LEGA,L
ST'KATEGIES·
FO'R
IND'USTRIAL
I,NNOVAT'I'ON
Richard A." Givens" Edi'for
BQleltl~ Hay5, 'Sklar & Her~b'erg
N:ew YurkjNew 'York
Ed'ward:S. B'inkow;sfd
D','·'r,'~:':C:"A ',M: " ~r.~-mi:e r
Kenneth Ross
Ric~h,ard iH. I ,ow-e
F,rank F•. Sk1Ilern
Lloyd ,M:t ,Aulayl
loberf-S~ Tift
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Frank .1. Mauro
Ske,patd' siMtGraw:.Hi'l
:P~O"., Bo'K
1215, Co)arlido Spdngs,l Coloftado 8,0901
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Book Co:mpany
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Stale and 'local Regulation
of In~novatlon
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- HQW Stattind' l ocatlelula:tioM andt':KtS Affect Innova'tnri
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-Proposi'ng legisati:on and fhe Probfem of Deflnltions;
State arid local Property Iax.atloo
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STATE & LOCAL REGULATION
280
§8.28
§8.29
§8.30
§8.01
Some Limits on the Exercise of State and Local Regul atory and
Taxation Authority-Federal Preemption
-Dormant Commerce Clause
Conclusion
Introduction
The purpose of this chapter is not to present a detailed account of how each
state and local governmental unit in the United States affects or can affect the
use of innovative technologies or products. Given the fact that there are 50
states and some 80,000 subs tate units of local government,l such an attempt
would be doomed to failure. The objective of this chapter is to provide a
framework for comprehending the nature of powers exercised by state and
local governments as they could potentially and realistically affect innovative
new products and technologies.
The chapter includes an analysis of how new technologies have in certain
cases been able to get the support of state and local governmental units to
eliminate barriers and create incentives for the marketing and distribution of
innovative new technology and products. Examples are provided of existing
state and local regulations which have had an impact on innovation and how
in certain circumstances the deleterious impacts have been eliminated. The
chapter also addresses the taxing structure at the state and local level in order
to illustrate how the tax structure may inhibit or foster the use of innovative
products. State and local governmental promotion of innovation is also mentioned, although briefly.2
To provide a more realistic approach to these problems, a model will be used
to show how a particularly broad innovative technology with many products
and subtechnologies has dealt with the issue of state and local taxation and
regulation. This model will be the solar energy revolution of the late 1970s,
more particularly the use of solar energy at the residential level. Although not
meant to be totally exhaustive of the potential problems of the innovator, the
issues facing the solar energy innovators will provide a good illustration of how
one can work with state and local governments to eliminate barriers and
establish incentives for the use of innovative products and technologies . Lessons learned from this experience may be transferable to other new products
and technologies so as to guide decision-makers in dealing with the impact of
state and local governmental regulation and taxation on their commercialization and marketing process.
The lessons to be learned from this chapter are relatively simple. State and
local regulatory and taxing programs can have a deleterious impact on the
marketing of innovative products and technologies. State and local governments can, on the other hand, be a positive force supporting innovation if the
I
2
US Bureau of the Census, 1977 Census of Governments.
For an in-depth discussion, see ch 9.