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Norfolk S. Corp. v. Oberly

Citation: 17 ELR 20941
No. No. 86-5322, 822 F.2d 388/26 ERC 1193/(3d Cir., 06/30/1987) Aff'd on other grounds

The court holds that state coastal management programs (CMPs) under the Coastal Zone Management Act (CZMA) are not immunized from Commerce Clause challenges, but the development restrictions in the Delaware Coastal Zone Act do not violate the Commerce Clause. The court first rules that state CMPs are not immunized from scrutiny under the dormant Commerce Clause, since Congress has not unambiguously consented to otherwise invalid state regulation. The text of the CZMA does not expand state authority to legislate in ways that would be otherwise invalid under the Commerce Clause. The Act's legislative history supports the conclusion that the CZMA is a grant-in-aid statute intended to encourage states to use their existing authority to develop CMPs, but not to broaden state regulatory authority. A body of Supreme Court precedent supports the conclusion that Congress has not consented to otherwise invalid state regulation. While Congress envisioned that states would regulate development activities under their CMPs, it does not follow that it consented to state legislation that would otherwise violate the Commerce Clause. Further, the CZMA would not be rendered a nullity if state regulation is required to be issued in accordance with the Commerce Clause, since not all state regulation that affects interstate commerce is constitutionally invalid.

The court next holds that the balancing approach is the proper standard of review of appellant's claim that the application of the Delaware CMP's ban on new bulk transfer facilities to their proposed coal top-off facility violates the Commerce Clause. The court holds that appellant has not alleged any discriminatory affects that would justify the application of heightened scrutiny. The ban does not block the flow of coal at Delaware's borders. Even if it did, heightened scrutiny is not appropriate because the CMP regulates an intrastate activity in a wholly nondiscriminatory manner. Although the ban may favor industries such as tourism and fishing that produce more economic benefits for Delaware than coal lightering, facially neutral legislation is held discriminatory only where the state law benefits in-state business over out-of-state business in the same market. The court holds that appellant also has not shown that the Delaware legislature had a discriminatory intent that would justify heightened scrutiny. The court holds that heightened scrutiny is not warranted based on impacts on foreign commerce, since the CMP does not impinge on the need for federal uniformity in the area of foreign trade policy. The court next holds that a deferential standard of review should not be applied to this nondiscriminatory environmental statute.

Applying the balancing test, the court holds that the Delaware statute passes constitutional scrutiny because the state law imposes no burden that discriminates against out-of-state interests. The burden identified by appellants, the prevention of a facility that would lower the average transportation costs for coal exporters, is not a legally relevant burden, since it must be shouldered by any coal transporter, regardless of state affiliation.

[The lower court opinion is digested at 16 ELR 20714.]

Counsel for Appellants
Jeffrey S. Berlin
Verner, Liipfert, Bernhard, McPherson & Hand
1660 L St. NW, Suite 1000, Washington DC 20036
(202) 775-1000

Counsel for Appellees
Regina M. Mullen, Deputy Attorney General
Department of Justice
State Office Bldg., 820 N. French St., Wilmington DE 19801
(302) 571-2500

Before Higginbotham and Conaboy,* JJ.