Also known as: protectionism · trade protectionism
Written by attorneys — see sources below.
State legislation that discriminates against interstate commerce to favor local economic interests over out-of-state competitors. Such measures trigger a virtually per se rule of invalidity under the dormant Commerce Clause unless the state demonstrates that no reasonable nondiscriminatory alternatives exist.
Elite Dynamics, an in-state hatchery, receives an order from an out-of-state buyer for live baitfish. State officials enforce an export prohibition that reserves all stock for local purchasers. The buyer sues, and the court invalidates the ban because it blocks interstate sales solely to shield in-state interests from competition.
Eastern Electric, an out-of-state winery, seeks to ship wine directly to consumers in the state. The state permits only in-state wineries to make such shipments. The winery challenges the restriction, and the court strikes it down as discriminatory protectionism not saved by the Twenty-First Amendment.
Elysium Media operates a private recycling plant outside the state. A city ordinance requires all local construction debris to go to a municipally owned recovery center. The company sues, but the court upholds the rule because it favors a public provider performing a traditional government function rather than private competitors.
Emily Ellis runs a landfill in a neighboring state that accepts waste from the defendant state. The state enacts a statute blocking all out-of-state waste shipments. Ellis sues, and the court invalidates the law as simple economic protectionism that overtly blocks interstate commerce at the border.
In 1973 the New Jersey Legislature enacted chapter 363 of the 1973 N.J. Laws. The law took effect in early 1974. It provided that no person shall bring into the state any solid or liquid waste which originated or was collected outside the territorial limits of the state. The statute excepted garbage to be fed to swine and other limited categories later permitted by the Commissioner of the Department of Environmental Protection. The Commissioner promulgated regulations permitting four categories of waste to enter the state while barring all others. The statute immediately affected operators of private landfills in New Jersey that had agreements with cities in other states for waste disposal. Several landfill operators and out-of-state cities brought suit in New Jersey state court against the State of New Jersey and its Department of Environmental Protection. They attacked the statute and regulations on multiple state and federal grounds. The trial court granted the plaintiffs' motion for summary judgment in an oral opinion declaring the law unconstitutional because it discriminated against interstate commerce. The New Jersey Supreme Court consolidated the case with a similar action and reversed. The plaintiffs appealed to the United States Supreme Court. The Court noted probable jurisdiction, heard argument, and then remanded for reconsideration of the preemption claim in light of the Resource Conservation and Recovery Act of 1976. On remand the New Jersey Supreme Court again found no federal preemption. The United States Supreme Court noted probable jurisdiction a second time. The New Jersey Supreme Court found that existing landfill sites in the state would be exhausted within a few years. Continued use or development of new sites would impose heavy environmental costs from pollution and loss of open lands. New disposal techniques were under development but would require time. Excluding out-of-state waste could extend the lifespan of existing landfills and thereby help avoid devoting additional virgin wetlands to landfill purposes.
View caseEugene Ellsworth owns a construction firm in a neighboring state that needs cement during a shortage. The state cement plant fills all in-state orders first and turns away out-of-state buyers. Ellsworth sues, and the court upholds the preference because the state is acting as a market participant rather than a regulator.
In 1919, shortly after South Dakota's admission to the Union, the state established a cement plant near Rapid City through its Cement Commission to develop natural resources and provide an affordable supply of cement for residents and highway construction needs. The plant was financed by revenue bonds and required to be self-supporting without relying on general state revenues. Over the years the plant produced more cement than South Dakotans could use, with buyers in nine nearby states purchasing cement and between 1970 and 1977 some 40 percent of output going outside the state. As the 1978 construction season approached, production difficulties at the plant coincided with high regional and national demand, leading the Commission to reaffirm its policy of supplying all South Dakota customers first and allocating remaining volume on a first-come, first-served basis to others. The plant was producing at 100% of its capacity, but demand for cement in the region was running at about 120% of capacity. Reeves, Inc., a Wyoming corporation operating ready-mix concrete plants in that state, had purchased approximately 95 percent of its cement from the South Dakota plant since 1958, including $1,172,000 worth in 1977, and had supplied over half the ready-mix needs in three northwestern Wyoming counties. On June 30, 1978, the plant informed Reeves it could not continue filling orders, and on July 5 it turned away a Reeves truck, forcing Reeves to cut production by 76 percent after failing to find another supplier. On July 19, 1978, Reeves brought suit in the United States District Court for the District of South Dakota against the Commission, seeking injunctive relief. The District Court granted a permanent injunction after finding no substantial issue of material fact. The United States Court of Appeals for the Eighth Circuit reversed the judgment. The Supreme Court granted certiorari.
View caseEsther Eisenberg, a licensed attorney living across the state line, applies for admission to the state bar. The state supreme court denies the application solely because she is not a resident. Eisenberg sues, and the court invalidates the rule as economic protectionism that the Privileges and Immunities Clause forbids.
Kathryn Piper resided in Lower Waterford, Vermont, approximately 400 yards from the New Hampshire border. In 1979 she applied to take the February 1980 New Hampshire bar examination and included a statement of intent to become a New Hampshire resident. After an investigation the Board of Bar Examiners determined that Piper possessed good moral character and satisfied the remaining admission criteria. She took and passed the examination but was advised that she must establish a home address in New Hampshire before being sworn in. On May 7, 1980, Piper asked the Clerk of the New Hampshire Supreme Court for an exemption from the residency requirement. She explained that she had a possible job with a lawyer in Littleton, New Hampshire, yet becoming a resident would be inconvenient because her Vermont house carried a favorable mortgage interest rate and she and her husband had recently become parents. The Clerk denied the request on May 13, 1980. Piper then formally petitioned the New Hampshire Supreme Court for admission, asserting that her circumstances were unique enough to warrant an exception without creating precedent. The court denied her petition on December 31, 1980. On March 22, 1982, Piper commenced an action in the United States District Court for the District of New Hampshire against the Supreme Court of New Hampshire, its five Justices, and its Clerk. She challenged Rule 42, which excludes nonresidents from the bar, on the ground that it violates the Privileges and Immunities Clause. The District Court granted her motion for summary judgment on May 17, 1982. An evenly divided Court of Appeals for the First Circuit, sitting en banc, affirmed the judgment in 1983. The Supreme Court of New Hampshire appealed, and the United States Supreme Court noted probable jurisdiction.
View caseA state may adopt evenhanded quotas or license limits that apply equally to in-state and out-of-state users. An outright export ban that reserves a local resource exclusively for in-state buyers is protectionism and virtually per se invalid.
No. The doctrine permits a state to favor its own citizens when buying or selling as a market participant. It does not allow downstream conditions that regulate post-sale activity or rules that function as regulation rather than proprietary action.
A flow-control ordinance directing waste to a government-owned facility performing a traditional public function receives lenient review. The favoritism is presumed to reflect legitimate public objectives rather than simple economic protectionism.
…commerce may be unavoidable when a State legislates to safeguard the health and safety of its people. Thus, where simple economic protectionism is effected by state legislation, a virtually per se rule of invalidity has been erected. See, e. g. , H. P. Hood & Sons, Inc. v. Du Mond, supra ; Toomer v. Witsell , 334 U. S. 385,…