Opinion ID: 3012168
Heading Depth: 2
Heading Rank: 1

Heading: The Basic Analytical Framework

Text: In addition to granting Congress the power to regulate Commerce . . . among the several States, U.S. Const. art. I, S 8, cl. 3, the Commerce Clause has a negative aspect (commonly called the dormant Commerce Clause) that limits the states’ power to regulate interstate commerce. The dormant Commerce Clause prohibits the states from imposing restrictions that benefit in-state economic interests at out-of-state interests’ expense, thus reinforcing the principle of the unitary national market.13 West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 192-93 (1994). Axiomatic in dormant Commerce Clause jurisprudence is the principle that a state cannot impede free market forces to shield in-state businesses from out-of-state competition. See, e.g., Polar Ice Cream & Creamery Co. v. Andrews, 375 U.S. 361, 377 (1964) ([T]he State may not, in the sole interest of promoting the economic welfare of its dairy farmers, insulate [its] milk industry from competition from other States.); H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 532 (1949). Thus state laws that discriminate against out-of-state businesses by forcing them to surrender _________________________________________________________________ 13. Congress can authorize states to impose restrictions that the dormant Commerce Clause would otherwise forbid. See, e.g., Shamrock Farms Co. v. Veneman, 146 F.3d 1177, 1180, 1182 (9th Cir. 1998) (upholding California’s milk composition standards and pooled minimum producer price scheme because Congress expressly immunized the State’s milk regulations from dormant Commerce Clause scrutiny); see also Norfolk S. Corp. v. Oberly, 822 F.2d 388, 392-93 (3d Cir. 1987). The Board does not maintain that Congress authorized Pennsylvania to impose wholesale price floors. 12 whatever competitive advantages they may possess are especially suspect. Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 580 (1986). The initial question in a dormant Commerce Clause case is whether the state regulation at issue discriminates against interstate commerce either on its face or in practical effect. Maine v. Taylor, 477 U.S. 131, 138 (1986); Harvey & Harvey, Inc. v. County of Chester, 68 F.3d 788, 797 (3d Cir. 1995). If so, heightened scrutiny applies. 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 [State] can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate local interest. C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 392 (1994); Juzwin v. Asbestos Corp., 900 F.2d 686, 689 (3d Cir. 1990). On the other hand, if the state regulation does not discriminate against interstate commerce, but regulates even-handedly and merely incidentally burdens it, the regulation will be upheld unless the burden is clearly excessive in relation to the putative local benefits. Pike, 397 U.S. at 142; Harvey & Harvey, 68 F.3d at 797. When a facially neutral law has the effect of disproportionately burdening out-of-state interests, it can be difficult to determine whether the burden rises to the level of discrimination against interstate commerce. See Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 579 (1986); General Motors Corp. v. Tracy, 519 U.S. 278, 298 n.12 (1997). Indeed, sometimes the distinction between state laws subject only to Pike balancing and those that are nearly per se invalid is hazy. Norfolk S. Corp. v. Oberly, 822 F.2d 388, 400 n.18 (3d Cir. 1987). However, as explained in more detail below, it is clear that state laws that are facially neutral but have the effect of eliminating a competitive advantage possessed by out-of-state firms trigger heightened scrutiny. See Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333 (1977); Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935). In this case, Cloverland argues for heightened scrutiny, but disclaims any contention that the Milk Law is facially discriminatory. Thus we must consider whether a 13 reasonable jury could find that the minimum wholesale prices have the effect of discriminating against out-of-state dealers.