Federalism: between states Flashcards
Comity Clause
Under the Privileges and Immunities Clause of Article IV, states are prohibited from seriously discriminating against out-of-state individuals—i.e., without substantial justification.
The Comity Clause does not protect non-citizen residents of states.
The Comity Clause does not protect out-of-state corporations.
Comity Clause: private employment
Privileges and Immunities primarily applies to rules on private employment.
States cannot require residency for private employment (e.g., bar admission and other occupational licenses) but they can require it for public employment (e.g., hiring quotas).
Comity Clause: recreation
it is not serious discrimination to differentiate between in-state and out-of-state residents for purposes of recreation—e.g., hunting licenses or state park access.
Dormant Commerce Clause
Unlike the Comity Clause, the Dormant Commerce Clause protects out-of-state businesses as well as out-of-state individuals.
Under the rule, state regulation of commerce in absence of federal regulation is valid so long as:
(1) There is no discrimination against out-of-state interests;
(2) The regulation does not unduly burden interstate commerce; and
(3) The regulation does not apply to wholly extraterritorial activity.
Dormant Commerce Clause: discrimination against out-of-state interests
Examples include banning sale only of out-of-state products, taxing out-of-state products at a higher rate, or requiring that manufacturing be performed in state.
The rule narrowly excepts such discrimination if:
(1) it effects a substantial state interest and
(2) no other non-discriminatory means is available.
Rarely will discrimination be okayed on these grounds.
Dormant Commerce Clause: exceptions to non-discrimination
(1) State as market participant:
When a state is buying or selling goods or services, it can choose to deal only with in-state persons;
(2) Subsidies:
A state can choose to subsidize only its own citizens, e.g., through welfare benefits or in-state college tuition;
(3) Federal approval:
A state can discriminate against out-of-state interests if Congress authorizes or consents to state regulation of commerce.
It must be unmistakably clear that Congress intended to permit the otherwise impermissible state regulation.
Dormant Commerce Clause: undue burden
In considering whether a state law unduly burdens interstate commerce, a court will:
(1) Balance the objective and purpose of the state law
(2) Against the burden on interstate commerce—and then evaluate whether there are less restrictive alternatives.
In practice, non-discriminatory state regulation of commerce is almost always upheld.
Only when it is so costly relative to the benefits of the regulation is a non-discriminatory state regulation struck down as an undue burden on interstate commerce.
Dormant Commerce Clause: wholly extraterritorial activity
A state cannot regulate conduct that wholly occurs outside of its borders.
State taxation of interstate commerce
Discriminatory taxation is illegal unless Congress consents.
Unless it is unduly burdensome, non-discriminatory taxation is upheld unless it is unduly burdensome if:
(1) there is a substantial nexus between the activity taxed and the taxing state;
(2) the tax is fairly apportioned according to a rational formula;
(3) the tax does not provide a direct commercial advantage to local businesses over interstate competitors; and
(4) there is a fair relationship between the tax and the service provided.
State taxation of interstate commerce: ad valorem property taxes
(1) On commodities:
A state can collect a tax on goods stopped in the state for business purposes on a tax day.
(2) On instrumentalities, i.e., transportation equipment:
Each state in which an instrumentality is used—with a substantial nexus to the instrumentality—can tax the value of that instrumentality.
For example, in the case of a long-haul truck, each state the truck passes through can tax a portion of the truck’s value roughly equal to the portion of in-state use.
Functionally, the state of the taxpayer’s domicile taxes the full rate and then gives a credit to each state that asserts taxation over the truck.
Interstate compacts
States can make interstate compacts—agreements among states—but Congress must approve them if they affect federal rights.
Full Faith and Credit Clause
States do not have to follow other states’ laws, but they do have to give full faith and credit to judgments rendered by other states’ courts meeting certain requirements.
In order to be given full faith and credit, a decision must meet three requirements:
(i) the court that rendered the judgment must have had jurisdiction over the parties and the subject matter;
(ii) the judgment must have been on the merits rather than on a procedural issue; and
(iii) the judgment must be final.
Dormant Commerce Clause: traditional government functions
A state or local government may favor state and local government entities when those entities are performing a traditional governmental function without running afoul of the Dormant Commerce Clause.
