I.  Preemption

In a preemption challenge, the challenger is claiming that a state law is unconstitutional because it has been preempted by a valid federal law. Under this analysis, the state law violates the Supremacy Clause of Article VI because the federal government has enacted a law that prohibits the state from acting in a particular way and the state law being challenged is one in which the state is acting in the prohibited manner. To successfully assert a claim of preemption, the challenger must show:

A.  that the federal government has enacted a valid federal law (the law is a constitutional exercise of congressional regulatory power such as the power granted by the Commerce Clause) and that the federal law either:

B.  expressly preempts the state law because it contains explicit preemptive language (see D below); or

C.  impliedly preempts the state law because Congress intended to preempt the state law and the congressional intent can be implied based on conflict preemption (see E below) or field preemption (see F below).

D.  To demonstrate express preemption (see B above), you must show that there is language in the federal statute that expressly states that the federal law preempts certain types of state legislation. Even if the statute contains express preemptive language, there may still be an issue as to the scope of the preemptive effect under that statutory language because it is hard to draft preemption language that removes all ambiguities as to the scope of the intended preemption. In addition to expressly stating an intent to preempt, Congress can also expressly state that it does not intend to preempt certain types of state legislation (express nonpreemption). Just as in the case of express preemption, there can be an issue as to the intended scope of the nonpreemptive language.

E.  To demonstrate (implied) conflict preemption (see C above), the challenger must show either:

(1)  that the state law is in conflict with the federal law because it is physically impossible to comply with both at the same time; or

(2)  that the state law is in conflict with the federal law because it interferes with the objectives of the federal law or is an obstacle to the accomplishment of the federal purpose. To decide whether this type of implied preemption exists, you need to review the statutory language in the federal law and its legislative history to determine what the purpose of the federal law is, and then ask whether the operation of the state law interferes with accomplishing the objectives of the federal law.

F.  To demonstrate (implied) field preemption (see C above), the challenger must show that the federal government has fully occupied the field it has chosen to regulate. In field preemption cases, there does not need to be any conflict between the state and federal law. The state law may even further the same purpose as the federal law. Nevertheless, there may be preemption if the federal regulatory scheme is sufficiently comprehensive to make reasonable the inference that Congress left no room for supplemental state regulation. When the Court is uncertain as to whether Congress intended to preempt the field, it will look at the nature of the regulated area. If the area regulated by Congress is an area in which the federal interest is dominant, the Court will be more inclined to presume that Congress intended to occupy the field (as in the areas of immigration or foreign affairs). If the area regulated by Congress is an area that has traditionally been regulated by the states (as in the area of tort liability), the Court will be less likely to presume that Congress intended to occupy the field. In cases in which a field preemption argument is made, there may also be an argument over how broad or narrow the preempted field is and whether the state law falls within the scope of the field preemption.

G.  The state can defend its state law against a preemption challenge in a variety of ways.  It can argue that (1) the federal law is beyond the power of Congress, (2) the federal law does not expressly preempt state law, (3) the federal law expressly authorizes the states to continue to regulate in the area, and (4) the federal law does not impliedly prempt the state law because it is possible to comply with both state and federal law at the same time, the state law does not interfere with the achievement of the federal purpose, and the federal law does not fully occupy the field the state is regulating.  

H.  On the exam, preemption issues are usually obvious because an exam question raising a preemption issue must describe both a state law that is being challenged and a federal law or regulation that regulates an identical or at least a similar area to that of the state law.

II.  Dormant Commerce Clause

In challenging a law because it violates the dormant Commerce Clause, the challenger argues that while the federal government has been silent in the area (meaning that the state law or municipal ordinance is not preempted by federal law), the state law (or municipal ordinance) places an unreasonable burden on out-of-state or interstate commerce and therefore violates the dormant Commerce Clause. These cases are analyzed in two different ways depending on the type of burden placed on interstate commerce. Laws that discriminate against out-of-state commerce on their face or in their effect are subject to very rigorous review whereas laws that burden interstate commerce in a nondiscriminatory way are subject to a balancing test often referred to as the Pike balancing test from the case of Pike v. Bruce Church, Inc. The very rigorous or strict test requires that the government prove that the law serves a legitimate local purpose and that the purpose cannot be adequately served by reasonable nondiscriminatory alternative means (often described by the Court as a standard of virtual per se invalidity because of how difficult it is to satisfy). Under the less strict balancing test, the Court weighs the burdens on interstate commerce as against the local benefits. Each state or local law that burdens out-of-state commerce in a significant way is reviewed under one of the two tests unless the state is acting as a market participant rather than a market regulator. In choosing between the two tests, the challenger is always trying to argue, if at all possible, that the strict test applies, but must be prepared to argue, in the alternative, that the law is unconstitutional even if the balancing test applies. By contrast, the government is always trying to argue that the balancing test applies, but must be prepared to argue, in the alternative, that the law is constitutional even if the strict test applies.

A.  Discrimination Against Interstate Commerce.  Two forms of discrimination justify the application of the strict test: (1) if the state or local law discriminates against out-of-state commerce on its face (such as by expressly favoring local businesses as in Dean Milk and C & A Carbone, Inc. v. Clarkstown or hoarding resources for local residents as in Hughes v. Oklahoma and Philadelphia v. New Jersey), or (2) if the state or local law, while not discriminatory on its face, nevertheless has a discriminatory effect on out-of-state commerce as demonstrated by extrinsic evidence (as in Hunt v. Washington State Apple Advertising Commission and Bacchus Imports, LTD. v. Dias). If either of these two types of discrimination exists, the presumption of validity normally afforded to such laws disappears, and the burden of proof shifts to the state or locality to demonstrate that it has a legitimate objective and that it cannot accomplish that objective by alternative means. Under this test, an economic protectionist purpose (to benefit local business at the expense of out-of-state business) is not a legitimate objective. In addition, under this strict test, means that discriminate against interstate commerce may only be used if there are no other means available to achieve the government's purpose. (Dean Milk v. Madison - alternative means existed; Maine v. Taylor - alternatives means did not exist). While laws that discriminate against interstate commerce on their face are usually easy to identify, laws that discriminate against interstate commerce in their effect are harder to identify. In such cases, the challenger will argue that the discriminatory effect is sufficient to justify applying the strict test and the government will argue that the discriminatory effect is insufficient to justify applying the strict test so that the less strict balancing test should apply. Both parties must also be prepared to argue in the alternative, if at all possible. The challenger will also argue that the law is unconsitutional under the balancing test and the government will also argue that the law is constitutional under the strict test.

In a recent case, United Haulers Ass’n v. Oneida-Herkimer Solid Waste Management Authority, the Court clarified the meaning of laws that discriminate against interstate commerce. It said that a law that favored a government entity performing a traditional government activty, waste processing, and discriminated against all in-state private waste processors as well as all out-of-state waste processors, did not qualify as a law that discriminates against out-of-state commerce under the dormant Commerce Clause. Because the only discrimination was in favor of a government entity, the Court applied the Pike balancing test applicable to laws that burden interstate commerce, but do not discriminate against such commerce rather than the strict test.

B.  Balancing Test.  Even if the state or local law does not discriminate against out-of-state commerce, it can be challenged under the dormant Commerce Clause if it imposes a significant burden on interstate commerce. In evaluating the constitutionality of such a law, the Court will apply a balancing test: “Where the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.”  This test is called the Pike balancing test because it derives from the case of Pike v. Bruce Church, Inc. Under this balancing test, a presumption of validity attaches to the state statute (or municipal ordinance). It will be upheld even though it burdens interstate commerce so long as the burden it imposes is not excessive in relation to its value as a health, safety, environmental protection or consumer protection measure. To win, the challenger must show the law burdens interstate commerce in a significant way and the benefits of the law are not sufficient to outweigh the burdens. For examples of this balancing approach see Bibb v. Navajo Freight Lines, Inc. and Kassel v. Consolidated Freightways Corp. In both of these cases, the Court concluded that the law had no safety benefits at all and so the balancing test was easy to apply since all the weight on the scale was on the burden side, sharply tipping the scale in the challenger's favor. It is less clear how a case would be resolved if there was some burden, but also some benefit from the law.

C.  Economic Protectionism.  As Justice Souter stated in Department of Revenue of Kentucky v. Davis, "The modern law of what has come to be called the dormant Commerce Clause is driven by concern about 'economic protectionism - that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.' " If a state or local law is designed to achieve some economic benefit for the state or locality in the form of hoarding resources or avoiding economic burdens, the purpose of the law will be viewed as economic protectionism and this purpose is illegitimate under the dormant Commerce Clause. Typically, a law that is aimed at achieving the goal of economic protectionism will discriminate against out-of-state commerce on its face or in its effect. If the law discriminates against out-of-state commerce, a state or local purpose designed to achieve economic protectionism will not satisfy the strict test employed to evaluate such discriminatory laws because the law will lack a legitimate objective. In the rare case that the law is nondiscriminatory, a state or local purpose that is designed to hoard resources or avoid economic burdens rather than sharing them with other states will not be sufficiently weighty under the balancing test used in such cases and will not outweigh a substantial burden imposed on interstate commerce. Cases in which laws are struck down under the dormant Commerce Clause because they were found to be motivated by nothing more than economic protectionism include Bacchus Imports, LTD. v. Dias (state law was discriminatory in its effect and lacked a legitimate local purpose) and South-Central Timber v. Wunnicke (state law was discriminatory on its face and lacked a legitimate local purpose). Frequently, it will not be clear if the purpose of the law is the illegitimate one of economic protectionism or some other legitimate purpose such as health, safety, or consumer protection. In such cases, the challenger will argue, based on the available evidence, that the law is designed to accomplish the illegitimate objective of economic protectionism and the government will argue, based on the available evidence, that the law is designed to accomplish a legitimate objective. Since neither party can be certain a court will agree with its argument, both parties must be prepared to try and argue in the alternative with the challenger trying to argue, if possible, that the law is unconstitutional even if it has a legitimate purpose and the government trying to argue, if possible, that the law is constitutional even if it has an illegitimate purpose (only possible if the government can rely on the market participant exception described in D. below).

D.  Market Participant Exception.  There is also one additional argument seen in dormant Commerce Clause cases. It is not an additional test, but is, instead, a defense that may be available to a state or locality in a limited number of cases when the challenger argues that the state or local law violates the dormant Commerce Clause. Relying on the market participant exception, the government may defend itself by arguing that it is permitted to engage in protectionist behavior or discriminate against out-of-state commerce because it is acting as a market participant by directly engaging in commercial activities rather than by regulating the activities of private participants in the market. This exception permits a state or locality to discriminate against out-of-state commerce when it acts as a market participant, but not when it acts as a market regulator (South-Central Timber v. Wunnicke). The market participant defense is not limitless and it may not be available if the state is controlling access to a natural resource, if the state is controlling a market in which it is not a direct participant (downstream activity), or if the state is interfering with international commerce. All three of these factors were present in Wunnicke and the Court, therefore, rejected the state's effort to defend its action based on the market participant exception to the dormant Commerce Clause and found instead that the law was invalid as a protectionist measure. When the state participates in a market where it monopolizes the market rather than participating along with private businesses, it is unlikely that a court will consider the state to be a market participant within the meaning of the market participant exception. This is because the premise of the market participant exception is that the state is only one among a number of market participants.

E.  I want to add a word or two about the relationship between a preemption argument and a dormant Commerce Clause argument. In cases where there is no federal law on the subject, obviously there is no preemption argument, but there could be a dormant Commerce Clause argument. Where there is a federal statute on point, there may be a preemption argument and there could also, in the alternative, be a dormant Commerce Clause claim if interstate commerce is discriminated against or unduly burdened by the state law being challenged. In making this claim, the challenger is assuming that the preemption challenge could fail, and is presenting the court with an alternative ground of decision in its favor.

III.  Privileges and Immunities Clause of Article IV, Section 2.

To show that a state law (or a municipal ordinance) violates the Privileges and Immunities Clause of Article IV, Section 2, the challenger first must satisfy three preliminary hurdles:

A.  The state law or municipal ordinance must treat differently citizens (residents) and noncitizens (nonresidents) of the state and discriminate against noncitizens (nonresidents); and

B.  The state law or municipal ordinance must be challenged by a flesh and blood nonresident of the state rather than a corporation or other artificial entity; and

C.  The discrimination must adversely affect a privilege or immunity of state citizenship. The question is whether the activity the nonresident is seeking to engage in is one that is a basic right or essential activity and is, therefore, "fundamental to the promotion of interstate harmony." Access to private employment opportunities have been found to be fundamental or essential activities protected by Article IV, Section 2 as has the right of a nonresident to purchase property within the state. However, both the right to obtain government employment and the right to gain access to recreational activities on the same terms as residents have been found not to be activities protected by the Clause.

D.  If a court concludes that the challenger has satisfied the three preliminary hurdles (A, B, and C above), the burden shifts to the government to satisfy a two part test:

1.  Does the state or locality have a substantial reason for treating nonresidents differently? (are nonresidents a peculiar source of the evil); and

2.  Does the degree of discrimination against nonresidents bear a substantial relation to the state or local government's objective? Does the degree of discrimination against nonresidents bear a substantial relation to the state or local government's objective? This inquiry includes a consideration of the availability of less restrictive means (Supreme Court of New Hampshire v. Piper) as a method of evaluating the relationship between the ends and the means. However, this standard is a version of intermediate scrutiny rather than strict scrutiny. Therefore, the government is not required to adopt the least discriminatory alternative means to accomplish its objective under this test.

E.  In this analysis, unlike under the dormant Commerce Clause, there is no exception when the state is acting as a market participant (United Building & Construction Trades Council v. Mayor and Council of Camden).

Because of the differences between the dormant Commerce Clause and the Privileges and Immunities Clause of Article IV, it is possible for a law to be constitutional under the dormant Commerce Clause (immunized by the market participant exception, for example), but unconstitutional under the Privileges and Immunities Clause (no market participant exception). The opposite result can also occur. A law can be successfully challenged under the dormant Commerce Clause (the law discriminates against out-of-state commerce and there are nondiscriminatory alternatives available), but unsuccessfully challenged under the Privileges and Immunities Clause (the challenger is a corporation or the degree of discrimination bears a substantial relation to the objective even though there are nondiscriminatory alternatives available). Because these two constitutional arguments are not identical in scope, they should be considered as alternative arguments in cases where both claims can be asserted.