35 Pages Posted: 9 Feb 2013
Date Written: February 7, 2013
Among the various branches of the dormant Commerce Clause doctrine (“DCCD”) — the judge-made rules grounded in the Constitution’s grant of power over interstate commerce to Congress — is that which prohibits so-called “extraterritorial” state legislation. As recently as 1989, the Supreme Court held that the DCCD “precludes the application of a state statute to commerce that takes place wholly outside of the State's borders, whether or not the commerce has effects within the State...”
That broad articulation of the principle, however, represented extraterritoriality’s high tide. The Court has since retreated; in 2003 it seemed to limit the extraterritoriality principle dramatically, rejecting arguments that a Maine prescription drug subsidy program actually attempted to fix prices outside the state. At this point, the extraterritoriality principle looks to be quite moribund. This essay, then, is an autopsy of sorts. Assuming, as I do, that extraterritoriality — at least the strong form articulated by the Court in the 1980s — is dead, and unlikely to be revived by the current Court, its passing offers an opportunity to examine the lifecycle of constitutional doctrine, from birth to death.
In Part I, I describe extraterritoriality’s early emergence. In its early form, it was not exclusively yoked to the DCCD. The Due Process Clause of the Fourteenth Amendment was also cited as a source, as were less clause-bound structural principles. Beginning in the early twentieth century, however, the doctrine became closely linked with the DCCD; it emerged as a robust branch of that doctrine in the 1980s. This association is described in Part II. Its decline is detailed in Part III; in Part IV, I return to the question of what “killed” extraterritoriality. I conclude that extraterritoriality’s demise was likely overdetermined. Factors contributing to its demise include what Kermit Roosevelt calls a “loss of fit” between the doctrine and the purposes of the DCCD generally, as well as the doctrine’s calcification; the lack of a limiting principle that would prevent it from curtailing legitimate state regulatory power; the Court’s decision to locate limits on punitive damage awards in the Due Process Clause after flirting with the notion that those limits grew out of DCCD extraterritoriality; and shift in attitude on the Court itself from robust enforcement of the DCCD to a desire to limit the doctrine. In Part V, I consider the impact of extraterritoriality’s demise on a related doctrine: the Court’s periodic invalidation of state laws that presented the problem of “inconsistent state regulations.” A brief conclusion follows.
Keywords: dormant commerce clause, extraterritoriality, Donald Regan, calcification, Healy, MITE, CTS Corp., decision rules, constitutional doctrine
JEL Classification: K10
Suggested Citation: Suggested Citation
Denning, Brannon P., Extraterritoriality and the Dormant Commerce Clause: A Doctrinal Post-Mortem (February 7, 2013). Available at SSRN: https://ssrn.com/abstract=2213511 or http://dx.doi.org/10.2139/ssrn.2213511