LYCOS RETRIEVER 
Commerce Clause: Dormant Commerce Clause
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Today, if a law is challenged under the doctrine of the dormant Commerce Clause, the Court determines its constitutionality by examining its discriminatory effects. The Court is primarily concerned with whether a law in one state discriminates against out-of-Staters. If so, it is typically found to be unconstitutional. If not, then the Court proceeds in its evaluation of the law using a balancing test. The Court determines whether the burden imposed by a law outweighs the benefits. Again, if such is the case, the law is usually deemed unconstitutional.
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In evaluating a Dormant Commerce Clause challenge, a Court first looks at the language of the state statute, determining if the statute is facially discriminatory or facially neutral. If the statute is facially discriminatory, then the statute is presumed unconstitutional. Typical cases demonstrating this analysis are the City of Philadelphia v. New Jersey, 437 U.S. 617 (1978), Kassel v. Consolidated Freightways Corp.,
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The principle of the Dormant Commerce Clause is that states may not burden interstate commerce; they may not discriminate against business in other states for the benefit of their own state’s business interests. This intent is consistent with the Founders’ experience under the Articles of Confederation of economic efficiency across the nation being nearly impossible because each state regulated interstate commerce concerns by erecting barriers to trade. The idea behind the commerce clause was to insure the creation of one, single economic union.
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The "market participation exception" to the Dormant Commerce Clause does not give states unlimited authority to favor local interests, because limits from other laws and Constitutional limits still apply. In United Building & Construction Trades Council v. Camden, 465 U.S. 208 (1984), the city of Camden, New Jersey had passed an ordinance requiring that at least forty percent of the employees of contractors and subcontractors on city projects be Camden residents. The Supreme Court found that while there law was not infirm due to the Dormant Commerce Clause, it violated the Privileges and Immunities Clause of Article IV of the Constitution. Justice Rehnquist's opinion distinguishes the market-participant doctrine from the privileges and immunities doctrine. Similarly, Congress has the power itself under the Commerce Clause to regulate and sanction states acting as "market participants," but it lacks power to legislate in ways that violate Article IV.
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Generally a state law is found to be unconstitutional under the Dormant Commerce Clause if on its face it discriminates against out-of-state businesses or if it appears neutral but has the effect of favoring in-state economic interests. The former is usually determined unconstitutional. The latter cases tend to be examined by courts to determine if the burden on commerce outweighs the benefits it brings to the state. If they determine it does, then the law is deemed unconstitutional.
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This paper will address potential dormant Commerce Clause restrictions on state attempts to regulate e-commerce and other activities over the Internet. In a world without borders, the Internet facilitates an explosion of online retail opportunities, as more commerce is moving onto the Internet. Despite the borderless nature of the Internet, hundreds of laws concerning the Internet and e-commerce have been passed over the last few years. This patchwork of state, national and international laws and regulations threaten continued growth of e-commerce. Many of these statutes on their face discriminate against out-of-state commerce and place a burdensome "chilling effect" on interstate and international e-commerce. The problems facing e-commerce suggest the extreme need for a cautious approach to state and national regulation of commercial Internet activity.
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Dormant Commerce Clause