Rule of Law

Big Business Loses Dormant Commerce Clause as Tool Against States

The US Supreme Court decision in National Pork Producers Council v. Ross suggests the dormant Commerce Clause won’t become a deregulatory tool that advances corporate interests, writes Brian Frazelle of the Constitutional Accountability Center.

In recent years, the US Supreme Court has expanded or refashioned numerous doctrines in ways that advance corporate interests by impeding legislative efforts to protect consumers, employees, or the environment. But the court’s recent decision in National Pork Producers Council v. Ross makes clear that the dormant Commerce Clause is unlikely to become one of those deregulatory tools.

In Ross, the court rebuffed an aggressive effort to reconceptualize the dormant Commerce Clause as shielding large companies’ preferred business methods from state interference. Although much has been made of the supposedly fractured opinions in the case, its central conclusions and likely implications are clear.

To start, the majority opinion vigorously reaffirms that the “core” of the dormant Commerce Clause is its “antidiscrimination principle,” which bars measures benefitting in-state economic interests by burdening out-of-state competitors. If a state law is nondiscriminatory, as in Ross, litigants challenging it are in “a tough spot.”

The court also rejected the notion that the dormant Commerce Clause contains an “extraterritoriality” principle, invalidating state laws whenever they have the “practical effect” of influencing conduct in other states. The opinion explains that such a rule is both unsupported by precedent and untenable, given that many kinds of valid state laws have indirect ripple effects in other states.

Notably, the court did more than just reject this argument as an overreading of the cases on which the pork industry association relied. It described those prior cases as nothing more than an application of the antidiscrimination rule, downplaying language in the opinions that arguably supported a broader reading. Ross confirms that there is no “extraterritoriality” principle under the dormant Commerce Clause. Not even the dissenters would have allowed the case to go forward on this basis.

As the court was quick to point out, however, there are other constitutional limits on states’ ability to control activity outside their borders. Controversies involving efforts to regulate beyond state lines, whether involving abortion or other issues, will continue to center around those limits.

Finally, having rejected the idea of expanding the dormant Commerce Clause, the court put a serious damper on the most controversial aspect of its existing doctrine—the Pike balancing test, which instructs courts to strike down even nondiscriminatory state laws if the burdens they impose on interstate commerce are “clearly excessive in relation to the putative local benefits.”

The majority opinion recasts this line of cases as also being primarily about economic protectionism. The Pike test, it explains, helps smoke out protectionist laws that appear neutral but cannot plausibly be explained as anything other than covert discrimination against out-of-state commerce.

This is a significant development. Scholars have long observed that the court’s Pike cases, despite their rhetoric about “balancing” competing interests, have almost exclusively struck down protectionist measures. But the court has never offered this gloss on its Pike cases. (The closest it came was in a footnote 25 years ago.)

It’s one thing for the court to follow an identifiable pattern in case after case without comment. It’s quite another to acknowledge what it’s doing and explain why. The Ross opinion does exactly that, declaring that challenges to neutral state laws are “outside Pike’s heartland.” This can only make it harder to succeed on such claims, which faced steep odds already.

At this point, the majority opinion splits into discrete sections joined by two different pluralities, each offering a separate reason for rejecting the pork industry association’s Pike claim. Justices Neil Gorsuch, Clarence Thomas, and Amy Coney Barrett rejected the legitimacy of Pike balancing altogether, characterizing its weighing of costs and benefits as a task that courts have neither the constitutional authority nor the institutional competence to undertake.

Justices Gorsuch, Thomas, Elena Kagan, and Sonia Sotomayor endorsed a narrower, but still significant, rationale: Laws that merely increase compliance costs or require changes to a company’s preferred operating methods don’t impose the kind of burden on interstate commerce that triggers the dormant Commerce Clause at all.

The upshot is that the court has left the door ajar—just barely—for suits challenging nondiscriminatory state laws under the dormant Commerce Clause. But given the “extreme caution” the majority opinion urges in this area, along with its narrow depiction of the court’s precedent, it may prove difficult to convince lower courts to take the bait on these claims in the future.

When the most that the dissents can say is that the court didn’t “pull the plug” on Pike claims (Chief Justice John Roberts), and that “it appears” they can still succeed (Justice Brett Kavanaugh), this can hardly bolster a judge’s confidence in allowing such claims to go forward.

In the end, while Ross didn’t close the door entirely on dormant Commerce Clause lawsuits against neutral, nondiscriminatory state laws, its effect in years to come may not be much different. That’s a refreshing victory for judicial restraint where corporate interests are on the line.