Also known as: extraterritorial regulations · extraterritoriality · extraterritorial jurisdiction
Written by attorneys · grounded in primary & secondary sources — see below
A prohibition under the dormant Commerce Clause against state laws that effectively control prices or conduct occurring wholly outside the enacting state's borders. Such regulation is invalid even when framed as a condition on in-state sales or market access. The doctrine protects the national economic union by preventing one state from projecting its regulatory policy into the territory of others.
Empire Logistics, an out-of-state wholesaler, seeks to sell beer to retailers in State A. State A requires Empire to certify that its prices in State A are no higher than those charged in any other state. Empire must either raise prices nationwide or lose access to State A. The certification requirement projects State A policy into other states and triggers the extraterritoriality bar.
Dairy Distributors, an out-of-state milk processor, wants to sell in State B. State B conditions the license on the processor certifying that its prices in every other state are at least as high as those in State B. The firm must either raise nationwide prices or exit State B. The statute directly regulates conduct outside State B and is barred.
Select any source to read its text and confirm it supports the definition.
Pacific Mutual, an insurer headquartered outside State C, seeks to sell policies in State C. State C requires the insurer to file and adhere to the same rates it uses in every other state. Compliance forces Pacific Mutual to alter prices charged to policyholders in other states. The filing rule projects State C regulation extraterritorially.
Farm Fresh Eggs, an out-of-state producer, sells to grocery chains in State D. State D demands that the producer certify its hens in every other state meet State D cage-size rules. The producer must either reconfigure operations nationwide or forgo the State D market. The condition reaches wholly extraterritorial conduct.
Interstate Haulers, based outside State E, applies to operate on State E highways. State E conditions the permit on the carrier charging the same fuel surcharge it uses in all other states. The carrier must either standardize surcharges nationwide or abandon State E routes. The rule controls pricing beyond State E borders.
Vintage Imports, an out-of-state wholesaler, seeks shelf space in State F stores. State F prohibits the wholesaler from offering any discount outside State F that is not also offered inside State F. Compliance requires the firm to change pricing in every other state. The ban constitutes impermissible extraterritorial regulation.
A state law triggers the prohibition when it conditions access to the local market on the seller's pricing or conduct in other states. Compliance then forces the seller to alter out-of-state prices or withdraw from the regulating state.
Supporting sources
No. The Amendment does not authorize states to impose extraterritorial price controls that would otherwise violate the dormant Commerce Clause.
Supporting sources
Yes. A facial challenge may be brought before enforcement because the law directly regulates out-of-state conduct and imposes immediate compliance costs.
Supporting sources
…within the State, a judgment could affect his interest in property outside the State. But any attempt "directly" to assert extraterritorial jurisdiction over persons or property would offend sister States and exceed the inherent limits of the State's power. A judgment resulting from such an attempt, Mr. Justice Field concluded, was not only…