Constitutional Law Class Notes 2/18/04


“Differential taxation” is considered different from a pure subsidy.  Realize that the line between a subsidy and tax exemption is a very slippery and murky line.


You can hand stuff out to your own folks, but you can’t impose burdens and barriers on other folks.


If you have a real case in practice, hire an economist!


States are trying, in general, to hide their protectionism.  One of the early stages of the lawyering process in one of these cases is to expose the hidden protectionism.  In the real world, there is plenty of time to unearth all the relevant facts.


One exception is the subsidy exception.


The question of the market participation exception is whether the state is acting like a regulator, or whether the state is entering the marketplace as if it were just a business.  If the state enters the marketplace as a business, then its activities that favor in-state businesses are exempt from Dormant Commerce Clause analysis.  The state isn’t using its sovereign power to engage in protectionism.  Instead, the state is simply operating as a company.


For example, Ohio State could be seen as an attempt by the state to enter the education market.


Conservation Force, Inc. v. Manning


The Arizona rule is a 10% limit and it is facially discriminatory.  It’s not a subsidy.  It’s a classic example of state coercion where there is a different rule for out-of-state hunters than in-state hunters.  The state won in the district court, but the Court of Appeals reversed and remanded.  They found that they district court was ridiculous for not finding a Commerce Clause issue.


How can the Arizona government win under strict scrutiny?  What plausible justification does it have for saying that our citizens can hunt elk and deer but citizens from other states can’t?  What is the legitimate interest that Arizona asserts?  Arizona says that they are worried about depleting their elk and deer population.  They are afraid that if they have too much elk and deer hunting, they will disappear.  They want to conserve the species.


But is there a non-discriminatory way for the state of Arizona to protect this interest?  The state has the burden of showing that there are no alternatives.  It’s great if Arizona wants to protect their deer and elk.  But can’t they do it without discrimination against out-of-staters?  Sure they could!  They could issue permits for such-and-such number of elk, and give them out without respect to what state you’re from.  They could set limits that don’t discriminate!


We want to prevent Balkanization!  The whole concept of interstate commerce is that we’re one big country.  States try to do this stuff all the time and they need to get beaten down by the federal government!


In general, you’re not allowed to give your own resources just for your own citizens.  There is one free trade zone in America unless and until Congress adopts rules to the contrary.


Foley thinks the “remand” idea in this case is “for the birds”.  Foley thinks that this opinion doesn’t add up.


Foley is worried because it says you can only get accredited for being a safe hunter by going to one particular school.


It’s hard to win strict scrutiny cases.  One case where the state did win was the Maine v. Taylor case, AKA the “Maine minnow” case.  Maine argued that they were very concerned about the ecology of their local waters.  The bait is going to be incorporated into the local ecosystem.  If there are diseases in the bait from other states, they won’t just make other people sick eating them, but will actually “destroy the fabric of Maine’s ecology”!  The Court said that this was a legitimate justification!  There is an ecological danger that when you import species into the territory it can wreck havoc environmentally.


Is getting a license to hunt a subsidy?  Is not giving a license a tax?


Be able to formulate arguments on both sides.


Heald v. Engler


A lot of intellectual resources have gone into attacking these rules that exist in all the states: the importation of alcohol and the “three-tier” system (retail, wholesale, manufacturers).  In some states, there can be direct sale to consumers of alcohol.  But there is no direct sale to consumers from out-of-state wineries.  Wineries want to sell wine on the Internet.  They want to cut out the “middlemen”.  The states are saying that they can’t do that.  A lot of lawyering has gone into making arguments on both sides of the issue.  A three-judge panel in the Sixth Circuit says, unanimously: “You can’t do it!”  But a three-judge panel in the Second Circuit says, also unanimously, and before the same alcohol attorneys: “You can do it!”


No matter what judges you get, you have to make your arguments and hope for the best.


The key to wine case is that if it were any commodity that wasn’t covered under the Twenty-First Amendment, there would be no question of a violation of the Dormant Commerce Clause.  The state of Ohio cannot allow widgets to be sold directly to consumers only by in-state widget manufacturers.


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