273 U.S. 34 (1927)

A 1927 United States Supreme Court opinion pertaining to the doctrine of Dormant Commerce Clause in which the Court drew a distinction between state laws that directly interfered with interstate commerce and thus were invalid vs. laws that indirectly affected interstate commerce and were permissible under the Constitution.

The case involved a Pennsylvania law which required a state licence to sell tickets for foreign travel.  The state argued that the law was necessary to prevent fraud in the ticket industry.

The Court, however, rejected Pennsylvania’s justification for its law and held that the law was unconstitutional as it directly interfered with interstate commerce.  The Court reasoned:

A state statute which by its necessary operation directly interferes with or burdens foreign commerce is a prohibited regulation and invalid, regardless of the purpose with which it was passed.  Such legislation cannot be sustained as an exertion of the police power of the State to prevent possible fraud. The Congress has complete and paramount authority to regulate foreign commerce and, by appropriate measures, to protect the public against the frauds of those who sell these tickets and orders.

Id. at 37 (citations omitted).

In his dissent, Justice Stone criticized the majority’s direct-indirect test:

In this case the traditional test of the limit of state action by inquiring whether the interference with commerce is direct or indirect seems to me too mechanical, too uncertain in its application, and too remote from actualities, to be of value. In thus making use of the expressions, “direct” and “indirect interference” with commerce, we are doing little more than using labels to describe a result rather than any trustworthy formula by which it is reached.

Id. at 44.

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