Also known as: protectionist purposes · protectionism
Written by attorneys — see sources below.
A state's motive in enacting legislation that intentionally favors its own citizens over out-of-state interests by granting them a competitive advantage in business or employment. The presence of such a purpose triggers heightened scrutiny under the Dormant Commerce Clause or Privileges and Immunities Clause because it reflects economic protectionism rather than a legitimate non-discriminatory objective.
Pierce Patterson operates a bait shop in Oklahoma and seeks to purchase live minnows from local suppliers for resale across state lines. The state enacts a statute prohibiting any export of baitfish caught in its waters. Patterson's out-of-state customers lose access to the supply while in-state buyers continue to purchase freely. The law's design reserves the resource exclusively for local economic benefit.
Priya Prasad owns an out-of-state winery that wants to ship wine directly to consumers in Michigan. Michigan law permits in-state wineries to make such shipments but requires out-of-state wineries to route all sales through in-state wholesalers. Prasad's direct orders are rejected while local producers fulfill them without restriction. The scheme channels sales exclusively to in-state businesses.
Perry Pratt runs a private recycling firm that competes for construction debris in New York counties. A county ordinance requires all local waste to be delivered to a publicly owned recovery center. Pratt's out-of-state clients must pay higher fees at the public site while the county facility receives guaranteed volume. The rule advances a traditional public function rather than economic protectionism.
Pearl Porter distributes liquor from out-of-state producers into New York. State law requires affirmation that prices charged in New York match the lowest price offered anywhere in the country. In-state distributors face no equivalent constraint and can adjust prices freely. The rule effectively shields local sellers from out-of-state price competition.
New York extensively regulates the sale and distribution of alcoholic beverages within its borders. Distillers and their agents may not sell to wholesalers in New York except in accordance with a price schedule filed with the State Liquor Authority. The distiller or agent must file the price schedule before the 25th day of each month, and the prices therein become effective on the first day of the second following month. The schedule must contain a precise description of each item the distiller intends to sell, and a per-bottle and per-case price. All sales to any wholesaler in New York during the month for which the schedule is in effect must be at those prices. Section 101-b(3)(d) of the ABC Law requires any distiller or agent that files a schedule of prices to include an affirmation that the bottle and case price of liquor to wholesalers set forth in such schedule is no higher than the lowest price at which such item of liquor will be sold by such distiller to any wholesaler anywhere in any other state of the United States or in the District of Columbia during the month covered by the schedule. Twenty other States have similar affirmation laws. Some require the distiller to set a price that is no higher than the lowest price charged previously anywhere in the United States. Others, like New York, require the affirmed price to be no higher than the lowest price that will be charged during the current month. Beginning in 1978, Brown-Forman has offered its wholesalers cash payments, or promotional allowances, which are credited against any amounts due appellant. The amount of a particular wholesaler’s allowance does depend on its past purchases and projections of future purchases, but accepting the allowance does not constitute an agreement to purchase any particular quantity of Brown-Forman products. The allowances are unconditional, lump-sum payments to all wholesalers in every State except New York. Brown-Forman offered the promotional allowance to its New York wholesalers, but the Liquor Authority determined that the ABC Law prohibited such payments. The Authority also determined that the payment of promotional allowances to wholesalers in other States lowered the effective price of Brown-Forman brands to those wholesalers, and thus violated § 101-b(3)(d) of the ABC Law. The Liquor Authority accordingly instituted license revocation proceedings against appellant. Brown-Forman sought review in the Appellate Division of the New York Supreme Court and then in the New York Court of Appeals. Both courts sustained the Authority’s interpretation and application of the statute. The Supreme Court noted probable jurisdiction limited to the question whether the ABC Law, on its face, violates the Commerce Clause.
View casePriscilla Parks manages a New Jersey landfill that accepts solid waste from Philadelphia haulers. New Jersey enacts a statute barring importation of waste generated outside the state. Parks loses major contracts while in-state landfills continue to operate without restriction. The prohibition reserves disposal capacity exclusively for local generators.
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 casePortia Price operates a dairy cooperative that sells milk into Massachusetts from out-of-state farms. The state imposes a tax on all milk sales and rebates the proceeds only to in-state producers. Price's members receive no rebate while local dairies obtain the full subsidy. The mechanism transfers economic benefit solely to resident businesses.
In the 1980s and early 1990s, Massachusetts dairy farmers began to lose market share to lower-cost producers in neighboring states. A Special Commission appointed by the Governor found that many producers had sold their dairy farms during the past decade. The commission concluded that if prices paid to farmers were not significantly increased, a majority of the remaining farmers in Massachusetts would be forced out of business within the year. On January 28, 1992, the Commissioner of the Massachusetts Department of Food and Agriculture declared a state of emergency. He noted that the average federal blend price had declined from $14.67 per hundredweight in 1990 to $12.64 per hundredweight in 1991. Costs of production for Massachusetts farmers had risen to an estimated average of $15.50 per hundredweight. Promptly after the emergency declaration, the Commissioner issued a pricing order. The order requires every dealer in Massachusetts to make monthly premium payments into the Massachusetts Dairy Equalization Fund. The amount of each payment is computed by subtracting the monthly federal blend price from $15, dividing the difference by three to obtain the order premium, and then multiplying that premium by the volume of the dealer's Class I sales in Massachusetts. Each month the entire fund is distributed to Massachusetts producers, with each receiving a share equal to its proportionate contribution to the state's total production of raw milk, subject to a 200,000-pound cap per producer and a net-price ceiling of $15 per hundredweight. Petitioner West Lynn Creamery, Inc., is a licensed Massachusetts milk dealer that purchases about 97 percent of its raw milk from out-of-state farmers. Petitioner LeComte's Dairy, Inc., purchases all of its milk from West Lynn for distribution to retail outlets in Massachusetts. The petitioners complied with the pricing order for two months and paid almost $200,000 into the fund. Starting in July 1992 the petitioners refused to make further payments, prompting the Commissioner to commence license-revocation proceedings against them. The petitioners filed suit in state court seeking an injunction against enforcement of the order. The state court denied relief and the licenses were conditionally revoked. The parties agreed to an expedited appellate procedure. The Supreme Judicial Court of Massachusetts transferred the cases to its own docket and affirmed the validity of the order. The United States Supreme Court granted certiorari.
View caseA protectionist purpose exists when a state reserves a resource exclusively for in-state economic actors without equivalent limits on local activity. Legitimate conservation measures apply evenhandedly to in-state and out-of-state users alike. Export bans or import restrictions that single out interstate transactions for disadvantage reveal the protectionist motive.
Supporting sources
The clause is triggered only when the law burdens a fundamental right and was enacted to give local citizens a competitive advantage in business or employment. Once those elements are shown, the state must demonstrate a substantial reason for the discrimination and that no less restrictive means exist.
No. Flow-control ordinances that favor a government-owned facility performing a traditional public function receive lenient review because the preference is presumed to advance legitimate public objectives rather than economic protectionism.
Supporting sources
…isolation.’ ” The opinions of the Court through the years have reflected an alertness to the evils of “economic isolation” and protectionism, while at the same time recognizing that incidental burdens on interstate commerce may be unavoidable when a State legislates to safeguard the health and safety of its people. Thus, where…