106 Iowa L. Rev. 1801 (2021)

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Abstract

The extraterritoriality doctrine of the Commerce Clause forbids a state from regulating activities wholly outside of its borders. There are three primary criticisms of the doctrine: first, that any “dormant” or “negative” component of the Commerce Clause is not supported by the text, structure, or history of the Constitution; second, that to recognize a specific ban on extraterritorial legislation is to misread core Commerce Clause cases; and third, that, even if there is a sound basis for a ban on extraterritorial legislation, such a prohibition is no longer needed because in today’s modern economy regulated entities can comply easily with diverse state regulations.

Despite these textual, jurisprudential, and practical criticisms, courts continue to invoke the doctrine to restrict the traditional police powers of the state. Recently, courts used the doctrine to block Maryland from ensuring that live-saving prescription drugs are affordable and New York from requiring that opioid manufacturers contribute to a fund for addiction treatment. To make matters worse, the courts’ use of the doctrine is inconsistent, if not incoherent. Indeed, there are three live circuit splits on the existence and meaning of the doctrine.

A new model is needed. This Article proposes that the extraterritoriality doctrine be collapsed into a Due Process inquiry. Doing so will give courts a familiar availment standard to deploy, will restore the authority of the states to set the terms of access to their market, and will respect the ability of market actors to weigh whether the proposed terms are worth the prospects of market entry. This Article offers this model as a reasoned and workable alternative to the current extraterritoriality framework, outlining its theoretical basis and applying it to recent circuit court cases as well as to responses to the COVID-19 pandemic.