Federal ism disputes arising from state regulations, particularly those pursuing health, safety, and environmental goals, are a common feature of the U.S . political system. Discussion of bases for settling such disputes often focuses on the in- and out-state incidence of benefits and costs but incidence is a complex concept that has not been systematically analyzed. We discuss five factors important to evaluating incidence and present spillover criteria for judging disputes based on them. When applied to a Massachusetts regulation of daminozide residues in heat-processed apple products, the criteria reach different conclusions on its appropriateness, although the main criteria suggest it should be invalidated by the courts or preempted by federal law. The application illustrates how the spillover criteria can clarify analysis of federalism disputes.