Law would stop Tesla electric car sales in NC

[happyslug]

95. How? Each state has the right to regulate trade within its borders

A State can NOT forbid the importation of items made outside the state, if the same item made in the state is legal to sell. On the other hand a State can FORBID the sale of items within its borders, if such a law applies to both sellers within the state and sellers outside the state.

Alcohol is a big exception, when Prohibition was repealed, the repeal also redefined how alcohol can be sold within the states. Here is the appeal of Prohibition Amendment:

AMENDMENT XXI
Passed by Congress February 20, 1933. Ratified December 5, 1933.

Section 1.
The eighteenth article of amendment to the Constitution of the United States is hereby repealed.

Section 2.
The transportation or importation into any State, Territory, or Possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

Notice the language of Section 2, previous to Prohibition the Federal Courts had ruled it was unconstitutional for a State to make it illegal to import alcohol into the borders of a State, even if that State made such importation, possession, and use illegal. The Federal Courts had ruled if it was legal in a "Wet" State to make and ship Alcohol, the fact it was being shipped to a "Dry" State, which forbade Alcohol could NOT be made a crime for all acts were done in the "Wet" State not the "Dry" State. The courts did rule once in the "Dry" State the "Dry" State could confiscate the Alcohol, but only if it was clearly for use within the "Dry" State. Section 2 of the Repeal of Prohibition was to address this problem, a problem that had been one of reason for passing Federal Prohibition in the first place. Thus a state can make it a crime to IMPORT alcohol to into that state, even if the importers NEVER stepped into that state.

Notice, this is a narrow exception to the previous rule. applying only to Alcohol.

On the other hand, the Federal Courts that had ruled that it was unconstitutional for a State to forbid the importation of Alcohol into that same State, had also ruled against other forms of State Economic Regulation, a position reversed in the 1930s when the Courts started to permit the States to better regulate commerce.

Thus today, States have more leeway in regulation of commerce then the State had prior to the Great Depression. In many ways, Section 2 of the Repeal of Prohibition, while itself restricted to Alcohol, became the general rule from the Great Depression onward.

This gets to be complicated when it comes to large ticket items, like cars. If a regulation is clearly intended to favor in state car sellers, it violates the rights of sellers in other states. On the other hand, if a state just passes a law that all cars, sold to residence, must be through a dealer, even of the dealer is NOT within the borders of the State, that is a "Neutral" meant to regulate commerce not favor in state businesses over out of state businesses.

In the case of Tesla, this is an issue Car Dealers have fought since the end of WWII, i.e. trying to force all new car sales through dealers instead of through other means of commerce. Can the States regulate Commerce? The answer is clearly yes, UNLESS the regulation has more to do with discriminating against sellers of the item who happen to be from other States then with protecting consumers. The Federal Court will defer to the State Legislature when it comes to such determination UNLESS it can be clearly shown protection of in state interests was more important then protecting consumers.

Tesla is the largest seller of high price items whose business model do NOT use local dealers (Computers are no longer high price, even when home computers cost a couple of thousand dollars, no one considered them a true high price item like an automobile, computers could be purchased locally, but also shipped in, thus no push for special laws to protect sellers of Computers, unlike Automobile dealers who have fought for such laws since WWII).

Tesla has a valid constitutional argument, that such a law restricts out of state "dealers" from doing business within those states with such restrictions. Please note that is an argument not the law. The States also have a valid constitutional argument, the State's right to regulate commerce to protect consumers permit them to require all Automobile sale occur through dealers. It will be interesting how the courts will rule.