Extraterritoriality and the Dormant Commerce Clause: A Doctrinal Post-Mortem

Author:Brannon P. Denning
Position:Professor, Cumberland School of Law, Samford University
Pages:979-1009
 
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Extraterritoriality and the Dormant Commerce
Clause: A Doctrinal Post-Mortem
Brannon P. Denning*
INTRODUCTION
Among the various branches of the dormant Commerce Clause
doctrine (DCCD)—the judge-made rules grounded in the
Constitution’s grant of power over interstate commerce to
Congress—is that which prohibits “extraterritorial” state legislation.
As recently as 1989, the Supreme Court held that the DCCD
“‘precludes the application of a state statute to commerce that takes
place wholly outside of the State’s borders, whether or not the
commerce has effects within the State.’”1
That broad articulation of the principle, however, represented
extraterritoriality’s high tide. The Court has since retreated; in 2003,
it seemed to limit the extraterritoriality principle dramatically,
rejecting arguments that a Maine prescription-drug subsidy program
actually attempted to fix prices outside the state.2 At this point, the
extraterritoriality principle looks to be quite moribund.
As Donald Regan noted during extraterritoriality’s heyday,
“[W]e do not understand the extraterritoriality principle . . . nearly as
well as we should.”3 While Regan believed it was a constitutional
principle, he rejected the notion that extraterritoriality had anything
to do with the DCCD.4 The Court apparently agreed.
This Article, then, is an autopsy of sorts. Assuming, as I do, that
extraterritoriality—at least the strong form articulated by the Court
Copyright 2013, by BRANNON P. DENNING.
* Professor, Cumberland School of Law, Samford University. Ben Barton
read an early draft and made excellent suggestions for improving the piece.
Robbie McNaughton provided excellent research assistance. Special thanks to
Christina Sautter and the editors of the Louisiana Law Review for both the
opportunity to contribute this essay, as well as for the editors’ skillful edits.
1. Healy v. Beer Inst., Inc., 491 U.S. 324, 336 (1989) (plurality opinion)
(quoting Edgar v. MITE Corp., 457 U.S. 624, 642–43 (1982) (plurality opinion)).
For articles on extraterritoriality generally, see Jack L. Golds mith & Alan O.
Sykes, The Internet and the Dormant Commerce Clause, 110 YALE L.J. 785
(2001); Donald H. Regan, Siamese Essays: (I) CTS Corp. v. Dynamics Corp. o f
America and Dormant Commerce Clause Doctrine; (II) Extraterritorial State
Legislation, 85 MICH. L. REV. 1865 (1987); Peter C. Felmly, Comment, Beyond
the Reach of States: The Dormant Commerce Clause, Extraterritorial State
Regulation, and the Concerns of Federalism, 55 ME. L. REV. 467 (2003).
2. Pharm. Research & Mfrs. Ass’n v. Walsh, 538 U.S. 644 (2003).
3. Regan, supra note 1, at 1884.
4. Id. at 1888 (arguing that early cases demonstrate that “the
extraterritoriality principle does not flow from the dormant commerce clause”).
980 LOUISIANA LAW REVIEW [Vol. 73
in the 1980s—is dead, and unlikely to be revived by the current
Court, its passing offers an opportunity to examine the lifec ycle of
constitutional doctrine, from birth to death.5 Kermit Roosevelt has
argued that doctrine and doctrinal rules can suffer from
“calcification” that causes courts to alter those rules or discard them
altogether.6 Close study may reveal information about what, exactly,
the Court sought through the doctrine’s development and
enforcement and why the Court ultimately abandoned it.
In Part I, I describe extraterritoriality’s early emergence. In its
early form, extraterritoriality was not exclusively yoked to the
DCCD. The Due Process Clause of the Fourteenth Amendment was
also cited as a source of the extraterritoriality doctrine, as were less
clause-bound structural principles. Beginning in the early twentieth
century, however, the doctrine became closely linked with the
DCCD; it emerged as a robust branch of the DCCD in the 1980s.
This association is described in Part II. Extraterritoriality’s decline is
detailed in Part III. In Part IV, I return to the question of what
“killed” extraterritoriality. I conclude that extraterritoriality’s demise
was likely overdetermined. Factors contributing to the doctrine’s
demise include what Kermit Roosevelt calls a “loss of fit” between
the doctrine and the purposes of the DCCD generally, as well as the
doctrine’s calcification; the lack of a limiting principle that would
prevent it from curtailing legitimate state regulatory power; the
Court’s decision to locate limits on punitive damage awards in the
Due Process Clause after flirting with the notion that those limits
grew out of DCCD extraterritoriality; and the Court’s apparent shift
away from robust enforcement of the DCCD generally to limitation
of the doctrine. In Part V, I consider the impact of
extraterritoriality’s demise on a related doctrine: the Court’s
periodic invalidation of state laws that presented the problem of
“inconsistent state regulations.” A bri ef conclusion follows.
I. THE EARLY HISTORY OF EXTRATERRITORIALITY
The concern with “territoriality”—ensuring that a state did not
exceed its legitimate legislative jurisdiction—was long a concern of
5. I accept as descriptively accurate Mitchell Berman’s “two-outputs thesis”
that the Supreme Court, when it interprets the Constitution, first establishes
“constitutional operative propositions”—what the Constitution requires or
prohibits—by interpreting the document, then operationalizes those propositions
by crafting “decision rules” that it t hen applies to facts to produce judgme nts. See
generally Mitc hell N. Berman, Constitutional Decision Rules, 90 VA. L. REV. 1
(2004). I will employ Professor Berman’s terminology throughout this Article.
6. Kermit Roosevelt III, Constitutional Calcification: How the Law Becomes
What the Court Does, 91 VA. L. REV. 1649, 1693 (2005).

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