The Extraterritoriality Doctrine of the Dormant Commerce Clause is Not Dead

In 1895, the New York Court of Appeals, in refusing to enforce a Kansas statute, referred to “a principle of universal application, recognized in all civilized states, that the statutes of one state have . . . no force or effect in another.” In 1897, the Court of Appeals of Kentucky noted that “[t]he statute of another state has, of course, no extraterritorial force.” That old notion describes the extraterritoriality doctrine of the dormant Commerce Clause. In recent years, the doctrine has become problematic for several reasons. One, the line between intrastate and interstate business has become blurred with many fewer transactions falling clearly in the former category. Two, when Congress does not act on issues that affect many, if not all, states, it creates the impression that federalism is not working and states need to undertake a larger role in regulating commerce.

Three, there is a clear two-part test for the out-of-state-discrimination strand of the dormant Commerce Clause, so it is easy to confuse it with an appropriate test for the extraterritoriality doctrine. Therefore, some commentators have said that the extraterritoriality doctrine serves no useful purpose. This article argues that there is a reasonably clear test for extraterritoriality, and the doctrine serves the important purposes of discouraging undue burdens on interstate commerce and of not giving preference to one state’s policy decisions over the decisions of other states.