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The Commerce Clause and the Necessary and Proper Clause A. The Dormant Commerce Clause i. In General a) The so-called "dormant" Commerce Clause was developed by the Court to restrain states from enforcing laws that burdened interstate commerce b) The textual foundations of the dormant commerce clause:
? The Commerce Clause empowers Congress to regulate commerce "among the several states," Art. I, SS 8, cl. 3, but does not explicitly grant power to federal courts to invalidate state laws in the absence of congressional action.
? From this "great silence," H.P. Hood & Sons, Inc. v. Du Mond, the Court has inferred that absent congressional action, states have a "residuum of power" to regulate local affairs, even if their actions affect interstate commerce, provided that their regulation does not impermissibly "trespass upon national interests." Great Atl. & Pac. Tea Co. v. Cottrell. c) Congress today legislates against a backdrop of default rules generated by the Court's dormant Commerce Clause doctrine.
?????It appears by Congress' actions and inactions over many decades, that Congress has rather forcefully embraced the federal judiciary as its partner in keeping states under control in the economic domain. ii. The Balancing Test a) Pike v. Bruce Church Inc. (pg. 731)
? General Rule:?
"Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will upheld unless the burden imposed in such commerce is clearly excessive in relation to the putative local benefits. If a legitimate local purpose is found , then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities." Pike v. Bruce Church Inc. (pg. 731) In Pike, the Court, in applying the above balancing test, invalidated an Arizona statute requiring that all cantaloupes grown in Arizona and offered for sale be packed in Arizona before being shipped out of state.
Here, the Court found that Arizona's interest in protecting the reputation of its produce "minimal" when placed against the requirement that the packer "build and operate and unneeded $200,000 packing plant in the state."
? The Court in Pike explicitly rejected the dichotomy, employed in earlier cases, between "direct" and "indirect" burdens on commerce. b) Hughes v. Oklahoma (pg. 731)
? The Pike test was refined in Hughes v. Oklahoma.The Hughes decision developed the Pike test into a threepronged test:
? The Court considered (1) whether the challenged statute regulates even-handedly with only "incidental" effects on interstate commerce, or instead discriminates against interstate commerce either on its face or in practical effect; (2) whether the statute serves a legitimate local purpose; and if so, (3) whether alternative means could promote this local purpose as effectively without discriminating against interstate commerce.
? Thus, the Hughes test, like the Pike test, balances the state's interest in promulgating a statute against the burden that the statute imposes on interstate commerce. c) Cooley v. Board of Wardens (pg. 204)
? In Cooley, the Court determined that a local Pennsylvania law regulating the qualifications of pilots and the times and modes of their offering and rendering their services (the law required vessels entering and leaving the port of Philadelphia to engage a local pilot to guid them through the harbor) did not run afoul of the commerce clause.
? "That the power to regulate commerce includes the regulation of navigation, we consider settled." Cooley v. Board of Wardens (pg. 204)
? "And . . . the regulation of the qualifications of pilots, of the modes and times of offering and rendering their services . . . do constitute regulations of navigation, and consequently of commerce, within the just meaning of this clause of the Constitution." Cooley v. Board of Wardens (pg. 204)
? "Whatever subjects of this power are in their national, or admit only of one uniform system, or plan of regulation, may justly be said to be of such a nature as to require
exclusive legislation by Congress." Cooley v. Board of Wardens (pg. 204)
? "That this cannot be affirmed of laws for the regulation of pilots and pilotage, is plain." Cooley v. Board of Wardens (pg. 204)
? "The act of 1789 contains a clear and authoritative declaration by the first Congress, that the nature of this subject is such, that until Congress should find it necessary to exert its power, it should be left to the legislation of the States; that it is local and not national; that it is likely to be the best provided for, not by one system, or plan of regulation, but by as many as the legislative discretion of the several States should deem applicable to the local peculiarities of the ports within their limits." Cooley v. Board of Wardens (pp. 204-05)
? "It is the opinion of a majority of the court that the mere grant to Congress of the power to regulate commerce, did not deprive the States of power to regulate pilots, and that although Congress has legislated on this subject, its legislation manifests and intention . . . not to regulate this subject, but to leave its regulation to the several States." Cooley v. Board of Wardens (pg. 205)
? "We are of the opinion that this State law was enacted by virtue of a power, residing in the State to legislate; that it is not in conflict with any law of Congress; that it does not interfere with any system which Congress has established by making regulations, or by intentionally leaving individuals to their own unrestricted action; that this law is therefore valid . . . ." Cooley v. Board of Wardens (pg. 205) d) RE State regulation of transportation
? On the one hand, the Court has recognized a state's strong safety interests in controlling its own streets and thoroughfares; on the other hand, the Court has been sensitive to the need for each state to bear its share of supporting a national transportation network that can be threatened by unnecessary or conflicting local laws.
? In South Carolina State Highway Dept. v. Barnwell Brothers, the Court upheld a state law regulating truck size in a nondiscriminatory way, whose burden fell largely on intrastate shippers, and whose specifics plausibly served legitimate interests in safety and road conservation.
?????In contrast, in South Pacific Co. v. Arizona, the Court struck down a state law regulating train size that had dubious safety benefits and that interfered with the "national uniformity . . . practically indispensable to the operation of an efficient and economical national railway system," and whose burdens fell on train traffic that was more than 90 percent interstate.
? In Bibb v. Navajo Freight Lines, Inc., the Court struck down a state law regulating truck mud flaps differently than, and partly inconsistent with, the mud flap regulations of sister states. iii. The "Per Se Invalidity" Test a) In cases where state law overtly discriminates against out-of-state economic interests in a fashion akin to a tariff, quota, or outright embargo, the Supreme Court has routinely abandoned the balancing approach in favor of a "virtually per se rule of invalidity." See, e.g., City of Philadelphia v. New Jersey.
? In City of Philadelphia v. New Jersey, the Court invalidated a New Jersey statute that prohibited the importation of most solid or liquid waste originating outside the borders of the state.
? The Court concluded that "whatever New Jersey's ultimate purpose, it may not be accomplished by discriminating against articles of commerce coming from outside the State unless there is some reason, apart from their origin, to treat them differently." City of Philadelphia v. New Jersey (pg. 732)
? The State could not achieve the legitimate goals of conservation of landfill facilities by "the illegitimate means of isolating the State from the national economy. . . .
[T]here is no basis to distinguish out-of-state waste from domestic waste. . . ." City of Philadelphia v. New Jersey (pg. 732) iv. The Market Participant Exception a) When a state enters the market as purchaser for end use of the items in interstate commerce, it may restrict its trade to its own citizens or businesses within the state. Hughes v. Alexandria Scrap Corp. (pg. 732) b) Because "the Commerce Clause responds principally to state taxes and regulatory measures," the state is exempt when acting in its proprietary capacity. Reeves, Inc. v. Stake (pg. 733) v. Congressional Consent
a) Even where the Court has spoken to strike down a state law, the Wheeling Bridge cases establish that Congress can consent to state regulation of interstate commerce which would otherwise be held to run afoul of the commerce clause.
? The Wheeling Bridge cases arose out of the competition between Pennsylvania and Virginia regarding where the Cumberland Road, one of the major national thoroughfares of the time, would cross the Ohio River.
? In the first Wheeling Bridge case, Pennsylvania v. Wheeling &
Belmont Bridge Co., where the Virginia legislature charted a corporation to build the bridge across the Ohio River in Virginia (today it is in West Virginia), Pennsylvania sought to enjoin the construction. The Court held that the bridge impermissibly obstructed interstate navigation. (Although the bridge was already built by the time this ruling came down)
? After this, Congress passed a bill whereby the bridge was declared to be a lawful structure in its existing position and elevation and was declared to be a post road for the passage of the mails.
? In the second Wheeling Bridge case, the Court sustained the statute and denied the injunction:
? "So far . . . as this bridge created an obstruction to the free navigation of the river, in view of the previous acts of congress, they are to be regarded as modified by this subsequent legislation; and, although it still may be an obstruction in fact, it is not so in the contemplation of the law. . . . The regulation of commerce includes intercourse and navigation, and of course, the power to determine what shall or shall not be deemed in judgment of law, an obstruction to navigation." Second Wheeling Bridge case (pg. 206) b) "[W]henever Congress' judgment has been uttered affirmatively to contradict the Court's previously expressed view that specific action taken by the states in Congress' silence was forbidden by the commerce clause, [the Court] has accommodated its previous judgment to Congress' express approval." Prudential Insurance Co. v. Benjamin (pg. 207)
??? ?In Prudential, the Court sustained Congress' consent to state regulation and taxation of the interstate insurance business after the Court had struck down such regulation as beyond states' authority because of its "interstate character."
B. The Commerce Clause i. The Constitution of the United States provides that "[t]he Congress shall have Power . . . To regulate Commerce with foreign Nations, and among the several States, and the Indian tribes . . . ." Art. 1, SS 8, cl. 3. ii. United States v. Lopez (Kennedy, J., concurring) - History of the Commerce Clause (in March 11, 2013 folder) a) Chief Justice Marshall announced that the national authority reaches "that commerce which concerns more States than one" and that the commerce power "is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the constitution." Gibbons v. Ogden
? His statements can be understood now as an early and authoritative recognition that the Commerce Clause grants Congress extensive power and ample discretion to determine its appropriate exercise. b) "The progression of our Commerce Clause cases from Gibbons to the present was not marked, however, by a coherent or consistent course of interpretation." United States v. Lopez (Kennedy, J., concurring)
? "Furthermore, for almost a century after the adoption of the Constitution, the Court's Commerce Clause decisions did not concern the authority of Congress to legislate. Rather, the Court faced the related but quite distinct question of the authority of the States to regulate matters that would be within the commerce power had Congress chosen to act." United States v. Lopez (Kennedy, J., concurring) c) At the midpoint of the 19th century, the Court embraced the principle that the States and the National Government both have authority to regulate certain matters absent the congressional determination to displace local law or the necessity for the Court to invalidate local law because of the dormant national power. Cooley v. Board of Wardens of Port of Philadelphia d) One approach the Court used to inquire into the lawfulness of state authority was to draw content based on subject matter distinctions, thus defining by semantic or formalistic categories those activities that were commerce and those that were not.
? For instance, in deciding that a State could prohibit the in state manufacture of liquor intended for out of state shipment, it distinguished between manufacture and commerce.
? "No distinction is more popular to the common mind, or more clearly expressed in economic and political literature, than that between manufactur[e] and commerce. Manufacture is transformation---the fashioning of raw materials into a change of form for use. The functions of commerce are different." Kidd v. Pearson e) Though that approach likely would not have survived even if confined to the question of a State's authority to enact legislation, it was not at all propitious when applied to the quite different question of what subjects were within the reach of the national
power when Congress chose to exercise it.
? This became evident when the Court began to confront federal economic regulation enacted in response to the rapid industrial development in the late 19th century.
? Thus, the Court relied upon the manufacture commerce dichotomy in United States v. E. C. Knight Co., 156 U.S. 1 (1895), where a manufacturers' combination controlling some 98% of the Nation's domestic sugar refining capacity was held to be outside the reach of the Sherman Act. Conspiracies to control manufacture, agriculture, mining, production, wages, or prices, the Court explained, had too "indirect" an effect on interstate commerce.
? And in Adair v. United States, 208 U.S. 161 (1908), the Court rejected the view that the commerce power might extend to activities that, although local in the sense of having originated within a single state, nevertheless had a practical effect on interstate commercial activity. The Court concluded that there was not a "legal or logical connection .
. . between an employee's membership in a labor organization and the carrying on of interstate commerce," id., at 178, and struck down a federal statute forbidding the discharge of an employee because of his membership in a labor organization. f) The Court disavowed E. C. Knight's reliance on the manufacturing commerce distinction in Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 68-69 (1911), declaring that approach "unsound."
? The Court likewise rejected the rationale of Adair when it decided, in Texas & New Orleans R. Co. v. Railway Clerks, 281 U.S. 548, 570-571 (1930), that Congress had the power to regulate matters pertaining to the organization of railroad workers. g) In another line of cases, the Court addressed Congress' efforts to impede local activities it considered undesirable by prohibiting the interstate movement of some essential element.
? In the Lottery Case, 188 U.S. 321 (1903), the Court rejected the argument that Congress lacked power to prohibit the interstate movement of lottery tickets because it had power only to regulate, not to prohibit.
? In Hammer v. Dagenhart, 247 U.S. 251 (1918), however, the Court insisted that the power to regulate commerce "is directly
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