The DCC in United Haulers
I've been mulling about corporate-farming-ban opinions as I draft an article on what lessons that line of decisions has for the dormant Commerce Clause (DCC) doctrine. Below, I share some thoughts on what United Haulers might mean to the DCC doctrine.
United Haulers doesn't seem to shed much light on where the corporate-farming cases may have gone wrong. But one interesting and relevant part of the United Haulers decision is Part II.D of Robert's opinion. While only 3 other Justices (Souter, Ginsburg, and Breyer) were willing to sign on, Thomas and Scalia are somewhat ready to uphold a state law. Thus, if one is arguing for the "balance" of Pike to be struck in a way that favors state (or local) law, Part II.D would get you 4 votes and you might be able to get Scalia or Thomas. So it might have something useful.
But what is useful about it? One question that continues to perplex those writing in this area (including me) is the notion of discriminatory effects. That is, are discriminatory effects a necessary OR a sufficient part of a DCC claim. And, in either event, under what tier of analysis should they be treated if they (or other evidence) does not raise a further strong inference of discriminatory purpose? There is lots of language in the Court's opinions about how discriminatory effects are one way of proving "discrimination" for discrimination-tier analysis. But it is also fairly clear that a law won't be struck down under the non-discrimination tier unless it has something like a discriminatory effect. Thus, cases like Hunt (the Washington-grade apples case) tend to balance under a Pike analysis because the only thing the Court can find is a discriminatory effect. Indeed, Pike itself has led some to conclude that it was really a discrimination-tier case. I disagree, and tend to think that discriminatory effects are evaluated under the non-discrimination tier if the evidence of discriminatory purpose is weak or inconclusive. Thus, I tend to think that the primary showing of discriminatory effect is necessary to bring the case within DCC doctrine and that a further showing of discriminatory purpose (which could come from strong evidence of discriminatory effects) will bring the case within the discrimination tier. Thus, I tend to think that discriminatory effects must be shown in all cases as a necessary part of recovery. And that is where I think the 8th Circuit has gone astray in its discriminatory-purpose-is-enough reasoning in Jones v. Gale, Hazeltine, etc.
[I qualify this, however, with the transportation cases (like Kassel), in which the Court undertakes balancing where the need for uniformity is more salient. That is, when we are talking about something like the "channels" of interstate commerce, the notion of discriminatory effect becomes more problematic]
So what does United Haulers have to do with that? Well, after finding that there was no "discrimination" for purposes of the discrimination tier (because the entity favored by the flow control ordinance was a public entity), Roberts moves into the non-discrimination tier. The first thing he questioned was whether there was any "disparate impact" from the flow control ordinance. Is "discriminatory effect" any different than "disparate impact"? It is hard to tell from this case, but the question looms. And, what I think is interesting, is the notion that disparate impact could be necessary in a non-discrimination case (i.e., as the "undue burden" that the Court cares about). And this would bring the DCC "non-discrimination" tier much closer to Equal Protection analysis, which under Washington v. Davis, does not include disparate impact as anything more than evidence of the unlawful discriminatory purpose that the 14th Amendment outlaws. Further, some of the Court's prior opinions support this reading (although, of course, some do not).
From there, I tend to think that the necessity of a disparate impact in the non-discrimination tier opens up the possibility that disparate impact (or discriminatory effects) is required in the discrimination tier as well. Notably, no SCOTUS opinion has concluded that a bare purpose is enough (but I'll blog on that later).
One more interesting tidbit from Part II.D: Typically, the Court will not entertain the intermediate-goal argument--the argument that economic protectionism (giving insiders an advantage at outsiders expense) is merely a way to foster the development or security of an insider industry. Thus, the cry is often for a legitimate state purpose unrelated to economic protectionism. But, in United Haulers, Roberts and the other 3 conclude that the economic benefits of the flow control ordinance as a financing mechanism (that which would be economically protectionist discrimination absent the public/private distinction), is a valid state interest for purposes of balancing under Pike. That is a big deal.
And, finally, the Court's opinion in United Haulers (not Part II.D) reaffirms that Exxon is still good law. In that case, the State prohibited producers and refiners of petroleum from owning retail stations within the State. Reaffirming the validity of that case is good news for proponents of state regulation seeking to deal with the problem of vertical integration, (i.e., to legislate on "'the particular structure or method of operation' of a market").
So, basically, that little opinion (taken in conjunction with the notion that Scalia and Thomas hate the DCC) opens up a few arguments. I plan to expand on some of these arguments in upcoming posts on the DCC doctrine and the corporate-farming bans, and I would appreciate any feedback you may have.
United Haulers doesn't seem to shed much light on where the corporate-farming cases may have gone wrong. But one interesting and relevant part of the United Haulers decision is Part II.D of Robert's opinion. While only 3 other Justices (Souter, Ginsburg, and Breyer) were willing to sign on, Thomas and Scalia are somewhat ready to uphold a state law. Thus, if one is arguing for the "balance" of Pike to be struck in a way that favors state (or local) law, Part II.D would get you 4 votes and you might be able to get Scalia or Thomas. So it might have something useful.
But what is useful about it? One question that continues to perplex those writing in this area (including me) is the notion of discriminatory effects. That is, are discriminatory effects a necessary OR a sufficient part of a DCC claim. And, in either event, under what tier of analysis should they be treated if they (or other evidence) does not raise a further strong inference of discriminatory purpose? There is lots of language in the Court's opinions about how discriminatory effects are one way of proving "discrimination" for discrimination-tier analysis. But it is also fairly clear that a law won't be struck down under the non-discrimination tier unless it has something like a discriminatory effect. Thus, cases like Hunt (the Washington-grade apples case) tend to balance under a Pike analysis because the only thing the Court can find is a discriminatory effect. Indeed, Pike itself has led some to conclude that it was really a discrimination-tier case. I disagree, and tend to think that discriminatory effects are evaluated under the non-discrimination tier if the evidence of discriminatory purpose is weak or inconclusive. Thus, I tend to think that the primary showing of discriminatory effect is necessary to bring the case within DCC doctrine and that a further showing of discriminatory purpose (which could come from strong evidence of discriminatory effects) will bring the case within the discrimination tier. Thus, I tend to think that discriminatory effects must be shown in all cases as a necessary part of recovery. And that is where I think the 8th Circuit has gone astray in its discriminatory-purpose-is-enough reasoning in Jones v. Gale, Hazeltine, etc.
[I qualify this, however, with the transportation cases (like Kassel), in which the Court undertakes balancing where the need for uniformity is more salient. That is, when we are talking about something like the "channels" of interstate commerce, the notion of discriminatory effect becomes more problematic]
So what does United Haulers have to do with that? Well, after finding that there was no "discrimination" for purposes of the discrimination tier (because the entity favored by the flow control ordinance was a public entity), Roberts moves into the non-discrimination tier. The first thing he questioned was whether there was any "disparate impact" from the flow control ordinance. Is "discriminatory effect" any different than "disparate impact"? It is hard to tell from this case, but the question looms. And, what I think is interesting, is the notion that disparate impact could be necessary in a non-discrimination case (i.e., as the "undue burden" that the Court cares about). And this would bring the DCC "non-discrimination" tier much closer to Equal Protection analysis, which under Washington v. Davis, does not include disparate impact as anything more than evidence of the unlawful discriminatory purpose that the 14th Amendment outlaws. Further, some of the Court's prior opinions support this reading (although, of course, some do not).
From there, I tend to think that the necessity of a disparate impact in the non-discrimination tier opens up the possibility that disparate impact (or discriminatory effects) is required in the discrimination tier as well. Notably, no SCOTUS opinion has concluded that a bare purpose is enough (but I'll blog on that later).
One more interesting tidbit from Part II.D: Typically, the Court will not entertain the intermediate-goal argument--the argument that economic protectionism (giving insiders an advantage at outsiders expense) is merely a way to foster the development or security of an insider industry. Thus, the cry is often for a legitimate state purpose unrelated to economic protectionism. But, in United Haulers, Roberts and the other 3 conclude that the economic benefits of the flow control ordinance as a financing mechanism (that which would be economically protectionist discrimination absent the public/private distinction), is a valid state interest for purposes of balancing under Pike. That is a big deal.
And, finally, the Court's opinion in United Haulers (not Part II.D) reaffirms that Exxon is still good law. In that case, the State prohibited producers and refiners of petroleum from owning retail stations within the State. Reaffirming the validity of that case is good news for proponents of state regulation seeking to deal with the problem of vertical integration, (i.e., to legislate on "'the particular structure or method of operation' of a market").
So, basically, that little opinion (taken in conjunction with the notion that Scalia and Thomas hate the DCC) opens up a few arguments. I plan to expand on some of these arguments in upcoming posts on the DCC doctrine and the corporate-farming bans, and I would appreciate any feedback you may have.
posted by Anthony Schutz at 12:16 PM
1 Comments:
First of all, great post. I agree with your reasoning that a discriminatory effect should be necessary for recovery in a DCC case. The Eighth's "purpose is enough" approach leaves something to be desired in my book as well. However, I wonder where that leaves us. If a reviewing court required a discriminatory effect and purpose maybe I300 would have been left standing. However, if a law has a discriminatory purpose and no effect, it seems that it was just a really toothless law. (Maybe the anti-corporate farming laws do have a big effect? I dont' feel like I have enough info to make a judgment.)
If anti-corporate farming laws are that ineffectual I wonder if it is worth preserving them as they are currently written. What do you think? Are you working on DCC reform to preserve anti-corporate farming laws or as a bigger effort to improve judicial review or soemthing else? I've been thinking about this myself and am not sure exactly where I stand.
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