Where United Haulers Might Take Us: The Future of the State-Self-Promotion Exception to the Dormant Commerce Clause Rule

AuthorDan T. Coenen
PositionUniversity Professor and Harmon W. Caldwell Chair in Constitutional Law, University of Georgia School of Law

University Professor and Harmon W. Caldwell Chair in Constitutional Law, University of Georgia School of Law. The author thanks Walter Hellerstein, James C. Smith, Brannon Denning, and Michael Coenen for commenting on earlier versions of this Article. He also thanks Benn Wilson for helpful research assistance and Melissa Connelly for excellent word-processing and proofreading work.

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I Introduction

The so-called "dormant Commerce Clause"1 prohibits state action that "discriminates against or unduly burdens interstate commerce."2 By forging a "federal free trade unit,"3 this constitutional restriction has bred a level of "material success" that ranks as "the most impressive in the history of commerce."4 It also has brought "solidarity,"5 if not "salvation,"6 to fifty diverse and potentially antagonistic states.7

The dormancy doctrine has spawned many controversies,8 and one modern conundrum surfaced in C & A Carbone, Inc. v. Town of Clarkstown.9In that case, the Court detected unlawful discrimination against interstate commerce in an ordinance that mandated citizens to deliver all local trash to a single, in-state, privately owned waste-transfer station.10 The difficulty with the law, according to the Court, was that it operated solely "for the benefit of the preferred processing facility,"11 thereby "depriv[ing] out-of-state businesses of access to a local market."12 In its 2007 ruling in United Haulers Ass'n v. Oneida-Herkimer Solid Waste Management Authority,15 the Court turned its attention to a closely related question-whether the principle of Page 544 Carbone applies when a local-processing requirement favors a public, rather than a private, waste-handling facility.14 Effectively creating a new state-self-promotion exception to the antidiscrimination rule, the Court in United Haulers concluded that Carbone did not control.15

In Department of Revenue v. Davis,16 the Court reaffirmed the principle of United Haulers and again upheld state action that impeded free interstate trade. The issue in Davis was whether Kentucky could enhance the salability of its own bonds by exempting interest earned on them from its income tax, even while fully taxing interest paid on all other bonds, including bonds issued by sister states.17 In upholding Kentucky's action, the Court looked past the state's stark discrimination between intrastate and interstate commerce, reasoning that the "tax scheme parallels the ordinance upheld in United Haulers"19, because it "'benefit[s] a clearly public [issuer] . . . , while treating all private [issuers] exactly the same.'"19 At least as a general rule, the Court proclaimed, no constitutionally cognizable discrimination inheres in laws aimed at "favoring . . . States and their subdivisions" since government entities have the distinctive mission of "provid[ing] public goods and services on their own."20

In this Article, I examine the doctrinal initiative launched in United Haulers and Davis. My analysis proceeds in four steps. In Part II, I survey the case law, noting along the way why the Court in United Haulers cabined its holding in Carbone and how the Court in Davis extended the reach of United Haulers. This analysis gives rise to two key conclusions. First, the Court's recent decisions put in place a significant new limit on longstanding dormant Commerce Clause protections. Second, this new doctrine has its roots in two justifications: (1) the view that constitutionally problematic "protectionism" seldom lurks in laws that benefit society-serving public institutions, rather than gain-seeking private entities, and (2) the predictive judgment that local political processes typically will safeguard the interests of nonresidents threatened by state-self-promoting programs, thus lessening the need for a judicial check on government overreaching in this context.

In Part III, I turn to the implications of United Haulers and Davis. I suggest in particular that the Court's new state-self-promotion principle will have wide-ranging effects in five major categories of cases: (1) cases (like Page 545 United Haulers) that involve local-processing requirements tied to traditional public programs that the state either runs itself or operates via a joint venture; (2) cases (much like United Haulers) that involve exclusive distribution rights accorded to so-called "utilities," including monopoly providers of water, electricity, or natural gas; (3) cases (unlike both United Haulers and Davis) in which the state forces local citizens to make use of a government-provided service traditionally supplied through the private sector; (4) cases (like Davis) that involve state efforts to promote favored local interests by way of the taxing system; and (5) cases in which states seek to leverage the immunity afforded by United Haulers and Davis (thus going beyond what both of those precedents directly authorize) by either (a) channeling work that state-self-promoting monopolies generate exclusively to local, private-sector service providers or (b) coupling the operation of permissible state-self-promoting forced-use rules with user fees that far exceed charges reasonably calibrated to recapture program costs. As Part II shows, the Court's recent decisions raise a sufficiently diverse range of issues such that there is no easy answer to the question: "Where will United Haulers take us?"

Part IV builds on the analysis of Parts II and III by suggesting that courts should bring to bear three overarching considerations as they evaluate future state-self-promotion cases. First, courts must understand how the state-self-promotion exception fits together with other elements of dormant Commerce Clause law. There are many subtle connections between the Court's new state-self-promotion doctrine and preexisting features of the dormant Commerce Clause landscape. Courts must take care to consider these relationships as they apply the principles of United Haulers and Davis.

Second, the policies identified in Part II as having spurred creation of the state-self-promotion principle should guide judicial efforts to sort through that principle's implications. Thus, any proper evaluation of concrete disputes must take account of (1) a private-gains-centered notion of state protectionism and (2) an evaluation of the underlying dynamics of the political processes that produced the challenged state law. As Part III illustrates, in many contexts-ranging from public/private joint ventures to state-issued private-activity bonds to "cradle to grave" waste-service programs to high-end state user fees-careful evaluation of these dual considerations should help point the way to sound results.

Third, courts must be ever-mindful that United Haulers and Davis reflect a doctrinal ambitiousness that the opinions in those cases tend to understate. Some might argue that the innovative nature of the state-self-promotion doctrine, and the Court's unlabored endorsement of it, support its broad application going into the future. There is, however, a different- and I believe more proper-view to take. Given the deep roots of the dormant Commerce Clause rule and the vital service it has rendered to the nation, courts should hesitate to apply the principles of United Haulers and Page 546 Davis to validate discriminatory state programs absent powerful indications that the principle should control. At the least, courts should think long and hard before invoking the state-self-promotion exception to uphold programs that operate primarily to benefit private market actors rather than the state itself.

In Part V of this Article, I explore what United Haulers and Davis suggest about how the Roberts Court will approach the Commerce Clause in other settings. My conclusion is that these rulings may well lay the groundwork for additional constitutional innovations. In the dormant Commerce Clause context, key reforms could involve: (1) a retreat from the Court's use of so-called Pike-balancing analysis as a tool for scuttling commerce-impeding state laws; (2) a contraction of the market-participant exception to the dormant Commerce Clause rule; or (3) an overruling of important precedents, including Carbone itself. No less important, the underlying logic of United Haulers and Davis could lead to new protections of state autonomy as the Court measures the reach of not only the dormant Commerce Clause, but also Congress's enumerated powers. In particular, the Court's emphasis of the traditional character of the challenged state program in both United Haulers and Davis could lead the Court to abandon its landmark, Congress-empowering ruling in Garcia v. San Antonio Metropolitan Transit Authority."21

The analysis that follows showcases the breadth and complexity of the legal field touched by United Haulers and Davis. My hope is that the...

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