Metropolitan Life Insurance Co. V. Ward

• 1985. Held that some discrimination against out-of-staters, even if consented to by Congress under CC, may still violate equal protection clause of 14^th Amendment.

Facially neutral statutes with significant effects on interstate commerce

• Problem. Both cases below agree that proof of discriminatory impact can be a basis for a claim of discrimination, but differ on whether discrimination has been proven. Not clear what “discrimination” means. If it does not mean discriminatory purpose (Hunt), and it is not demonstrable simply by discriminatory impact (Exxon), then what else could it mean?

Exxon Corp. V. Governor of Maryland

• Stevens 1978. A statute which is evenhanded on its face may nonetheless turn out to be disproportionately burdensome to some or all out-of-state businesses. Where this disproportionate impact is truly accidental, and does not directly derive from the fact that the burdened firms are out-of-staters, SCt will normally uphold the statute. This is what happened here.

• Facts. Maryland passed a law prohibiting oil producers or refiners from operating retail gas stations in Maryland. The law was enacted because of evidence that gas stations operated by producers and refiners had received preferential treatment during the 1973 oil shortage. Since no gas is produced or refined in Maryland, the rule against vertically-integrated operations affected out-of-state companies exclusively. Conversely, the vast majority (but not all) of the non-integrated retailers, who were not harmed and were probably helped by the statute, were in-state business people.

• Statute attacked. Exxon and several other out-of-state integrated oil companies sued. They made a three-pronged Commerce Clause argument: (1) that the measure impermissibly discriminated against interstate commerce; (2) that the measure unduly burdened such commerce; and (3) that because of the nationwide nature of oil marketing, only the federal government may regulate retail gas sales.

• Statute upheld. SCt upheld this statute (forbidding any producer or refiner of petroleum products from operating a retail gas station) against each of these attacks:

• No discrimination. First, majority held that statute did not discriminate against interstate commerce. Most significantly, not all out-of-state companies were affected by the statute; Sears Roebuck, for instance, was an out-of-state company which was selling gas at retail within Maryland, yet was not involved in refining it and was therefore not affected by the statute. The mere fact that the entire burden of the statute fell on some out-of-state companies was insufficient to establish that “interstate commerce” was discriminated against.

• Not burdened. Similarly, SCt found that interstate commerce was not impermissibly burdened by the statute. The opinion conceded that the statute might cause sales volume to shift from refiner-operated stations to independent dealers. But, SCt held, Commerce Clause “protects the interstate market, not particular interstate firms, from prohibitive or burdensome regulation.” Furthermore, SCt noted, in all probability the same percentage of gasoline would come from out-of-state suppliers after the statute as before it (e.g. 100%), so that the flow of goods in the interstate market would not be decreased.

• Not preempted. Finally, SCt quickly dismissed contention that because the market for gasoline is nationwide, no state may regulate its retail marketing. DCC may preempt an entire field from state regulation only when lack of national uniformity would impede the flow of interstate goods. What Ps were complaining of here was not lack of uniformity, but rather that many or all of the states would pass exactly the sort of divestiture law that Maryland did. Thus, the problem was not one of national uniformity.

• Dissent - Blackmun.

• Protectionist device. Viewed statutory scheme as a protectionist device designed to “protect in-state retail service station dealers from the competition of out-of-state businesses.” More than 99% of local retailers were protected from competition by more than 98% of interstate retail gas stations.

• State’s burden of proof. Blackmun proposed that discriminatory impact shifted burden of proof onto state: state should justify its statute. He felt that this protectionist objective was not justified by any legitimate state interest that could not be satisfied by more evenhanded regulation. [but Blackmun is not sure that discrimination was intentional.]

• “Universal” discrimination requirement. Also, Blackmun interpreted majority’s opinion as requiring that discrimination be universal before a Commerce Clause violation would be found. Under this interpretation, he foresaw that “States will be able to insulate in-state interests from competition by identifying the most potent segments of out-of-state business, banning them, and permitting less effective out-of-state actors to remain.” (He found the facts of this case indistinguishable from those of Hunt, where North Carolina had discriminated only against the powerful Washington growers, but where the SCt had nonetheless found the Commerce Clause to have been violated.)