Opinion ID: 3009773
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Heading: the general commerce clause jurisprudence

Text: The Commerce Clause provides that [t]he Congress shall have Power . . . to regulate Commerce . . . among the several States. U.S. Const. Art. I, § 8, cl. 3. Although the Clause speaks in terms of powers bestowed upon Congress, the Court has long recognized that it also limits the power of the States to erect barriers against interstate trade. Lewis v. B.T. Investment Managers, Inc., 447 U.S. 27, 35, 100 S. Ct. 2009, 2015 (1980). That is, the Commerce Clause has a negative or dormant aspect which limits state authority to regulate areas where Congress has not affirmatively acted to either authorize or forbid the challenged state activity. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County, 48 F.3d 701, 710 (3d Cir. 1995) (quoting Norfolk Southern Corp. v. Oberly, 822 F.2d 388, 392 (3d Cir. 1987)). None of the parties has argued that Congress has either prohibited or authorized the flow control ordinances at issue here.0 0 As with any dormant commerce clause issue, [i]t is well established that Congress may authorize the States to engage in 18 Consequently, we must consider whether these ordinances violate the dormant Commerce Clause. In considering Commerce Clause challenges, courts should 'determine whether action taken by state or local authorities unduly threatens the values the Commerce Clause was intended to serve.' Norfolk Southern Corp. v. Oberly, 822 F.2d 388, 399 (3d Cir. 1987) (quoting Wardair Canada, Inc. v. Florida Dept. of Revenue, 477 U.S. 1, 106 S.Ct. 2369, 2372-73 (1986)). [T]he Commerce Clause is designed to eliminate protectionist restrictions on interstate trade which typically characterize international trade, such as embargoes, quotas, and tariffs. Oberly, 822 F.2d at 399; see also New Energy Co. v. Limbach, 486 U.S. 269, 273 (1988) (explaining purpose of the clause as prohibiting economic protectionism -- that is, regulatory regulation that the Commerce Clause would otherwise forbid. See Maine v. Taylor, 477 U.S. 131, 138, 106 S. Ct. 2440, 2447 (1986). Congress can in effect overturn a Supreme Court decision simply by explicitly giving the states the authority to regulate. In her concurrence in Carbone, Justice O'Connor considered whether Congress' passage of the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6941 et seq., constituted such an authorization. Although she conceded that the statute (in conjunction with its legislative history) could be read to empower states to adopt flow control ordinances, she maintained that, in order to authorize potentially discriminatory state regulation, Congress must speak explicitly and unmistakably. Carbone, 114 S. Ct. at 1691-92. Because RCRA did not constitute such an explicit pronouncement, she concluded that RCRA could not serve as the necessary enactment. In the wake of Carbone, Congress has considered legislation providing for such explicit authorization of flow control schemes. Although the Senate passed the bill known as the Interstate Transportation of Municipal Solid Waste Act of 1995, S.534, see 141 Cong. Rec. S.6728, which would have grandfathered many of the flow control ordinances enacted to finance existing facilities, the bill has not passed the House. Thus, we must consider whether the ordinances involve here survive the Carbone test. 19 measures designed to benefit in-state economic interests by burdening out-of-state competitors). Because of that animating purpose, the Court has applied a two-step inquiry to determine whether a challenged ordinance or regulation violates the Commerce Clause. The first step involves determining whether the ordinance discriminates against interstate commerce; discrimination is defined as the differential treatment of instate and out-of-state economic interests that benefits the former and burdens the latter. Oregon Waste Syst. Inc. v. Dept. of Environmental Quality of Oregon, 114 S.Ct. 1360 (1994). If a state law is shown to discriminate against interstate commerce 'either on its face or in practical effect,' the burden falls on the State to demonstrate both that the statute 'serves a legitimate local purpose,' and that this purpose could not be served as well by available nondiscriminatory means. Maine v. Taylor, 106 S. Ct 2440, 2447 (citing Hughes v. Oklahoma, 441 U.S. at 336, 99 S. Ct. at 1736); Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1, 10 (1928). But if the ordinance does not discriminate against interstate commerce either in purpose or effect, it is subjected to a balancing test whereby the statute will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. Pike v. Bruce Church Inc., 397 U.S. 137, 142 (1970). For instance, in Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 101 S. Ct. 715 (1981), the Court upheld a Minnesota statute that banned the retail sale 20 of milk in plastic jugs. Because the statute imposed burdens on both in-state and out-of-state dairies, it was subjected only to the Pike balancing test. After determining which standard to apply, courts must then determine whether the statute can meet the test enunciated under the appropriate standards.
Purpose or Effect A regulation serving a protectionist purpose is obviously invalid since a discriminatory purpose is a fortiori illegitimate. See Philadelphia v. New Jersey, 437 U.S. at 624, 98 S. Ct. at 2535 (characterizing a statute with a protectionist purpose as virtually per se invalid). More benign purposes, however, do not immunize the statute from the challenge since the evil of protectionism can reside in legislative means as well as legislative ends. Id. at 626, 2536; see also Fort Gratiot Landfill v. Michigan Department of Natural Resources, 112 S. Ct. 2019, 2024 (1992) (invalidating legislation with legitimate goals since even valid purposes may not be accomplished by the illegitimate means of isolating [the county] from the national economy). If a statute's purpose is not manifestly discriminatory, the court must determine how directly [the statute] burdens interstate commerce and how evenhandedly it impacts interstate and intrastate commerce. Stephen D. DeVito, Jr. Trucking v. RISWMC, 770 F. Supp. 775, 781 (D.R.I. 1991); see also Carbone, 104 S. Ct. at 1684 (courts look beyond explicit terms of statute to examine its practical purpose or effect); 21 Hughes, 441 U.S. at 336, 99 S. Ct. at 1736; Taylor, 477 U.S. at 138, 106 S. Ct. at 2447; Fort Gratiot, 112 S. Ct. at 2023-25 (either purpose or effect can trigger strict scrutiny); Norfolk S. Corp. v. Oberly, 822 F.2d 388, 406 (3d Cir. 1987). This court has expressed some doubt whether a showing of discriminatory effect alone could suffice. See Oberly, 822 F.2d at 400-01 n.18. But Carbone and the entire line of recent Supreme Court cases have clarified that either purpose or effect will trigger strict scrutiny analysis. We also note that where the showing of effect is weak, demonstrating discriminatory purpose buttresses the case. As we explained, the purpose of the dormant Commerce Clause is to prevent [s]tate and local governments [from using] their regulatory power to favor local enterprise by prohibiting patronage of out-of-state competitors or their facilities. Carbone, 114 S. Ct. at 1684; see also H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. at 537-38 (What is ultimate is the principle that one state in its dealings with another may not place itself in a position of economic isolation.). The purpose of the dormant Commerce Clause is not to protect individual firms. In Exxon Corp. v. Maryland, 437 U.S. 117, 126, 98 S. Ct. 2207, 2214 (1978), the Supreme Court upheld a statute prohibiting a petroleum producer or refiner from operating retail service stations within the state. The Court explained: While the refiners will no longer enjoy their same status in the Maryland market, in-state independent dealers will have no competitive advantage over out-of-state dealers. The fact that the burden of a state regulation falls 22 on some interstate companies does not, by itself, establish a claim of discrimination against interstate commerce. Id. at 2214. Conversely, the one-time selection of an in-state interest does not by itself establish a discriminatory effect unless the selection confers an unreasonably long-term benefit. This Court has recently rejected attempts to characterize all legislative schemes which award business to a successful bidder as Commerce Clause violations. Atlantic Coast, 48 F.3d at 714-15. Although we recognized that regulations of public utilities (including those that require the utility to secure its capacity within the state) are now subject to the same Commerce Clause scrutiny as non-utility statutes, we found significant precedent for local government authorities to select a single service provider in the public utility context: A gas or electric utility granted a franchise to serve the needs of all residents within a local area is not ordinarily required to commit to producing its electricity or securing its natural gas supply within that area as well. Normally, both in-state and out-of-state interests may, therefore, compete equally for the franchise award and the creation of a captive consumer base does not, under these circumstances, discriminate against electricity and gas generated or produced out of state. 48 F.3d at 715. Carbone explicitly rejected the argument that a disputed statute would have to favor all in-state businesses as a group -- a statute may be invalid if it favors only a single or finite set of businesses. 114 S. Ct. at 1682-83. Consequently, 23 where a challenge is based on the alleged favoritism of a finite set of in-state interests (rather than all in-state businesses), it must be demonstrated that the ordinance actually favors the chosen in-state providers. That the ordinance requires the use of the selected facility, thus prohibiting the use of nondesignated facilities (which may be out of state), does not itself establish a Commerce Clause violation.