Limitations on state regulation

• Judicial efforts to protect the expansion of the market from assertions of local power.

• Clearest limitation on state power  supremacy clause. When state statute conflicts with federal statute, federal statute preempts state statute.

• Primary issue. Do states have the power to regulate in certain areas that are within federal power?

• Threshold question. Is subject matter of regulation one that Congress can regulate? If yes, then two possible questions arise:

• Preemption problem. If there is federal statute, does it nullify a state statute related to the same subject? [this is not strictly a constitutional question, but rather a question of statutory interpretation]

• Dormant commerce clause doctrine. If there is no conflicting federal statute, is the state law nonetheless disabled from regulating? [Other doctrines as well.]

Typology of Powers

• Exclusive federal powers: war, treaties

• Concurrent powers (either states or federal government can act independently of other): taxation

• State powers, conditional on federal permission: interstate compacts

• Shared powers (neither states nor federal government can act independently of the other): amend the USC.

• Exclusive state powers: 10^th and 21^st amendments

• Powers nobody has: the power to set up custom house on an internal state border, to enact an ex post facto law or bill of attainder.

Preemption

• Three ways federal statute may preempt state law:

• Express preemption. Federal statute says that it preempts state law. There will still be interpretive questions concerning the reach of the express preemption. [see Shaw v. Delta Air Lines, 381]

• Conflicting regulations. It may be impossible to comply with both laws, or state law my frustrate purposes of federal statute.

1. Example: Perez v. Campbell (1971): AZ statute suspending driver’s license of people who have not satisfied judgments against them in accident cases conflicted with federal bankruptcy law, which relieves debtor of duty to satisfy judgment.

• Occupying the field. Scheme of federal regulation may be “so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it.” (Rice v. Santa Fe Elevator Corp. at 374).

1. There is some ambiguity about what constitutes a “field.” Definition of “field” is often determinative of cases, and doctrine does not make clear how SC resolves this problem of characterization  there is judicial discretion in identifying breadth of “field.”

The Privileges and Immunities Clause of Article IV

• PIC of Article IV. “The Citizens of each State shall be entitled to all the Privileges and Immunities of Citizens in the several States.”

• In any case in which out-of-staters are discriminated against by the state acting as a “market participant,” the statute may be vulnerable to an attack based on PIC.

United Building Council V. Camden - No market participant exception for pic

• SCt has held that there is no “market participant” exception to PIC. Facts. Camden ordinance required that at least 40% of employees of contractors and subcontractors on city projects be Camden residents.

• Grounds for distinction of commerce clause. Commerce clause challenge to this kind of discrimination had previously been rejected by SCt under “market participant” exception, which held that state can burden interstate commerce when it does so in its capacity as a “participant,” rather than as “regulator” of market. Majority reasoned that the rationale for a “market participant” exemption in the PIC context was not nearly as strong as in the Commerce Clause context. The Commerce Clause deals only with regulation, and a state acting as “market participant” is simply not regulating. But PIC bars any type of state conduct, regulatory or otherwise, which discriminates against out-of-staters on matters of fundamental concern.

• Holding: SCt held that Camden statute was discrimination against out-of-state residents.

• Discrimination against municipal residence barred: SCt broke major new ground by holding that PIC bars discrimination based on municipal residence, just as it bars such discrimination based on state residence. SCt conceded that a regulation that discriminates against out-of-towners burdens some in-staters as well as out-of-staters. But it reasoned that while in-staters “at least have a chance to remedy at the polls any discrimination against them, out-of-state citizens have no similar opportunity,” so there is violation of PIC as to them.

• Two-step inquiry: This discrimination triggers 2-step inquiry.

1. Did the law burden a privilege that is sufficiently fundamental to be protected by the clause? [yes, because “pursuit of common calling” is a fundamental privilege.]

2. Is there “substantial reason” justifying the difference in treatment? [need to remand case for findings of fact on this question.]:

1. SCt emphasized that ban on discrimination against out-of-staters is not absolute; all that is required is that there be a tight fit between the particular discrimination used and a significant evil that the state is combating.

2. Here, Camden claimed that it was attempting to reverse wide-spread local unemployment and “middle-class flight.” SCt remanded to TC for consideration of whether this was an appropriate purpose, and whether the particular discriminatory measure chosen was sufficiently closely linked to attainment of that objective. But SCt implied that, especially since the City was spending its own funds, the City would prevail if it could show that emigration was indeed a “peculiar source” of the City’s economic decline.

• Dissent - Blackmun. PIC did not prohibit discrimination among state residents because Ely’s process theory (45, and Stone’s long quotation on 294) did not indicate any representational failure that warranted judicial intervention.