Business Law Commerce Clause

The Commerce Clause is a grant of power to Congress, not an express limitation on the power of the states to regulate the economy. At least four possible interpretations of the Commerce Clause have been proposed. First, it has been suggested that the Clause gives Congress the exclusive power to regulate commerce. Under this interpretation, states are divested of all power to regulate interstate commerce. Second, it has been suggested that the Clause gives Congress and the states concurrent power to regulate commerce. Under this view, state regulation of commerce is invalid only when it is preempted by federal law. Third, it has been suggested that the Clause assumes that Congress and the states each have their own mutually exclusive zones of regulatory power. Under this interpretation, it becomes the job of the courts to determine whether one sovereign has invaded the exclusive regulatory zone of the other. Finally, it has been suggested that the Clause by its own force divests states of the power to regulate commerce in certain ways, but the states and Congress retain concurrent power to regulate commerce in many other ways. This fourth interpretation, a complicated hybrid of two others, turns out to be the approach taken by the Court in its decisions interpreting the Commerce Clause.

Justice Curtis, in Cooley v Board of Wardens (1851) outlines the case for recognizing, as a constitutional matter, zones of exclusive federal authority over commerce and other zones of concurrent state and federal authority. Cooley, upholding a Pennsylvania law requiring that vessels entering Philadelphia harbor use of local pilots, applies a balancing test to judge the validity of the regulation.

Baldwin v G. A. F. Seelig (1935) invalidated a New York law prohibiting the sale in the state of milk bought outside of New York. New York argued the law was necessary to avoid price competition that would drive dairies into producing less wholesome milk. The Court, more realistically, saw the law as protectionist. Justice Cardozo wrote that when "a state tries to isolate itself economically" it must show an important interest for doing so and that it had no less discriminatory mean open for accomplishing its goal. Cardozo's test has become the standard test for evaluating state laws that discriminate against out-of-state commerce.

In another New York milk case, H. P. Hood and Sons v Dumond (1949), the Court applied the Baldwin test for protectionist laws to the state's denial of a license to operate a depot to collect milk for distribution to Boston. The Court saw the license denial as an effort by New York to horde a resource and thereby keep prices for its consumers low.

Dean Milk Co. v Madison (1951) deals with discrimination against out-of-state (as well as much in-state) commerce not by a state, but by a city. At issue in yet another milk case was a Madison, Wisconsin ordinance that prohibited the sale of milk in Madison that was bottled more than five miles from the city's center. The ordinance was justified by Madison as necessary to facilitate inspection by city dairy inspectors. Finding the ordinance discriminatory and believing that reasonable non-discriminatory alternatives existed, the Supreme Court invalidated the ordinance despite the fact that a Milwaukee dairy was shut out of town just as much as one from Illinois.

Edwards v California (1941) considered a challenge to a California law aimed at reducing the influx of dustbowl indigents to the state. The California statute made it a crime to bring into the state any indigent non-resident. Finding people in this case to be "articles of commerce," the majority found the statute to be a form of unconstitutional discrimination against out-of-state commerce. (Four concurring justices would have preferred to invalidate the law on 14th Amendment privileges and immunities grounds.)

In Philadelphia v New Jersey (1976), the Court struck down a New Jersey law that prohibited the importation of garbage into the state. Concluding that garbage was "commerce," the Court viewed the law--despite its environmental justification--as unconstitutional discrimination agains out-of-state commerce. The Court held that as long as reasonable, non-discriminatory alternatives exist that serve the states legitimate interests, they must be used instead of a discriminatory ban.

In Hughes v Oklahoma (1979), the Court invalidated an Oklahoma law prohibiting the interstate transportation of minnows taken from Oklahoma waters. The Court rejected Oklahoma's law that states "own" wildlife and therefore wildlife is not "an article of commerce." The law could be upheld only if the state could show it served a significant local interest that could not be furthered by a non-discriminatory law--this Oklahoma