William & Mary Law Review Volume 39 (1997-1998) Issue 4 Article 5 April 1998 The Flawed Economics of the Dormant Commerce Clause Paul E. McGreal Follow this and additional works at: https://scholarship.law.wm.edu/wmlr Part of the Constitutional Law Commons Repository Citation Paul E. McGreal, The Flawed Economics of the Dormant Commerce Clause, 39 Wm. & Mary L. Rev. 1191 (1998), https://scholarship.law.wm.edu/wmlr/vol39/iss4/5 Copyright c 1998 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/wmlr THE FLAWED ECONOMICS OF THE DORMANT COMMERCE CLAUSE PAUL E. MCGREAL" Shhh! If you keep very, very quiet, and listen really, really carefully, you just might hear it rustling around underneath the Constitution. Like the sound of a tree falling in a deserted for- est, constitutional law commentators are never sure if it truly exists. And, like people who claim to have seen UFOs, state gov- ernments swear that it exists and is here to conquer them. What is this lurking presence that so perplexes the mind? It is the doctrine of the dormant Commerce Clause, perhaps the Supreme Court's best known invocation of constitutional silence.' And, to continue mxang metaphors, that unseen constitutional doctrine acts like a colorless, odorless toxic gas: a silent killer of state laws affecting interstate commerce. Exactly what is this hideous thing? In short, the dormant Commerce Clause is a constitutional law doctrine that says Congress's power to "regulate Commerce among the several States"2 implicitly restricts state power over the same area.' In * Assistant Professor, Texas A&M Umversity Law Center; LL.M. Yale Law School; J.D. SMU Law School. I would like to thank Bruce Burton, Linda Eads, Kara Kellogg, Ricardo Lopez, Tom Mayo, James Musselman, Fran Ortiz, Val Ricks, and Kevin Yamamoto for their helpful comments on prior drafts of this Article, as well as Dax Faubus and John White for their research assistance. I also received comments on a presentation of this Article at the April 1997 Works-rn-Progress ses- sion at South Texas College of Law. Work on this Article was supported by a summer research grant from South Texas College of Law. 1. See H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 535 (1949) (stating that the dormant Commerce Clause derives from the "great silences of the Constitution"). 2. U.S. CONST. art. I, § 8, cl. 3. 3. See Camps Newfound/Owatonna, Inc. v. Town of Harrison, 117 S. Ct. 1590, 1596 (1997) ("[Tlhe Commerce Clause not only granted Congress express author- ity to override restrictive and conflicting commercial regulations adopted by the States, but it also immediately effected a curtailment of state power."); Wy- omng v. Oklahoma, 502 U.S. 437, 454 (1992); Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 350 (1977); Baldwin v. G.AF. Seelig, Inc., 294 U.S. 511, 522 (1935); ERWIN CHEMERiNSKY, CONSTITUTIONAL LAW: PRINCIPLES AND POLI- 1191 1192 WILLIAM AND MARY LAW REVIEW [Vol. 39:1191 general, the Commerce Clause places two main restrictions on state power. First, Congress can preempt state law merely by exercising its Commerce Clause power.4 Second, the Commerce Clause itself-absent action by Congress-restricts state power; the grant of federal power implies a corresponding restriction of state power.5 This second limitation has come to be known as the "dormant" Commerce Clause because it restricts state power even though Congress's commerce power lies dormant.6 Generally, the dormant Commerce Clause doctrine prohibits states from unduly interfering with interstate commerce.7 The Court has developed two tests to determine when state regulation has gone too far. Under one test, the Court balances the burden on interstate commerce against the state's interest in its regula- CIES § 5.3, at 306-07 (1997); LAURENCE H. TRIBE, AMERICAN CONSTITUTIONAL LAW § 6-2, at 403 (2d ed. 1988). 4. This is done through the Supremacy Clause of Article VI, clause 2 of the Constitution: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land .... " U.S. CONST., art. VI. Congress need not expressly state that it is preempting state law; courts may infer that Congress has preempted state law when state law conflicts with or impedes the functioning of federal law. See Hillsborough County v. Automated Med. Lab., Inc., 471 U.S. 707, 713 (1985) (noting that courts will find that federal law pre- empts an entire subject when "the scheme of federal regulation is sufficiently compre- hensive to make reasonable the inference that Congress 'left no room' for supplementa- ry state regulation") (citation omitted); Hines v. Davidowitz, 312 U.S. 52, 67 (1941) (stating that state law is preempted when it "stands as an obstacle to the accomplish- ment and execution of the full purposes and objectives of Congress"); Henry H. Drummonds, The Sister Sovereign States: Preemption and the Second Twentieth Centu- ry Revolution in the Law of the American Workplace, 62 FORDHAM L. REV. 469, 532 (1993); Paul E. McGreal, Some Rice with Your Chevron: Presumption and Deference in Regulatory Pre-emption, 45 CASE W. RES. L. REV. 823, 830-41 (1995). 5. See TRIBE, supra note 3, § 6-2, at 403 ("All of the doctrine in this area is . traceable to the Constitution's negative implications . "). 6. See Willson v. Black Bird Creek Marsh Co., 27 U.S. (2 Pet.) 245, 252 (1829) (noting that state power over interstate commerce is restricted by Congress's "power to regulate commerce in its dormant state"). As one commentator has pointed out, the label "dormant Commerce Clause" is a misnomer because the doctrine applies when Congress is dormant, not the Clause itself. See Julian N. Eule, Laying the Dormant Commerce Clause to Rest, 91 YALE L.J. 425, 425 n.1 (1982). Regardless, this paper adopts the usage shared by most courts and commentators. 7. See CHEMERINSKY, supra note 3, § 5.3.1, at 306 ("The dormant commerce clause is the principle that the state and local laws are unconstitutional if they place an undue burden on interstate commerce."); TRIBE, supra note 3, § 6-2, at 403; Eule, supra note 6, at 426. 19981 ECONOMICS OF THE DORMANT COMMERCE CLAUSE 1193 tion.s Under the second test, states are prohibited generally from enacting laws that discriminate against interstate commerce. 9 Over the last two decades, the dormant Commerce Clause has received much scholarly attention, with commentators either proposing refinements to the balancing test 0 or challenging the constitutional basis for the doctrine as a whole." The commenta- tors, however, generally have been kind to the antidiscrimination test of the dormant Commerce Clause.' Indeed, even Justice 8. See Kassel v. Consolidated Freightways Corp., 450 U.S. 662, 670-71 (1981); Raymond Motor Transp., Inc. v. Rice, 434 U.S. 429, 441-42 (1978); Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970) ("Where the statute regulates evenhandedly to effectuate a legitimate local public interest, ... it will be upheld unless the bur- den imposed on such commerce is clearly excessive in relation to the putative local benefits."); Southern Pac. Co. v. Arizona, 325 U.S. 761, 768-71 (1945). 9. See infra Part I.B.1; see also City of Philadelphia v. New Jersey, 437 U.S. 617 (1978) (deciding that New Jersey's law "block[ing] the importation of waste" from outside the state was impermissible under the Commerce Clause). 10. See Richard B. Collins, Economic Union as a Constitutional Value, 63 N.Y.U. L. REV. 43 (1988); Daniel A. Farber, State Regulation and the Dormant Commerce Clause, 3 CONST. COMMENTARY 395 (1986); James M. O'Fallon, The Commerce Clause: A Theoretical Comment, 61 OR. L. REv. 395 (1982); Robert A. Sedler, The Negative Commerce Clause as a Restriction on State Regulation and Taxation: An Analysis in Terms of Constitutional Structure, 31 WAYNE L. REV. 885 (1985); Mark Tushnet, Rethinking the Dormant Commerce Clause, 1979 WIS. L. REV. 125; see also Michael E. Smith, State Discriminations Against Interstate Commerce, 74 CAL. L. REV. 1203 (1986) (describing doctrines of the law concerning state interference with interstate commerce). 11. See DAVID P. CURRIE, THE CONSTITUTION IN THE SUPREME COURT: THE FIRST HUNDRED YEARS 1789-1888, at 234 (1985); Thomas K. Anson & P.M. Schenkkan, Fed- eralism, the Dormant Commerce Clause, and State-Owned Resources, 59 TEX. L. REV. 71, 78-80 (1980); Eule, supra note 6, at 446-47 (suggesting the Privileges and Im- munities Clause of Article IV, section 2 as a more appropriate control on commercial isolationism); Edmund W. Kitch, Regulation, the American Common Market and Public Choice, 6 HARV. J.L. & PUB. POL'Y 119, 122-23 (1982); David Pomper, Recyclizig Phila- delphia v. New Jersey: The Dormant Commerce Clause, Postindustrial 'Natural" Re- sources, and the Solid Waste Crisis, 137 U. PA. L. REV. 1309, 1316-17 (1989); Martin H. Redish & Shane V. Nugent, The Dormant Commerce Clause and the Constitutional Balance of Federalism, 1987 DUKE L.J. 569, 573 (stating that "not only is there no textual basis... , but.., the dormant commerce clause actually contradicts, and therefore directly undermines, the Constitution's carefully established textual structure for allocating power between federal and state sovereigns"). Just last term, three Jus- tices reached just that conclusion. In a dissent joined by Chief Justice William Rehnquist and Justice Antonin Scalia, Justice Clarence Thomas concluded: "The nega- tive Commerce Clause has no basis in the text of the Constitution, makes little sense, and has proved virtually unworkable in application." Camps Newfound/Owatonna, Inc.