It’s been a busy fall for the Dormant Commerce Clause. In addition to the Fifth Circuit’s recent invalidation of a Texas law about the ownership of electricity-generation facilities, the Court also struck down a New Orleans residency requirement for the ownership of Vrbo-type rental properties:

The district court held that the residency requirement discriminated against interstate commerce. That was the right call. But the court then applied the Pike test [for an incidental effect] to uphold the law. That was a mistake; it should have asked whether the City had reasonable nondiscriminatory alternatives to achieve its policy goals. Because there are many such alternatives, the residency requirement is unconstitutional under the dormant Commerce Clause.

Hignell-Stark v. City of New Orleans, No. 21-30643 (Aug. 22, 2022).

“Imagine if Texas—a state that prides itself on promoting free enterprise—passed a law saying that only those with existing oil wells in the state could drill new wells. It would be hard to believe. It would also raise significant questions under the dormant Commerce Clause. …

Texas recently enacted such a ban on new entrants in a market with a more direct connection to interstate commerce than the drilling of oil wells: the building of transmission lines that are part of multistate electricity
grids. A 2019 law says that the ability to build, own, or operate new lines “that directly [connect] with an existing utility facility . . . may be granted only to the owner of that existing facility.” …

NextEra challenges the new law, as it applies to the interstate electricity networks in Texas (but not the intrastate ERCOT network), on dormant Commerce Clause grounds. … Once we wade through the thicket of electricity regulation, the ban’s interference with interstate commerce becomes as clear as it is for the oil well hypothetical. We thus conclude that the dormant Commerce Clause claims should proceed past the pleading stage.”

NextEra Energy Capital v. Lake, No. 20-50160 (Aug. 30, 2022) (citations omitted).

Texas liquor law prohibits a public corporation from holding a “P permit,” which “authorize[s] the sale of liquor, wine, and ale for off-premises consumption.” Wal-Mart successfully challenged this law as a violation of the dormant Commerce Clause.The Fifth Circuit reversed and remanded, making these observations, of general interest beyond this specific dispute, on the issue of legislative intent:

• “Under the law of the Fifth Circuit, evidence that legislators intended to ban potential permittees based on company form alone is insufficient to meet the purpose element of a dormant Commerce Clause claim”;
• “An admission that the drafter sought to create a law that would survive a constitutional challenge is not evidence of a discriminatory legislative purpose”;
• “[O]verreliance on ‘post-enactment testimony’ from actual legislatures is problematic, and not ‘the best indicia of the Texas Legislature’s intent'”; and
• “The motivations and lobbying efforts of the [Texas Package Store are not direct evidence of legislative purpose.”

Wal-Mart Stores, Inc. v. Texas Alcoholic Beverage Commission, No. 18-50299 (Aug. 15, 2019).

The Texas Package Sales Association, a trade association of alcohol sellers, moved for relief under Fed. R. Civ. P. 60(b) from a longstanding injunction against the enforcement of a residency requirement for sales permits. The Fifth Circuit concluded:

1. While not a plaintiff in the original litigation, TPSA had intervened in it, and could challenge the permanent injunction; and
2. TPSA had standing as an organization to sue about the requirement; but
3. Subsequent Supreme Court opinions about the Commerce Clause did not create an intervening change in the law that would justify Rule 60(b) relief original litigation; and
4. TPSA had not adequately placed at issue the alternative ground for the injunction, based on the Privileges and Immunities Clause.

A dissent would not have found that TPSA had standing to sue, characterizing its suit as an effort “to substitute itself . . for the state authorities” with jurisdiction over the applicable law. Cooper v. TABC, No. 14-51343 (April 21, 2016).

Plaintiffs, “waste haulers that operate throughout the City of San Antonio and its surrounding counties,” claimed that a fee imposed by San Antonio for a waste collection permit violated the Commerce Clause.  Cibolo Waste, Inc. v. City of San Antonio, No. 12-50153 (May 15, 2013).  Examining their standing, the Fifth Circuit found that they showed an injury-in-fact because the fee increased their cost of doing business.  The plaintiffs, could not, however, show that they fell within zone of interest protected by the dormant Commerce Clause, since “[t]heir business is purely intrastate,” and “the only parties that have standing to bring a dormant Commerce Clause challenge are those who both engage in interstate commerce and can show that the ordinance at issue has adversely affected their commerce.”

In an antitrust suit about fees for a golf voucher program, the defendant successfully moved to dismiss on the ground that the plaintiff had not alleged an effect on interstate commerce.  Substantively, the Court acknowledged that while it has “limited the reach of the Commerce Clause with respect to non-economic activity,” (Op. at 7, citing U.S. v. Lopez, 514 U.S. 549 (1995)), “the conduct alleged here . . . bringing out-of-state tourists to play golf–falls squarely within the Supreme Court’s commerce clause jurisprudence.  Procedurally, the Court reviewed the plaintiff’s allegations about the effect of the fees on “out-of-state residents” in light of Twombly and Iqbal and concluded that, while “sparse,” those allegations sufficed to allege an effect on interstate commerce.  The Court reversed the lower court’s dismissal of the case for lack of jurisdiction.  Gulf Coast Hotel-Motel Association v. Mississippi Gulf Coast Golf Course Association