The proper standard for non-discrimination has long been a vexing question in GATT/WTO law. Is there anything to be learned from seeing how others do it? Yesterday the U.S. Supreme Court decided a "dormant" commerce clause case, where non-discrimination is part of the legal standard (at least under the view of some people). The following summary of the case and the various opinions is from Scotusblog. I focus here on the parts that apply the non-discrimination standard (there is more to the case as well).
The background of the case is as follows:
During the 1980s, the New York counties of Oneida and Herkimer faced, according to the Chief Justice, a “solid waste ‘crisis’” that included not only health and safety problems, but also “price fixing, pervasive overcharging, and the influence of organized crime.” ... In response, the counties enacted ordinances that required all of their solid waste to be delivered to processing sites owned and operated by the Oneida-Herkimer Solid Waste Management Authority, a corporation created by the New York state government. Buoyed by the Supreme Court’s 1994 decision in C & A Carbone v. Clarkstown, which invalidated a similar ordinance that required trash to go to a privately operated processing facility, trash haulers filed suit, alleging that the ordinance violated the dormant Commerce Clause.
In essence, the local government ordinance requires that waste be delivered only to a designated local government owned corporation. A prior Supremore Court case struck down a similar ordinance that required waste to go to a local private corporation.
The majority's opinion finding that the law does not violate the dormant commerce clause is summarized as follows:
Relying on the difference between the privately operated facility at issue in Carbone and the publicly owned Oneida-Herkimer facility, the Court today rejected the trash haulers’ challenge to the “flow control” regulations. In the majority’s view, Carbone could not be dispositive because it did not address the public-private distinction. And because governments have responsibilities – such as health and safety concerns – beyond those of private businesses, the majority posits that “it does not make sense” to subject laws that favor local government to the same level of scrutiny as laws that “favor[] in-state business over out-of-state competition,” as the latter often seek to achieve “simple economic protectionism.” Indeed, the majority emphasizes, “treating public and private entities the same under the dormant Commerce Clause would lead to unprecedented and unbounded interference by the courts with state and local government” – interference that is particularly inappropriate in the area of traditional local government functions such as solid waste.
Thus, the majority thinks this law is permissible because it discriminates in favor of a government-owned corporation rather than a private corporation, referring in this regard to the importance of "traditional local government functions." However, there was also a three person dissent, which held as follows:
Joined by Justices Stevens and Kennedy, Justice Alito would have invalidated the ordinances on the ground that they were “essentially identical” to those at issue in Carbone. In Justice Alito’s view, statements by the Carbone majority “reflect[ed] a clear understanding that the station was, for all purposes relevant to the dormant Commerce Clause, a municipal facility.” More importantly, however, Justice Alito rejects the majority’s public-private distinction as “illusory”: “The Court has long subjected discriminatory legislation to strict scrutiny, and has never, until today, recognized an exception for discrimination in favor of a state-owned entity.” Moreover, there is no justification for the exception that, in the dissent’s view, the majority is creating out of whole cloth today. Contrary to the majority’s assertion, discrimination in favor of a state-owned entity, Justice Alito posits, does serve “local economic interests” (such as providing jobs to local residents and business for local suppliers), while discrimination in favor of privately owned local entities may serve legitimate health and safety purposes. Thus, Justice Alito contends, the proper inquiry in dormant Commerce Clause cases looks not only at the goals of the challenged regulation, but also at “the means by which those goals are realized.” If the means are discriminatory, then the regulation must be subjected to strict scrutiny.
I think I side with the dissent on this one. If you are going to apply a non-discrimination rule, why carve out an exception for discriminating in favor of a government-owned corporation? That could be quite a big exception in practice.
