Learning Outcomes
After reading this article, you will be able to explain when federal authorization allows states to enact or enforce laws that would otherwise be unconstitutional under the Dormant Commerce Clause or preemption principles. You will understand the legal effect of congressional consent, the market participant exception, and how federal approval impacts state regulatory power, enabling you to answer MBE questions on this topic with confidence.
MBE Syllabus
For the MBE, you are required to understand the constitutional boundaries between federal and state authority, especially where federal authorization affects state action. This article covers:
- The Dormant Commerce Clause and its limits on state regulation of interstate commerce.
- The effect of explicit or implicit congressional authorization on otherwise invalid state laws.
- The market participant exception to the Dormant Commerce Clause.
- Preemption doctrine and the impact of federal approval or occupation of a regulatory field.
- The distinction between state regulation and state proprietary (market participant) conduct.
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
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A state law bans the export of groundwater to other states. Congress passes a statute stating, "States may prohibit or restrict the export of groundwater as they see fit." Is the state law constitutional?
- (A) No, because it discriminates against interstate commerce.
- (B) No, because water is not an article of commerce.
- (C) Yes, because Congress has authorized the restriction.
- (D) Yes, because the state is acting as a market participant.
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Congress enacts a law requiring states to allow only in-state companies to bid on state highway contracts. Is this law valid?
- (A) Yes, because Congress may regulate interstate commerce and authorize state discrimination.
- (B) No, because it violates the Equal Protection Clause.
- (C) No, because Congress cannot force states to discriminate.
- (D) Yes, but only if the contracts are for federal highways.
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A state-owned cement plant sells only to in-state buyers during shortages. Out-of-state buyers sue under the Dormant Commerce Clause. What is the likely result?
- (A) The state loses, because it discriminates against interstate commerce.
- (B) The state wins, because it is acting as a market participant.
- (C) The state loses, unless Congress authorizes the discrimination.
- (D) The state wins, only if it treats all in-state buyers equally.
Introduction
The U.S. Constitution establishes a federal system in which both the federal government and the states have regulatory powers. However, the Constitution also restricts states from enacting certain laws, especially those that burden or discriminate against interstate commerce. These restrictions are not absolute. If Congress expressly authorizes state action, a state may enact or enforce laws that would otherwise be invalid under the Dormant Commerce Clause or preemption principles. Understanding when federal authorization "saves" state action is essential for MBE success.
Key Term: Dormant Commerce Clause
The principle that state laws are unconstitutional if they discriminate against or unduly burden interstate commerce, unless Congress has authorized the state action.Key Term: Preemption
The doctrine that federal law overrides conflicting state law, either expressly or by occupying a regulatory field.Key Term: Market Participant Exception
An exception to the Dormant Commerce Clause allowing a state, when acting as a buyer or seller in the market, to favor its own citizens without violating the Commerce Clause.
Congressional Authorization of State Action
Normally, states may not discriminate against or unduly burden interstate commerce. However, if Congress authorizes a state law that would otherwise violate the Dormant Commerce Clause, the state law is valid. Congressional consent removes the constitutional barrier.
Explicit Authorization
Congress may expressly permit states to regulate or discriminate in ways that would otherwise be unconstitutional under the Dormant Commerce Clause. For example, if Congress passes a statute stating, "States may prohibit the export of groundwater," a state law doing so is valid, even if it discriminates against out-of-state users.
Implicit Authorization
Congress can also implicitly authorize state action by passing a federal law that leaves room for state regulation or by occupying a field but allowing concurrent state laws. Courts look for clear congressional intent.
Key Term: Congressional Authorization
Express or implied approval by Congress that allows states to enact laws that would otherwise violate constitutional limits on state power.
The Market Participant Exception
When a state acts as a market participant—buying, selling, or producing goods or services—it may favor its own residents without violating the Dormant Commerce Clause. This exception does not require congressional authorization.
Preemption and Federal Approval
If federal law preempts a field, state laws are generally invalid. However, if Congress includes a "savings clause" or otherwise authorizes state regulation, state laws may coexist with federal law.
Worked Example 1.1
A state passes a law banning the export of water to other states. Congress later enacts a statute stating, "States may regulate or prohibit the export of water resources as they choose." Is the state law constitutional?
Answer: Yes. Congressional authorization removes the Dormant Commerce Clause barrier, so the state law is valid even though it discriminates against interstate commerce.
Worked Example 1.2
A state-owned cement plant refuses to sell to out-of-state buyers during shortages. Out-of-state buyers sue, claiming discrimination against interstate commerce.
Answer: The state wins. As a market participant, the state may favor its own citizens when acting as a seller, and the Dormant Commerce Clause does not apply.
Exam Warning
Congressional authorization must be clear. Courts require explicit or strongly implied consent before allowing states to discriminate against interstate commerce.
Revision Tip
When analyzing a state law that burdens interstate commerce, always check if Congress has authorized the state action. If so, the state law is valid.
Key Point Checklist
This article has covered the following key knowledge points:
- The Dormant Commerce Clause restricts state laws that burden or discriminate against interstate commerce.
- Congressional authorization allows states to enact laws that would otherwise violate the Dormant Commerce Clause or be preempted.
- The market participant exception permits states to favor their own citizens when acting as buyers or sellers.
- Preemption doctrine is subject to congressional intent; federal approval can allow concurrent state regulation.
- Courts require clear congressional consent before upholding otherwise invalid state action.
Key Terms and Concepts
- Dormant Commerce Clause
- Preemption
- Market Participant Exception
- Congressional Authorization
