Law in Contemporary Society
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Does the Market Participation Exception Make Sense? (I hate this title, it must change)

-- By AndrewCascini - 24 Feb 2010

BACKGROUND

The Commerce Clause and the Dormant Commerce Clause

Article I of the Constitution delegates many different powers to Congress. One of these powers is to "regulate Commerce... among the several states." This is referred to as the commerce clause. While the Constitution never explicitly bars individual states from interfering with this Congressional power, the Supreme Court has inferred the presence of a "dormant commerce clause" from the text of Article I. This dormant commerce clause allows state and municipal legislation resulting in interference with interstate commerce to be evaluated and limited by the Supreme Court, even where Congress has passed no conflicting law. Legislation is often found to violate the dormant commerce clause on the grounds that the legislation is economically “discriminatory” to other states.

The Market Participation Exception

The dormant commerce clause does not bar all state and local legislation that may in any way affect the interstate economy, however. The Court has carved an exception from dormant commerce clause doctrine in instances where states, through legislation, are deemed to be merely “participating” in the market.

Origin

In Hughes v. Alexandria Scrap Corp., the Court upheld a state program that aimed to reduce the number of junked cars. The state would purchase the cars, paying a disproportionate amount for cars with in-state plates and imposing less stringent documentation requirements from in-state scrap processors. “Nothing in the purposes of the Commerce Clause prohibits a state from participating in the market,” wrote Justice Powell for the majority. Choosing to buy in-state junk and junk processing serves was merely participation.

Limitation

Yet market participation was held to have its limits. Eight years later in Central Timber Development v. Wunnicke, the Court ruled that states, while enacting legislation to enable market participation, must not “impose conditions having a substantial regulatory effect outside the particular market.” This restriction marked the “limit of the market-participant doctrine.”

"Downstream" and "upstream" effects

GOALS:

Describe the downstream and upstream effects. (does this need to be here?)

MARKET PARTICIPATION VERSUS MARKET REGULATION

THE DISCRETE LABELS, WHAT THEY SIGNIFY BUT WHAT THEY REALLY DO

All Participation Creates Market Changes

GOALS:

Dictating behavior with your dollar.

The Individual Model

GOALS:

Talk about how an individual, through his participation, creates changes in the market

The State Model

GOALS:

Talk about how a state, through its market participation, creates widespread industry changes

PARTICIPATION as a Label

GOALS:

Just a label for a category of changes in a market, instead of a discrete action. THIS HAS BEEN CHANGED FROM REGULATION - the idea here is that all market participation creates market changes, so the court has just labeled consideration of certain factors "participation" and contrasted them, perhaps arbitrarily.

FINAL THOUGHTS

GOALS:

This definitely needs a conclusion, and you might want to distinguish some of the external reasons that might force the court to distinguish "regulation" from participation in states. Either way we need to expand this.


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r3 - 25 Feb 2010 - 16:49:26 - AndrewCascini
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