Negative Commerce Clause

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The "negative" Commerce Clause, or "dormant"[1] Commerce Clause, is a judicial doctrine that invalidates state laws burdening interstate commerce even in the absence of any conflicting federal law. The principle is that the Commerce Clause keeps the field clear for Congress should it ever decide to regulate such interstate commerce.

The Negative or Dormant Commerce Clause prevents states from favoring local business interests or imposing undue burdens on interstate commerce.

Both Justices Antonin Scalia and Clarence Thomas now criticize the Negative Commerce Clause as unfounded in the U.S. Constitution. On April 30, 2007, they concurred in a decision written by Chief Justice John Roberts that rejected a challenge under the Negative Commerce Clause to ordinances in upstate New York that favored local waste removal companies.[2]

Chief Judge Edith Jones of the Fifth Circuit summed up the trend by the U.S. Supreme Court on this issue, while criticizing how the Court has not yet overruled Exxon Corp. v. Maryland, 437 U.S. 117 (1978):[3]


The Exxon case found no discrimination against interstate commerce where a state statute prohibited competition with local gasoline retailers by out-of-state companies at another level of product distribution (refiners). Exxon seems woefully out of step with the Court's more recent cases. See, e.g., West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 114 S. Ct. 2205, 129 L. Ed. 2d 157 (1994). Texas's outright prohibition on retail competition from out-of-state auto manufacturers is about as negative toward interstate commerce as legislative action can get. If, as the Court says, its negative commerce clause jurisprudence intends to prevent "economic protectionism" of local businesses, 114 S. Ct. at 2217, and to stop states from imposing higher (in this case prohibitive) costs on products from out-of-state sources, 114 S. Ct. at 2213-14, then Ford's dealer-cooperative, consumer-friendly program ought not be stymied by parochial state legislation. It should be obvious that the flow of interstate goods is diminished when barriers to entry totally prevent fair competition by a class of potential distributors: the favored local distributors' price and service incentives become less keenly competitive, prices rise, and overall sales will decline from the free-market equilibrium point. Since this Texas statute appears to reflect a genre of state laws favoring local automobile dealers over out-of-state manufacturers, perhaps the Supreme Court will give us further guidance.

References

  1. The supporters of the judicial doctrine tend to call it the "dormant" Commerce Clause, while its critics tend to call it the "negative" Commerce Clause. See infra n.2.
  2. United Haulers Ass'n, Inc. v. Oneida-Herkimer Solid Waste Management Auth., 2007 U.S. LEXIS 4746 (2007).
  3. Ford Motor Co. v. Tex. DOT, 264 F.3d 493, 512 (5th Cir. 2001) (Jones, C.J., concurring).
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