Also known as: beggar thy neighbor policy · beggar-thy-neighbour policy · beggar thy neighbour policy · beggar-thy-neighbor · protectionism
Written by attorneys — see sources below.
An economic policy by which a state restricts exports of local resources or otherwise discriminates against out-of-state buyers to reserve benefits for in-state interests. The policy constitutes impermissible economic protectionism under the dormant Commerce Clause when it facially favors local purchasers or processors over interstate competitors.
The state of Maine enacts a statute prohibiting the export of live baitfish harvested within its borders. An out-of-state distributor seeks to purchase the fish for resale in neighboring states but is blocked by state officials. The distributor sues, arguing the ban reserves the resource exclusively for local buyers and thereby discriminates against interstate commerce.
A state permits only in-state wineries to ship wine directly to consumers while requiring out-of-state wineries to route all sales through local wholesalers. An out-of-state winery sues after its direct-shipment applications are denied. The suit claims the scheme protects local producers from out-of-state competition in violation of the dormant Commerce Clause.
A county adopts an ordinance directing all construction debris to a government-owned recovery facility and barring haulers from using private out-of-state processors. A regional trade group challenges the rule as discriminatory. The ordinance survives because it favors a public provider performing a traditional government function rather than private economic interests.
Oklahoma prohibits the export of minnows caught in state waters to preserve supply for local bait shops. An out-of-state buyer is denied a shipment and sues. The restriction is struck down as classic economic protectionism that reserves a local natural resource for in-state purchasers.
Robert J. Taylor operates a bait business in Maine. In 1984 he arranged to have 158,000 live golden shiners delivered to him from outside the State even though a Maine statute prohibited the importation of live baitfish. The shipment was intercepted. A federal grand jury in the District of Maine indicted Taylor for violating and conspiring to violate the Lacey Act Amendments of 1981, 16 U.S.C. § 3372(a)(2)(A), which criminalizes the importation of fish taken or possessed in violation of state law. Maine intervened in the District Court pursuant to 28 U.S.C. § 2403(b) to defend the constitutionality of its statute, asserting that the ban protected the State's fisheries from parasites and nonnative species that might accompany shipments of live baitfish. Taylor moved to dismiss the indictment, arguing that the import ban unconstitutionally burdened interstate commerce. The District Court conducted an evidentiary hearing before a Magistrate at which three scientific experts testified for the prosecution and one testified for the defense. The prosecution experts described two principal risks: three types of parasites prevalent in out-of-state baitfish but uncommon in Maine's wild fish population, and nonnative species that could be inadvertently included in shipments and could compete with, prey upon, or otherwise disrupt Maine's native fish. They further testified that no satisfactory inspection or sampling procedures existed for baitfish because of their small size, the large quantities shipped, and the absence of standardized techniques comparable to those developed for salmonids. Taylor's expert disputed the severity of the risks and stated that professional baitfish farmers using freshly drained ponds could largely avoid commingled species. The District Court found the statute constitutional and denied the motion to dismiss. Taylor entered a conditional plea of guilty under Federal Rule of Criminal Procedure 11(a)(2), reserving the right to appeal the constitutional ruling. The Court of Appeals for the First Circuit reversed. Maine appealed to the Supreme Court, which set the case for plenary review and postponed consideration of Taylor's challenges to appellate jurisdiction under 28 U.S.C. § 1254(2) and to Maine's standing as an intervenor. The District Court's findings rested on the Magistrate's weighing of the expert testimony, including the prosecution witnesses' statements that inspection for parasites would require destruction of the fish and that no scientifically accepted sampling methods had been developed for baitfish, as well as the absence of any estimate from Taylor's expert of the time or cost required to develop such methods.
View caseSouth Dakota operates a state-owned cement plant and sells output only to in-state contractors at favorable prices. An out-of-state construction firm is refused supply and sues. The policy is upheld because the state is acting as a market participant rather than regulating private commerce.
In 1919, shortly after South Dakota's admission to the Union, the state established a cement plant near Rapid City through its Cement Commission to develop natural resources and provide an affordable supply of cement for residents and highway construction needs. The plant was financed by revenue bonds and required to be self-supporting without relying on general state revenues. Over the years the plant produced more cement than South Dakotans could use, with buyers in nine nearby states purchasing cement and between 1970 and 1977 some 40 percent of output going outside the state. As the 1978 construction season approached, production difficulties at the plant coincided with high regional and national demand, leading the Commission to reaffirm its policy of supplying all South Dakota customers first and allocating remaining volume on a first-come, first-served basis to others. The plant was producing at 100% of its capacity, but demand for cement in the region was running at about 120% of capacity. Reeves, Inc., a Wyoming corporation operating ready-mix concrete plants in that state, had purchased approximately 95 percent of its cement from the South Dakota plant since 1958, including $1,172,000 worth in 1977, and had supplied over half the ready-mix needs in three northwestern Wyoming counties. On June 30, 1978, the plant informed Reeves it could not continue filling orders, and on July 5 it turned away a Reeves truck, forcing Reeves to cut production by 76 percent after failing to find another supplier. On July 19, 1978, Reeves brought suit in the United States District Court for the District of South Dakota against the Commission, seeking injunctive relief. The District Court granted a permanent injunction after finding no substantial issue of material fact. The United States Court of Appeals for the Eighth Circuit reversed the judgment. The Supreme Court granted certiorari.
View caseNew Jersey bars the importation of solid waste from out-of-state sources to preserve landfill capacity for local municipalities. Philadelphia-area haulers challenge the ban after their shipments are turned away. The prohibition is invalidated as economic protectionism that discriminates against interstate commerce in a common article of trade.
In 1973 the New Jersey Legislature enacted chapter 363 of the 1973 N.J. Laws. The law took effect in early 1974. It provided that no person shall bring into the state any solid or liquid waste which originated or was collected outside the territorial limits of the state. The statute excepted garbage to be fed to swine and other limited categories later permitted by the Commissioner of the Department of Environmental Protection. The Commissioner promulgated regulations permitting four categories of waste to enter the state while barring all others. The statute immediately affected operators of private landfills in New Jersey that had agreements with cities in other states for waste disposal. Several landfill operators and out-of-state cities brought suit in New Jersey state court against the State of New Jersey and its Department of Environmental Protection. They attacked the statute and regulations on multiple state and federal grounds. The trial court granted the plaintiffs' motion for summary judgment in an oral opinion declaring the law unconstitutional because it discriminated against interstate commerce. The New Jersey Supreme Court consolidated the case with a similar action and reversed. The plaintiffs appealed to the United States Supreme Court. The Court noted probable jurisdiction, heard argument, and then remanded for reconsideration of the preemption claim in light of the Resource Conservation and Recovery Act of 1976. On remand the New Jersey Supreme Court again found no federal preemption. The United States Supreme Court noted probable jurisdiction a second time. The New Jersey Supreme Court found that existing landfill sites in the state would be exhausted within a few years. Continued use or development of new sites would impose heavy environmental costs from pollution and loss of open lands. New disposal techniques were under development but would require time. Excluding out-of-state waste could extend the lifespan of existing landfills and thereby help avoid devoting additional virgin wetlands to landfill purposes.
View caseA beggar-thy-neighbor policy explicitly reserves local resources or market access for in-state interests by blocking exports or imposing origin-based burdens. Permissible regulation applies evenhandedly to in-state and out-of-state actors or advances a non-protectionist goal such as health or safety without reasonable nondiscriminatory alternatives.
The doctrine protects a state when it acts as a buyer or seller in the market and favors its own citizens in those proprietary transactions. It does not shield rules that regulate private parties or impose downstream conditions on goods after title passes.
A state must prove the ban serves a legitimate non-economic interest such as preventing ecological harm and that no reasonable nondiscriminatory alternative exists. Mere desire to reserve resources for local economic benefit never suffices.
…isolation.’ ” The opinions of the Court through the years have reflected an alertness to the evils of “economic isolation” and protectionism, while at the same time recognizing that incidental burdens on interstate commerce may be unavoidable when a State legislates to safeguard the health and safety of its people. Thus, where…