Congressional Authorization of Otherwise Impermissible State Action.
The Supreme Court has heeded the lesson that was administered to it by the Act of Congress of August 31, 1852,991 which pronounced the Wheeling Bridge “a lawful structure,” thereby setting aside the Court’s determination to the contrary earlier the same year.992 The lesson, subsequently observed the Court, is that “[i]t is Congress, and not the Judicial Department, to which the Constitution has given the power to regulate commerce.”993 Similarly, when in the late 1880s and the early 1890s statewide prohibition laws began making their appearance, Congress again authorized state laws that the Court had held to violate the dormant commerce clause.
The Court applied the “original package” doctrine to interstate commerce in intoxicants, which the Court denominated “legitimate articles of commerce.”994 Although it held that a state was entitled to prohibit the manufacture and sale of intoxicants within its boundaries,995 it contemporaneously laid down the rule, in Bowman v. Chicago & Northwestern Ry. Co.,996 that, so long as Congress remained silent in the matter, a state lacked the power, even as part and parcel of a program of statewide prohibition of the traffic in intoxicants, to prevent the importation of liquor from a sister state. This holding was soon followed by another to the effect that, so long as Congress remained silent, a state had no power to prevent the sale in the original package of liquors introduced from another state.997 Congress soon attempted to overcome the effect of the latter decision by enacting the Wilson Act,998 which empowered states to regulate imported liquor on the same terms as domestically produced liquor, but the Court interpreted the law narrowly as subjecting imported liquor to local authority only after its resale.999 Congress did not fully nullify the Bowman case until 1913, when enactment of the Webb-Kenyon Act1000 clearly authorized states to regulate direct shipments for personal use.
National Prohibition, imposed by the Eighteenth Amendment, temporarily mooted these conflicts, but they reemerged with repeal of Prohibition by the Twenty-first Amendment. Section 2 of the Twenty-first Amendment prohibits “the importation into any State . . . for delivery or use therein of intoxicating liquors, in violation of the laws thereof.” Initially the Court interpreted this language to authorize states to discriminate against imported liquor in favor of that produced in-state, but the modern Court has rejected this interpretation, holding instead that “state regulation of alcohol is limited by the nondiscrimination principle of the Commerce Clause.”1001
Less than a year after the ruling in United States v. South-Eastern Underwriters Ass’n1002 that insurance transactions across state lines constituted interstate commerce, thereby establishing their immunity from discriminatory state taxation, Congress passed the McCarran-Ferguson Act,1003 authorizing state regulation and taxation of the insurance business. In Prudential Ins. Co. v. Benjamin,1004 the Court sustained a South Carolina statute that imposed on foreign insurance companies, as a condition of their doing business in the state, an annual tax of three percent of premiums from business done in South Carolina, while imposing no similar tax on local corporations. “Obviously,” said Justice Rutledge for the Court, “Congress’s purpose was broadly to give support to the existing and future state systems for regulating and taxing the business of insurance. This was done in two ways. One was by removing obstructions which might be thought to flow from its own power, whether dormant or exercised, except as otherwise expressly provided in the Act itself or in future legislation. The other was by declaring expressly and affirmatively that continued state regulation and taxation of this business is in the public interest and that the business and all who engage in it ‘shall be subject to’ the laws of the several states in these respects.”1005
Justice Rutledge continued: “The power of Congress over commerce exercised entirely without reference to coordinated action of the states is not restricted, except as the Constitution expressly provides, by any limitation which forbids it to discriminate against interstate commerce and in favor of local trade. Its plenary scope enables Congress not only to promote but also to prohibit interstate commerce, as it has done frequently and for a great variety of reasons. . . . This broad authority Congress may exercise alone, subject to those limitations, or in conjunction with coordinated action by the states, in which case limitations imposed for the preservation of their powers become inoperative and only those designed to forbid action altogether by any power or combination of powers in our governmental system remain effective.”1006
Thus, it is now well-established that “[w]hen Congress so chooses, state actions which it plainly authorizes are invulnerable to constitutional attack under the Commerce Clause.”1007 But the Court requires congressional intent to permit otherwise impermissible state actions to “be unmistakably clear.”1008 The fact that federal statutes and regulations had restricted commerce in timber harvested from national forest lands in Alaska was, therefore, “insufficient indicium” that Congress intended to authorize the state to apply a similar policy for timber harvested from state lands. The rule requiring clear congressional approval for state burdens on commerce was said to be necessary in order to strengthen the likelihood that decisions favoring one section of the country over another are in fact “collective decisions” made by Congress rather than unilateral choices imposed on unrepresented out-of-state interests by individual states.1009 And Congress must be plain as well when the issue is not whether it has exempted a state action from the Commerce Clause but whether it has taken the less direct form of reduction in the level of scrutiny.1010
- Ch. 111, 10 Stat. 112, § 6.
- Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. (13 How.) 518 (1852), statute sustained in Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421 (1856). The latter decision seemed facially contrary to a dictum of Justice Curtis in Cooley v. Board of Wardens of Port of Philadelphia, 53 U.S. (12 How.) 299, 318 (1851), and cf. Tyler Pipe Indus., Inc. v. Washington State Dept. of Revenue, 483 U.S. 232, 263 n.4 (1987) (Justice Scalia concurring in part and dissenting in part), but if indeed the Court is interpreting the silence of Congress as a bar to action under the dormant commerce clause, then when Congress speaks it is enacting a regulatory authorization for the states to act.
- Transportation Co. v. Parkersburg, 107 U.S. 691, 701 (1883).
- The Court had developed the “original package” doctrine to restrict application of a state tax on imports from a foreign country in Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 449 (1827). Although Chief Justice Marshall had indicated in dictum in Brown that the same rule would apply to imports from sister states, the Court had refused to follow that dictum in Woodruff v. Parham, 75 U.S. (8 Wall.) 123 (1869).
- Mugler v. Kansas, 123 U.S. 623 (1887). Relying on the distinction between manufacture and commerce, the Court soon applied this ruling to authorize states to prohibit manufacture of liquor for an out-of-state market. Kidd v. Pearson, 128 U.S. 1 (1888).
- 125 U.S. 465 (1888).
- Leisy v. Hardin, 135 U.S. 100 (1890).
- Ch. 728, 26 Stat. 313 (1890), upheld in In re Rahrer, 140 U.S. 545 (1891).
- Rhodes v. Iowa, 170 U.S. 412 (1898).
- Ch. 90, 37 Stat. 699 (1913), sustained in Clark-Distilling Co. v. Western Md. Ry., 242 U.S. 311 (1917). See also Department of Revenue v. Beam Distillers, 377 U.S. 341 (1964).
- Granholm v. Heald, 544 U.S. 460, 487 (2005). See also Bacchus Imports Ltd. v. Dias, 468 U.S. 263 (1984); Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573 (1986); Healy v. The Beer Institute, 491 U.S. 324 (1989), and the analysis of section 2 under Discrimination Between Domestic and Imported Products.
- 322 U.S. 533 (1944).
- 59 Stat. 33, 15 U.S.C. §§ 1011–15.
- 328 U.S. 408 (1946).
- 328 U.S. at 429–30.
- 328 U.S. at 434–35. The Act restored state taxing and regulatory powers over the insurance business to their scope prior to South-Eastern Underwriters. Discriminatory state taxation otherwise cognizable under the Commerce Clause must, therefore, be challenged under other provisions of the Constitution. See Western & Southern Life Ins. Co. v. State Bd. of Equalization, 451 U.S. 648 (1981). An equal protection challenge was successful in Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869 (1985), invalidating a discriminatory tax and stating that a favoring of local industries “constitutes the very sort of parochial discrimination that the Equal Protection Clause was intended to prevent.” Id. at 878. In Northeast Bancorp, Inc. v. Board of Governors of the Federal Reserve System, 472 U.S. 159, 176–78 (1985), the Court declined to follow Ward where state statutes did not, as in Ward, favor local corporations at the expense of out-of-state corporations, but instead “favor[ed] out-of-state corporations domiciled within the New England region over out-of-state corporations from other parts of the country.” The Court noted that the statutes in Northeast Bancorp were concerned with “preserv[ing] a close relationship between those in the community who need credit and those who provide credit,” and with protecting “the independence of local banking institutions”; they did not, like the statutes in Ward, discriminate against “nonresident corporations solely because they were nonresidents.”
- Northeast Bancorp, Inc. v. Board of Governors of the Federal Reserve System, 472 U.S. 159, 174 (1985) (interpreting a provision of the Bank Holding Company Act, 12 U.S.C. § 1842(d), permitting regional interstate bank acquisitions expressly approved by the state in which the acquired bank is located, as authorizing state laws that allow only banks within the particular region to acquire an in-state bank, on a reciprocal basis, since what the states could do entirely they can do in part).
- South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 90 (1984).
- 467 U.S. at 92. See also Hillside Dairy, Inc. v. Lyons, 539 U.S. 59 (2003) (authorization of state laws regulating milk solids does not authorize milk pricing and pooling laws). Earlier cases had required express statutory sanction of state burdens on commerce but under circumstances arguably less suggestive of congressional approval. E.g., Sporhase v. Nebraska ex rel. Douglas, 458 U.S. 941, 958–60 (1982) (congressional deference to state water law in 37 statutes and numerous interstate compacts did not indicate congressional sanction for invalid state laws imposing a burden on commerce); New England Power Co. v. New Hampshire, 455 U.S. 331, 341 (1982) (disclaimer in Federal Power Act of intent to deprive a State of “lawful authority” over interstate transmissions held not to evince a congressional intent “to alter the limits of state power otherwise imposed by the Commerce Clause”). But see White v. Massachusetts Council of Construction Employers, 460 U.S. 204 (1983) (Congress held to have sanctioned municipality’s favoritism of city residents through funding statute under which construction funds were received).
- Maine v. Taylor, 477 U.S. 131 (1986) (holding that Lacey Act’s reinforcement of state bans on importation of fish and wildlife neither authorizes state law otherwise invalid under the Clause nor shifts analysis from the presumption of invalidity for discriminatory laws to the balancing test for state laws that burden commerce only incidentally).