9th Circuit Considers Commerce Clause

September 9, 2009. The U.S. Court of Appeals (9thCir) issued its opinion [14 pages in PDF] in Los Angeles v. Kern County, rejecting a commerce clause challenge to a county ordinance.

This case involves recycling of wastes by the City of Los Angeles, and other recyclers. It does not involve information technology. However, the key legal issues involve the Constitution's commerce clause, which also serves to protect participants in electronic commerce from local and state government regulators who would burden or discriminate against online commerce.

Kern County, California, passed an ordinance banning the type of recycling used by Los Angeles. The City of Los Angeles and others filed a complaint in the U.S. District Court (CDCal) against the Kern County Water Agency and others alleging, among other things, violation of the commerce clause. The District Court held that Kern County violated the commerce clause.

The Court of Appeals held otherwise, on the basis of standing.

The commerce clause and the concept of standing are both in the Constitution. The Court of Appeals concluded that Los Angeles lacks "prudential standing", a concept not found in the Constitution. In so doing, it applied the "zone of interests test", which is not in the Constitution either. Hence, the Court applied extraconstitutional judicially created principles to hold that it would not be prudent to allow Los Angeles to invoke a Constitutional principle.

Waste disposal and recycling is interstate commerce. Kern County's ordinance regulates all recyclers. Los Angeles suffered financial harm as a result of the ordinance. But, the Court reasoned that "Financial injury, standing alone, does not implicate the zone of interests protected by the dormant Commerce Clause. That financial injury must somehow be tied to a barrier imposed on interstate commerce." Both Los Angeles and Kern County are in the same state. Thus, the Court wrote that, hypothetically, had the ordinance allowed out of state recyclers to do business in Kern County, Los Angeles would have suffered the same injury, but there would be not barrier to interstate commerce.

This limited notion of interstate commerce does not bode well for e-commerce actors who might seek to invoke the protections afforded by the commerce clause in the 9th Circuit.

Perhaps it should be noted that the 9th Circuit applies a far broader concept of interstate commerce in the context of federal criminal statutes, including those that bar certain internet based conduct. That is, crimes are created by statute; the Constitution provides that the Congress only has legislative powers enumerated in the Constitution; there is no general grant of criminal authority; the Congress relies upon the commerce clause as authority for most of the criminal statutes that it enacts.

This case is City of Los Angeles, et al. v. Kern County Water Agency, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 07-56564, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-06-05094-GAF, Judge Gary Fees presiding. Judge Diarmuid O'Scannlain wrote the opinion of the Court of Appeals, in which Judges Pam Rymer and Kim Wardlaw joined.