Congress Powers and the Commerce Clause and the Dormant Commerce Clause
Theory of Congress Power under Commerce Clause
The Commerce Clause is to address issues when some genuine national interest is at stake and when states cannot, as a practical matter address certain issues, because of interstate commerce and transport.
Exceptions in which DCC does not apply
(1) US Haulers Test - Flow control ordinances that favor the government instead of a private facility are constitutional as long as they do not violate the Dormant Commerce Clause (2) Inspection Laws - Local Health and Safety Issue but there must also be no reasonable adequate alternatives.
Dean Milk Test
Another test in which the court will apply is the Dean Milk Test. Under the Dean Milk Test, the state must show there is a legitimate local concern. Even if the court finds there is a legitimate local concern but there are other reasonable adequate alternatives, then it is unconstitutional. If there are none, then it is constitutional.
DCC TEST RULE ON HISTORY
By interpreting the express power of the Federal government to regulate Interstate Commerce, the court has found, implied via the negative, that there are enforceable limits on the sates legislative power to regulate Interstate Commerce (with attempts to protectionist and discriminatory trade laws) in the absence of Congressional policy on the subject. Court relies on history and inferences from the Federal Structure to justify these limits on state power.
Kinds of Discrimination
Discrimination occurs when there is treatment from a state in favor or against another state. There are three kinds of discrimination the court recognizes. Facial Discrimination, Facially Neutral but intentionally discriminatory. Facially Neutral and not intentional discrimination.
Limitations on Commerce US v. EC KNIGHT
Congress cannot, under the commerce clause reach a monopoly in manufacture. That is left to state control. If the issue is left for the health and safety, it is left for the state and beyond the scope of the federal government.
Cumulative Effect Theory WICKARD v. FILBURN
Congress may regulate not only acts which, taken alone, would have a substantial economic effect on interstate commerce, but also an entire class of acts, if the class has a substantial economic effect (even though one act within it might have virtually no interstate impact at all) Cumulative effect - if everyone did the same thing, it would substantially effect interstate commerce
Natural Resources
Even if the state is participating in the market in which they are regulating, if the state is rich in a natural resource, such as timber, coal, wild game, and oil, mineral, and they have a monopoly over the resource, the state cannot keep the resources from other states.
Facial Discrimination
Facial discrimination, which on its face discriminates against out of state commerce, also known as purposeful discrimination, is held to be per se unconstitutional.
Facially Neutral and Not Intentional Discrimination
Facially neutral and not intentionally discrimination occurs when the state is not intentionally discriminating against other states but in effect there is discrimination.
Facially Neutral but Intentionally Discriminatory
Facially neutral but intentionally discriminatory, meaning while on its face may seem neutral where state law favors local economic interests but it is at the expense of out of state competition, also known as de facto discrimination.
Market Participation Doctrine
However, even if the state violates the dormant commerce clause, under the market participation doctrine, a state may favor its own citizens and companies when it buys or sells goods or services. However, the market participation only permits a state or locality to discriminate against out of state commerce when it acts as a market participant, but not when the state is regulating the market. A state is considered a market participant where a state is acting as a producer or supplier of a marketable good or service. When a state is acting in such a role, it may be permissibly discriminate against non-residents. Whereas, when a state enters the market and uses its coercive power to dictate the ways in which the governed conduct their business or other activities, then a state is considered to be regulating in the market rather than participating in the market. If the state is a market participant and they are participating in the particular market in which they are regulating, then it is constitutional and they can discriminate in favor of local business. Unless it violates a fundamental rights, or if they are not participating in the particular market they are regulating, or if a state is rich in a resource, such as a natural resource, that another country or state needs, the state cannot hog the resource. (Coal, timber, mineral, wild game).
Actually Listed v. Implied
If the constitution specifically addresses the power the federal government has, then it is an independent source of power and the federal government may enforce those powers. If the constitution is silent, particular powers can be implied from the explicit grant of other powers in the constitution through the necessary and proper clause.
Pike Test
Next, if the court finds the discrimination is incidental, de facto, then the court will apply the Pike Test. Under the Pike test, the state must have a legitimate local concern, in which the state is not trying to discriminate against other states, but it ends up happening. If the state has a legitimate local concern, the court will apply a balancing test between the burden on interstate commerce and the benefit of the state. If the burden on interstate commerce is greater than the benefit of the state, then it is unconstitutional. If not, then it is constitutional.
Dormant Commerce Clause
On its face, the Commerce Clause, Article I, Section 8, is merely an affirmative grant of legislative power to Congress, authorizing it to regulate commerce with foreign nations, and among the several states, and with the Indian Tribes. However, this Congressional power is silent as to whether States can regulate interstate and foreign commerce. The Dormant Commerce Clause, is a legal doctrine that courts in the United States have inferred from the Commerce Clause, it refers to the prohibition, implicit in the Commerce Clause, against states passing legislation that discriminates against or excessively burdens interstate commerce. Thus, where there is a State action, and the Constitution is silent on regulation of state action, the Dormant Commerce Clause is drawn from the negative implications of the commerce clause.
Prohibiting Technique US v. DARBY
Rule: Congress has the power to use prohibitions on the interstate transportation of items or people in furtherance of state police power or general welfare regulations. Rule: Company cannot ship goods in interstate commerce if they do not meet the wage/hour standards. Reasoning: Congress can regulate production of goods, it can make it a federal crime to employ people in production for interstate commerce at other than prescribed rates and hours. Congress can attack any problem, even one of overwhelming state concern, by prohibiting all interstate activity associated in any way with it. If Congress couldn't regulate labor, a race to the bottom of labor law protections would ensue, heavily impacting interstate commerce.
REASONING FOR THE DORMANT COMMERCE CLAUSE
State laws that protect local economic interests at the expense of out of state interests impair political and economic vision of the framers. Economic visions were one of free trade and the states must sink or swim together
States Regulating Commerce
State laws that protect local economic interests at the expense of out of state interests impair political and economic vision of the framers. Economic visions were one of free trade and the states must sink or swim together. The Dormant Commerce clause is valuable because the clause prohibits State laws that protect local economic interests at the expense of out of state interest which impair the political and economic vision of the framers of the U.S.
Article I Section 8
TAX AND SPEND: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; To borrow on the credit of the United States; COMMERCE CLAUSE: To regulate Commerce with foreign Nations, and among the several States, and with the Native American Tribes; To establish a uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States; CREATE A BANK: To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States; To establish Post Offices and Post Roads; To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries; To constitute Tribunals inferior to the supreme Court; To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations; WAR POWERS: To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water; To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years; To provide and maintain a Navy; To make Rules for the Government and Regulation of the land and naval Forces; To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions; To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress; To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And NECESSARY AND PROPER: To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
States Power
The Tenth Amendment provides that the powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people. Thus, states have all powers not granted to the federal government by the Constitution.
Functions of the Commerce Clause
The commerce clause serves two distinct functions; it acts as a source of congressional, federal, authority and it acts implicitly as a limitation on states power. (DCC)
EXAM RULE US v. LOPEZ
The federal government can regulate the channels of interstate commerce, such as roadways, waterways, any means of transportation across state lines. The federal government can regulate the instrumentality of interstate commerce, such as cars, planes, boats, any method used for transporting commerce. The federal government can regulate activities that have a substantial impact on interstate commerce. However, it is not enough that the activity "affects" interstate commerce, it must "substantially affect" interstate commerce. An act must be economic in nature for the federal government to regulate under the commerce clause. (In this case, education is not economic in nature).
Congress Powers
The federal government has enumerated powers, they are listed in the constitution. Thus, the federal government cannot do anything unless the power was given to them. These powers are found under Article I section 8 of the constitution and are either actually listed or they may be implied.
Limits and Characteristics of the Necessary and Proper Clause
The necessary and proper clause is not an independent source of power, rather it is the means to achieve the ends. The clause carries into execution other enumerated powers in the Constitution. Necessary does not be absolutely necessary, only appropriate. However, the Necessary and Proper Clause only expands legislative powers.
Inactivity NFIB v. SEBELIUS
Under the commerce clause, congress has the power to regulate activity that substantially effects interstate commerce, not inactivity.
Downstream Regulation
Thus, the limit on the Market Participation Exception is that it allows 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, whether by statute, regulation, or contract, that had a substantial regulatory effect outside of that particular market. Downstream restrictions have a greater regulatory effect than do limitations on the immediate transaction. The state may not avail itself of the market participant doctrine to immunize its downstream regulation of a market it is not actually a participant.
Commerce Clause
Under Article I Section 8, Congress has the power to regulate commerce with foreign nations, and among the several states, and with the Indian Tribes.
Privileges and Immunities Clause
Under Article IV Section 2 of the Constitution, the Privileges and Immunities Clause provides that the Citizens of each state shall be entitle to all Privileges and Immunities of Citizens in the Several States. This clause protects fundamental rights of individual citizens and restrains state efforts to discriminate against out of state citizens. However, the Privileges and Immunities Clause extends not to all commercial activity, but only to fundamental rights. This only applies to US Citizens, immigrants living in the US or corporation cannot take advantage of this. A fundamental right includes the right to work, the right to be an economic actor in society and the right to get paid for your work. if the ordinance violates a fundamental right, then under this clause, the ordinance is unconstitutional, unless it is justified by a compelling governmental interest.
Necessary and Proper Clause
Under the Necessary and Proper Clause, Article I section 8, Congress has the power to make all laws which shall be necessary and Proper for carrying into execution the foregoing powers vested by the constitution in the government of the US, or in any Department of Officer thereof.
Philadelphia Test
Under the Philadelphia test, the court will distinguish between facial discrimination and de facto discrimination. If the court finds there is facial discrimination, meaning, purposeful discrimination, then it is virtually per se unconstitutional. However there is an exception under Inspection Clause, Article I, Section 10 of the Constitution. Under this exception, No state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing it's inspection laws. Thus, if the inspection laws are for the local health and concern of the state, then it may be constitutional
Market Participation Doctrine
Under the market participation doctrine, if the court finds that a state is a market participant and there is discrimination against economic interests, then it may be found constitutional. Thus, where a state is acting as a market participant and the state is in the market in which they are regulating, then it is constitutional and the state can discriminate in favor of local businesses. However, the doctrine is not limitless. If a fundamental right is violated, or if the state is not participating in the market in which they are regulating, or when the state is hogging natural resources
Analysis of DCC
When analyzing whether an act is unconstitutional under the dormant commerce clause, the courts will first determine whether a state is market participant or if the state is regulating the market.
Discrimination and Regulating the Market
When the court finds there is some kind of discrimination, the court will apply various tests to determine whether the state's action is unconstitutional under the Dormant Commerce Clause. Phlily Test Pike Test Dean Milk Test
Regulating the Market
When the state is not involved in the market, but rather controlling the market. A state is found to regulate a market when the state creates standards and restrictions without being in that particular market.
Health and Safety Rule Starter
Where there is no federal regulation on commerce clause grounds, the states are typically given great deference with legislative issues concerning health and safety as long as the safety concern is legitimate and the benefit to the state outweighs the burden on interstate commerce.
United Haulers Test
only for local processing requirements!! Is there a traditional government function? If yes, constitutional. Where there is a traditional government activity, the state has the right to legislate for the health safety and welfare of its citizens.