Which is an exception to the Dormant Commerce Clause?

• A. Market participant exception
• B. Regulatory parity exception
• C. Economic efficiency exception
• D. Territorial integrity exception

Answer: (A)

The Dormant Commerce Clause bars states from discriminating against or unduly burdening interstate commerce when they act as regulators. But there’s a recognized exception: when the state is acting as a market participant rather than as a regulator. In that role, the state may favor its own citizens or in-state businesses in market transactions without violating the Dormant Commerce Clause.

So if a state buys goods or contracts for services with in-state providers, or operates a state-owned enterprise that directs preference to in-state suppliers, this is allowed because the state is participating in the market on its own terms, not imposing rules on private businesses. The key limitation is that the exception applies only to market participation, not to broad regulatory actions that discriminate against out-of-state interests.

The other proposed “exceptions” aren’t recognized Dormant Commerce Clause doctrines in the same way. They don’t provide a lawful basis for discriminatory state action in the market, so they aren’t correct here.