Limits on State Regulatory and Taxing Power

Question 1

Limits on State Regulatory and Taxing Power, Preemption Rule

Answer 1

Grounded in the Supremacy Clause. If federal government passed a law (includes Constitution, statutes, Eos, administrative regulations, and treaties), these laws bind state law/constitutional provisions to fit within the fed. statutory scheme.

Types of Preemption

(1) Express – statute expressly preempts category of state law
(2) Implied
(a) Field Preemption – fed. regulatory scheme so pervasive as it occupies the field
- Did Congress INTEND to occupy the field and displace all state law
- If Congress occupies an entire field, then complementary state regulation is impermissible
- Look to see the pervasiveness of the regulation

(b) Conflict Preemption
- Actual conflict/impossibility – does state law “actually conflict” with a law of the US such that compliance with both is impossible?
- Obstacle – Does state law present an obstacle with the accomplishment of full purposes & objectives of Congress
- - What was the specific purpose of the federal law claimed to preempt state law? What is that federal law trying to achieve? (Ex. Safety, environmental, conservation, economic development)

***NOTE: If on test, there will be a state law/local law and federal law in the same problem.

Question 2

Express Preemption, A: Lorillard v. Reilly:

Answer 2

Holding that a Mass. law banning certain advertisements for tobacco/smoking products was expressly preempted by Fed. smoking advertisement law.

• Preempted by fed. law - A requirement/restriction from a state creating new laws about advertising smoking and its health effects
• Mass law = Promoting health of youth by prohibiting where a tobacco company could advertise product
• In all, fed law created an express intention to prevent states from regulating more stringently. So, Mass law preempted

Question 3

Field Preemption, A: PG&E v. State Energy Resources Conservation Commission

Answer 3

Holding the Atomic Energy Law act does not preempt the entire field of atomic regulation b/c the AEL is about Safety.

• AEL: concerns safety of atomic nuclear sites
• CA law: about economics
  (a) Expensive to store nuclear waste, limited places to put it
  (b) Increase of nuclear waste, more $$ needed to store
  (c) Can halt the creation of new plants until there is an economically sustainable way to dispose of the waste

Question 4

Field Preemption, A: Arizona v. US

Answer 4

S.B 1070 (state law to discourage and deter unlawful entry of people into Arizona)

• Passed with wide support of AZ voters
• Other laws followed suit
• 4 provisions at issue

1. Provision about failure to complete/carry state registration document
   - Preempted b/c fed government occupies the field in alien registration
   - - Congress occupies entire field, no complementary state regulation is allowed
   - - Would allow state official to bring charges for violating federal law even in circumstances that would frustrate federal polices
   - Congress made clear they do not want complementary regulation b/c it has to pervasively regulated every aspect of the field of immigration registration
2. Provision that allows a state officer the ability to arrest a person whom the officer has PC to believe committed a public offense that makes him removable
   - Makes being in the US illegally a removable offense and brings person into criminal justice system  not a feature in US fed. immigration policy
   - Preempted b/c federal gov occupies the entire removal process field
   - This provision would give State law enforcement more power to remove an alien than Congress gives immigration officers
   - - Decision to remove would be exercised without any input from Feds.
   - - Congress created a system where US needs to speak with one voice about immigration policy  potential foreign relations issues if State enacts own policy

Question 5

Impossibility Preemption, A: FL Lime & Avocado Growers v. Paul

Answer 5

Holding FL avocado growers can comply with both CA and fed. avocado quality laws, so there is no impossibility preemption.

• CA law: All avocados in CA sold must have 8% oil
• Fed. law: no requirement about oil content
• Fed. law sets floor, and CA law ensures quality
• • A state can make state laws more restrictive, not less

Question 6

Impossibility Preemption, A: PG&E v. State Energy Resources Conservation Commission

Answer 6

Holding a party can comply with both the CA law and the AEL

• AEL does not mandate the construction of nuclear sites
• If sites aren’t being built, then there is no safety concern

Question 7

Obstacle preemption, A: PG&E v. State Energy Resources Conservation Commission:

Answer 7

Holding CA law is not an obstacle to the accomplishment of the full purpose of Congress in passing the AEL.

• Purpose and objective in passing the AEA
• • Purpose is to ensure that nuclear tech be safe enough for widespread development and use
• • NOT develop nuclear power at all cost (Not meant to override state decisions about the economic wisdom or viability of nuclear power)

Question 8

Obstacle preemption, A: Arizona v. US

Answer 8

S.B 1070 (state law to discourage and deter unlawful entry of people into Arizona)

• Passed with wide support of AZ voters
• Other laws followed suit
• 4 provisions at issue
• AT ISSUE with obstacle: provisions that enacts criminal prosecution when no fed counterpart exists
• • This is preempted b/c is it stands as an obstacle to the accomplishment of the purpose of the Immigration Reform and Control Act
• • • Its purpose was to penalize employers of illegal aliens NOT the workers themselves
• • • Congress made a deliberate choice to not impose criminal sanctions on undocumented workers
• • Fed scheme says the root of the problem is people hiring undocumented workers
• • • By decreasing the demand to hire undocumented workers, decrease incentive for illegal immigrants to come into the US in the first place
• • • There was legislative history to prove this (Criminal offense for illegal immigrants debated and rejected in the IRCA)

Question 9

Dormant Commerce Clause, Rule

Answer 9

Dormant Commerce Clause is principle that state and local laws that place an undue burden on interstate commerce are unconstitutional. Sets limits on the power of state and local government

Question 10

Dormant Commerce Clause, Test

Answer 10

(1) Is the law discriminatory?
a. Facial
i. On the face of the law, it treats in-state and out-of-state actors, products, economic activity differently
b. Purpose
i. Court will look at the law to determine if there is a legitimate purpose comparted to an illegitimate, protectionist purpose
ii. Why did the state enact the law?
c. Effect
i. Effect of the law differs between I/S and OOS
- Did the state law strip the OOS producer of competitive advantage?
- Does law benefit local producers at expense of OOS?
- How are benefits and burdens distributed among OOS producers?

(2) If discriminatory, then the State law must survive strict scrutiny
a. Presumptively unconstitutional.
i. The law must:
1. Extremely important state interest and
2. There is no less restrictive alternative

(3) If the law is not discriminatory, then Court uses a balancing test to determine state law’s constitutionality
a. There is a (supposed) deference to state law
b. Court balances
i. Benefits of the law to the State v.
1. Ex. Health, safety, welfare
ii. The Burdens of the law on interstate commerce

Question 11

Dormant Commerce Clause, Rule on State Tax

Answer 11

Rule for imposition of State tax

• The Court will allow a State to impose a tax if it
  (1) applies to an activity with a substantial nexus with the taxing state,
  (2) is fairly apportioned,
  (3) does not discriminate against interstate commerce, and
  (4) is fairly related to the services the State provides

Question 12

Where does the DCC come from?

Answer 12

• Text = b/c Commerce Clause has so few words is evidence that there was a broad agreement about the need of centralized regulation among the States (weak)
• Structure = Structural premise of Constitution is that fed. government has to control interstate commerce so individuals are protected against invading State power
• History = Primary reason that Constitution made was to end a trade war between states
• Precedent = Court has adhered to DCC for a long time
• Policy = Free trade better served if state do not put arbitrary barriers to not allow different state to enter market
• *NOTE: Originalists HATE DCC, gives Court too much policymaking power, nothing in the text about DCC

Question 13

DCC Facial Discrimination, A: City of Philly v. NJ

Answer 13

Holding that PA law that prohibited importation of waste from other states was facially discriminatory.

• On its face does not allow waste from out of state solely because of its origins
• Therefore, subject to SS
• • There is an important state interest of environmental, health, safety
• • BUT there are less restrictive ways to achieve end. Could restrict waste from both I/S and OOS sources

Question 14

DCC Purpose Discrimination, A: West-Lynn Creamery v. Healy

Answer 14

Holding that the intent of a Mass tax was to prop up the state’s diary industry at the expense of OOS producers, so it has a discriminatory purpose.

• Taxed all milk dealers, but gave subsidies only to MA dairy farmers
• While tax and subsidy are on its own ok, the combination makes it look like Mass is imposing a discriminatory tax only on out-of-state producers
• This is a self-funding tax that does not impact the overall state budget, so money is not fungible here

Question 15

DCC Effects Discrimination, A: Hunt v. WA State Apple Advertisement Commission

Answer 15

Holding that North Carolina law that forbids apple producers from including any grading marker on their apple containers other than the FDA had discriminatory effects.

• WA has own grading system that creates a competitive advantage
• • State poured time and resources to ensure their apples where the best
• The law creates an advantage in I/S growers at the expense of out-of-state growers
• Therefore, subject to strict scrutiny
• • Does not protect consumers b/c North Carolina is depriving consumers about the quality of the apples they are buying

Question 16

DCC Not Discriminatory, A: Exxon Corp. v. Gov. of Maryland

Answer 16

Holding a Maryland law that prohibits all petroleum refiners from owning retail service stations in the state was not discriminatory b/c it ensures the equitable distribution of gas in times of shortage.

• Not discriminatory in its effect b/c the statute does not inhibit the flow of interstate goods or place additional costs on OOS or distinguish between I/S and OOS goods in same market
• The distinction here is based on a business model, not an OOS status
• • Banning vertically integrated supply chain
• • • Exxon cannot produce Exxon gas for an Exxon gas station
• • Still allowed to sell in general
• • • Exxon can sell Exxon gas to a local gas station

Question 17

DCC Balancing Test Analysis, A: Minnesota v. Cloverleaf:

Answer 17

Holding that a MN statute that banned the retail sale of milk in plastic containers was not discriminatory.

• Not facial b/c nothing in text differentiates between I/S and OOS.
• Not effect b/c is applied evenly to I/S and OOS.
• Not purpose b/c its purpose was to promote conservation, energy, and reduce waste
• • Does not prop up MN pulpwood industry b/c other states have pulpwood industry that will fill the void of plastic manufacturer
• • There also is a burden on State plastic manufacturers as well
• Balancing test:
• • Benefits to the state: state interest in conserving energy/reducing waste is substantial
• • Burden on interstate commerce: small burden on interstate commerce (Benefits/burdens distributed to I/S and OOS entities)

Question 18

DCC Effects Discrimination, A: Dean Milk v. City of Madison

Answer 18

Holding that a Madison ordinance that prohibited the sale of milk as “pasteurized” unless it was pasteurized within 5 mile radius had discriminatory effects, and did not survive SS.

• Discriminatory effects: excluded all milk from Illinois
• Strict Scrutiny:
• • Important state interest: health and safety
• • Less restrictive alternative?
• • • Can send inspectors to Illinois or create a uniform benchmarking system

Question 19

DCC Balancing Test, A: Pike v. Bruce Church

Answer 19

Holding that an AZ law that required all cantaloupes grown in AZ be packaged in AZ in AZ approved packaging was not discriminatory, but the burdens outweigh the benefits.

• Not discriminatory to OOS b/c only applies to in-state producer
• Balancing test:
• • Benefits to state: AZ wants to promote cantaloupe industry. This is an insignificant interest b/c it wants to promote AZ as a brand, not employment
• Burdens on interstate commerce: huge financial burden to create an AZ packaging site, more cost-efficient to send CA packaging plant

Question 20

DCC Balancing Test, A: Bibb v. Navajo Freight Lines

Answer 20

Holding that an Illinois law that required truck drivers use special mud flaps was not discriminatory, but the burden outweigh the benefit.

• Not discriminatory b/c it applies same way to I/S and OOS trucking companies
• Balancing Test:
• • Benefit to the state:
• • • IL say it’s a safety interest, but the new mud flaps do not mitigate existing road hazards and create new problems
• • Burden on interstate commerce:
• • • Extremely expensive to implement

Question 21

DCC Balancing Test, A: Consolidated Freightways v. Kassell

Answer 21

Holding that an Iowa law that limited truck length to 60 ft was not discriminatory, but the burden outweighed the benefit.
- Not discriminatory b/c applies equally to I/S and OOS

Balancing Test

• Benefit to the state:
• • State interest: safety
• • • Court does not buy this b/c shorter trucks mean more trucks on the road and more opportunities for accidents OR longer routes not in Iowa that can lead to more accidents (Places safety burden on other states, but does not burden interstate commerce)
• Burden on interstate commerce:
• • There’s a burden on interstate trucking industry

Question 22

Exceptions to DCC Rule

Answer 22

If Congress has acted on its Commerce Power, then it is no longer dormant. Congress has plenary power to regulate interstate commerce.

(1) Congressional Approval
(a) Generic approval of state regulation in a particular area
- Congress gives blanket authorization for states to regulate
- - A: Western & Southern Ins: Holding that b/c Congress gave explicit authorization for states to regulate the insurance industry, CA can enact laws that discriminate against OOS.

(b) Targeted approval of state laws that court has found violate DCC
- Once congress exercise power, not dormant
- - A: Rahrer: Upholding a state law restricting importation of alcoholic beverages after declaring an identical law unconstitutional, b/c Congress has enacted a law to permit such regulation

(2) Market Participant Exception
- Law that protects State as a market actor is not a violation of DCC
- Justifications:
- - State residents should channel state resources they provided to themselves
- - DCC meant to promote free market (state should be able to participate in the market)
- - Fairness = State market participants should be on equal footing with private company
- - Cases are inappropriate for court

Question 23

Exceptions, A: Hughes v. Alexandria Scrap

Answer 23

Upholding a MD scrap auto buyback program that discriminate against OOS producers.

• MD only wants to pay for destruction of MD cars, NOT DC or Virginia cars
• No doc for MD car owners, but lots of docs for OOS car owners

Question 24

Exceptions, A: Reeves v. Stake

Answer 24

Upheld preference for South Dakota residents to purchase cement from state owned plant
- The state entity could be the same thing as an unconstitutional DCC, but b/c state is an actor, constitutional

Question 25

Facial Discrimination, A: Maine v. Taylor:

Answer 25

Holding that Maine’s ban on out-of-state live fishing bait was facially discriminatory, but it survives SS.
- Facially discriminatory: statute bans OOS live bait

Strict Scrutiny:

• Important state interest: Conserve delicate marine ecosystem
• Less restrictive alternative: impossible
• • Can’t inspect the bait, there are millions of them
• • Can’t cut them open to look for parasite, defeats the purpose of having live bait

Question 26

Balancing Test, Southern Pacific v. Arizona

Answer 26

• AZ law imposed a penalty on RR companies operating trains of over 14 passenger cars
• Imposed a burden on interstate commerce b/c most train traffic was interstate
• Huge cost burden (costs more than $1 million a year to detach trains), and would have added more trains on the track
• Not reasonably related to legit state interest in train safety and the end does not justify the means

Question 27

Balancing Test, Barnwell Bros v. South Carolina (pre balancing test, but this is what Thomas and Gorsuch like)

Answer 27

• South Carolina banned trucks over 90 inches wide and weight over 20,000 lbs on state highway
• This law is constitutional
• Regulates local safety regulations on state highways
• Acknowledges that it places a burden on interstate commerce, but because Congress has not enacted regulations in that area, the states could freely regulate is
• Law closely related to matter of substantial local concern b/c states maintain their highways