Teaching the government powers and constraints portion of my constitutional law course while prepping for the civil liberties section for the winter term tends to foster interesting counterfactuals. As I created the moot court hypothetical for this term, I had occasion to review Reno v. Condon (528 US 141 2000). In this case the Court is examining a federalism and sovereign immunity conflict. Congress passed the Driver’s Privacy Protection Act of 1994 after learning that states were selling private information for revenue. South Carolina challenged the act claiming that Congress was infringing on state power. The Supreme Court disagreed and found that if the state is acting as a business not a sovereign, then the federal government can regulate the interstate commerce.
As class moved on this term, we came to the case of Heart of Atlanta Motel v. US (379 US 241 1964), and the typical discussion ensued regarding why the federal government could not ban discrimination under the 14th Amendment instead of the commerce clause. I provided a quick summary of the state action doctrine and referenced Wilmington Parking Authority v. Burton (365 US 715 1961).
After class, I began wondering about the implications of Reno here. In Burton, the Court finds state action because the parking garage housing the segregated restaurant was built with public monies AND the restaurant pays rent to the city. In other words, the parking garage and the restaurant are revenue streams. Wilmington is a landlord. Under Reno, Wilmington should not be treated as a sovereign or part of a sovereign—it should be treated as any other private business and immune to equal protection arguments under the 14th Amendment.
This same line of reasoning opens up states to a whole host of federal regulation based upon the reasoning in Reno. For example, in City of Abilene v. EPA (2003), the Fifth Circuit noted that Reno means that cities themselves fall under the proscriptions of the Clean Water Act. “Like the DPPA, the proposed numeric end-of-pipe permits would not have required the Cities to regulate their own residents, but instead, by requiring the Cities to meet effluent limitations, would have regulated them in the same manner as other dischargers of pollutants.” (325 F.3d 663)
If the doctrine in Reno shield states and cities from some intrusions, the pay-off may not be as great as the price. While there may be fewer places for the reach of the 14th amendment, there seems to be more areas where a state or city government is acting as an individual.
 Of course, this does not mean that the restaurant could discriminate—the Civil Rights Act covered that base under the commerce clause.