Commerce Clause - Discrimination As A Burden On Commerce

A state has the power to regulate intrastate commerce in a field where Congress has not chosen to legislate, as long as there is no injustice or unreasonable discrimination in favor of intrastate commerce as against interstate commerce. In a Colorado case, out-of-state students at the University of Colorado sued the state BOARD OF REGENTS to recover the higher costs of the tuition paid by them as compared to tuition paid by in-state residents. They contended that their classification as out-of-state students—which violated, among other things, the Commerce Clause—constituted unreasonable discrimination in favor of in-state students. The court held that the statutes that classified students who apply for admission to the state university into in-state and out-of-state students did not violate the Commerce Clause because the classification was reasonable. A state statute affecting interstate commerce is not upheld merely because it applies equally to, and does not discriminate between, residents and nonresidents of the state, as it can otherwise unduly burden interstate commerce.

Discrimination must be more than merely burdensome; it must be unduly or unreasonably burdensome. One state required a licensed foreign corporation with retail stores in the state to collect a state sales tax on the sales it made from its mail-order houses located outside the state to customers within the state. The corporation contended that this statute discriminated against its operations in interstate commerce. Other out-of-state mail-order houses that were not licensed as foreign corporations in the state did not have to collect tax on their sales within the state. The court decided that the state could impose this burden of tax collection on the corporation because the corporation was licensed to do business in the state and it enjoyed the benefits flowing from its state business. Such a measure was not an unreasonable burden on interstate commerce.

A state may not prohibit the entry of a foreign corporation into its territory for the purpose of engaging in foreign or interstate commerce, nor can it impose conditions or restrictions on the conduct of foreign or interstate business by such corporations. When intrastate business is involved, it may do so.

Similarly, a private person who conducts a business that has a significant effect on interstate commerce in a discriminatory manner is not beyond the reach of lawful congressional regulation.

RACIAL DISCRIMINATION in the operation of public accommodations, such as restaurants and lodgings, affects interstate commerce by impeding interstate travel and is prohibited by the CIVIL RIGHTS ACT OF 1964 (codified in scattered sections of 42 U.S.C.A.). In Heart of Atlanta Motel v. United States, 379 U.S. 241, 85 S. Ct. 348, 13 L. Ed. 2d 258 (1964), a local motel owner had refused to accept black guests. He argued that since his motel was a purely local operation, Congress exceeded its authority in legislating as to whom he should accept as guests. The U.S. Supreme Court held that the authority of Congress to promote interstate commerce encompasses the power to regulate local activities of interstate commerce, in both the state of origin and the state of destination, when those activities would otherwise have a substantial and harmful effect upon the interstate commerce. The Court concluded that in this case, the federal prohibition of racial discrimination by motels serving travelers was valid, as interstate travel by blacks was unduly burdened by the established discriminatory conduct.