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19. Must the prominent limousine service comply with the new rule of the Redville City Council?
A prominent limousine service has a lucrative business transporting passengers between Greenville and the airport in Redville, at much lower rates than those required by the Redville City Council. It transports passengers in interstate traffic only; it does not provide local service within Redville. The new rule adopted by the Redville City Council will require the prominent limousine service to charge the same rates as limousines operating only in Redville.
The cities of Redville and Greenville are located adjacent to each other in different states. The airport serving both of them is located in Redville and is one of those airports specified in the federal statute. The Redville City Council has adopted a rule that requires any limousines serving the airport to charge only the rates authorized by the Redville City Council.
A federal statute provides that the cities in which certain specified airports are located may regulate the rates and services of all limousines that serve those airports, without regard to the origin or destination of the passengers who use the limousines.
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This Commerce Clause also limits each state's ability to pass laws that affect interstate commerce. The negative implications of the Commerce Clause (called the «Dormant Commerce Clause») mean that, in the absence of federal regulations on the subject, states cannot pass regulations of local aspects of interstate commerce unless they do not discriminate against out-of-state parties to benefit local economic interests and are not unduly burdensome.
The Supremacy Clause invalidates any state action that is contrary to validly-enacted federal law. This Clause ensures that the U.S. Constitution, and federal laws made pursuant to it, remain the supreme law of the land.
The Takings Clause prohibits the government from taking an individual's property without paying just compensation. When a state merely regulates property use in a manner consistent with the state's designated powers, no compensation needs to be paid, even if the owner's use of his property, or its value, has been substantially diminished. Often, regulations that result in unconstitutional takings occur in cases involving land-use, especially when there has been a denial of all economically viable use of the land. See also Duquesne Light Co. v. Barash, 488 U.S. 299 (1989) (state scheme of utility regulation and rate-setting was not a taking of property requiring compensation).
B is correct. It is true that the rule of the Redville City Council burdens interstate commerce. However, the federal statute explicitly grants power to Redville to set limousine rates, which thus authorizes the Council to do this. The Supremacy Clause ensures that federal law remains supreme, which removes any potential constitutional issue under the Dormant Commerce Clause, the Supremacy Clause, or any other provision.
A is incorrect. This answer reaches the correct answer with the wrong reasoning, as well as misstates the law. Redville does not have «exclusive regulatory authority» to regulate transportation to and from the airport because such travel would fall within the reach of the Commerce Clause as a channel or instrumentality (depending on what Congress regulated) of interstate commerce. As such, Congress also retains authority, and the assertion that Redville has «exclusive» authority is incorrect.
C is incorrect. First, this answer choice stretches the facts. The question provides that the prominent limousine service would have to raise its rates, but it does not offer any facts indicating the broader assertion that doing so would «destroy» the business. The facts also do not state that this increase in rates would lead to a net loss of revenue for the company — it might, but there is no clear indication to conclude one way or another. Finally, a regulatory taking normally does not rise to the level required to trigger the Takings Clause unless it, for example, entirely destroys the economic value, leaving no viable alternative. This is not a bright-line test, but the mere interference and potential decrease in value in this question does not rise to the required level.
D is incorrect. As described above, Congress has expressly authorized laws of this sort, and therefore, even though it potentially imposes an undue burden on interstate commerce, it is one that Congress has permitted, so it poses no problem under the Commerce Clause.