It is a basic, intuitive premise of our federal system that each state makes law for that state and not for other states. To steal an example by Professor Don Reganeven though the State of Michigan had a very strong anti-smoking policy, it could not ban the manufacture of cigarettes in North Carolina, only the importation of these cigarettes into Michigan.
And yet, we do not know what real part of our positive law enacts this premise. There is no territoriality clause in the Constitution, no territoriality statute, and arguments based on other more esoteric sources of law (general law?) themselves raise deep questions. Moreover, as any scholar of conflict of laws knows, the basic tenet of our federal system is often denied in practice: states routinely apply their own law to conduct that has taken place in other states, with relatively little shame or theoretical explanation. And if there’s no territoriality clause in the Constitution, maybe they’re allowed to do that.
Occasionally, courts are so baffled by this that they temporarily force other constitutional clauses to temporarily serve as a territoriality clause. The due process clause is sometimes asked to do this job, for example (as many constitutional odd jobs have been asked to do). More promisingly, several cases had asked the so-called dormant trade clause to do this job as well. If states cannot discriminate against interstate commerce, by logic, neither can they simply regulate out-of-state commerce.
No more. In today’s decision in National Pork Producers v. Ross, a majority opinion of Judge Gorsuch upholds California’s ban on the production of pork under inhumane conditions, even though such production generally takes place outside of California. In doing so, the Court fairly squarely rejects the idea of a territoriality review under the dormant Commerce Clause, despite several cases that had generally been read that way (and extracted that way from the case reports on conflict of laws); and even the partially dissenting judges seem to agree with him on this point. The dormant commerce clause will no longer serve as a territoriality clause.
But at the same time, even Judge Gorsuch’s opinion cannot abandon the idea that something in the Constitution must do the job of a territoriality clause. Distinguishing yet another of the Court’s dormant territoriality commerce clause cases, the Court wrote:
Beyond Baldwin, Brown-Forman and Healy, the petitioners point to Edgar v. MITE Corp., 457 US 624 (1982), as authority for the “almost per se” rule they propose. Citing the dormant Commerce Clause, a plurality in that case declined to enforce an Illinois securities law that “directly regulates[d] operations which [took] place . . . entirely out of state” and involved individuals “with no connection to Illinois.” Id., 641–643 (emphasis added). as much as testing the territorial limits of state authority within the horizontal separation of powers of the Constitution. See, for example, D. Regan, Siamese Essays: (I) CTS Corp. vs. Dynamics Corp. of America and Dormant Commerce Clause Doctrine; (II) Extraterritorial State Legislation, 85 Mich. L.Rev. 1865, 1875–1880, 1897–1902 (1987); see Shelby County v. Holder, 570 US 529, 535 (2013) (“[A]all States enjoy equal sovereignty”). But in any case, the opinion of the plurality of Edgar does not support the rule proposed by the petitioners. This ruling spoke of a law that directly regulated out-of-state dealings by those unaffiliated with the state. The petitioners do not allege that those conditions exist here. Rather, they acknowledge that Proposition 12 only regulates products that companies choose to sell “in” California. Cal. Health and Safety Code Ann. §25990(b).
There’s A LOT to unpack here.
It is true that true cases of extraterritoriality involve “direct regulation[ing] out-of-state transactions”, and not indirectly as in the National Pork Producers case. But what does the Court think of these direct regulations? Are they unconstitutional? And if so, why ?
The Court’s response in this footnote is to move these cases away from the dormant Commerce Clause doctrine and instead within the “territorial limits of state authority under horizontal separation powers of the Constitution”. But what is it ? What constitutional provision encodes “the horizontal separation of powers of the Constitution”? Or is Judge Gorsuch (Judge Gorsuch!?) approving some kind of floating unwritten constitutional law that is not contained in a specific constitutional provision?
And what does the answer to that have to do with the famous but controversial statements in Shelby County v. Holder on equality of sovereignty? The idea that the missing territoriality clause will henceforth be located inside the equal sovereignty clause (which is, alas, also missing)? Or is it the idea that if the Court can find a principle of equality of sovereignty without clause floating freely, it can also do it for a principle of territoriality without clause?
On the one hand, the Court’s desire to limit the dormant doctrine of the commerce clause and to avoid interfering in intractable questions of territoriality reflects a commendable restraint. On the other hand, his apparent belief, reflected in this footnote, that these intractable questions of territoriality will always be dealt with within the framework of the Constitution, within the “unspoken territorial limits of the authority of the State by virtue of the horizontal separation of powers of the Constitution”, does not inspire confidence that the Court has thought about it to the end.
[In my view, the territorial limits on the states were probably originally understood as a subset of the law of nations, as applied to the U.S. states, and perhaps then better understood as a form of pre-Erie general law. But if that is their status it is hard to know what to make of them in a post-Erie world, and hard to figure out whether and when states have the power to disregard them. And it is hard to know what to make of various constitutional rules, from Due Process to the Faith and Credit to the Extradition Clause and maybe even the Commerce Clause that seem to presuppose such limits even if they do not enact them.]
I have described the Court’s occasional but inconstant temptation to constitutionalize such principles “The Temptation of the Dark Side” So I’m going to ask again a version of the question I asked there. If we are going to have “territorial limits on the authority of the state under the horizontal separation of powers of the Constitution”, can we at least use them consistently, rigorously and for good, to limit the choice state law in cases involving conduct in other states? And if not, can we be clearer and more definitive about the absence of constitutional limits in this area?