State Regulation and Taxation of Commerce

Question 1

What is the general rule of the Dormant Commerce Clause?

Answer 1

If Congress has not, the states can regulate interstate commerce so long as the regulation does not:
-> discriminate against out-of-state commerce
-> unduly burden interstate commerce
OR
-> purposefully regulate wholly out-of-state activity.

Question 2

How does discrimination against out-of-state commerce work?

Answer 2

It’s the event of protecting local economic interests at the expense of out-of-state competitors.

Question 3

When may a discriminatory state or local regulation be upheld?

Answer 3

A discriminatory state or local regulation may be upheld IF
-> an important local interest is being served
AND
-> no other nondiscriminatory means are available to achieve that purpose

RARELY UPHELD

Question 4

Is it discriminatory simply because the entire burden of a regulation falls on out-of-state businesses?

Answer 4

No it isn’t discriminatory for just his reason.

Question 5

What is the market-participant exception that allows a state to discriminate against out-of-state commerce?

Answer 5

A state can favor local commerce OR discriminate against nonresident commerce like a private business IF
-> the state is acting as a buyer OR seller and not as a market regulator

Question 6

When does the Market-participant exception not apply?

Answer 6

This exception does not apply to challenges pursuant to the Privileges and Immunities Clause of Article IV.

Question 7

What is the “traditional government function” rule with regards to discrimination against out-of-state commerce?

Answer 7

State and local regulations can favor state and local government entities, BUT not private entities,

IF the entities are performing a traditional government function (e.g. waste disposal).

Question 8

What is the “Congressionally permitted discrimination” rule with regards to discrimination against out-of-state commerce?

Answer 8

State can discriminate with congressional permission to do so.

The congressional permission must be unmistakably clear that Congress intended to permit the otherwise impermissible state regulation.

Question 9

Can a nondiscriminatory state regulation still be struck down if it imposes an undue burden on interstate commerce?

How is it determined if it’s “unduly burdensome”?

Answer 9

Yes EVEN if it isn’t discriminatory.

Balancing test
-> purpose of state law against burden on interstate commerce
AND
-> evaluate whether there are less restrictive alternatives (not a cost-benefit analysis test)

Question 10

What is the general rule regarding state taxation of interstate commerce?

Answer 10

States may tax interstate commerce only if:
-> Congress has not acted in the particular area
AND
-> the tax does not discriminate against or unduly burden interstate commerce

Question 11

What is the four-part test the Supreme Court uses to determine if a state’s tax on interstate commerce comports with the Commerce Clause?

Answer 11

Substantial nexus
-> between the activity being taxed and the taxing state

Fair apportionment
-> such that interstate commerce does not pay total taxes greater than local commerce

Nondiscrimination
-> no direct commercial advantage to local businesses over interstate competitors (even if neutral on its face)

AND

Fair relationship
-> the tax must be fairly related to the services provided by the taxing state

Question 12

What is the general rule regarding state taxation of foreign commerce?

Answer 12

States must have congressional consent to impose import or export taxes
-> EXCEPT what is absolutely necessary for executing its inspection laws