The Commerce Clause of the U.S. Constitution gives Congress the power “to regulate Commerce…among the several States.” U.S. Const. art. I, § 8, cl. 3. Federal laws can therefore regulate business activities if they affect interstate commerce. This authority has led courts to identify a converse legal principle, known as the “dormant” Commerce Clause, which holds that state laws may not discriminate against out-of-state businesses in a way that impedes interstate commerce. A petition for certiorari currently before the U.S. Supreme Court could lead to changes in how states may regulate interstate commerce. Texas Package Stores Assoc., Inc. v. Fine Wine and Spirits of North Texas, LLC, No. 16-242, pet. for cert. (Sup. Ct., Aug. 19, 2016). The petitioner is asking for clarification about the scope of the dormant Commerce Clause in relation to the rarely-discussed Twenty-First Amendment, which ended Prohibition and gave broad authority to the states to regulate alcohol.
The U.S. Supreme Court has given Congress very wide authority under the Commerce Clause. The dormant Commerce Clause is essentially the negative converse of this authority. If Congress can regulate interstate commerce, the states cannot unreasonably impede it, nor can they discriminate against out-of-state businesses in favor of in-state businesses. For example, the Supreme Court found that a Massachusetts law imposing a tax on milk produced out of state, while providing a subsidy for in-state milk producers, violated the dormant Commerce Clause. West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994).
The Twenty-First Amendment ended the period of American history known as Prohibition, when alcohol was banned nationwide, in 1933. The Eighteenth Amendment, ratified in 1919, had started Prohibition. Section 1 of the Twenty-First Amendment officially repealed the Eighteenth Amendment. Section 2 states that transporting, importing, or possessing alcohol in any U.S. state or territory is prohibited if it is done “in violation of the laws thereof.” This has generally been construed to mean that the states have broad authority to regulate alcohol within their own jurisdictions. Courts have had to address the apparent conflict between § 2 and the dormant Commerce Clause on several occasions.