rather than a product of a complex manufacturing process using a costly physical plant and human labor

Discriminatory Taxation

• No higher taxes on out-of-state businesses.
• No subsidies to in-state businesses from an even-handed tax on in-state and out-of-state businesses.
• No tax credits to in-state businesses from an even-handed tax on in-state and out-of-state businesses.
• May give special subsidies to in-state businesses from general revenues (e.g., free water and sewer hook-ups to businesses that locate in the state).

Privileges and Immunities Clause of Article IV

Privileges and Immunities Clause of Article IV

• Does the law burden an Art. IV privilege or immunity (i.e., is the out-of-state resident’s interest in the state’s privilege sufficiently fundamental to the promotion of interstate harmony)?

Privileges and Immunities Clause of Article IV

• Does the law burden an Art. IV privilege or immunity (i.e., is the out-of-state resident’s interest in the state’s privilege sufficiently fundamental to the promotion of interstate harmony)?
• Does the state (or municipality) have a substantial reason for its discrimination, and is there a close relationship between the reason and the degree of discrimination?

Combining the Doctrines

• Dormant Commerce Clause
  • Market participant exception
    • Privileges and Immunities Clause limitation
    • Equal Protection Clause limitation
• Dormant Commerce Clause
  • Congressional Consent
    • Privileges and Immunities Clause limitation
    • Equal Protection Clause limitation

State Taxation of Interstate Commerce

• must be applied to activity with substantial nexus to the taxing state (e.g., Montana cannot tax coal mined in Kentucky)
• must be fairly apportioned to business activities within the state (no multiple taxation)
• can’t discriminate against interstate commerce
• must fairly relate to services provided by the state (e.g., tax rate applied to earnings in-state)