Also known as:extraterritorial jurisdiction · extra territorial jurisdiction · extraterritoriality · ETJ · extraterritorial
Written by attorneys · grounded in primary & secondary sources — see below
An exercise of state regulatory power that reaches commercial transactions or pricing decisions occurring wholly outside the regulating state's borders. Such regulation is invalid under the dormant Commerce Clause because it projects one state's policy into the territory of sister states and disrupts the national economic union.
Sources & Authorities
How it applies
Common Examples
2
Out-of-State Beer Price Certification
Elemental Pharmaceuticals, a national distributor headquartered in State A, sells beer to retailers in State B. State B requires every out-of-state seller to certify annually that its prices in State B are no higher than those charged in any other state. To comply without altering its national pricing schedule, Elemental would have to raise prices everywhere else or lose access to State B's market. The certification requirement therefore controls pricing decisions made entirely outside State B.
Distiller Price Affirmation Statute
Echo Systems, an out-of-state distiller, sells liquor to wholesalers in State C. State C demands that Echo certify its in-state prices never exceed the lowest prices it charges anywhere else in the country. Compliance would force Echo to adjust its pricing structure in other states or forgo sales in State C. The statute thereby dictates commercial conduct occurring wholly beyond State C's borders.
Put it into practice
Test Yourself
10
Practice Questions5
· 3 primary sources
Select any source to read its text and confirm it supports the definition.
Cases
Restatements
Study Supplements
Common questions
Frequently Asked
3
What makes a state statute impermissibly extraterritorial?+
A statute is impermissibly extraterritorial when it conditions access to the in-state market on how a seller prices or conducts business in other states. The practical effect of the law, rather than its facial terms, determines whether it controls out-of-state transactions.
Supporting sources
Does the Twenty-First Amendment save state liquor price-affirmation laws from Commerce Clause challenge?+
No. Even in the alcohol context, the Twenty-First Amendment does not authorize states to regulate prices or transactions occurring wholly outside their borders. The dormant Commerce Clause prohibition on extraterritorial regulation applies regardless of the product involved.
Supporting sources
How does a court determine whether a pricing statute has an extraterritorial effect?+
A court examines whether the law ties the legality of an in-state sale to the seller's prices or conduct in other states, thereby forcing nationwide price alignment. If compliance compels the seller to change prices elsewhere or abandon the regulating state's market, the statute regulates extraterritorially.
Supporting sources
Constitutional LawThe relation of nation and states in a federal system · Federalism-based limits on state authorityUBEFoundational