In this blog series, Colin W. Maguire, JD, SP, recounts his drafting of the legal article The Imposing Specter of Municipal Liability for the Exclusive Promotion of Green Building Certification Systems, 1 University of Baltimore Journal of Land & Development 157 (2012).
What federal/Constitutional issues could come up in a lawsuit based upon a municipality’s exclusive endorsement of a private green building certification? You have probably heard of the Commerce Clause in the Constitution. But have you heard of the Dormant Commerce Clause?
This doctrine states that individual states or local governments may not set up barriers to competition in private markets which may affect out-of-state businesses. Classic example: a local ordinance states that you can only use the trash collection services of X private company. That is a violation of the Dormant Commerce Clause if an out-of-state trash collector wants to collect trash but cannot due to the ordinance. There are exceptions to this rule, such as the market participant exception. Example: a local ordinance states that only Y collector can collect trash, but Y collector is actually a unit of city government. Now, the municipality is participating in the market and can give itself an advantage while regulating trash collection.
As I hypothesized in my article – suppose that a Michigan municipality passes an ordinance which requires any developer to buy a LEED certification in order to qualify for Brownfield credits. This is very distressing news to Shamrock Green Buildings of South Bend, Indiana. Shamrock is attempting to certify a building in the municipality. Yet, the property owner needs to clean up its development site. It could really use that public funding, possibly in excess of $100,000!
That makes the choice to buy LEED an obvious one. Therefore, Shamrock could sue as an out-of-state competitor trying to come into the Michigan market but cannot operate in this municipality. That is why the Dormant Commerce Clause exists – to stop this type of unfair anti-competition. Even if Shamrock merely sought injunctive relief (the ability to declare the ordinance unconstitutional), the municipality may incur great cost defending this claim. The same municipality could pass an ordinance which states that each municipal-owned building must have a LEED certification. That would be fine because the government unit was acting as a market participant.
Part 4 of a 6-part blog series to be continued.