Vanderbilt Law Review Volume 31 Issue 3 Issue 3 - April 1978 Article 1 4-1978 Some Intersections of the Negative Commerce Clause and the New Federalism James F. Blumstein Follow this and additional works at: https://scholarship.law.vanderbilt.edu/vlr Part of the Constitutional Law Commons Recommended Citation James F. Blumstein, Some Intersections of the Negative Commerce Clause and the New Federalism, 31 Vanderbilt Law Review 473 (1978) Available at: https://scholarship.law.vanderbilt.edu/vlr/vol31/iss3/1 This Article is brought to you for free and open access by Scholarship@Vanderbilt Law. It has been accepted for inclusion in Vanderbilt Law Review by an authorized editor of Scholarship@Vanderbilt Law. For more information, please contact [email protected]. VANDERBILT LAW REVIEW VOLUME 31 APRIL 1978 NUMBER 3 Some Intersections of the Negative Commerce Clause and the New Federalism: The Case of Discriminatory State Income Tax Treatment of Out-of-State Tax- Exempt Bonds* James F. Blumstein** TABLE OF CONTENTS I. INTRODUCTION ................................ 474 II. NEGATmE CO MMRCE CLAUSE CASES: THE ROLE OF THE COURT ................................... 490 III. NEGATIVE COMMERCE CLAUSE CASES: AN ANALYTICAL FRAMiEWORK .................................. 497 A. Legislative Purpose ........................ 497 B. The Extent of the Burden on Commerce ....... 498 C. The Nature of the Subject Matter Regulated (Herein of the Need for Uniformity) ......... 500 ' I would like to acknowledge the contribution of Ms. Susan E. Dominick, a member of the Bar of the State of Alabama. Initially, she and I were planning to write this Article jointly, but the press of her practice precluded that. Portions of the Article, however, reflect her direct input, for which I express my appreciation. I would also like to express my gratitude to Messrs. James S. Hutchinson, David L. Jordan, George C. Lamb III, and Joel R. Tew of the Vanderbilt Law School class of 1979 for their able and diligent assistance in the assiduous task of preparing the footnotes for this Article. Finally, I would like to thank Kevin J. Wolff, Editor in Chief of the Law Review, for his constructive blend of patience and persistence during the preparation of this Article and his acumen in the editorial process. Work on portions of this article was supported by the Vanderbilt Institute for Public Policy Studies. "Professor of Law, Vanderbilt Law School; Senior Research Associate, Vanderbilt Insti- tute for Public Policy Studies. B.A., Yale College, 1966; M.A., Yale University, 1970; LL.B., Yale Law School, 1970. VANDERBILT LAW REVIEW [Vol. 31:473 D. The Nature of the Effect on Commerce (Here- in of Discrimination) ...................... 501 (1) Regulation Cases ...................... 503 (2) Taxation Cases ....................... 508 IV. JUDICIAL INTERVENTIONISM IN DIFFERING CONTEXTS: COMPARING THE COURT'S APPROACH IN NEGATIVE COMMERCE CLAUSE AND EQUAL PROTECTION CASES .. 518 V. THE NEW FEDERALISM........................... 524 A. The Usery Case ........................... 525 B. The Hughes Case .......................... 533 VI. DISCRIMINATORY STATE INCOME TAXATION OF OUT-oF- STATE TAX-EXEMPT BONDS ..................... 542 A. The Problem .............................. 542 B. PriorNon-Commerce Clause Case Law ....... 547 C. The Commerce Clause Analysis .............. 559 D. The Impact of the New Federalism ........... 565 VII. CONCLUSION .................................. 572 I. INTRODUCTION Much has been written about the change in the Supreme Court's judicial philosophy, as a new, ascendant majority2 has been able successfully to implement its emerging notions of judicial reti- cence and self-abnegation.3 This fundamental turnabout in judicial perspective is hardly coincidental, since it reflects the fulfillment of an oft-repeated campaign pledge of Richard Nixon, who in 1968 promised, if elected, to appoint so-called strict constructionists to 1. See, e.g., Fiss, Dombrowski, 86 YAr L.J. 1103 (1977); Gunther, Supreme Court 1971 Term, Foreword:In Search of Evolving Doctrineon a Changing Court:A Model for a Newer Equal Protection, 86 HARv. L. Rav. 1 (1972); Michelman, States' Rights and States' Roles: Permutations of "Sovereignty" in National League of Cities v. Usery, 86 YMz L.J. 1165 (1977); Swindler, The Court, the Constitution, and Chief Justice Burger, 27 VAND. L. REv. 443 (1974); Tribe, UnravelingNational League of Cities: The New Federalism and Affirma- tive Rights to Essential Government Services, 90 HARv. L. Ray. 1065 (1977). 2. With regard to the ideological composition of the Court, Chief Justice Burger and Justice Rehnquist seem to represent one wing of the Court while Justices Brennan and Marshall represent another. The remaining Justices stand somewhere in between. The voting patterns of the Justices evidence this composition. During the 1976-77 term, for example, while Chief Justice Burger and Justice Rehnquist agreed in 78.4% of the decisions in which both took part, Chief Justice Burger agreed with Justices Brennan and Marshall only 36.9% and 37.4% of the time respectively. Similar differences occurred between Justice Rehnquist and Justices Brennan and Marshall. See The Supreme Court, 1976 Term, 91 HA.v. L. REv. 72, 296 (1977). On many specific issues, however, it seems that the Burger-Rehnquist position has prevailed. See, eg., National League of Cities v. Usery, 426 U.S. 833 (1976); Paul v. Davis, 424 U.S. 693 (1976); Miller v. California, 413 U.S. 15 (1973). 3. See, e.g., Yarbrough, Litigant Access Doctrine and the Burger Court, 31 VnD. L. REV. 33 (1978). 1978] NEGATIVE COMMERCE CLAUSE the Court.' In a basic way his appointees have succeeded in modify- ing the activist stance that prevailed on the Court during much of the tenure of Earl Warren as Chief Justice. With notable exceptions in some areas,5 the new majority has a much more modest view of the judicial function within our democratic society.' Elements of 4. In October 1968 Mr. Nixon expressed the opinion that Supreme Court Justices had "gone too far" by injecting "social and economic ideas" into their opinions, and he promised to appoint Justices who would "interpret the Constitution strictly and fairly" instead of writing the law. N.Y. Times, Oct. 4, 1968, at 50, col. 2. 5. The primary exceptions are the abortion cases. Carey v. Population Servs. Int'l, 431 U.S. 678 (1977) (striking down numerous state restrictions on the sales, the advertising of, and the right to purchase contraceptives); Planned Parenthood v. Danforth, 428 U.S. 52 (1976) (striking down a state statute requiring parent's or husband's consent before an abor- tion may be performed); Doe v. Bolton, 410 U.S. 179 (1973) (striking down a state statute prohibiting abortion except in narrowly defined medical circumstances and requiring proce- dural conditions beyond the mere approval of the attending physician); Roe v. Wade, 410 U.S. 113, 160 (1973) (although admitting there was a "wide divergence of thinking on this most sensitive and difficult question," the Court struck down a state statute prohibiting nontherapeutic abortions). But see Poelker v. Doe, 432 U.S. 519 (1977) (per curiam); Maher v. Roe, 432 U.S. 464 (1977) (equal protection clause allows a state participating in the medi- caid program to pay for childbirth expenses of indigent women and not for nontherapeutic abortions). Furthermore, in the environmental area Justice Blackmun has been willing to adopt a more interventionist approach. See Sierra Club v. Morton, 405 U.S. 727, 757 (1972) (Blackmun, J., dissenting) CI would permit an imaginative expansion of our traditional concepts of standing in order to enable an organization such as [plaintiff] possessed, as it is, of pertinent, bona fide, and well-recognized attributes and purposes in the area of envi- ronment, to litigate environmental issues."). Compare United States v. SCRAP, 412 U.S. 669 (1973) (association has standing to challenge the ICC's failure to suspend a temporary sur- charge on railroad freight rates; plaintiffs alleged the surcharge would indirectly damage the natural environment they enjoyed) with Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26 (1976) (barring standing to a group challenging Treasury regulations that grant favorable tax treatment to nonprofit hospitals, even though they do not provide significant non- emergency medical care to indigents). See also Duke Power Co. v. Carolina Environmental Study Group, Inc., 98 S. Ct. 2620 (1978). 6. See generally A. BicKaL, THE LEAsTDANGEROUS BRANcu (1962); Bickel, The Supreme Court, 1960 Term, Foreword: The Passive Virtues, 75 Hnv. L. Rav. 40 (1961); see also Wright, ProfessorBickel, the Scholarly Tradition,and the Supreme Court, 84 HARv. L. Rv. 769 (1971). This view has been articulated well in recent decisions that contract the concept of standing. See notes 298 & 324 infra. Pursuing JusticelHarlan's suggestion in dissent in Flast v. Cohen, 392 U.S. 83, 116 (1968), Justice Powell's concurrence in United States v. Richard- son, 418 U.S. 166, 188 (1974), sets a tone of judicial modesty: Relaxation of standing requirements is directly related to the expansion of judicial power. It seems to me inescapable that allowing unrestricted taxpayer or citizen stand- ing would significantly alter the allocation of power at the national level, with a shift away from a democratic form of government. I also believe that repeated and essentially head.on confrontations between the life-tenured branch and the representative branches of government will