Article I, Section 8, Clause 3:

[The Congress shall have Power . . . ] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; . . .

In general, the Court has recognized that Congress’s plenary authority over interstate commerce enables Congress to “keep the way open, confine it broadly or closely, or close it entirely, subject only to the restrictions placed upon its authority by other constitutional provisions and the requirement that it shall not invade the domains of action reserved exclusively for the states.” 1 Because the Dormant Commerce Clause protects this legislative domain, Congress may authorize state laws that otherwise would be considered discriminatory.2 For example, in 1852, the Supreme Court held that the Wheeling Bridge unlawfully obstructed the free navigation of the Ohio River.3 Soon thereafter, Congress enacted legislation declaring the bridge to be a “lawful structure[ ].” 4 In a subsequent opinion, the Court acknowledged that the act of Congress superseded its earlier ruling.5 Some Justices, however, have questioned whether Congress may in fact override the dormant Commerce Clause.6

Congress’s intent to permit otherwise impermissible state actions must “be unmistakably clear,” however.7 The Court has struck down various state regulations where it held that there was no federal law expressing a sufficiently clear intent to authorize a particular burden on interstate commerce.8

One line of cases has addressed states’ authority to regulate and tax the insurance business. In United States v. South-Eastern Underwriters Association, the Court held that insurance transactions across state lines constituted interstate commerce and thus could not be subjected to discriminatory state taxation.9 Less than a year later, Congress passed the McCarran-Ferguson Act, which provided that “the continued regulation and taxation by the several States of the business of insurance is in the public interest, and that silence on the part of the Congress shall not be construed to impose any barrier to the regulation or taxation of such business by the several States.” 10 Following the enactment of that law, the Court upheld a South Carolina statute that taxed the premiums of business done in that state by foreign insurance companies.11

In a series of cases relating to state prohibition laws enacted in the 1890s, the Court emphasized that states could prohibit the manufacture and sale of alcohol within their boundaries, but could not prevent the importation or sale of alcohol in its original package from another state so long as Congress remained silent on the issue.12 Congress then enacted the Wilson Act, which empowered states to regulate imported liquor on the same terms as domestic liquor.13 But the Court interpreted the Wilson Act narrowly to authorize states to regulate the resale of imported liquor, and not direct shipment to consumers for personal use.14 Congress then responded in 1913 by enacting the Webb-Kenyon Act, which authorized states to limit direct shipments of liquor for personal use.15

Following the repeal of Prohibition, the Supreme Court has repeatedly considered the relationship between the Twenty-First Amendment and the Dormant Commerce Clause as they govern state alcohol laws.16 Section 2 of the Amendment prohibited the “transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof.” 17 In its recent case law, the Court has emphasized that “the aim of § 2 was not to give States a free hand to restrict the importation of alcohol for purely protectionist purposes.” 18 The Court has thus invalidated various state alcohol laws that discriminated in favor of in-state businesses where it has determined that a challenged requirement “[cannot] be justified as a public health or safety measure or on some other legitimate nonprotectionist ground.” 19

Footnotes

1

Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 434 (1946).

2

Ne. Bancorp, Inc. v. Bd. of Governors of the Fed. Reserve Sys., 472 U.S. 159, 174 (1985) ( “When Congress so chooses, state actions which it plainly authorizes are invulnerable to constitutional attack under the Commerce Clause.” )

3

Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. 518 (1852).

4

Ch. 111, 10 Stat. 112, § 6.

5

Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. 421 (1856).

6

E.g., Comptroller of Treasury v. Wynne, 575 U.S. 542, 572 (2015) (Scalia, J., dissenting) ( “The clearest sign that the negative Commerce Clause is a judicial fraud is the utterly illogical holding that congressional consent enables States to enact laws that would otherwise constitute impermissible burdens upon interstate commerce. . . . How could congressional consent lift a constitutional prohibition?” ); Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 426 (1946) ( “[I]f the commerce clause ‘by its own force’ forbids discriminatory state taxation, or other measures, how is it that Congress by expressly consenting can give that action validity?” ).

7

S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 90, 92 (1984) (explaining that this rule ensures that there is a “collective decision” to impose a burden on interstate commerce and reduces the risk that unrepresented, out-of-state interests will be adversely affected by a state’s unilateral regulations). Likewise, Congress must specify when it intends to reduce the degree of scrutiny to be applied to a state action. See Maine v. Taylor, 477 U.S. 131, 139 (1986) (holding that the Lacey Act’s reinforcement of state bans on importation of fish and wildlife neither authorizes state law that otherwise would be unconstitutional, nor shifts analysis from the presumption of invalidity for discriminatory laws to the balancing test for state laws that burden commerce only incidentally).

8

E.g., Hillside Dairy Inc. v. Lyons, 539 U.S. 59, 66 (2003) (holding that the Federal Agriculture Improvement and Reform Act of 1996 addressed laws regulating the composition and labeling of fluid milk products, but did not mention pricing laws, and thus did not authorize a California program to regulate the minimum prices paid by California dairy processors to producers); S.-Cent. Timber Dev., 467 U.S. at 92 (holding that consistency between federal and state policy was “insufficient indicium” that Congress intended to authorize the state to apply a similar policy for timber harvested from state lands).

9

322 U.S. 533 (1944).

10

Act of Mar. 9, 1945, ch. 20, § 1, 59 Stat. 33, 15 U.S.C. § 1011.

11

Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 429 (1946) (explaining that Congress “[o]bviously [intended] to give support to the existing and future state systems for regulating and taxing the business of insurance” ).

12

Bowman v. Chi. & Nw. Ry., 125 U.S. 465 (1888); Leisy v. Hardin, 135 U.S. 100 (1890). Relying on the distinction between manufacture and commerce, the Court applied Mugler to authorize states to prohibit the manufacture of liquor for an out-of-state market. Kidd v. Pearson, 128 U.S. 1 (1888). For a lengthier discussion of the Court’s temperance-law jurisprudence, see Granholm v. Heald, 544 U.S. 460, 476–482 (2005); and Tennessee Wine & Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2464–2467 (2019).

13

Ch. 728, 26 Stat. 313 (codified at 27 U.S.C. § 121).

14

Rhodes v. Iowa, 170 U.S. 412 (1898); see also Scott v. Donald, 165 U.S. 58, 100 (1897) (holding that the Wilson Act did not authorize a South Carolina law requiring all liquor sales to be channeled through the state liquor commissioner); Vance v. W. A. Vandercook Co., 170 U.S. 438 (1898).

15

37 Stat. 699 (codified at 27 U.S.C. § 122). The Supreme Court upheld the constitutionality of the Webb-Kenyon Act in Clark Distilling Co. v. W. Md. Ry., 242 U.S. 311 (1917).

16

See Amdt21.S2.1 Discrimination Against Interstate Commerce.

17

U.S. Const. amend. XXI, § 2.

18

Tenn. Wine & Spirits Retailers Ass’n, 139 S. Ct. at 2469 (citing Granholm, 544 U.S. at 486–487, and Bacchus Imps., Ltd. v. Dias, 468 U.S. 263, 276 (1984)).

19

E.g., id. at 2474–2476 (holding that a Tennessee two-year residency requirement for retail liquor license applicants was not justified on public health and safety grounds and violated the Commerce Clause); Bacchus, 468 U.S. at 273–276 (invalidating tax exemption favoring certain in-state alcohol producers); Healy v. Beer Inst., 491 U.S. 324, 340–341 (1989) (holding unconstitutional a Connecticut law requiring out-of-state shippers of beer to affirm that their wholesale price for products sold in the state was no higher than the prices they charged to wholesalers in bordering states); Granholm, 544 U.S. at 492–493 (holding that discriminatory direct-shipment law that favored in-state wineries was not reasonably necessary to protect states’ asserted interests in policing underage drinking and facilitating tax collection).