ABSTRACT
This chapter focuses on the national commerce power and possible state immunities as illustrated by Garcia v. San Antonio Metro. Transit Auth., which overruled National League of Cities v. Usety. The extent to which the national commerce power is to apply to transactions of states and their municipalities raises particular issues of federalism and intergovernmental immunities. Since the Commerce Clause was adopted in the context of regulating private transactions, one might expect the commerce power to be extended only to state transactions that were like private ones, proprietary transactions. Governmental transactions are concerned with the supply of public goods, those which it is not economically feasible for a citizen to provide for himself because of economies of scale and the "free rider problem". Some of the lower-court decisions can be reconciled if one applies the primary distinction between state regulation and state transactions.
