August 17, 2017 | Advocate Health Care Network v Stapleton: “Church Plan” ERISA Exemption Clarified
|The Commerce Clause gives the federal government the authority to regulate commerce “among the several states” (see the Commerce Clause for what this power entails). States, however, are not bound by the enumerated powers of the Constitution. They have what are called “plenary” powers. Essentially, they can do whatever they wish – provided those actions don’t conflict with some negative prohibition in the U.S. Constitution. Either way, however, states don’t need to be affirmatively granted power by constitutional provision, like the federal government.|
However, once the federal government is granted a certain power, that power is theoretically “concurrent.” Meaning, for example, with the Commerce Clause in place, both the federal government and the state governments have authority in the realm of commerce. The question becomes, then, to what degree does the Commerce Clause actually limit a state’s ability to regulate commerce?
The answer (among other provisions like the Supremacy Clause and the Privileges and Immunities Clause) is what is known as the Dormant Commerce Clause.
The Dormant Commerce Clause does not explicitly stem from any textual provision. It is entirely implied from the Commerce Clause. One of the underlying purposes of the Commerce Clause is to allow the federal government to prevent economic discrimination between states. Selling goods between Alabama and Mississippi should not be as difficult as selling goods between the United States and Russia. While somewhat sovereign, a state should not be permitted to pass laws benefiting itself that also burden another state. The Commerce Clause allows laws passed by the federal government to override state laws that affect interstate commerce. The Dormant Commerce Clause automatically invalidates a protectionist state law, whether or not the federal government has legislated on the issue.
|Gibbons v. Odgen (1824)|
|The Pike Test||Important Cases|
|Whether a state law violates the Dormant Commerce Clause is generally governed by a test gleaned from Pike v. Bruce Church, Inc. (1970). In Pike, Arizona had passed a law requiring (sometimes at great expense) Arizona cantaloupe growers to label their product as coming from Arizona, regardless of where the cantaloupes were eventually packed and shipped from. The Court invalidated this law as protectionist, coming up with the following framework:|
First, if the state or local law is specifically purposed with economic protectionism, it is automatically (or, ‘per se’) unconstitutional.
Second, if the purpose is not economic protectionism – and is otherwise legitimate – the Court will use a balancing test. It will examine the significance of burden that this law places on interstate commerce. It will ask if the value of the benefit outweighs the burden. In other words, as stated in Pike, “Where the statute regulates evenhandedly…it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.”
While the Pike Test may appear complex, is it practically relatively simple. The following cases illustrate the test in operation.
|Pike v. Bruce Church, Inc. (1970)|
|Examples of Governments Failing the Pike Test||Important Cases|
|In Hunt v. Washington State Apple Advertising Commission (1977), North Carolina imposed a packaging requirement on apples whereby they had to be labelled according to the USDA, a federal agency that oversees food quality, and not individual state labels. However, apples from Washington State were actually of a higher quality than even the best USDA apples. Forcing the Washington State apples to replace their labels with USDA stickers when sold in North Carolina essentially eliminated the quality advantage possessed by Washington State apples. The Court held that, indeed, this was a violation of the Dormant Commerce Clause. The purpose wasn’t outright protectionism. It was the standardization of apple packaging. But it had a protectionist effect. Out-of-state apples that may have been better than in-state apples lost their competitive edge. As the benefit of the law did not outweigh the burden on interstate commerce, the law was unconstitutional.|
In City of Philadelphia v. New Jersey (1978), New Jersey prohibited out-of-state waste from entering New Jersey landfills. Though the Court did not find this to be per se unconstitutional, it considered the potential burden on interstate commerce if such regulations were allowed. Though a particular state may want to limit its exposure to out-of-state garbage, it may not essentially blockade waste from entering the state. This was economic protectionism, burdening out-of-state interests without enough of an in-state benefit, and therefore invalid.
In West Lynn Creamery, Inc. v. Healy (1994), Massachusetts placed a tax on all milk sales (in-state and out-of-state), but redistributed the money back to in-state milk producers, essentially subsidizing the in-state industry. This practically amounted to a tariff on out-of-state milk and was therefore unconstitutional.
In C&A Carbone, Inc. v. Town of Clarkstown (1994), the city of Clarkstown prohibited businesses from discarding certain waste anywhere but in an in-city private facility, which was actually more expensive to use than other facilities outside of the city. Though this was not a state being protectionist – it was a city – the Court still found this law to be unconstitutional.
|Hunt v. Washington State Apple Advertising Commission (1977)|
City of Philadelphia v. New Jersey (1978)
West Lynn Creamery, Inc. v. Healy (1994)
C&A Carbone, Inc. v. Town of Clarkstown (1994)
|The Market Participant Theory||Important Cases|
|A notable exception exists to the Pike Test approach to the Dormant Commerce Clause that involves states acting as so-called “market participants” instead of market regulators. When a state passes a law favoring public facilities or entities, even if the law is explicitly for protectionist purposes, it is constitutional.|
For example, in United Haulers Association v. Oneida-Herkimer Solid Waste Management Authority (2007), New York forced private waste management companies to deliver waste to a particular public facility. Since this was a public facility, and not a private facility, the Court held that this protectionist law was constitutional. This case is especially noteworthy because of how similar it is to C&A Carbone, Inc. v. Town of Clarkstown (1994) (see above). Essentially, the only significant difference between the two cases – leading to two different results – was that in United Haulers, New York mandated using an in-state public facility, while in Carbone, Clarkstown mandated using an in-city private facility.
|United Haulers Association v. Oneida-Herkimer Solid Waste Management Authority (2007)|
|The Quarantine Exception||Important Cases|
|Finally, an additional exception revolves around so-called “quarantine laws.” These are fairly simple. Even if the law is protectionist, if it is to keep something harmful out of the state, it is permitted. Essentially, this exception revolves around health and safety. A law preventing one state’s contaminated beef from entering another is, by definition, protectionist – but it is nevertheless protectionist for an acceptable reason.|