The newest dangerous proposal filtering through Congress is H.R. 2887, the "No Regulation Without Representation Act of 2017." Packaged as a prohibition on states regulating outside of their borders, the bill is a Trojan horse that usurps the states' role in the federal system and threatens their ability to protect their own citizens from harm. The House Committee on the Judiciary's Subcommittee on Regulatory Reform, Commercial and Antitrust Law is taking up the bill in a hearing today, July 25, and Center for Progressive Reform Member Scholars have submitted a letter opposing the bill.
Poor drafting obscures impact
The bill itself is challenging to read. It is poorly drafted and hides its true impact behind generic terminology and rabbit-hole definitions. Here is a summary of the key language – after which a concrete example helps demonstrate its meaning.
The bill contains a prohibition: states may not regulate a person's activity in interstate commerce unless that person is physically present in the state when the regulation is imposed. (The bill also includes a tax prohibition, which is not addressed in this post.) The term "regulate" is defined as imposing a "standard or requirement on the production, manufacture or post-sale disposal of any out-of-state product sold or offered for sale in interstate commerce as a condition of sale" when the standard or requirement is "in addition to" federal law or that of the state where the product was produced (emphases added). "Products" include both goods and services, tangible and intangible.
So how does the prohibition work? Suppose State A requires that all eggs sold within its borders must come from chickens housed in pens at least two feet long on all sides. This law applies neutrally – anyone wishing to sell eggs in State A must comply, regardless of their state of origin. Now suppose State B allows egg producers within its borders to keep chickens in smaller pens. Typically, the impact of this difference is that egg producers in State B have a choice: they may comply with State A's requirements and sell in State A. Or they may choose not to comply with State A's requirements and sell their eggs elsewhere, including in State B. By the way, if State A's egg prices rise because of the stricter standards, it's up to State A's voters to decide whether the increase is worthwhile.
There is nothing inherently remarkable about this difference in the two states or the egg producers' choices. It happens all the time. But the effect of H.R. 2887 is both simple and dangerous: State A's law is prohibited because it imposes a "requirement" of "production" that is "in addition" to that of State B.
Prohibition violates fundamental constitutional principles of federalism
Why is the prohibition a problem? It violates basic principles of our constitutional framework. The framers of the U.S. Constitution erected a system of government that preserves for states the power to protect the health, safety, and other needs of their citizens. For nearly 200 years, the Supreme Court has applied the common-sense principle that "there is a residuum of power in the states to make laws governing matters of local concern which nevertheless in some measure affect interstate commerce, or even, to some extent, regulate it." This is a critical way that H.R. 2887 goes astray – it bans this kind of incidental regulation that states have always been permitted to do.
State regulation and experimentation is a key component of federalism. As the Supreme Court recently described, "Federalism, central to the constitutional design, adopts the principle that both the National and State Governments have elements of sovereignty the other is bound to respect." Congress, of course, may regulate within its broad Commerce Clause power and preempt state law. But if Congress wishes to regulate a matter formerly within the states' sphere, it must do so with precision; the presumption is always that states retain their authority. These and other longstanding norms ensure that federal law sets a floor against which states may experiment, maintaining the states' fundamental role in the constitutional balance.
States' power, in turn, is limited by the dormant Commerce Clause; they cannot directly regulate or discriminate against interstate commerce. But the Constitution permits states to regulate within their borders in ways that indirectly impact interstate commerce, provided the burden is not "clearly excessive" in relation to the local benefits. This so-called "Pike balancing test" works hand-in-hand with the pragmatic notion – reflected modernly throughout both statutory and constitutional law – that there is no such thing as solely federal or solely state activity.
To return to the egg example: State A's egg production standard, although neutral, indeed poses an indirect impact on interstate commerce. Were State B to challenge the law in court, the Pike standard would ask whether the standard were clearly excessive in relation to the benefits to State A of larger cages. The point is that the Constitution has never banned this kind of neutral state law – but that's what H.R. 2887 would do.
Prohibition is staggeringly broad
Indeed, H.R. 2887's language is so broad that it would effectively require all state laws to be uniform if they impact goods or services in interstate commerce. The breadth of its applicability is staggering and amounts to a second critical way in which the bill goes astray. It goes far beyond Congress's more typical exercises of the Commerce Power because it is not specific to any subject matter. And because it forbids any state from having standards "in addition" to any other state with respect to interstate commerce, it would make federal law a ceiling, not a floor. That is, states could never experiment with "additional" requirements for products or services sold within their borders. As a result, all states would be required to follow the standards of the least protective or innovative state, or rely on Congress to create new regulatory schemes.
The vast scope of state protections and innovations that would fall under H.R. 2887's prohibition is stunning. What about licensing for service professions; consumer protections; tort reforms; oil and gas extraction laws; environmental, health, and safety protections; agricultural standards; and even state quarantine laws? H.R. 2887 calls all of these state standards into question – regardless of their benefits.
At bottom, H.R. 2887 is repugnant to what Justice Brandeis eloquently described nearly one hundred years ago: "It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country." This bill turns its back on that wisdom.
