State extraterritorial powers reconsidered.

• Author: Rosen, Mark D.

INTRODUCTION I. FLOREY'S THREE UNSTATED ASSUMPTIONS A. One or Multiple Extraterritoriality Principles? B. Constitutional Limits? C. What Institutions? II. THE BIG PICTURE: TWO COMPETING VIEWS OF THE STRUCTURE OF POWER-ALLOCATION AMONG THE STATES A. The Two Possibilities: Exclusivity and Concurrence B. Choosing Between Exclusivity and Concurrence 1. A Little Bit of History 2. Why Concurrence Is More Sensible than Exclusivity in this Context 3. Implications CONCLUSION INTRODUCTION

To what extent may a state in this country apply its laws to people and events outside its territorial borders? In what probably will be surprising to most readers, constitutional doctrine still does not offer a clear or settled answer to this basic "horizontal federalism" question. (1) In a recent article published in this journal, Professor Katherine Florey provides a sustained analysis of two doctrines (due process and the dormant Commerce Clause) that bear on the scope of states' extraterritorial powers. (2) Florey shows that the doctrines are in tension, and proposes that courts integrate them into a single constitutional principle that would determine the scope of states' extraterritorial powers. (3)

Florey's thoughtful piece appears to stake out only modest ground, stating that it only "briefly suggest[s] a substantive direction that such a revised extraterritorial standard could take." (4) In fact, however, the article implicitly pushes extraterritoriality considerations in a very definite, yet nonaxiomatic, direction. This Essay fleshes out three assumptions that infuse Florey's informative article--two of which also can be found in the work of other commentators who have tackled the subject of state extraterritorial powers. My goal in unmasking these assumptions is to more precisely describe the status quo and to explicitly identify all options. An enhanced understanding of what is and what could be facilitates consideration of whether there is a contemporary problem in need of fixing and, if there is, of what form the fix should take.

Though I agree that the two doctrines Florey highlights stand in tension with one another and require further clarification, this Essay expresses skepticism that a court-generated constitutional doctrine is the best mechanism for checking states' exercise of extraterritorial powers. Rather, I suggest that apart from some important outer limits that are imposed by several distinct constitutional provisions, the Constitution itself does not set the limits on state extraterritorial powers, but instead allocates the authority to draw such limits to Congress. Absent congressional action, federal courts may (and do) create federal common law limitations that, by their nature, can be overridden by Congress. In the event that neither federal statute nor federal common law governs--what describes the situation in respect to most contemporary questions concerning state extraterritorial regulatory authority--each state has the authority to set for itself the limit of its regulatory powers. Though this might sound like an unstable and unsound "fox guarding the henhouse" arrangement, it has not worked out so poorly--which is one reason why neither Congress nor the federal courts have settled so many questions concerning states' extraterritorial powers. States have come to coordinated solutions to many recurring problems. This Essay suggests that though the status quo is not ideal, it is far from a crisis. And any problems that the status quo cannot handle are best managed by political institutions, not court-generated constitutional doctrines, with the caveat that courts can (and probably should) generate first-cut solutions that can be legislatively overridden.

1. FLOREY'S THREE UNSTATED ASSUMPTIONS

   Professor Florey's apparently unassuming suggestion that courts aim to develop a single constitutional extraterritorial principle is premised on three deep, unspoken assumptions, two of which are shared by other prominent scholars who have considered the scope of states' extraterritorial powers. All three assumptions merit identification and forthright consideration.

   1. One or Multiple Extraterritoriality Principles?

      Florey's starting point is that there presently exist two different extraterritoriality principles that were developed in two different contexts. Courts relied on due process in what she calls the "choice of law" context, articulating a weak constraint that allows states to act extraterritorially so long as the state possesses a "significant contact or significant aggregation of contacts, creating state interests, with the parties and the occurrence or transaction." (5) Florey notes the similarity between this and the Court's minimal contacts test for personal jurisdiction, and correctly observes that satisfying personal jurisdiction typically will satisfy the "choice of law" test as well. (6)

      In what Florey calls the "legislative" context, by contrast, the Supreme Court has articulated a far stricter limitation on states' extraterritorial powers. A strand of dormant Commerce Clause jurisprudence provides that states may not regulate "'commerce that takes place wholly outside of the State's borders, whether or not the commerce has effects within the State,'" if its "practical effect ... is to control conduct beyond the boundaries of the State" or if it risks creating a problem with "inconsistent legislation arising from the projection of one State regulatory regime into the jurisdiction of another State." (7) This is a strict extraterritoriality test because it purports to bar regulation of out-of-state activities that have "effects within the State" if the regulation risks creating "inconsistent legislation," and this condition is always satisfied insofar as extraterritorial regulations applicable to places where other polities have regulatory authority always create a risk of inconsistent regulations.

      To begin, the presence of two apparently inconsistent legal principles does not, on its own, necessarily mean that they are in tension and need be collapsed into one. A plausible alternative is that each standard is appropriate in different contexts, but that the common law process has not yet clearly identified the appropriate scope of each. Here are three plausible ways to harmonize the two extraterritoriality standards: perhaps the stricter approach applies only (1) to regulations of commerce, (8) (2) to regulations whose out-of-state costs exceed their in-state benefits, (9) or (3) perhaps (narrower still) only to protectionist state regulations.(10)

      More troublesome to Florey's project of promoting a single extraterritoriality standard is that there are many other legal principles apart from due process and the dormant Commerce Clause that together serve to determine the scope of states' extraterritorial powers. Most important of these is the Full Faith and Credit Clause, (11) which determines the effect that one state must give to another state's 'judicial Proceedings" and "public Acts." (12) Consider as well the subdoctrine of the Double Jeopardy Clause known as the "dual sovereignty doctrine." While the Double Jeopardy Clause (13) famously protects a person from being "subject for the same offence to be twice put in jeopardy of life or limb," (14) the dual sovereignty doctrine ensures that one state's criminal adjudication will not impede a second state from prosecuting the person for breaking its laws, even if the identical actions were the subject of the two prosecutions. (15) The dual sovereignty doctrine thus protects the second state's interests by depriving the first state's prosecution of extraterritorial effects. (16) Finally, it has been strenuously argued that the "right to travel" limits the degree to which State A can regulate its citizens when they are located in a sister state. (17)

      The fact that there are multiple doctrinal limits on states' extraterritorial powers puts a heavy burden of persuasion on Florey to explain why only a single extraterritoriality principle should be created. This is particularly so where there is no single constitutional text that is an obvious hook to which the extraterritorial principle can be tied. In such circumstances, why is a unitary principle preferable?

      Florey never addresses this question, but instead assumes that one is superior to many. But this may not be true. There instead may be benefits to maintaining distinct extraterritoriality principles. The extraterritoriality doctrines mentioned above protect at least three distinct (albeit sometimes overlapping) interests: (1) individuals, (2) states, and (3) the interstate federal system. Right now, due process primarily protects individuals from being unfairly subject to another state's laws, the dormant Commerce Clause primarily protects the interstate system from being mucked up by inconsistent state laws, and the Full Faith and Credit Clause and the dual sovereignty doctrine protect different aspects of states' sovereignty. A single extraterritoriality principle risks slighting, or wholly ignoring, one or more of these interests. This is so because protecting the distinct interests by separate doctrines forces the decisionmaker (for the time being, let us say the judge) to give sustained attention to each, something that may not happen under a single extraterritoriality test. It might be thought that the danger of slighting some interests can be addressed by simply listing all interests in a single doctrinal laundry list, but this is not so. The Second Restatement of Conflicts, (18) for example, utilizes a single test that provides a list of legally relevant considerations. Courts typically give attention to only one (or a few) and ignore most of the others. (19)

      There is yet another danger of Florey's effort to combine the disparate constitutional principles into a single test. Under current doctrine, some of the Court's limitations bind Congress while others are...