State Regulatory Jurisdiction and the Internet: Letting the Dormant Commerce Clause Lie
Cyberspace seems to pose a dual threat to "Our Federalism." Only one aspect of this threat, however, has captured the scholarly imagination. Commentators have devoted a great deal of attention to the problems of horizontal federalism raised by the new technology. Cyberspace, they point out, is a profoundly integrative social and economic force. As a result, local legislation touching on cyberspace is likely to produce effects beyond local borders. State laws like a recently deceased Georgia statute that arguably would have prohibited all Internet users from "falsely identifying" themselves on- lines convince observers that the information superhighway is a dangerous new means for states to export their legislative products to other jurisdictions. Although the danger is more potential than actual, the pages of recent law reviews echo with calls for preemptive federal legislation, or more commonly, for self-regulation with minimal governmental interference.
The more strident of these calls highlight the cyberspace threat that has largely been ignored: the threat to vertical federalism. Cyberspace imbues state regulation with tremendous potential for extraterritorial effect, potential which invites the federal judiciary to cut down a broad swath of state law. This invitation is made all the more appealing by the rather amorphous nature of the Supreme Court's extraterritoriality jurisprudence. The Constitution contains no explicit command forbidding states from projecting their legislation beyond their own borders. The Court might be expected to infer that directive from constitutional structure, but instead has sited the proposition in a succession of unlikely textual locales: the Contracts Clause, the Full Faith and Credit Clause, and the Due Process Clause. The current locus of the extraterritoriality principle seems to be a line of dormant Commerce Clause cases stemming from Edgar v. MITE Corp." One commentator has dubbed Edgar and its progeny "the new territorialism;" others have seized on the cases' seeming insistence on strict territorial sovereignty and suggested that the dormant Commerce Clause seriously curtails states' ability to regulate the Internet. Such expansive readings of the cases have found an appreciative audience in the Southern District of New York, where, in American Libraries Ass'n ['ALA"] v. Pataki, a federal court flatly ruled that states have no jurisdiction to enact cyberlaw.