Opinion ID: 3046278
Heading Depth: 2
Heading Rank: 3

Heading: dormant commerce clause background

Text: The Commerce Clause grants to Congress the power to regulate interstate and foreign commerce. U.S. Const. art. I, § 8, cl. 3. “[T]his affirmative grant of 26 FTS cross-appeals the district court’s order granting the County’s pre-trial motion in limine and excluding from the jury’s consideration evidence of FTS’s alleged lost profits in 2006 and 2007. FTS acknowledges that it did not apply for a permit in 2006 or 2007. We affirm the district court’s order because FTS’s cross-appeal lacks merit. 22 Case: 11-10475 Date Filed: 12/28/2012 Page: 23 of 81 authority to Congress also encompasses an implicit or ‘dormant’ limitation on the authority of the States to enact legislation affecting interstate commerce.” Healy v. Beer Inst., Inc., 491 U.S. 324, 326 n.1, 109 S. Ct. 2491, 2494 n.1 (1989). “This negative command prevents a State from jeopardizing the welfare of the Nation as a whole by placing burdens on the flow of commerce across its borders that commerce wholly within those borders would not bear.” Am. Trucking Ass’ns v. Mich. Pub. Servs. Comm’n, 545 U.S. 429, 433, 125 S. Ct. 2419, 2423 (2005) (alteration and internal quotation marks omitted). In addition to state laws, the dormant Commerce Clause applies equally to local and municipal laws. “[A] State (or one of its political subdivisions) may not avoid the strictures of the Commerce Clause by curtailing the movement of articles of commerce through subdivisions of the State rather than through the State itself.” Fort Gratiot Sanitary Landfill, Inc. v. Mich. Dep’t of Natural Res., 504 U.S. 353, 361, 112 S. Ct. 2019, 2024 (1992). The dormant Commerce Clause “invalidate[s] local laws that impose commercial barriers or discriminate against an article of commerce by reason of its origin or destination out of State.” C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 390, 114 S. Ct. 1677, 1682 (1994) (emphasis added); accord Dean Milk Co. v. City of Madison, 340 U.S. 349, 354, 71 S. Ct. 295, 298 (1951) (“In thus erecting an economic barrier protecting a major 23 Case: 11-10475 Date Filed: 12/28/2012 Page: 24 of 81 local industry against competition from without the State, [the City of] Madison plainly discriminates against interstate commerce.”); S. Waste Sys., LLC. v. City of Delray Beach, 420 F.3d 1288, 1290 (11th Cir. 2005).
Laws challenged under the dormant Commerce Clause are examined using a two-tiered analysis. First, we consider whether the law or regulation “directly regulates or discriminates against interstate commerce, or has the effect of favoring in-state economic interests.” Island Silver & Spice, Inc. v. Islamorada, 542 F.3d 844, 846 (11th Cir. 2008) (internal quotation marks and alteration omitted). “Discrimination against interstate commerce in favor of local business or investment is per se invalid, save in a narrow class of cases in which the municipality can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate local interest.” Carbone, 511 U.S. at 392, 114 S. Ct. at 1683. “The central rationale for the rule against discrimination is to prohibit state or municipal laws whose object is local economic protectionism . . . .” Id. at 390, 114 S. Ct. at 1682. Second, if the law or regulation advances a legitimate local interest and has only “indirect effects on interstate commerce,” we apply the balancing test from Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S. Ct. 844 (1970), and invalidate the 24 Case: 11-10475 Date Filed: 12/28/2012 Page: 25 of 81 law only if “the burden on interstate commerce clearly exceeds the local benefits.” Island Silver & Spice, 542 F.3d at 846 (internal quotation marks omitted). Thus, the two ways a law can violate the dormant Commerce Clause are (1) by discriminating against interstate commerce or (2) by unduly burdening interstate commerce. We next explain in more detail the ways in which a state or local law discriminates against interstate commerce.
“[T]here is no clear line” separating discriminatory from non-discriminatory state regulations. Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 579, 106 S. Ct. 2080, 2084 (1986). Rather, the Supreme Court’s decisions show that state and local laws discriminate in violation of the dormant Commerce Clause in several ways. First, a state or local law discriminates by restricting market participation or curtailing the movement of articles of interstate commerce based on whether a market participant or article of commerce is in-state versus out-of-state, or local versus non-local. See, e.g., Fulton Corp. v. Faulkner, 516 U.S. 325, 333, 116 S. Ct. 848, 855 (1996); Fort Gratiot, 504 U.S. at 361, 112 S. Ct. at 2024; H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 526, 69 S. Ct. 657, 659 (1949). Second, a state or local law discriminates by conditioning participation in an 25 Case: 11-10475 Date Filed: 12/28/2012 Page: 26 of 81 interstate market on the in-state or local processing of goods. In other words, a state or local government may not require diversion of resources of an interstate market into the local market to serve local interests. See, e.g., Carbone, 511 U.S. at 390, 114 S. Ct. at 1682; Dean Milk, 340 U.S. at 354, 71 S. Ct. at 298. Importantly, a discriminatory law is no less discriminatory because it applies “alike to the people of all the States, including the people of the State enacting such statute.” Fort Gratiot, 504 U.S. at 361, 112 S. Ct. at 2025 (internal quotation mark omitted); accord Dean Milk, 340 U.S. at 354 n.4, 71 S. Ct. at 298 n.4 (explaining that local ordinance’s subjecting non-local, in-state residents to same proscription as out-of-state residents is “immaterial” to dormant Commerce Clause analysis); see Carbone, 511 U.S. at 393–94, 114 S. Ct. at 1683–84 (invalidating local waste disposal ordinance that required both in-state and out-of-state waste disposal companies to use local processing facility). A state or local law may impermissibly discriminate against interstate commerce even if that law applies to all. The Supreme Court’s dormant Commerce Clause decisions also show what types of state or local laws are not discriminatory. A state or local law is not discriminatory where it (1) has incidental negative effects on some (but not all) 26 Case: 11-10475 Date Filed: 12/28/2012 Page: 27 of 81 out-of-state market participants and (2) does not reduce or curtail access to interstate markets. See, e.g., Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 98 S. Ct. 2207 (1978). As we explained in Island Silver & Spice, the fact that “a regulation falls onto a subset of out-of-state [companies] does not, by itself, establish a claim of discrimination against interstate commerce.” 542 F.3d at 846 (internal quotation marks omitted); see also S. Waste Sys., 420 F.3d at 1291 (“[T]o the extent that in-state and out-of-state bidders are allowed to compete freely on a level playing [field], there is no cause for constitutional concern.”).
Even if a law is not discriminatory, it nonetheless violates the dormant Commerce Clause if it unduly burdens interstate commerce. A law unduly burdens interstate commerce under Pike if “the burden on interstate commerce clearly exceeds the local benefits.” Island Silver & Spice, 542 F.3d at 846 (internal quotation marks omitted). In this inquiry, we evaluate the “practical effect of the statute” in light of “what effect would arise if not one, but many or every, State adopted similar legislation.” Healy, 491 U.S. at 336, 109 S. Ct. at 2499. Notably, “interstate commerce is not subjected to an impermissible burden simply because an otherwise valid regulation causes some business to shift from one interstate 27 Case: 11-10475 Date Filed: 12/28/2012 Page: 28 of 81 supplier to another.” Exxon, 437 U.S. at 127, 98 S. Ct. at 2214. Although these general principles are easy to summarize, they are more difficult to apply. Thus we examine how the Supreme Court and this Court have applied them to specific factual scenarios in dormant Commerce Clause cases.