Dormant Commerce Clause

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DORMANT COMMERCE CLAUSE

The Constitution does not explicitly restrict state regulation of commerce. While the commerce clause of Article I authorizes congressional displacement of state commercial regulation, the constitutional text is silent regarding the residuum of power left to the states where Congress has not acted. It has long been accepted, however, that the mere grant of authority to Congress—even if unexercised—implies some restrictions on the states. A panoply of terms is applied to this constitutional implication. Among the most popular are the "negative commerce clause" or the "dormant commerce clause."

Surprisingly there was little discussion at the constitutional convention of 1787 on the subject of free trade. Consequently, the Supreme Court felt obligated to justify the implied limitation on the state by reference to the events that precipitated the call for a convention rather than to what transpired at the gathering. The articles ofconfederation era was marked by commercial warfare between the states. The resulting barriers to national trade, which threatened the vitality and peace of the Union, are often viewed as a primary catalyst for the Convention of 1787.

Judging from the constitutional language alone, one might conclude that the Framers left protection of national trade to congressional supervision rather than judicial enforcement. This expectation, however, does not appear to have been the vision of the principal Framer. james madison anticipated that competing economic interests would neutralize each other in Congress and prevent the enactment of national regulation of interstate trade. The commerce clause, explained Madison in a letter written a half-century after the Constitution's drafting, would act "as a negative and preventive provision against injustice among the States themselves, rather than as a power to be used for the positive purposes of the General Government." Under Madison's impasse theory, Congress would be unable to act because of political impediments, and the state would be powerless to act because of limited authority.

Madison's theory did not address the question of who was to bring the states back in line when they transcended their authority. Logic pointed to the courts. If Congress were paralyzed in the face of potent and conflicting local interests, only the courts could protect the national interest in free trade. Few expressed this sentiment better than oliver wendell holmes, jr. too often, observed holmes, state action is taken "that embodies what the commerce clause is meant to end." the union "would be imperiled," he warned, if the court lacked power to void such laws. the court's active role in scrutinizing state commercial regulation suggests that most of holmes's successors have shared his concern.

The Court's dormant commerce clause jurisprudence has two distinctive branches. Under the "discrimination" branch, the Court invalidates state legislation discriminating against interstate commerce. Under the "undue burdens" branch, the Court will strike down even neutral state regulations if the burden imposed on the interstate commerce is clearly excessive in relation to the local benefits.

The discrimination branch has been relatively noncontroversial. Even those who question the propriety of judicial balancing of trade burdens and local benefits generally concede the need for discrimination review. The dormant commerce clause, however, seems an odd vehicle for attacking interstate discrimination. The antidiscrimination provision of Article IV's privilege and immunities clause seems far more appropriate.

In its original form, as contained in the Articles of Confederation, the privileges and immunities clause specifically addressed the problem of commercial isolationism, providing that the inhabitants of each state "shall be entitled to all privileges and immunities of free citizens in the several states; and … shall have free ingress and regress to and from any other States, and shall enjoy therein all the privileges of trade and commerce, subject to the same duties, impositions and restrictions as the inhabitants thereof." Little evidence exists on why the clause was pared down when carried over to the Constitution. charles pinckney, generally believed to have drafted the shorter version, assured the convention that no change in substance was intended. The term "privileges and immunities" probably was seen as sufficiently comprehensive to obviate the need for explicit references to ingress, regress, trade, and commerce.

If the positive command of the privileges and immunities clause were given the broad scope that was likely intended, resort to the commerce clause's negative inferences would be unnecessary for resolution of the discrimination cases. That the Court has not followed this route is attributable largely to paul v. virginia (1869). Paul held that corporations were not "citizens" within the privileges and immunities clause. Notwithstanding subsequent construction of the due process and equal protection clauses to encompass corporations as "persons" and the recognition of corporate citizenship for purposes of Article III's diversity provisions, the holding in Paul remains a bar to corporate invocation of the antidiscrimination shield of Article IV.

Although some Justices and commentators believe that the Court may be proceeding under the wrong constitutional provision, almost no one questions the validity of the judicial role in voiding state discrimination against interstate commerce. However, the Court's continued willingness to strike down evenhanded state regulation because of "undue" burdens on the nation's free trade is a matter of substantial controversy. The present scope of congressional power dwarfs whatever James Madison may have anticipated. Moreover, the judicial expansion of the national commercial power is punctuated by the frequency with which Congress exercises its authority. Madison's image of a Congress deadlocked by competing geographic economic interests is seldom visible. Naturally, differences of perspective within Congress sometimes prevent consensus. But Congress has mechanisms to circumvent such stalemates. When impasses occur, Congress can shift decision-making responsibility onto the shoulders of regulatory agencies by broad and often standardless delegations of power.

The rationale for the Court's zealous oversight of state commercial regulation has thus been substantially undermined. This led Justice antonin scalia, ina concurring opinion in CTS Corp. v. Dynamics Corp. (1985) and a dissent in Tyler Pipe Industries, Inc. v. Washington State Department of Revenue (1987), to observe that absent rank discrimination—which he suggested is better dealt with under the privileges and immunities clause—the role of invalidating state legislation that unduly burdens free trade properly belongs with Congress. This view parallels another federalism development.

In garcia v. san antonio metropolitan transit authority (1985), the Supreme Court abdicated any role in preserving the balance of power between the states and the federal government, deciding that the struggle over the scope of Congress's commercial power was best suited for the political arena. The states that petitioned for judicial assistance were told to fight their battle in Congress. This, said the Court, is how the Framers wished the scales of power to be balanced. Yet when a state regulates commerce in a congressional vacuum, the Court is there to ensure that the national economic interest will be adequately protected. The scales are not, after all, allowed to tip according to the political wind. The Court is keeping its thumb on the congressional side.

Julian N. Eule
(1992)

(see also: Dormant Powers.)