How the Dormant Commerce Clause Can Fight Zoning Discrimination

By Michael D. Diederich, Jr.

August 11, 2021

How the Dormant Commerce Clause Can Fight Zoning Discrimination


By Michael D. Diederich, Jr.

Land use regulation is a vital governmental tool for safeguarding the health and safety of the citizenry, as has been well-recognized since early last century. However, it has become increasingly clear that zoning regulations may have exclusionary effects, whether intentional or not. The nation’s history of intentional exclusion is fully described in Richard Rothstein’s The Color of Law.[1] Rothstein describes how government has systemically discriminated against minorities in housing, with exclusion only getting worse, notwithstanding statutory remedies that have long existed. The result is racially, ethnically and religiously segregated housing and schools.

This article proposes a solution. Because real estate developers have a financial interest in providing residential housing, and state attorneys general have a public interest in fighting exclusionary zoning, both can deploy the commerce clause[2] to combat exclusionary land use regulations, resulting in more residential housing being built on a less segregated landscape.

The Commerce Clause has been an underutilized legal weapon, yet may be the “silver bullet” needed to remedy systemic discrimination. It does not require proof of unlawful discrimination. All that is needed for a viable Commerce Clause claim is regulation that burdens commerce without a justifiable regulatory basis. Since exclusion of outsiders is not a legitimate basis for land use regulation in New York State and elsewhere, an injured developer will have a prima facie case against the offending municipality under the Commerce Clause whenever a local regulation serves to exclude outsiders by unreasonably obstructing residential development.

Unlawful Bias, Exclusionary Zoning and Wilbur Fried

Black Americans have been segregated from white society since well before our nation’s founding. This was the product of slavery, and, except briefly during Reconstruction, left unchanged after the Civil War, with the Supreme Court judicially blessing segregation in 1896 in its infamous Plessy v. Ferguson[3] decision. The Supreme Court provided some justice in Buchanan v. Warley,[4] holding unconstitutional a city ordinance’s regulation of housing sales based upon race. It was not until 1954 that it issued its watershed Brown v. Board of Education[5] decision, rejecting “separate but equal.” The history of race discrimination in housing is tragic and continuing.

Nor is human bias limited to race. For example, in 2019, an Orthodox Jewish real estate developer filed a federal lawsuit alleging unlawful religious discrimination in a subdivision approval. The developer alleged in his Greens at Chester[6] lawsuit that over several years, the Town of Chester, located in Orange County, engaged in regulatory action to exclude Hasidic Jews. This lawsuit followed decades of town obstruction by the prior developer, Wilbur Fried. The regulatory obstruction by Fried (who is not Orthodox) seemed intended to exclude outsiders generally.

The New York State attorney general intervened in Greens at Chester in early 2020 to stop what appeared to be egregious anti-Hasidic discrimination. A consent decree was concluded in mid-2021.[7] Yet the consent decree did nothing to stop the town’s parochialism and general exclusion of outsiders, even though state law prohibits exclusionary zoning. The town’s parochial ordinances – local laws that hinder Hasidics, Blacks, other minorities and outsiders from relocating into this town – were left unchanged.

Bias or NIMBYism?

Greens at Chester is a case study in land use regulation as a tactic for exclusion. It shows why, 50 years after the Fair Housing Act (FHA)[8] was enacted, there exists widespread exclusion of Blacks and other minorities from the housing marketplace in New York’s suburbs[9] and nationally.[10] One reason this exclusion still exists is unlawful discrimination, usually based upon how people look or sound. State and federal laws that try to prevent discrimination in land use regulation are largely ineffectual because too often, intentional discrimination either cannot be proven or involves subconscious “implicit bias.” The tendency of humans to harbor bias is founded in biological science and human psychology.[11] Society can try to tackle the conscious and subconscious prejudices that human beings harbor, but these prejudices still often find expression in exclusionary zoning practices.

Another reason for exclusionary zoning, perhaps even more prevalent, is “NIMBYism” – the desire to keep newcomers out and “not in my backyard.”

The reality that both unlawful bias and NIMBYism influence municipal land use regulation creates a difficult societal and legal problem. Unconscious bias and NIMBYism may result in unfair land use regulation but generally civil rights lawsuits succeed only against intentional discrimination not unintentional (disparate impact[12]) discrimination. Civil rights laws, such as the FHA and RLUIPA,[13] are most effectively used to redress disparate treatment against a specific minority group. These laws do not easily remedy unconscious bias disfavoring a lower caste[14] or lower class of potential buyers or simply all outsiders.

The decades-long history of the Greens at Chester subdivision proposal is a case study in both (1) the attempted intentional exclusion of the Hasidim and (2) the preceding decades of obstruction by Wilbur Fried’s desire to sell to anyone in the marketplace. Fried experienced local regulation to exclude all newcomers, presumably due to NIMBYism and not animosity toward any particular racial, ethnic or religious group. Yet the byproduct of exclusion is segregation, whether motivated by unlawful animosity or not. This hurts Americans. It hurts the economy. It burdens interstate commerce.

The Dormant Commerce Clause as a Sword To Fight Exclusionary Zoning

Enter the commerce clause as an effective weapon for combating exclusionary land use regulation. Developers injured by exclusionary zoning can serve as a private attorney general to vindicate their right to develop land and also achieve a public good. They have a financial incentive to succeed in reasonably developing land and to sell their product: residential housing. This benefits them and also people of all socioeconomic strata in need of housing. Where in the past, governments “redlined” communities to exclude people of color, private developers today will see a financial incentive to help “green line” areas suitable for sound residential development and growth. Using the commerce clause, developers can fight the local parochialism, insularity and exclusionary zoning that is depriving so many Americans of needed housing.

Thus, where equal protection–related claims by developers would be viewed as too risky, and perhaps fail for lack a sufficient (“plausible”[15]) evidentiary support, the commerce clause will fare much better because there is no need to prove discriminatory intent. Municipal exclusion based upon race, ethnicity, religion, caste or class is irrelevant.

The commerce clause has been interpreted to protect all Americans in their right to a functioning national economy. Thus, a developer who does not directly engage in interstate merchandizing will nevertheless have standing to pursue a commerce clause lawsuit if the nation’s commerce is burdened and an injury sustained.[16] He or she could assert the commerce clause through an Article 78 proceeding to enjoin the exclusionary regulation, and if that fails, sue for the civil rights violation and recover damages and attorney’s fees if he or she prevails.[17]

Elements of an Exclusionary Zoning Commerce Clause Claim

The commerce clause provides that “Congress shall have Power . . . [t]o regulate Commerce with foreign Nations, and among the several States.”[18] As Justice Cardozo wrote in Baldwin v. G.A.F. Seelig, Inc.:[19] “The Constitution . . . was framed upon the theory that the peoples of the several states must sink or swim together, and that in the long run prosperity and salvation are in union and not division.”

The Supreme Court has long interpreted the commerce clause as an implicit restraint on state authority, even in the absence of a conflicting federal statute.[20] In determining whether a law violates this so-called “dormant” aspect of the commerce clause, the court first asks whether it discriminates on its face against interstate commerce. [21] “Discrimination” means treating in-state and out-of-state economic interests in a manner that benefits the former and burdens the latter.[22] A state or municipal government engaged in “economic protectionism” is subject to a “virtually per se rule of invalidity.”[23] To overcome invalidity, the government must show that the state has no other means to advance a legitimate local purpose.[24] As Justice Jackson wrote in H. P. Hood & Sons, Inc. v. Du Mond:[25]

Our system, fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the certainty that he will have free access to every market in the Nation…. , that no home embargoes will withhold his export, and no foreign state will by customs duties or regulations exclude them. Likewise, every consumer may look to the free competition from every producing area in the Nation to protect him from exploitation by any. Such was the vision of the Founders; such has been the doctrine of this Court which has given it reality (emphasis added).[26]

Yet despite Justice Jackson’s formulation, consumers are deprived of housing because producers are constrained by the protectionism of local governments. Many interstate real estate developers will not even attempt to develop land in New York state because of its burdensome local land use regulation and local governments’ efforts to exclude. Yet the Supreme Court teaches that the commerce clause guarantees a national marketplace. Localities do not have the right to unduly burden interstate commerce by protectionism.

There are two common types of dormant commerce clause violations. One type is protectionism against out-of-state interests. A state or local regulation that discriminates against a neighboring state is subject to essentially a per se rule of illegality.[27] The second type is undue burden upon interstate commerce, which claim the courts analyze using the so-called “Pike balancing test.”[28] Under Pike, the court weighs the legitimate local (state) interests against the burden imposed on the interstate marketplace.

Because most state-level governmental regulation has legitimate, articulated reasons, a challenger asserting that a state law has an undue burden on commerce most often loses under Pike balancing. However, local governments’ regulation is a different beast, as it very often is without state-sanctioned legal authority. Zoning to exclude outsiders as such is likely unauthorized in most, if not all, states, as it would violate equal protection principles.[29] Zoning to exclude is not only unauthorized in New York but affirmatively prohibited. New York’s home rule law does not allow exclusionary zoning. The Court of Appeals made this unequivocally clear in its holdings in Golden v. Planning Bd. of Town of Ramapo[30] and Berensen v. Town of New Castle.[31] Municipalities cannot permissibly zone to exclude or to insulate themselves from regional housing needs. New York statute provides for reasonable land use development, not municipal isolation.

Based on the U.S. Supreme Court precedent discussed below, if a land use regulation is burdensome to commerce and has no legitimate purpose, or if it discriminates against out-of-state interests, it should be viewed as presumptively violating the commerce clause. Under the teachings of Philadelphia v. New Jersey[32] and Pike v. Bruce Church, Inc.,[33] a fair formulation of a presumptive commerce clause violation for exclusionary zoning involves these two prongs:

  1. the land-use regulation involved is unauthorized by or contravenes state law; and
  2. the regulation either discriminates against interstate commerce, or burdens interstate commerce.

When an ordinance is shown to be exclusionary, establishing the two prongs above should be much easier than, for example, proving a case of housing discrimination under the FHA. Abusive local land use regulation likely can be shown to be unauthorized or unlawful. The burden upon interstate commerce need be only slight, as interstate commerce has been broadly defined ever since the Supreme Court held in Wickard v. Filburn[34] that subsistence farming will suffice. A real estate developer’s activities certainly meet Wickard’s interstate commerce threshold.[35]

Municipalities employ some common tactics to exclude. One is the use of development moratoria. When a municipality enacts a land use moratorium to single out an out-of-state business seeking a land use approval, the moratorium may reasonably be viewed as (1) discriminatory against interstate commerce and (2) arbitrary and unsupported by law (and thus not a legitimate governmental purpose). Either ground supports a commerce clause claim.

Another common tactic for exclusion is obstruction through burdensome land use ordinances or by repeatedly amended or abusively administrating such ordinances.[36] A third tactic is using environmental review statutes such as SEQRA[37] to obstruct a development proposal. If the motivation is NIMBYism, rather than bona fide environmental protection, the Pike balancing will weigh in favor of the developer.

As to municipalities that are in close proximity to a state border, the enactment of exclusionary zoning will likely discriminate against interstate commerce, by producing the cross-border rivalries and jealousies that the commerce clause was designed to prevent. If towns and villages bordering New Jersey adopt exclusionary local land-use ordinances to ensure “open space” and “community character” in order to maintain “high property values” and “keep out criminal elements,” these New York municipalities invite adjoining townships in New Jersey to follow suit[38] – to be equally spacious, upscale and safe. One result is to exclude minority and low-income families. Another is interference in the interstate housing marketplace, with lower numbers of homes being constructed and reduced housing availability, on both sides of the New York-New Jersey state border.

Hoarding local land (e.g., “open space”) and its ability to be economically used is akin to hording other types of natural resources that the Supreme Court has held violates the commerce clause.[39] If viewed as discrimination against interstate commerce, this would result in a per se commerce clause violation, and if not, a presumptively undue burden under Pike if the land use regulation contradicts state law.

Excluding Trash, Excluding People

Many recent commerce clause cases involve solid waste management. In C & A Carbone, Inc. v. Clarkstown, [40] a local municipal ordinance required trash haulers to deliver solid waste to a competitor’s local waste processing facility. The Supreme Court struck down the local regulation as violating the commerce clause. The ordinance discriminated against interstate commerce by “hoard[ing] solid waste, and the demand to get rid of it, for the benefit of the preferred processing facility.” [41] As the court stated:

While the immediate effect of the ordinance is to direct local transport of solid waste to a designated site within the local jurisdiction, its economic effects are interstate in reach.[42]

The hoarding of trash in Carbone is akin to hoarding the right of private landowner to develop and sell their land. In both instances, the municipal ordinance was designed for the benefit of local residents, enacted at the expense of the regional market for trash or for housing. Quarantining local trash or local land is unconstitutionally protectionist. The town in Carbone burdened out-of-state solid waste managers. Exclusionary local zoning burdens out-of-state people seeking homes and developers seeking to build and sell homes. Hoarding trash or land burdens commerce by preventing the product (trash or homes) from entering the stream of interstate commerce.

Resource protectionism is forbidden by the dormant commerce clause. The above can be summed up in the Supreme Court’s instruction in New England Power Co. v. New Hampshire.[43] There, in invalidating New Hampshire’s attempt to hoard in-state hydroelectric power for its residents, the court wrote:

Our cases consistently have held that the Commerce Clause . . . [of the Constitution, Art. I, § 8, cl. 3,]precludes a state from mandating that its residents be given a preferred right of access, over out-of-state consumers, to natural resources located within its borders or to the products derived therefrom.”[44]

Race, Religious and Socioeconomic Land Use Abuse 

The Greens at Chester case involved NIMBYism that evolved into anti-Hasidimism. The Town of Chester sought to protect itself from Fried, and then his Hasidic successor, in both instances at the expense of the interstate marketplace in housing. The town argues that its intent was and is to maintain the town’s character and property values. However, higher property values (and thus increased wealth) inure to the benefit of the locals by limiting housing stock. Based upon simple supply and demand economics, exclusionary zoning results in higher home values (for the local residents) and higher housing prices (for potential purchasers) in the localities that exclude. This favors the locals and disfavors outsiders, out-of-staters when near a state border, and interstate commerce.

The exclusionary zoning seen nationally often appears akin to governmentally sponsored “gated communities.” It increasingly excludes middle-class and lower-class Americans and disproportionately Blacks and other minority groups. It amounts to a reverse “race to the bottom,” where zoning allows the wealthy to “race to the top” to reside in high-priced enclaves, with everyone else left out. Equality of opportunity to reside in such places becomes non-existent as segregation increases. It is paradigmatic parochial protectionism, violating the central commerce clause tenet against protectionism – laws that “excite those jealousies and retaliatory measures the Constitution was designed to prevent.”[45]


Wealth is not a suspect class. Favoring current residents and the wealthy through police power regulation does not deny equal protection of the law to nonresidents and the less wealthy. Yet it creates socioeconomic structural inequality in American society. The commerce clause can be employed to help reduce such inequality where other civil rights statutes cannot.[46]

When land use regulation prevents reasonable residential real estate development, it burdens the interstate housing marketplace. If the regulation is unsupported by state law, it is susceptible to a commerce clause challenge. Developers injured by unjustified local land use regulation can obtain redress under the commerce clause for being denied the opportunity to provide housing in the national housing marketplace. In this, they will also serve as private attorneys general vindicating the Founding Fathers’ vision for a national economic union. When a municipality uses its regulatory power to exclude outsiders, either the developer or the state attorney general may find the commerce clause to be the most efficacious and practical means of opening up a housing market, particularly when intentional discrimination based upon race, ethnicity or religion cannot likely be established. The time is ripe to deploy the commerce clause to fight exclusionary zoning.

Michael D. Diederich, Jr. is a solo practitioner in Rockland County who represents individuals in civil rights and employment law matters. He is a retired U.S. Army “JAG” lawyer and served on active duty tours in Germany, Iraq and Afghanistan. He is a member of NYSBA’s Committee on Civil Rights.

[1] Richard Rothstein, The Color of Law: A Forgotten History of How Our Government Segregated America (2017).

[2] U.S. Constitution, Art.1, § 8, cl. 3.

[3] 163 U.S. 537 (1896).

[4] 245 U.S. 60 (1917).

[5] 347 U.S. 483 (1954).

[6] See Greens at Chester, LLC v. Town of Chester, 19 Civ. 06770, 2020 U.S. App. LEXIS 81547 (S.D.N.Y. May 8, 2020).

[7] Id. Local news stories are available at: and

[8] Title VIII of the Civil Right Act of 1968, 42 U.S.C. §§ 3601 et seq.

[9] See Editorial, The Jim Crow South? No, Long Island Today, N.Y. Times, Nov. 21, 2019,

[10] See Rothstein, supra note 1; see also Edward L. Glaeser, How Biden Can Free America From Its Zoning Straitjacket, N.Y. Times, April 12, 2021,

[11] See Keith Payne, Laura Niemi, John M. Doris, How to Think about ‘Implicit Bias,’ Scientific American, March 27, 2018,

[12] See Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519 (2015). Disparate impact is much more difficult to prove, for example, that the local zoning resulted in the exclusion of a protected minority, to a statically significant degree, and if so, that the regulation lacks a legitimate basis or a legitimate basis that cannot be revised to mitigate the impact. See also Griggs v. Duke Power Co., 401 U.S. 424 (1971) and MHANY Management, Inc. v. County of Nassau, 819 F.3d 581 (2d Cir. 2016).

[13] Religious Land Use and Institutionalized Persons Act, codified as 42 U.S.C. §§ 2000cc et seq.

[14] See Isabel Wilkerson, Caste: The Origins of Our Discontents (2021).

[15] A federal complaint, to be legally sufficient, must allege “plausible” claims. See, e.g., Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009).

[16] See Houlton Citizens’ Coalition v. Town of Houlton, 175 F.3d 178, 183 (1st Cir 1999), citing General Motors Corp. v. Tracy, 519 U.S. 278, 286 (1997). As stated in Houlton: “In Commerce Clause jurisprudence, cognizable injury is not restricted to those members of the affected class against whom states or their political subdivisions ultimately discriminate. See General Motors Corp. v. Tracy, 519 U.S. 278, 286, 117 S.Ct. 811, 136 L.Ed.2d 761 (1997). Thus, an in-state business which meets constitutional and prudential requirements due to the direct or indirect effects of a law purported to violate the dormant Commerce Clause has standing….” Id.  A developer’s injury, and thus his argument for standing, is much stronger than the generalized injury of low-income potential buyers from a neighboring municipality. Cf., Warth v Seldin, 422 U.S. 490 (1975) (no standing).

[17] See, e.g., Dennis v. Higgins, 498 U.S. 439 (1991); 42 U.S.C. §§ 1983, 1988.

[18] See note 2 supra.

[19] 294 U.S. 511, 523 (1935).

[20] See Case of the State Freight Tax, 15 Wall. 232, 279, 21 L.Ed. 146 (1873); Cooley v. Board of Wardens of Port of Philadelphia ex rel. Soc. for Relief of Distressed Pilots, 12 How. 299, 318, 13 L.Ed. 996 (1852).

[21] See American Trucking Assns., Inc. v. Michigan Pub. Serv. Comm’n, 545 U.S. 429, 433 (2005); Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources, 504 U.S. 353, 359 (1992).

[22] See Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore., 511 U.S. 93, 99, (1994); New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273 (1988).

[23] See Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978).

[24] See, e.g., Maine v. Taylor, 477 U.S. 131, 138 (1986).

[25] 336 U.S. 525 (1949).

[26] Id. at 538–39.

[27] See Philadelphia v. New Jersey, 437 U.S. 617 (1978).

[28] See Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970) (directed at laws directed to “legitimate local concerns, with effects upon interstate commerce that are only incidental”).

[29] The Supreme Court allowed zoning to preserve “community character” in Nectow v. City of Cambridge, 277 U.S. 183, 188 (1928) and “character of the neighborhood” in Village of Euclid, Ohio v. Ambler Realty Co., 272 U.S. 365 (1926). Plessy’s “separate but equal” was then good law. Today, if these are code words for racial bias the courts may deem such an illegitimate basis for regulation. See, e.g., MHANY Management, Inc. v. County of Nassau, 819 F.3d 581 (2d Cir. 2016) (see note 12 supra).

[30] See Golden v. Planning Bd. of Town of Ramapo, 30 N.Y.2d 359, 378 (1972), app. dismissed, 409 U.S. 1003 (1972).

[31] See Berenson v. Town of New Castle, 38 N.Y.2d 102 (1975); Continental Bldg. v. N. Salem, 211 A.D.2d 88 (2d Dep’t 1995) (applying “Berenson doctrine”).

[32] 437 U.S. 617 (1978).

[33] 397 U.S. 137, 142 (1970).

[34] 317 U.S. 111 (1942).

[35] The land use approval process may include out-of-state professionals, and construction, financing and sales that includes out-of-state vendors, lenders and purchasers, each of which involves the interstate marketplace.

[36] See Sherman v. Town of Chester, 752 F.3d 554 (2d Cir. 2014) (the author is plaintiff’s counsel in the Sherman case).

[37] N.Y.S. Environmental Quality Review Act, codified at article 8 of the N.Y.S. Environmental Conservation Law, with implementing regulations found at 6 N.Y.C.R.R. Part 617 (State Environmental Quality Review).

[38] New Jersey’s Supreme Court has prohibited exclusionary zoning in Mount Laurel I and its progeny. See Southern Burlington County N.A.A.C.P. v. Township of Mount Laurel, 67 N.J. 151, 336 A.2d 713 (1975) (Mount Laurel I) and Southern Burlington County N.A.A.C.P. v. Township of Mount Laurel, 92 N.J. 158, 456 A.2d 390 (N.J. 1983) (Mount Laurel II); see also, John R. Nolon, A Comparative Analysis of New Jersey’s Mount Laurel Cases with the Berenson Cases in New York, 4 Pace Envtl.. L. Rev 3 (1986),

[39] See, e.g., New England Power Co. v. New Hampshire, 455 U.S. 331, 338 (1982); Hughes v Oklahoma, 441 U.S. 322, 325 (1979); Camps Newfound/Owatonna, Inc. v Town of Harrison, Me., 520 U,S, 564, 576-77 (1997) (“Commerce Clause … precludes … a preferred right of access … to natural resources….”); Freedom Holdings, Inc. v Spitzer, 357 F.3d 205, 217–18 (2d Cir. 2004) (“… the Commerce Clause … precludes a state from mandating that its residents be given a preferred right of access, over out-of-state consumers, to natural resources located within its borders or to the products derived therefrom,” citing New England Power).

[40] See C & A Carbone, Inc. v. Clarkstown, 511 U.S. 383 (1994).

[41] Id. at 392.

[42] Id. at 389.

[43] 455 U.S. 331 (1982).

[44] Id. at 338.

[45] See Carbone, 511 U.S. at 390.

[46] See Baldwin v G.A.F. Seelig, Inc., 294 U.S. 511 (1935).

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